EXHIBIT
        10.8

       

      PLACEMENT
        AGREEMENT

       

      May
        27,
        2005

       

      Keating
        Securities, LLC

      5251
        DTC
        Parkway, Suite 1090 Greenwood Village, CO 80111

       

      
        	 	
                Re:

              	
                Private
                  placement offering of up to $3,000,000 of securities ("Offering"),
                  consisting of up to 300 units at an offering price of $10,000 per
                  unit,
                  each unit comprised of a 10% unsecured convertible promissory note
                  of
                  AeroGrow International, Inc. in the principal amount of $10,000
                  and 2,000
                  five-year warrants, each warrant providing for the purchase of
                  one share
                  of the Company's common stock at the exercise price of $5.01 per
                  share

              


      

       

      Dear
        Sirs:

       

      AeroGrow
        International, Inc. ("Company") proposes to offer, offer for sale and sell
        up to
        $3,000,000 of securities, consisting of 300 units ("Units") at an offering
        price
        of $10,000 per Unit, to accredited investors. Each Unit will be comprised
        of a
        10% unsecured convertible promissory note in the principal amount of $10,000
        due
        June 30, 2006 ("Note") and 2,000 five-year warrants, each warrant providing
        for
        the purchase of one share of the Company's common stock at the exercise price
        of
        $5.01 per share ("Warrants").

       

      In
        the
        event the Company completes a registered public offering of its securities
        ("Primary Offering") under the Securities Act of 1933, as amended ("Securities
        Act") on or before June 30, 2006, the principal amount of the Note will be
        convertible, at the holder's election, into the same securities (including
        securities which are part of any unit) and at the same price as those being
        offered in the Primary Offering. The Company agrees to register for re-offer
        and
        re-sale, the securities into which the Note may be converted ("Conversion
        Securities"), on the registration statement filed by the Company with respect
        to
        the securities being offered in the Primary Offering. The Note may be converted,
        in whole or in part, by the Holder at any time commencing on the earlier
        of: (i)
        the date 45 days after the effectiveness of the Primary Offering, or (ii)
        the
        date thirty days prior to the maturity date of the Note ("Commencement Date"),
        and ending on the date the Note is paid in full by the Company. The Company
        may
        not redeem the Note and will have no right to pre-pay the Note without the
        prior
        consent of the holder.

       

      The
        Company agrees to file, on one occasion, a registration statement under the
        Securities Act to register the common stock underlying the Warrants ("Underlying
        Common Stock") and, to the extent the Company files a registration statement
        with respect to the Primary Offering, the Underlying Common Stock shall be
        included on such registration statement. The Warrants will be exercisable,
        in
        whole or in part, beginning on the earlier of (i) the date 45 days after
        the
        effectiveness of the Primary Offering, (ii) the date any other registration
        statement on which Underlying Common Stock is registered for re-offer and
        re-sale are included becomes effective; or (iii) the maturity date of the
        Note
        ("Commencement Date"), and ending on the fifth anniversary of the final closing
        of the Offering.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      The
        Company, the Units, the Note and the Warrants will be more fully described
        in a
        private placement memorandum to completed by the Company prior to commencement
        of the Offering and any supplements or amendments thereto (the "Memorandum").
        The Company desires to employ Keating Securities, LLC (the "Placement Agent")
        as
        its exclusive placement agent to offer, offer for sale and sell the Units
        subject to all of the terms and conditions of this Agreement and subject
        to the
        terms and conditions contained in the Memorandum.

       

      For
        purposes of this Agreement, the terms and conditions of the Units and underlying
        Note and Warrants assume that the Company has completed, and therefore gives
        effect to, the proposed 1-for-5 reverse stock split of the Company's common
        stock. The Company agrees that it will complete the reverse stock split prior
        to
        the initial closing of this Offering.

       

      1.    Description
        of Offering and Appointment of Agent.

       

      (a)     Appointment.
        On the
        basis of the representations, warranties and covenants herein contained,
        but
        subject to the terms and conditions herein set forth, the Placement Agent
        is
        hereby appointed the exclusive agent of the Company during the Offering Period
        (as defined herein) for the purpose of finding subscribers for sale of up
        to
        $3,000,000 of Units on a "best efforts" basis. The Placement Agent may, in
        its
        sole discretion, appoint participating agents to offer and sell the Units
        as
        subagents of the Placement Agent (the "Participating Agents") pursuant a
        certain
        dealer agreement between the Placement Agent and each Participating Agent
        ("Dealer Agreement"). A minimum purchase of three Unit per investor is required,
        unless the Company and Placement Agent agree to allow a minimum purchase
        of one
        or two Units per investor, provided, in no case, shall any fractional Units
        be
        sold in the Offering. The Placement Agent acknowledges that the Company may
        limit its acceptance of subscriptions in any manner it deems prudent in order
        to
        provide for the timely use of subscriber funds and may reject any subscription
        for any reason, and the Placement Agent agrees that any such rejection of
        a
        subscription obtained by the Placement Agent or by the Participating Agents
        shall be deemed not to be a sale made by the Placement Agent or by the
        Participating Agents. The Placement Agent further acknowledges that (i) all
        wire
        transfers of subscription funds will be sent to a segregated account maintained
        by the Company at Steele Street State Bank ("Segregated Account"), (ii) all
        subscribers' checks shall be made payable to and deposited into the Segregated
        Account, (iii) all subscribers' check will be transmitted directly to Steele
        Street State Bank by noon of the next business day after receipt by the
        Placement Agent or the Participating Agents, (iv) all executed subscription
        documents shall be promptly sent to the Placement Agent, (v) no funds shall
        be
        disbursed from the Segregated Account until such time as the subscription
        has
        been accepted by the Company and approved by the Placement Agent, and (vi)
        Steele Street State Bank shall disburse funds from the Segregated Account
        only
        upon the written direction signed by the Company and the Placement
        Agent.

       

      (b)     Offering
        Period.
        The
        "Offering Period" shall mean that period during which the Units are offered
        for
        sale, commencing on the date of the Memorandum and continuing for forty-five
        (45) days thereafter, or such later date mutually agreed to by the Company
        and
        Placement Agent but not later than August 15, 2005 (the "Termination Date");
        provided, however, that the Offering Period shall in all events terminate
        upon
        the sale of all of the Units.

       

      
        
          
          

        

        
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      (c)     Acceptance.
        The
        Placement Agent hereby accepts such agency and agrees on the terms an conditions
        herein set forth to use the Placement Agent's best efforts during the Offering
        Period to find subscribers for the Units.

       

      (d)     Private
        Placement Offering.
        The
        Offering will not be registered under federal securities laws or the securities
        laws of any state. The Company will rely upon exemptions from registration
        under
        federal securities laws and state securities acts (the "State Acts"). With
        respect to federal securities laws, the Company will rely on one or more
        exemptions from registration for sales to accredited investors (as defined
        in
        Section 2(15) of the Securities Act and Rule 501 promulgated thereunder),
        including, without limitation, exemptions from registration provided by Sections
        3(b), 4(2) and/or 4(6) of the Securities Act, and Rule 506 of Regulation
        D,
        promulgated as part of the rules and regulations under the Securities Act
        (the
        "Rules and Regulations"). With respect to the State Acts, the Company will
        not
        be subject to them pursuant to preemption based on Section 18 of the Securities
        Act or will rely upon limited offering exemptions of certain states approved
        by
        the Company. The Company shall use its best efforts to qualify or register
        the
        Units for sale, or exempt the Units from qualification of registration, under
        the State Acts as requested by the Placement Agent, and the Company shall
        continue such qualifications in effect for so long as may be necessary to
        complete the Offering. The Company or its counsel shall provide Placement
        Agent
        with all applications, forms and documents filed in each jurisdiction where
        the
        Units are to be qualified or registered or qualified or offered in an exempt
        transaction under the State Acts. The Offering of the Units shall be at the
        offering price and upon the terms and conditions set forth in the Memorandum
        and
        the subscription agreement which is included in the subscription documents
        to be
        delivered with the Memorandum, and on the basis of the representations and
        warranties therein contained, and subject to the terms and conditions herein
        set
        forth.

