Unassociated Document


    PLACEMENT
      AGREEMENT

    


    February
      6, 2006

    


    Keating
      Securities, LLC

    5251
      DTC
      Parkway, Suite 1090

    Greenwood
      Village, CO 80111

    


    
      	
            	Re:	
              Private
                placement offering of up to
                2,400,000 units
                (“Units”), with each Unit consisting  of
                one share of common stock, $0.001 par value (“Common Stock”) and one
                common  stock
                purchase warrant (“Warrant”). 

            


    

    


    Dear
      Sirs:

    


    Aero
      Grow
      International, Inc. (“Company”) proposes to offer, offer for sale and sell up to
      2,400,000 Units at an offering price of $5.00 per Unit, to accredited investors.
      The offering of the Units (“Offering”) is being made on a best efforts,
      $5,000,000 minimum (“Minimum Amount”) $12,000,000 maximum (“Maximum Amount”)
      basis. Each Unit shall consist of one share of Common Stock and one Warrant.
      Each Warrant is exercisable for one share of Common Stock at an exercise price
      of $6.25 per share. Each Warrant will be non-redeemable and will be exercisable
      for five years from the closing of this Offering. There will be only one closing
      of this Offering.

    


    The
      Company agrees to file, on one occasion, a registration statement under the
      Securities Act of 1933, as amended (“Securities Act”) to register the shares of
      Common Stock included in each Unit and the shares of Common underlying the
      Warrants included in each Unit. 

    


    The
      Company, the Units, the Common Stock, the Warrants and the registration rights
      are more fully described in a private placement memorandum dated February 6,
      2006 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.

     

    	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
      $12,000,000 of Units on a “best efforts” basis.
      The
      Placement Agent may, in its sole discretion, appoint participating agents
      (including foreign banks, dealers and institutions) to offer and sell the Units
      as sub-agents 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 5,000 Units per investor is
      required. No fractional Units will 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
      an escrow account (“Escrow Account”) maintained by Steele Street State Bank,
      Denver, Colorado (“Escrow Agent”) under the name “Keating - AeroGrow Escrow
      Account,” (ii) all subscribers' checks shall be made payable to and deposited
      into the Escrow Account, (iii) all subscribers' check will be transmitted
      directly to the Escrow Agent 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 Escrow Account until such time as subscriptions in the
      Minimum Amount have been accepted by the Company and approved by the Placement
      Agent, and (vi) the Escrow Agent shall disburse funds from the Escrow 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 until March 1,
      2006, or such later date mutually agreed to by the Company and Placement Agent
      but not later than March 31, 2006 (the "Termination Date"); provided, however,
      that the Offering Period shall in all events terminate upon the sale of all
      of
      the Units.

    


    (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 Offering will be through
      a
      private offering to "accredited investors" (as such term is defined in Rule
      501
      of Regulation D) ("Accredited Investors") pursuant to and in accordance with
      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,
      including, without limitation, exemptions from registration provided by Sections
      3(b), 4(2) and/or 4(6) of the Securities Act, Regulation S, 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 or 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 Escrow
      Account maintained by the Escrow Agent. After the Company's acceptance of
      subscriptions in such amount as mutually determined by the Company and the
      Placement Agent, but not less than the Minimum Amount, and subject to the
      Placement Agent’s approval of such subscriptions, on a date to be determined by
      the Company and Placement Agent, a closing will take place at the offices of
      the
      Company's legal counsel or another location as determined by the Company, and
      the shares of Common Stock and Warrants included in the Units 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 "Closing"), and the shares of Common
      Stock when issued shall be fully paid and non-assessable. 

    


    
      
         

      

      
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    (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, Regulation S 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 Regulation S, Rule 506 of Regulation D
      or Sections 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.

    


    (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.
      The
      Company has the requisite power and authority to own, lease and operate its
      assets and properties and to carry on its business as it is now being or
      currently planned by the Company to be conducted. The Company is in possession
      of all franchises, grants, authorizations, licenses, permits, easements,
      consents, certificates, approvals and orders ("Approvals") necessary to own,
      lease and operate the properties it purports to own, operate or lease and to
      carry on its business as it is now being conducted, except where the failure
      to
      have such Approvals could not, individually or in the aggregate, reasonably
      be
      expected to have a Material Adverse Effect (as hereinafter defined) on the
      Company. The Company is not in violation of any of the provisions of its
      Articles of Incorporation or its bylaws, as currently in effect (“Charter
      Documents"). The Company is duly qualified or licensed to do business as a
      foreign company and is in good standing in each jurisdiction where the character
      of the properties owned, leased or operated by it or the nature of its
      activities makes such qualification or licensing necessary, except for such
      failures to be so duly qualified or licensed and in good standing that could
      not, individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect on the Company. The minute books or the equivalent of the Company
      to the extent of their existence contain true and accurate records of meetings
      and true, complete and accurate records of consents in lieu of meetings of
      its
      directors (and any committees thereof), similar governing bodies, and
      stockholders ("Corporate Records"), since the time of the Company's
      organization. The Company has no subsidiaries. For purposes of this Agreement,
      the term "Material Adverse Effect" when used in connection with an entity means
      any change, event, violation, inaccuracy, circumstance or effect, individually
      or when aggregated with other changes, events, violations, inaccuracies,
      circumstances or effects, that is materially adverse to the business, assets
      (including intangible assets), revenues, financial condition or results of
      operations of such entity or its subsidiaries, if any, taken as a whole (it
      being understood that neither of the following alone or in combination shall
      be
      deemed, in and of itself, to constitute a Material Adverse Effect: (a) changes
      attributable to the public announcement or pendency of the Merger (as defined
      herein), the Offering or any related transactions (collectively, the
“Transactions”), (b) changes in general national or regional economic
      conditions, or (c) changes affecting the industry generally in which the Company
      operates. 

    


    
      
         

      

      
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    (b) The
      Company has complied and 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 S, 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 Closing, 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.

    


    (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 Charter Documents 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 shares of Common Stock, 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. The shares of Common Stock included in the Units, and the shares
      of
      Common Stock underlying the Warrants and the Agent Warrants, when issued, shall
      be fully paid and non-assessable.

    


    
      
         

      

      
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    (f) Neither
      the Company nor, to the Company’s knowledge, any of the Company’s affiliates
      have 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 Rule
      503
      under Regulation D. During the past five year period, to the Company’s
      knowledge, no current or former director, executive officer or 10% or more
      stockholder of the Company has been the subject of: (a)
      a
      petition under the Federal bankruptcy laws or any other insolvency or moratorium
      law or has a receiver, fiscal agent or similar officer been appointed by a
      court
      for such person, or any partnership in which such person was a general partner
      at or within two years before the time of such filing, or any corporation or
      business association of which such person was an executive officer at or within
      two years before the time of such filing;
      (b) a
      conviction in a criminal proceeding or a named subject of a pending criminal
      proceeding (excluding traffic violations that do not relate to driving while
      intoxicated or driving under the influence); (c)
      any
      order, judgment or decree, not subsequently reversed, suspended or vacated,
      of
      any court of competent jurisdiction, permanently or temporarily enjoining any
      such person from, or otherwise limiting, the following activities: (1)
      Acting as a futures commission merchant, introducing broker, commodity trading
      advisor, commodity pool operator, floor broker, leverage transaction merchant,
      any other person regulated by the United States Commodity Futures Trading
      Commission or an associated person of any of the foregoing, or as an investment
      adviser, underwriter, broker or dealer in securities, or as an affiliated
      person, director or employee of any investment company, bank, savings and loan
      association or insurance company, or engaging in or continuing any conduct
      or
      practice in connection with such activity;
      (2)
      Engaging in any type of business practice; or (3)
      Engaging in any activity in connection with the purchase or sale of any security
      or commodity or in connection with any violation of Federal, state or other
      securities laws or commodities laws; (d)
      any
      order, judgment or decree, not subsequently reversed, suspended or vacated,
      of
      any Federal, state or local authority barring, suspending or otherwise limiting
      for more than 60 days the right of any such person to engage in any activity
      described in the preceding sub-paragraph, or to be associated with persons
      engaged in any such activity; (e)
      a
      finding by a court of competent jurisdiction in a civil action or by the U.S.
      Securities and Exchange Commission (the "Commission") to have violated any
      securities law, regulation or decree and the judgment in such civil action
      or
      finding by the Commission has not been subsequently reversed, suspended or
      vacated; or
      (f) a
      finding by a court of competent jurisdiction in a civil action or by the
      Commodity Futures Trading Commission to have violated any federal commodities
      law, and the judgment in such civil action or finding has not been subsequently
      reversed, suspended or vacated.