       

      (e)     Closing.
        All cash
        proceeds from the subscriptions (the "Funds") will be deposited into the
        Segregated Account maintained by the Company at Steele Street State Bank.
        After
        the Company's acceptance of subscriptions in such amount as mutually determined
        by the Company and the Placement Agent, and subject to the Placement Agent's
        approval of such subscriptions, on a date to be determined by the Company
        and
        Placement Agent (the "First Closing Date"), a closing will take place at
        the
        offices of the Company's legal counsel or another location as determined
        by the
        Company, and the Notes and Warrants evidencing the subscriptions in the forms
        shown in the Memorandum will be duly executed and issued by the Company in
        accordance with the terms of the Memorandum and promptly delivered to the
        investors (the "First Closing"). If the First Closing Date shall precede
        the
        Termination Date, all further proceeds from subscriptions will be deposited
        into
        the Segregated Account and any additional closings will take place at the
        offices of the Company's legal counsel or another location as determined
        by the
        Company and the Placement Agent (the "Additional Closings"), on a date or
        dates
        determined by the Company and the Placement Agent (the "Additional Closing
        Date(s)"). The Notes and the Warrants will be executed, issued and delivered
        in
        the same manner as at the First Closing.

       

      (f)     Other
        Covenants.
        In
        connection with the Offering, the Company and Placement Agent each agree
        as
        follows: (i) the Units will be offered and sold only to accredited investors
        pursuant to the registration exemption provided by Sections 3(b), 4(2) and/or
        4(6) of the Securities Act and Rule 506 of Regulation D, as and to the extent
        applicable to the Offering, and will otherwise comply with the applicable
        laws
        and regulations of any jurisdictions in which the Units are offered or sold,
        (ii) neither the offer, sale nor delivery of the Units in conformity with
        the
        terms hereof will violate Section 5 of the Securities Act, as currently in
        effect, and (iii) neither the Company nor Placement Agent has taken, nor
        will
        either party take any action which conflicts with the conditions and
        requirements of, or which would make unavailable with respect to the sale
        of the
        Units, the exemptions from registration available pursuant to Rule 506 of
        Regulation D or Section 3(b), 4(2) and/or 4(6) of the Securities Act and
        neither
        the Company nor Placement Agent knows of any reason why any such exemption
        would
        be otherwise unavailable to it.

       

      
        
          
          

        

        
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      (g)     Information
        to be Supplied.
        The
        Company will furnish or cause to be furnished to Placement Agent such
        information as Placement Agent reasonably believes appropriate to its assignment
        or necessary in connection with its assistance in the preparation of, review
        of,
        or inclusion in, the Memorandum. It is also understood that the Company may
        make
        available to Placement Agent and the offerees of the Units additional material,
        data or other information relating to the Company to the extent such information
        can be obtained without unreasonable effort or expense and is not otherwise
        confidential or a trade secret of the Company (collectively, as limited the
        "Company Data"). The Company recognizes and confirms that (a) in performing
        the
        services contemplated by this Agreement, Placement Agent will use and rely
        primarily on the Memorandum and Company Data made available to Placement
        Agent
        and on other information available from generally recognized public sources
        without having independently verified the same; (b) the contents of the
        Memorandum and the Company Data are the sole responsibility of the Company,
        and
        Placement Agent does not assume any responsibility for the accuracy or
        completeness of the Memorandum or the Company Data, and will not undertake
        to
        verify independently any of their accuracy or completeness; and (c) Placement
        Agent will furnish a copy of the Memorandum, and each supplement or amendment
        thereto, to each purchaser of Units, and Placement Agent will not employ
        any
        written material other than the Memorandum, each supplement and amendment
        thereto and the Company Data.

       

      2.    Representations
        and Warranties of the Company.
        The
        Company represents and warrants to, and agrees with, the Placement Agent
        and the
        Participating Agents (if any) as follows:

       

      (a)     The
        Company has been duly incorporated, and validly exists as a corporation in
        good
        standing under the laws of the state of Nevada.

       

      (b)     The
        Company has complied or will comply with Sections 3(b), 4(2) and/or 4(6)
        of the
        Securities Act, with all of the provisions of the Rules and Regulations
        promulgated under the Securities Act, specifically including the provisions
        of
        Regulation D and Rule 506 thereunder, applicable to them in connection with
        the
        offering and sale of the Units, and with all States Acts and regulations
        applicable to them in connection with the offering and the sale of the
        Units.

       

      (c)     The
        Memorandum, and any amendments or supplements thereto, as of the date hereof,
        and at all subsequent times through the First Closing Date and any Additional
        Closing Dates, shall in all material respects conform to all applicable
        provisions of the Securities Act, the Rules and Regulations and the State
        Acts,
        and shall not contain any untrue statement of a material fact or omit to
        state
        any material fact required to be stated therein or necessary to make the
        statements therein not misleading; provided however, that this representation
        and warranty shall not apply to any statements or omissions made in reliance
        upon and in conformity with written information furnished to the Company
        by or
        on behalf of the Placement Agent and any Participating Agents for use with
        reference to the Placement Agent and any Participating Agents in connection
        with
        preparation of the Memorandum.

       

      
        
          
          

        

        
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      (d)     The
        execution on performance of this Agreement, and the consummation of the
        transactions contemplated hereby, have been duly authorized by the Company
        and,
        at the time of its execution and performance, shall not constitute or result
        in
        any breach or violation (other than any breach or violation which shall have
        been waived or consented to in writing) of any of the terms, provisions or
        conditions of, or constitute a default under, any indenture, mortgage, deed
        of
        trust, note, contract, commitment, instrument or document to which it or
        any of
        its properties is subject, the Articles of Incorporation or Bylaws or
        corresponding documents of the Company, or any order, arbitration award,
        or
        judgment, of any court of governmental agency or body having jurisdiction
        over
        the Company or any of its activities or properties; and no consent, approval,
        authorization or order of any court or governmental agency or body is required
        for the consummation of the transactions contemplated hereby.

       

      (e)     The
        Units, the Notes, the Warrants and the Agent Warrants shall be duly authorized
        and shall be validly issued and binding obligations of the Company, and shall
        conform to the description thereof contained in the Memorandum.

       

      (f)     The
        Company has not been subject to any order, judgment or decree of any court
        of
        competent jurisdiction temporarily, preliminary or permanently enjoining
        such
        person for failing to comply with Section 503 of Regulation D.