    


    (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 statements 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 Documents, 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,
      subject
      to applicable bankruptcy, insolvency and other laws affecting the enforceability
      of creditors' rights generally.

    


    (n) The
      (A) authorization, execution, delivery and performance of the Documents;
      and (B) authorization, issuance, sale and delivery of the Units, the shares
      of Common Stock, 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 (2) 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 of 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 shares of Common Stock, 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 shares of Common Stock, the Warrants and the
      Agent Warrants will be duly and validly issued and outstanding, valid and
      binding obligations of the Company, and the shares of Common Stock included
      in
      the Units and the shares of Common Stock underlying the Warrants and the Agent
      Warrants, when issued, shall be fully paid and non-assessable, 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 shares of Common Stock, the Warrants and the Agent Warrants
      (collectively, the “Securities”)are exempt from the registration requirements of
      the Securities Act and the Rules and Regulations and the State Acts and the
      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 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.

    


    (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.

    


    
      
         

      

      
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    (u) The
      Company’s financial statements, which may be unaudited, that are included in the
      Memorandum, are true and correct and fairly present, in accordance with U.S.
      generally accepted accounting principles (“U.S. GAAP”), consistently applied,
      the financial condition of the Company as of the dates specified (“Financial
      Statements”). The audited Financial Statements of the Company included in the
      Memorandum have been audited in accordance with the standards of the U.S. Public
      Company Accounting Oversight Board (“PCAOB”) by an independent certifying
      accountant duly registered with the PCAOB. The Company maintains a system of
      internal accounting controls sufficient to provide reasonable assurance that
      (i)
      transactions are executed in accordance with management’s general or specific
      authorizations, (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with generally accepted
      accounting principles and to maintain asset accountability, (iii) access to
      assets is permitted only in accordance with management’s general or specific
      authorization, and (iv) the recorded accountability for assets is compared
      with
      the existing assets at reasonable intervals and appropriate action is taken
      with
      respect to any differences. Except
      as
      set forth in Schedule 2(u) hereto, the Company has no liabilities individually
      in excess of $25,000 and in the aggregate in excess of $50,000 (absolute,
      accrued, contingent or otherwise) of a nature required to be disclosed on a
      balance sheet or in the related notes to the financial statements prepared
      in
      accordance with U.S. GAAP which are, individually or in the aggregate, material
      to the business, results of operations or financial condition of the Company,
      except: (i) liabilities provided for in or otherwise disclosed in the balance
      sheets of the Company as of September 30, 2005 prepared in accordance with
      U.S.
      GAAP, (ii) such liabilities arising in the ordinary course of the Company’s
      business since September 30, 2005 and (iii) liabilities disclosed in the
      Memorandum, none of which would have a Material Adverse Effect on the
      Company.

    


    (v) Since
      September 30, 2005, the Company has conducted its business in the ordinary
      course and has not suffered any Material Adverse Effect. The Company has in
      place insurance
      policies covering the assets, business, products, equipment, properties,
      operations, employees, officers, directors, managers and managing members
      (collectively, the "Insurance Policies") of the Company adequate for the
      Company’s business as presently conducted.