       

      (g)     The
        Company represents and warrants that at all times from the respective dates
        that
        the Memorandum (including, without limitation, any supplement or amendment
        thereto) and the Company Data, if any, are furnished or made available by
        the
        Company to Placement Agent or, either directly or through Placement Agent,
        to
        offerees or any of their representatives, such Memorandum (including, without
        limitation, any supplement or amendment thereto) and Company Data will not,
        taken separately or in any combination as provided to Placement Agent or
        any
        offeree or its representatives, contain any untrue statement of a material
        fact
        or omit to state a material fact necessary in order to make the statements
        therein, in light of the circumstances under which they were made, not
        misleading,

       

      (h)     The
        Company will furnish Placement Agent from time to time, such number of copies
        of
        the Memorandum and Company Data, any exhibits thereto and agreements and
        documents referred to therein, as Placement Agent may reasonably
        request.

       

      (i)     If
        any
        event shall occur or condition exist as a result of which it is necessary
        or
        advisable, in the opinion of the Company or Placement Agent, to amend or
        supplement the Memorandum in order that the Memorandum will not contain any
        untrue statement of a material fact or omit to state a material fact necessary
        in order to make the statement therein not misleading in light of the
        circumstances existing at the time it is delivered to prospective purchasers,
        the Company will forthwith prepare and furnish to Placement Agent such number
        of
        copies as Placement Agent may reasonably request of an amendment or supplement
        to the Memorandum (in form and substance satisfactory to Placement Agent
        and its
        counsel) that will ensure that the Memorandum does not contain any misstatements
        or omissions and is not in any respect misleading and provide the same to
        offerees.

       

      
        
          
          

        

        
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      (j)     The
        Company will advise Placement Agent promptly of (A) the occurrence of any
        event
        or the existence of any condition known to the Company referred to in Section
        2(i) hereof; (B) the receipt by the Company of any communication, stop order
        or
        any order from the SEC, any state securities commissioner or any other domestic
        or foreign securities or financial regulatory authority or self-regulatory
        organization concerning the offering of the Units; and (C) the commencement
        of
        any lawsuit or proceeding to which the Company is a party relating to the
        Units
        or the Offering. The Company shall make every reasonable effort to prevent
        the
        issuance of any stop order and, if any stop order is issued, to obtain the
        lifting thereof as promptly as possible.

       

      (k)     The
        Company will (A) make available to each offeree of the Units the Memorandum;
        and
        (B) provide each offeree the opportunity to ask questions of, and receive
        answers from, the officers and employees of the Company concerning the terms
        and
        conditions of the Offering and to obtain any other additional information
        about
        the Company and the Units to the extent the officers and employees of the
        Company possess the same or can acquire it without unreasonable effort or
        expense and it is not otherwise confidential or trade secret information.
        The
        Company may require appropriate confidentiality and non-disclosure agreements
        as
        it is advised by counsel prior to the disclosure of any information not
        otherwise contained in the Memorandum.

       

      (l)     The
        Company
        is not in default in the performance or observance of any material obligation
        (A) under its charter or its by-laws, or any indenture, mortgage, contract,
        purchase order or other agreement or instrument to which the Company is a
        party
        or by which it or any of its property is bound or affected; or (B) with respect
        to any order, writ injunction or decree of any court of any Federal, state,
        municipal or other governmental department, commission, board, bureau, agency
        or
        instrumentality, domestic or foreign, and there exists no condition, event
        or
        act which constitutes, nor which after notice, the lapse of time or both,
        could
        constitute a default under any of the foregoing, which in either case would
        have
        a material adverse effect on the current business of the Company.

       

      (m)     The
        Company has full right, power and authority to execute and deliver this
        Agreement, and any document, certificate or instrument required hereunder
        or to
        be executed or delivered at any Closing in connection with the Offering
        (collectively, the "Documents"), and to perform all of its obligations hereunder
        and thereunder or contemplated hereby or thereby. The Documents have been,
        or
        will be, duly executed and delivered by the Company and the execution and
        delivery by the Company of the Documents and the performance of all of its
        obligations have been duly authorized by all requisite corporate action by
        the
        Company, and each Document (assuming the due authorization and execution
        of the
        other parties thereto) executed and delivered and obligation performed
        constitutes, or will constitute, the legal, valid and binding obligation
        of the
        Company enforceable in accordance with its respective terms.

       

      (n)     The
        (A)
        authorization, execution, delivery and performance of the Documents; and
        (B)
        authorization, issuance, sale and delivery of the Units, the Note, the Warrants
        and the Agent Warrants will not (1) violate any provision of law or statute
        or
        any order of any court or other governmental agency applicable to the Company;
        or (Z) conflict with or result in any breach of any of the terms, conditions
        or
        provisions of, or constitute (with due notice or lapse of time or both) a
        default under, or result in the creation of any material lien, security
        interest, charge or encumbrance upon any of the properties or assets of the
        Company under its charter or by-laws, or any indenture, mortgage, lease
        agreement or other material agreement or instrument to which the Company
        is a
        party or by which it or any or its property is bound or affected except for
        violations, conflicts breaches and defaults that would not, individually
        or in
        the aggregate materially and adversely affect the Company, Placement Agent
        or
        any investor in this Offering.

       

      
        
          
          

        

        
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      (o)     The
        Company has all requisite corporate power and authority to issue, sell and
        deliver the Units, the Note, the Warrants and the Agent Warrants and such
        issuances, sales and deliveries have been duly authorized by all requisite
        corporate action of the Company and when so issued, sold and delivered the
        Units, the Note, the Warrants and the Agent Warrants will be duly and validly
        issued and outstanding, valid and binding obligations of the Company, fully
        paid
        and nonassessable, with no personal liability attaching to the ownership
        thereof
        and will be free and clear of all liens, charges, claims, encumbrances,
        restrictions or preemptive or any other similar rights imposed by or through
        the
        Company, except as waived prior to the Closing or as disclosed herein and
        as
        shall be disclosed in the Memorandum, and the Company shall have paid all
        taxes,
        if any, in respect of the issuance thereof. Assuming that the investors met
        such
        suitability standards as are specified by the Company and the representations
        and warranties of Placement Agent are accurate as to the method of offering,
        the
        offer and sale of the Units, the Note, the Warrants and the Agent Warrants
        are
        exempt from the registration requirements of the Securities Act and the rules
        and regulations promulgated thereunder and the state "blue sky" laws and
        the
        Units Securities will be issued in compliance with all applicable Federal
        and
        state securities laws.

       

      (p)     No
        permit, consent, approval, authorization, order of, or filing with, any court
        or
        governmental authority is required in connection with the execution and delivery
        by the Company of this Agreement or to consummate the Offering, except that
        the
        offer and sale of the Units in certain jurisdictions may be subject to the
        provisions of the securities or "blue sky" laws of such jurisdictions and
        the
        federal securities laws.

       

      (q)     There
        is
        no action suit proceeding before or by any United States court or governmental
        agency or body, now pending or threatened, against or affecting the Company,
        or
        any of its properties, which would reasonably be anticipated to result in
        any
        material adverse change in the condition (financial or otherwise) or in the
        earnings, current business, current business plan as described in the
        Memorandum, properties or assets of the Company and its subsidiaries (a
        "Material Adverse Effect").

       

      (r)     The
        Company has (A) duly and timely filed all tax returns required to be filed
        by
        the Company under applicable law that include or relate to the Company, its
        income, assets, payroll, operations or business, which tax returns are true,
        correct and complete in all material respects; (B) duly and timely paid,
        in
        full, all taxes which are currently due and payable and for which the Company
        is
        liable; or (C) adequately reserved for taxes that have not been paid or are
        in
        dispute.

       

      
        
          
          

        

        
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      (s)     The
        Company is not in default under any agreement, lease, license contract or
        commitment, whether oral or written including, without limitation, agreements
        with employees and consultants ("Company Agreements") to which the Company
        is a
        party or by which any of its assets are bound, and there is no event known
        to
        the Company that, with notice, or lapse of time, or both, would constitute
        a
        default by any party to any Company Agreement or give any party the right
        to
        terminate or modify any of the same and the Company has not received notice
        that
        any party to any Company Agreement intends to cancel or terminate any Company
        Agreement or to exercise or not to exercise any renewal or extension options
        under any Company Agreement, except as to any events described in this
        subparagraph that would not have a Material Adverse Effect.

       

      (t)     The
        Company holds, and is in compliance with, all permits, licenses, registrations
        and authorizations required by it in connection with the conduct of the business
        of the Company as currently conducted under all Federal, state and local
        laws,
        rules and regulations (the "Permits"), except where the failure to be in
        compliance has not had, and is not reasonably expected to have, a Material
        Adverse Effect.

       

      (u)     The
        Company's financial statements, which may be unaudited, that will be included
        in
        the Memorandum, will be true and correct and fairly present, in accordance
        with
        generally accepted accounting principles, consistently applied, the financial
        condition of the Company as of the dates specified.

       

      (v)     Since
        December 31, 2004, the Company has conducted its business in the ordinary
        course
        and has not suffered any Material Adverse Effect. The Company does not have
        any
        liabilities or obligations (whether actual or accrued, accruing or contingent,
        or otherwise) which, individually or in aggregate, would be deemed material,
        other than those set forth in the balance sheet included within the financial
        statements included in the Memorandum, and those incurred, in the ordinary
        course of its business, since December 31, 2004.

       

      (w)     The
        capitalization of the Company shall be correctly and completely described
        in the
        Memorandum and, except as shall be disclosed therein, no person has any right
        of
        first refusal, preemptive right, right of participation, or any similar right
        to
        participate in the transactions contemplated by the Documents. There are
        no
        outstanding options, warrants, rights to subscribe to, calls or commitments
        of
        any character whatsoever relating to, or securities, rights or obligations
        convertible into or exchangeable for, or giving any person any right to
        subscribe for or acquire, any shares of capital stock of the Company, or
        contracts, commitments, understandings or arrangements by which the Company
        is
        or may become bound to issue shares of capital stock, except as shall be
        reflected in the Memorandum. All of the outstanding shares of capital stock
        of
        the Company are validly issued, fully paid and nonassessable, have been issued
        in compliance with all federal and state securities laws, and none of such
        outstanding shares of capital stock was issued in violation of any pre-emptive
        rights or similar rights to subscribe for or purchase securities.

       

      (x)     The
        Company has rights to use, all patents, patent applications, trademarks,
        trademark applications, service marks, trade names, copyrights, licenses
        and
        other similar rights that are necessary or material for use in connection
        with
        its business (collectively, the "Intellectual Property Rights"), except to
        the
        extent that the failure to have such Intellectual Property Rights, individual
        or
        in the aggregate, would not have or reasonably be expected to result in a
        Material Adverse Effect. No claims have been made or threatened by any third
        party to the effect that Intellectual Property Rights used by the Company
        violate or infringe upon the rights of such claimant. To the actual knowledge
        of
        the Company, all of the Intellectual Property Rights are enforceable and
        there
        is no existing infringement by another person of any of the Intellectual
        Property Rights.

       

      
        
          
          

        

        
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      (y)     At
        each
        Closing, the Company will deliver, or cause to be delivered, to Placement
        Agent,
        in each case in form and substance satisfactory to Placement Agent and its
        counsel: (A) a certificate of the Company signed by the Chief Executive Officer
        and the Chief Financial Officer thereof certifying (1) that the representations
        and warranties of the Company contained in this Agreement are true and accurate
        in all material respects as of the Closing; and, (2) that the representations
        and warranties of the Company contained in each subscription agreement entered
        into with a prospective purchaser of the Units are true and correct in all
        material respects as of the date of such certificate, except to the extent
        any
        such representation or warranty was expressly made as of any other date,
        in
        which case such representation and warranty was true anal correct in all
        material respects as of such other date; and at the Closing, and (B) an opinion
        of the Company's counsel, as to matters reasonably requested by the Placement
        Agent. In rendering the opinions required herein, counsel and special securities
        counsel to the Company may, as to factual matters, rely upon certificates,
        statements, letters, representations and affidavits of officers of the Company,
        its officers, any other records of the Company, certificates of public
        officials, and letters of independent certified public accountants. With
        respect
        to the opinions required herein, "known to such counsel", "to the best knowledge
        of such counsel" or any like phrase or reference shall mean to the best of
        knowledge of such counsel after due inquiry and investigation; "due inquiry
        and
        investigation" shall include only (i) discussions, inquiries and conferences
        with officials and agents of the Company occurring in connection with such
        counsel's representation of the Company, (ii) review of certain corporate
        records documents and proceedings of the Company as provided to such counsel
        by
        the Company and (iii) review of files maintained by such counsel relating
        to the
        Company; "due inquiry and investigation" shall not mean or imply any independent
        verification of any factual matter of which such counsel becomes aware as
        a
        result of the foregoing discussions, inquiries and reviews.

       

      (z)     The
        Company further agrees that it will not consummate the Offering unless it
        delivers or causes to be delivered the items described in Section 2(m) to
        Placement Agent at each Closing. The consummation of the Offering and the
        release of the investor funds from the Segregated Account shall be further
        subject to any other conditions set forth in the Memorandum or the subscription
        agreement entered into by each purchaser of Units.

       

      (aa)     The
        Company will be responsible for and comply with all applicable notification
        and
        fee requirements to qualify the offering and sale under the state securities
        or
        "blue sky" laws of such jurisdiction in which any sales pursuant to the offering
        may be transacted and as may otherwise be required or as requested by Placement
        Agent provided that, in connection therewith, the Company shall not be required
        to qualify as a foreign corporation.

       

      3.    Representations
        and Warranties of the Placement Agent.
        The
        Placement Agent represents and warrants to, and agrees with, the Company
        as
        follows:

       

      
        
          
          

        

        
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      (a) 
The
        Placement Agent is a limited liability duly organized, validly existing and
        in
        good standing under the laws of the jurisdiction in which it was formed,
        with
        all requisite power and authority to enter into this Agreement and to carry
        out
        your obligations hereunder. This Agreement (i) has been duly authorized,
        executed and delivered by the Placement Agent, (ii) constitutes legal, valid
        and
        binding obligation of the Placement Agent, and (iii) subject to applicable
        bankruptcy, insolvency and other laws affecting the enforceability of creditors'
        rights generally, is enforceable as to the Placement Agent in accordance
        with
        its terms, specific performance hereof being limited by general principles
        of
        equity and the enforceability of the indemnification provisions
        hereof.

       

      (b) 
The
        execution, delivery and performance of this Agreement by the Placement Agent
        and
        the consummation by the Placement Agent of the transactions contemplated
        hereby
        and by the Memorandum will not conflict with or result in the Placement Agent's
        breach or violation of any of the terms or provisions of, or constitute a
        default in any material respect under, (i) any indenture, mortgage, deed
        of
        trust, loan agreement, lease or other agreement or instrument to which the
        Placement Agent is a party or to which the Placement Agent or its property
        is
        subject, (ii) the Placement Agent's charter or its operating agreement or
        (iii)
        any statute, judgment, decree, order, rule or regulation applicable to the
        Placement Agent of any court or governmental agency or body having jurisdiction
        over the Placement Agent.

       

      (c) 
The
        Placement Agent is, and at all times through the date of the final sale of
        a
        Unit shall remain, duly registered pursuant to the provisions of the Securities
        Exchange Act of 1934, as amended ("Exchange Act") as a broker-dealer and
        duly
        registered as a broker-dealer in those states in which the Placement Agent
        is
        required to be so registered in order to carry out the Offering as contemplated
        by the Memorandum; the Placement Agent is, and at all times through the date
        of
        the final sale of a Unit shall remain, a member in good standing of the National
        Association of Securities Dealers, Inc. ("NASD"); the Placement Agent will
        not
        reallow discounts or pay commissions or other compensation for participation
        in
        the distribution of the Offering in the United States to any broker-dealer
        which
        is not a member of the NASD, the Placement Agent shall act as independent
        contractor, and nothing herein shall constitute the Placement Agent an employee
        of the Company; the Placement Agent shall not make sales of Units to
        discretionary accounts.

       

      (d) 
In
        connection with the offer, offer for sale and sale of the Units, the Placement
        Agent (and its representatives and agents) shall conform to and comply with
        (i)
        the provisions of the Rules of Fair Practice of the NASD, (ii) applicable
        provisions of federal law, including without limitation the Securities Act,
        the
        Exchange Act and the Rules and Regulations, and (iii) the State Acts and
        the
        rules and regulations thereunder, including without limitation those referred
        to
        in such letters regarding state securities and "blue sky" matters ("Blue
        Sky
        Letters") as are prepared by counsel for the Company and sent to the Placement
        Agent from time to time, with regard to, among other things, the period during
        which and conditions under which the Units may be offered, offered for sale
        and
        sold in various states; the Placement Agent shall not distribute the Memorandum
        or otherwise commence the Offering in any jurisdiction without prior
        confirmation from the Company or its counsel that the Offering may be commenced
        under applicable securities laws, rules and regulations.

       

      (e) 
The
        Placement Agent will use its best efforts to procure subscribers for the
        Units
        and will conduct the Offering in compliance with the suitability standards
        set
        forth in the Memorandum and with the requirements of Sections 3(b), 4(2)
        and/or
        4(6) of the Securities Act and Rule 506 of Regulation D, as and to the extent
        applicable to the Offering; accordingly, at all times through the date of
        the
        final sale of a Unit, the Placement Agent will have:

       

      
        
          
          

        

        
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      (i) 
not
        made
        any untrue statement of a material fact and not omitted to state a material
        fact
        required to be stated or necessary to make any statement made not misleading,
        to
        the extent any representations are made by the Placement Agent concerning
        the
        Offering or matters set forth in the Memorandum and Company Data other than
        those set forth in the Memorandum and Company Data;

       

      (ii) 
not
        offered, offered for sale, or sold the Units by means of: (A) any advertisement,
        article, notice, or other communication mentioning the Units published in
        any
        newspaper, magazine or similar medium or broadcast over television or radio;
        (B)
        any seminar or meeting, the attendees of which have been invited by any general
        solicitation or general advertising; or (C) any letter, circular, notice,
        or
        other written communication, unless the communication is accompanied or preceded
        by the Memorandum;

       

      (iii)     prior
        to
        the sale of any of the Units, reasonably believed that each subscriber and
        his
        or her purchaser representative, if any, met the suitability and other investor
        standards set forth in the Memorandum and the Blue Sky Letters, and the
        Placement Agent will have prepared and maintained, for your benefit and the
        benefit of the Company, file memoranda and other appropriate records
        substantiating the foregoing;

       

      (iv)     only
        used
        sales materials other than the Memorandum and Company Data which have been
        approved for use in the Offering by the Company, and refrained from providing
        any such materials to any offeree unless such materials were accompanied
        or
        preceded by the Memorandum;

       

      (v)     provided
        each offeree with a copy of the Memorandum;

       

      (vi)     promptly
        distributed any amendment or supplement to the Memorandum provided to the
        Placement Agent by the Company under this Agreement to persons who had
        previously received a copy of the Memorandum from the Placement Agent and
        who
        the Placement Agent believed continued to be interested in the Units and
        have
        included such amendment or supplement in all deliveries of the Memorandum
        made
        after receipt of any such amendment or supplement; and

       

      (vii)     not
        made
        any representations on behalf of the Company other than those contained in
        the
        Memorandum and the Company Data, nor shall the Placement Agent have acted
        as an
        agent of the Company or for the Company in any other capacity, except as
        expressly set forth herein.

       

      4.    Compensation
        and Expenses.

       

      (a)     The
        Company agrees to pay to the Placement Agent a placement fee of ten percent
        (10%) of the aggregate gross offering proceeds of all of the Units sold.
        The
        Placement Agent may instruct the Company to pay a portion of any placement
        fee
        due directly to Participating Agents. Such placement fee shall be due and
        payable at each closing. The Company also agrees to pay to the Placement
        Agent,
        as warrant placement agent for transactions involving the exercise of any
        Warrants after the first anniversary of the closing of this Offering, which
        exercise is solicited by the Placement Agent, a warrant solicitation fee
        of five
        percent (5%) of the aggregate exercise price received. Notwithstanding the
        foregoing, the warrant solicitation fee shall immediately terminate without
        further action by any party in the event the Company commences a registered
        offering of its securities which is declared effective by the U.S. Securities
        and Exchange Commission ("SEC") prior the first anniversary of the closing
        of
        this Offering.

       

      
        
          
          

        

        
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      (b)     In
        addition, the Company shall issue and sell, at each closing, to the Placement
        Agent or its designees 200 warrants for each Unit sold in the Offering at
        a
        price of $0.0001 per warrant ("Agent Warrants"). Each Agent Warrant shall
        entitle the holder thereof to purchase one share of the Company's common
        stock.
        The Agent Warrants shall be exercisable at any time alter the first anniversary
        of the closing of this Offering at a price equal $6.00 per share, on a
        net-issuance or cashless basis. The Company hereby grants the same registration
        rights to the Placement Agent with respect to the shares of common stock
        underlying the Agent Warrants as are granted to investors with respect to
        the
        Warrants as set forth in this Agreement. The Agent Warrants will expire five
        (5)
        years from the date of issuance. Notwithstanding the foregoing, the Agent
        Warrants shall immediately terminate and be canceled without further action
        by
        any party in the event the Company commences a registered offering of its
        securities which is declared effective by the SEC prior the first anniversary
        of
        the closing of this Offering.

       

      (c)     The
        Company will pay all costs and expenses related to the Offering and/or the
        performance of the Company's obligations under this Agreement, including
        preparation of the Memorandum, preparation of related documentation, accounting
        fees, legal fees, experts fees, consultants' fees, escrow fees, filing fees
        with
        the SEC and applicable states, any costs and expenses to qualify the Units
        for
        sale in any state, and any all costs and expenses for investor or road show
        presentations. Notwithstanding the foregoing, the Company shall not be
        responsible for any expenses of the Placement Agent or Participating Agents
        incurred in connection with the Offering, including, but without limitation,
        attorneys' fee, operating expenses, travel expenses and other incidental
        expenses incurred by the Placement Agent or the Participating Agents; except
        that the Company shall pay the Placement Agent a non-accountable expense
        allowance equal to three percent (3%) of the aggregate gross offering proceeds
        of all of the Units sold ("Allowance"). Upon execution of this Agreement,
        the
        Company shall pay the Placement Agent a non-refundable advance of $15,000,
        which
        such advance being credited against the Allowance earned with respect to
        the
        first $500,000 of gross offering proceeds raised in the Offering.

       

      5.    Covenants
        of the Company.
        The
        Company covenants and agrees that it will:

       

      (a)     Comply
        with all requirements imposed upon it by the Securities Act, as now and
        hereafter amended, by the Rules and Regulations from time to time in force,
        and
        by all State Acts, to permit the continuance of offers and sales of the Units
        in
        accordance with the provisions of Sections 3(b), 4(2) and/or 4(6) of the
        Securities Act and of Rule 506 of Regulation D, as and to the extent applicable
        to the Offering, and the Memorandum. During the Offering Period, the Company
        will amend or supplement the Memorandum in order to make such Memorandum
        comply
        with the requirements of the Securities Act, the Rules and Regulations and
        the
        State Acts.

       

      
        
          
          

        

        
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      (b)     Until
        the
        termination of the Offering Period, furnish to the Placement Agent information
        necessary to keep the Memorandum fair, accurate and complete in all material
        respects.

       

      (c)     If
        at any
        time any event occurs as a result of which the Memorandum would include an
        untrue statement of a material fact or, in view of the circumstances under
        which
        they were made, omit to state any material fact necessary to make the statements
        therein not misleading, the Company will notify the Placement Agent thereof
        (unless the information shall have been received from the Placement Agent)
        and
        will effect the preparation of an amended or supplemental Memorandum which
        will
        correct such statement or omission.

       

      (d)     Upon
        the
        Placement Agent's reasonable request, the Company will prepare an amended
        or
        supplemental Memorandum and take any other action which may be necessary
        of
        advisable in connection with the offer and sale of the Units.

       

      (e)     Not
        offer, offer to sell, offer for sale or sell any of the Units of the Company
        or
        other securities, except and to the extent any such offer, offer to sell,
        offer
        for sale or sale shall not render unavailable the exemptions from registration
        and qualification requirements of the Securities Act and the State Acts relied
        upon the respect to the offering and sale of the Units contemplated by this
        Agreement.

       

      (f)     Provided
        their subscriptions are accepted by the Company and approved by the Placement
        Agent, issue the Notes and Warrants with respect to the Units to the holders
        in
        accordance with the description of the procedures as set forth in the Memorandum
        and the subscription documents to be delivered with the Memorandum.

       

      (g)     Prepare,
        execute and file a Form D (and any and all amendments or supplements thereto)
        with the SEC in timely manner and deliver copies thereof to the placement
        Agent,
        together with copies of all forms (including without limitation, Form Ds)
        and
        other documents and/or materials filed either before or after the First Closing
        Date and the Additional Closing Dates, and comply with Regulation D and the
        State Acts and make any fillings required by the SEC and state securities
        authorities in a timely manner.

       

      (h)     The
        Company will make available for inspection by the Placement Agent or its
        authorized representatives, at the Company's principal office during normal
        business hours, any information and documents relating to the business and
        operations of the Company as the Placement Agent may reasonably request and
        as
        are available to the Company or obtainable by it without unreasonable effort
        or
        expense.

       

      (j)     The
        Company shall at all times reserve and keep available such number of authorized
        shares of its common stock as are sufficient to permit the exercise of the
        Warrants and Agent Warrants; all shares of common stock issued upon the exercise
        of Warrants and Agent Warrants, upon receipt of full payment therefore, will
        be
        duly authorized, validly and legally issued, fully paid and nonassessable,
        and
        such common stock will not have been issued in violation of or subject to
        any
        preemptive rights provided for by law or by the Company's corporate charter
        or
        bylaws or be subject to any lien, claim, encumbrance, security interest,
        preemptive rights or any other claim of any third party.

       

      
        
          
          

        

        
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      (k)     The
        Company shall file such registration statements and include such securities
        of
        the Company in such registration statements filed under the Securities Act
        as
        specifically provided in the Memorandum and the subscription agreement entered
        into by the purchaser of the Units.

       

      6.    Covenants
        of Placement Agent.
        The
        Placement Agent covenants and agrees that it will:

       

      (a)     Comply
        with all requirements imposed upon it by the Securities Act, as now and
        hereafter amended, by the Rules and Regulations from time to time in force,
        and
        by all State Acts, to permit the continuance of offers and sales of the Units
        in
        accordance with Sections 3(b), 4(2) and/or 4(6) of the Securities Act and
        of
        Rule 506 of Regulation D, as and to the extent applicable to the Offering,
        and
        the Memorandum.

       

      (b)     Comply
        with all applicable rules of the NASD and any other laws, rules and regulations
        applicable to broker-dealers.

       

      (c)     Not
        offer, offer to sell, offer for sale or sell any of the Units of the Company
        or
        other securities, except and to the extent any such offer, offer to sell,
        offer
        for sale or sale shall nor render unavailable the exemptions from registration
        and qualification requirements of the Securities Act and the State Acts relied
        upon with respect to the offering and sale of the Units contemplated by this
        Agreement.

       

      7.    Conditions
        of Closing.
        The
        purchase of, and payment for, the Units on the First Closing Date and any
        Additional Closing Dates shall be subject to the continuing accuracy of the
        representations and warranties of the Company and the Placement Agent as
        of the
        date hereof and as of the First Closing and any Additional Closings, to the
        performance by the Company and Placement Agent of their respective obligations
        hereunder, and to the following conditions:

       

      (a)     The
        Placement Agent's obligations as provided herein shall be subject to the
        accuracy of the representations, warranties and covenants of the Company
        herein
        contained as of the date hereof and as of the Closing Date and any Additional
        Closing Dates, and to the performance by the Company of its obligations
        hereunder to be performed.

       

      (b)     At
        the
        First Closing and the Additional Closing, if any, the Company
        shall:

       

      (1)     Accept
        subscriptions of qualifying potential purchasers that the Company reasonably
        believes to be qualified investors under Regulation D and the State Acts,
        in
        accordance with the Memorandum.

       

      (2)     Issue
        and
        deliver the Notes and Warrants with respect to the Units to subscribers as
        described in the Memorandum.

       

      (c)     At
        the
        First Closing and the Additional Closing, if any, the Placement Agent
        shall:

       

      
        
          
          

        

        
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      (1)     Deliver
        to the Company all subscription agreements that the Company agrees are
        acceptable.

       

      (2)     Receive
        from the Company or give assignment instructions for all compensation, including
        Agent Warrants, payable to the Placement Agent.

       

      8.    Indemnification.

       

      (a)     The
        Placement Agent and each of the Participating Agents, severally and not jointly,
        agree to indemnify and hold the Company and the directors, officers, employees,
        agents, attorneys, shareholders and control persons (as defined under federal
        and state securities laws) of the Company, and the respective heirs, personal
        representatives and assigns of each of the foregoing (collectively, the "Company
        Indemnified Persons") harmless from and against any loss, liability, claim,
        damage and expense (including, but not limited to, expenses reasonably incurred
        in investigating, preparing or defending against any litigation, commenced
        or
        threatened, or any claim whatsoever based upon) to which the Company Indemnified
        Persons may become subject, under the Securities Act or otherwise, insofar
        as
        such losses, claims, damages, liabilities, costs and expenses (including
        reasonable attorneys' and experts' fees) arise solely out of (i) any breach
        of
        any representation, warranty, agreement or covenant under this Agreement
        by
        Placement Agent or under the Dealer Agreement by Participating Agents, (ii)
        any
        untrue statement or alleged untrue statement of any material fact contained
        in
        the Memorandum, or any amendment or supplement thereto, or arise out of or
        are
        based upon the omission or alleged omission to state therein a material fact
        required to be stated therein or necessary to make the statements therein
        not
        misleading; in each case to the extent, but only to the extent, that such
        untrue
        statement or alleged untrue statement or omission or alleged omission was
        made
        in the Memorandum or such supplement or such amendment in reliance upon and
        in
        conformity with information furnished to the Company by the Placement Agent,
        (iii) any statement made, either orally or in a writing other than the
        Memorandum or the Company Data, by the Placement Agent or the Participating
        Agents containing an untrue statement or alleged untrue statement of any
        material fact or the omission or alleged omission to state a material fact
        required to be stated or necessary to make the statements not misleading,
        unless
        such statements or omissions are made in reliance upon or in conformity with
        statements made or information provided by the Company and/or the actions
        of the
        Company, and/or (iv) any amount paid in settlement of any litigation, commenced
        or threatened, or of any claim based upon any of the matters under (i) through
        (iii) (including, but not limited to, expenses reasonably incurred in
        investigating, preparing or defending against any such litigation or claim)
        if
        such settlement is affected with the written consent of the Placement Agent
        and/or the effected Participating Agents.

       

      If
        for
        any reason, the foregoing indemnification is unavailable to any Company
        Indemnified Persons, then the Placement Agent or Participating Agents shall
        contribute to the amount paid or payable by any such Company Indemnified
        Person
        as a result of such loss, claim, damage or liability in such proportion as
        is
        appropriate to reflect the relative fault of the Placement Agent or
        Participating Agents and any Company Indemnified Person.

       

      Promptly
        after a Company Indemnified Person receives notice of the commencement of
        any
        action, claim, proceeding or investigation ("Action"), such Company Indemnified
        Person, if a claim in respect thereof is to be made against the Placement
        Agent
        or Participating Agents under this Section 8(a), will notify the Placement
        Agent
        or Participating Agents of the commencement thereof. The omission to so notify
        the Placement Agent or Participating Agents will relieve the Placement Agent
        and
        Participating Agents from any liability which they may have to any Company
        Indemnified Person under this Section 8(a) if the Placement Agent or
        Participating Agents have been prejudiced in asserting, or shall have lost
        the
        right to assert, a legal defense by reason of such omission. The Placement
        Agent
        or Participating Agents will be entitled to participate in, and, to the extent
        that they may wish, to assume the defense thereof subject to the provisions
        herein stated, with counsel reasonably satisfactory to such Company Indemnified
        Person. The Company Indemnified Person will have the right to employ separate
        counsel in any such Action and to participate in the defense thereof but
        the
        fees and expenses of such counsel will be at the expense of the Company
        Indemnified Person if the Placement Agent or Participating Agents have assumed
        the defense of the Action with counsel reasonably satisfactory to the Company
        Indemnified Person. No settlement of any Action against a Company Indemnified
        Person for which indemnification from the Placement Agent or Participating
        Agents is sought will be made without the consent of the Placement Agent
        or
        Participating Agents.

       

      
        
          
          

        

        
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            15
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      (b)     The
        Company agrees to indemnify and hold the Placement Agent and Participating
        Agents, and the directors, officers, employees, agents, attorneys, shareholders
        and control persons (as defined under federal and state securities laws)
        of the
        Placement Agent and Participating Agents, and the respective heirs, personal
        representatives and assigns of each of the foregoing (collectively, the "Agent
        Indemnified Persons") harmless from and against any loss, liability, claim,
        damage and expense (including, but not limited to, expenses reasonably incurred
        in investigating, preparing or defending against any litigation, commenced
        or
        threatened, or any claim whatsoever based upon) to which the Agent Indemnified
        Persons may become subject, under the Securities Act or otherwise, insofar
        as
        such losses, claims, damages, liabilities, costs and expenses (including
        reasonable attorneys' and experts' fees) arise out of or relate to: (i) any
        breach of any representation, warranty, agreement or covenant under this
        Agreement by the Company, (ii) any untrue statement or alleged untrue statement
        of any material fact contained in the Memorandum, or any amendment or supplement
        thereto, or the Company Data, or arise out of or are based upon the omission
        or
        alleged omission to state therein a material fact required to be stated therein
        or necessary to make the statements therein not misleading, (iii) any statement
        made, either orally or in a writing other than the Memorandum or the Company
        Data, by the Company containing an untrue statement or alleged untrue statement
        of any material fact or the omission or alleged omission to state a material
        fact required to be stated or necessary to make the statements not misleading,
        and/or (iv) any amount paid in settlement of any litigation, commenced or
        threatened, or of any claim based upon any of the matters under (i) through
        (iii) (including, but not limited to, expenses reasonably incurred in
        investigating, preparing or defending against any such litigation or claim)
        if
        such settlement is affected with the written consent of the Company; provided,
        however, that the Company shall not be liable to any Agent Indemnified Persons
        to the extent that any such losses, claims, damages, liabilities, costs or
        expenses, or any actions in respect thereof, arises out of or is based upon
        an
        untrue statement or alleged untrue statement or omission or alleged omission
        made in the Memorandum or such amendment or such supplement in reliance upon
        and
        in conformity with information furnished to the Company by or on behalf of
        the
        Placement Agent.

       

      
        
          
          

        

        
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            16
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      If
        for
        any reason, the foregoing indemnification is unavailable to any Agent
        Indemnified Persons, then the Company shall contribute to the amount paid
        or
        payable by any such Agent Indemnified Persons as a result of such loss, claim,
        damage or liability in such proportion as is appropriate to reflect the relative
        fault of the Company and any Agent Indemnified Person.

       

      Promptly
        after an Agent Indemnified Person receives notice of the commencement of
        any
        action, claim, proceeding or investigation ("Action"), such Agent Indemnified
        Person, if a claim in respect thereof is to be made against the Company under
        this Section 8(b), will notify the Company of the commencement thereof. The
        omission to so notify the Company will relieve the Company from any liability
        which it may have to any Agent Indemnified Person under this Section 8(b)
        if the
        Company has been prejudiced in asserting, or shall have lost the right to
        assert, a legal defense by reason of such omission. The Company will be entitled
        to participate in, and, to the extent that they may wish, to assume the defense
        thereof subject to the provisions herein stated, with counsel reasonably
        satisfactory to such Agent Indemnified Person. The Agent Indemnified Person
        will
        have the right to employ separate counsel in any such Action and to participate
        in the defense thereof but the fees and expenses of such counsel will be
        at the
        expense of the Agent Indemnified Person if the Company has assumed the defense
        of the Action with counsel reasonably satisfactory to the Agent Indemnified
        Person. No settlement of any Action against an Agent Indemnified Person for
        which indemnification from the Company is sought will be made without the
        consent of the Company.

       

      9.    Representations,
        Indemnities and Agreements to Survive Sale and Payment.
        The
        respective representations, indemnities, warranties, covenants and other
        agreements of the Company and the Placement Agent set forth in or made pursuant
        to this Agreement, shall remain in full force and effect, regardless of any
        investigation made by or on behalf of the Placement Agent, the Company, or
        any
        Agent Indemnified Person or Company Indemnified Person, and shall survive
        closing, delivery of, and payment for the Units.

       

      10.    Termination
        of Agreement.
        Notwithstanding any of the terms and provisions thereof, this Agreement may
        be
        terminated by the Placement Agent based on a material breach of this Agreement
        by the Company. The Placement Agent shall give fifteen (15) days' prior written
        notice to the Company of such material breach, and the Company shall have
        thirty
        (30) days to cure such material breach before the Placement Agent may terminate
        the Agreement. In the event the Placement Agent reasonably determines that
        the
        Units are not marketable, notwithstanding its best efforts to sell the Units,
        the Placement Agent may terminate this Agreement with thirty (30) days' prior
        written notice to the Company.

       

      In
        the
        event of any termination this Agreement or the expiration of the Offering
        Period, the Placement Agent shall be entitled to: (i) any fees and compensation
        to which it was entitled as of the date of termination or expiration, and
        (ii)
        the fees and compensation as set forth in Section 4 for any securities sold
        by
        Company during the one (1) year period following such expiration or termination
        to any investor introduced by Placement Agent and/or any Participating
        Agent.

       

      Additionally,
        Sections 4, 8, 9, 10, 11, 12 and 14 shall survive any termination or survive
        closing, delivery of, and payment for the Units.

       

      
        
          
          

        

        
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      11.    Notices.
        All
        notices, requests, demands or other communications with respect to this
        Agreement shall be in writing and shall be personally delivered or mailed,
        postage prepaid, certified mail, or delivered by facsimile or a nationally
        recognized express courier service, charges prepaid, to the Company or Placement
        Agent at the addresses set forth in this Agreement (or such other addresses
        as
        the parties may specify from time to time in accordance with this section).
        Any
        such notice shall, when sent in accordance with the preceding sentence, be
        deemed to have been given and received, on the earliest of: (i) on the day
        personally delivered including by facsimile, (ii) on the third day following
        the
        date mailed, or (iii) twenty-four hours after shipment by such courier
        service.

       

      12.    Successors.
        This
        Agreement shall be binding upon and inure solely to the benefit of the Placement
        Agent and the Company and, to the extent provided in Section 8, an Agent
        Indemnified Person or Company Indemnified Person, and no other person shall
        acquire or have any right under or by virtue of this Agreement. No purchaser
        of
        any of the Units shall be construed a successor, representative or assignee
        by
        reason of such purchase.

       

      13.    Right
        of Exclusive Representation.
        During
        the one year period following the date hereof, the Company grants Placement
        Agent the right to act as the Company's exclusive placement agent and/or
        managing underwriter for any private placement or public offering of securities
        by the Company. This provision will not apply to any sale of securities to
        employees.

       

      14.    Miscellaneous
        Provisions.

       

      (a) Construction.
        This
        agreement shall be governed by, subject to and construed in accordance with
        the
        laws of the state of Colorado without regard to such state's conflicts of
        law
        principles.

       

      (b) Severability.
        If any
        portion of this Agreement shall be held invalid or inoperative, then, so
        far as
        is reasonable and possible (i) the remainder of this Agreement shall be
        considered valid and operative, and (ii) effect shall be given to the intent
        manifested by the portion held invalid or inoperative.

       

      (c) Modification
        or Amendment.
        This
        Agreement may not be modified or amended except by written agreement executed
        by
        the parties hereto.

       

      (d) Number
        and Gender of Words.
        Whenever
        the context so requires, the masculine shall include the feminine and neuter,
        and the singular shall include the plural, and conversely,

       

      (e) Other
        Instruments; Counterparts.
        The
        parties hereto covenant and agree that they will execute such other and further
        instruments and documents are or may become necessary or convenient to effect
        and carry out the terms of this Agreement. This Agreement may be executed
        by
        facsimile signatures and in multiple counterparts, each of which shall be
        deemed
        an original. It shall not be necessary that each party executes each
        counterpart, or that any one counterpart be executed by more than one party
        so
        long as each party executes at least one counterpart.

       

      (f) No
        Partnership.
        The
        Placement Agent is not a principal of or a partner with, or does not control
        in
        any way, the Company or its employees or agents.

       

      
        
          
          

        

        
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      (g) Announcements.
        Before
        the Company releases any information referring to the Placement Agent's role
        under this Offering or uses Placement Agent's name in a manner which may
        result
        in public dissemination thereof, the Company shall furnish drafts of all
        documents or prepared oral statements to Placement Agent for comments, and
        shall
        not release any information relating thereto without the prior written consent
        of the Placement Agent. Nothing herein shall prevent the Company from releasing
        any information to the extent that such release is required by law, rule
        or
        regulation. The Company agrees that, following the completion of the Offering,
        the Placement Agent shall have the right to place "tomb stone" advertisements
        in
        financial and other newspapers and journals, at the Company's cost, describing
        its services to the Company hereunder, provided that Placement Agent will
        submit
        a copy of any such advertisements to the Company for its prior approval,
        which
        approval shall not be unreasonably withheld.

       

      (h) Assignment.
        The
        Placement Agent may assign this Agreement to another company or firm under
        its
        common control. Otherwise, this Agreement shall not be assignable by any
        party
        to this Agreement without the express prior written consent of the other
        party
        to the Agreement, and in the event of an attempted assignment by one party
        to
        this Agreement without such consent, such attempted assignment shall be void
        and
        without effect.

       

      (i) Parties.
        This
        Agreement shall be binding upon and inure solely to the benefit of the parties
        hereto and any permitted assigns, and no other person shall have or be construed
        to have any legal or equitable right, remedy or claim under or in respect
        of or
        by virtue of this Agreement or any provision herein contained, except that
        the
        Participating Dealers shall be a third party beneficiary of the provisions
        of
        Section 8(b) hereof.

       

      (j) Entire
        Agreement.
        This
        Agreement contains the entire understanding between the parties and supersedes
        any prior understandings or written or oral agreements between them respecting
        the subject matter hereof.

       

      (k) Consent
        to Jurisdiction and Waiver of Trial by Jury.
        Each
        party hereto: (i) consents to personal jurisdiction and service and venue
        in any
        court in which a claim subject to this agreement is brought against the other
        party hereto or any other Indemnified Party; and (ii) waives all right to
        trial
        by jury in any action, proceeding or counterclaim (whether based upon contract,
        tort or otherwise) related to or arising out of the engagement of Placement
        Agent pursuant to, or the performance by Placement Agent of the services
        contemplated by, this Agreement.

       

      (1) Attorneys'
        Fees.
        In the
        event any party hereto shall commence legal proceedings against the other
        to
        enforce the terms hereof, or to declare rights hereunder, as the result of
        a
        breach of any covenant or condition of this Agreement, the prevailing party
        in
        any such proceeding shall be entitled to recover from the losing party its
        costs
        of suit, including reasonable attorneys' fees, as may be fixed by the
        court.

       

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      If
        the
        foregoing is in accordance with your understanding, please sign and return
        to us
        a counterpart hereof, whereupon this Agreement and the Placement Agent's
        acceptance thereof shall constitute a binding agreement between you, as the
        Placement Agent, and the Company.

       

      
        	 	 	AeroGrow
                International, Inc.
	 	 
	 	By:  	/s/ Michael
                Bissonnette, President
	 	
                

              


      

       

      
        	ACCEPTED AND AGREED TO:	 	 	 
	 	 	 	 
	/s/ Timothy
                J. Keating, President	 	 	 
	
                

              	 	 	
              
	Date: May 27, 2005	 	 	 


      

       

      
        
          
          

        

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