    


    (w) The
      capitalization of the Company has been correctly and completely described in
      the
      Memorandum and, except as shall be disclosed therein, no person has any right
      of
      first refusal, pre-emptive 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 non-assessable, 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, individually
      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.

    


    
      
         

      

      
        8

        
          

        

      

      
         

      

       

    

    (y) At
      the
      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 and 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 the Closing. The consummation of the Offering and the release
      of the investor funds from the Escrow 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.

    


    (bb) Except
      as
      set forth in this Agreement or as disclosed on Schedule 2(bb), neither the
      Company nor, to the Company’s knowledge, any of its officers, directors or
      stockholders has incurred, nor will they incur, directly or indirectly, any
      liability for brokerage, finders' fees, agent’s commissions or any similar
      charges in connection with this Agreement or the Transactions. Except as set
      forth in this Agreement or the Transactions, no membership interests, ownership
      interests, equity securities, convertible securities, warrants, options, or
      other derivative securities of the Company will be payable to any third party
      by
      the Company or any of its officers, directors or stockholders as a result of
      the
      Transactions.

    


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

    


    (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. 

    


    
      
         

      

      
        9

        
          

        

      

      
         

      

       

    

    (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
      or
      person which is not a member of the NASD; the Placement Agent shall act as
      an
      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.
      The
      Placement Agent may reallow discounts or pay commissions or other compensation
      to any foreign bank, person, dealer or institution for participation in the
      distribution of the Offering outside the United States to non-U.S. persons
      (notwithstanding that such foreign bank, person, dealer or institution may
      not
      be a member of the NASD.
      

    


    (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, Regulation S 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:

    


    (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;

    


    
      
         

      

      
        10

        
          

        

      

      
         

      

       

    

    (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, except to the extent
      that any of the foregoing are permitted under or in connection with offers
      or
      sales to non-U.S. persons under Regulation S;

    


    (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 the Closing. The Company also agrees to pay to the Placement Agent,
      as warrant placement agent for transactions involving the exercise of any
      Warrants, which exercise is solicited by the Placement Agent, a warrant
      solicitation fee of five percent (5%) of the aggregate exercise price received.
      

     

    (b) In
      addition, the Company shall issue and sell, at the Closing, to the Placement
      Agent or its designees 1 warrant (covering one share of Common Stock) for every
      10 Units 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 Common Stock. The Agent Warrants shall be non-redeemable and shall
      be
      exercisable at any time after the Closing at a price equal $6.25 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
      shares of Common Stock and the Warrants as set forth in this Agreement and
      the
      Memorandum. The Agent Warrants will expire five (5) years from the date of
      issuance. 

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    


    (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”). 

    


    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, Regulation S and 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.

    


    (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 shares of Common Stock 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.

    


    
      
         

      

      
        12

        
          

        

      

      
         

      

       

    

    (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 Closing,
      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.


    


    (i) The
      Company will apply the net proceeds from the sale of the Units as set forth
      in
      the Memorandum.

    


    (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 non-assessable,
      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 Charter Documents
      or
      be subject to any lien, claim, encumbrance, security interest, preemptive rights
      or any other claim of any third party.

    


    (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,
      Regulation S and 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 Closing 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 Closing, to the performance
      by the Company and Placement Agent of their respective obligations hereunder,
      and to the following conditions:

    


    
      
         

      

      
        13

        
          

        

      

      
         

      

       

    

    (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, and to the performance
      by
      the Company of its obligations hereunder to be performed.

    


    (b) The
      Closing of the Offering shall be subject to the Company's acceptance of
      subscriptions in such amount as mutually determined by the Company and the
      Placement Agent, but not less than the Minimum Amount, and subject to the
      Placement Agent’s approval of such subscriptions.

    


    (c) The
      Closing of the Offering shall be subject to the closing of the merger
      transaction (“Merger”) contemplated under that certain Agreement and Plan of
      Merger by and between the Company and Wentworth I, Inc. (“Wentworth”) dated
      January 12, 2006 (“Merger Agreement”). 

    


    (d) The
      Closing of the Offering shall be subject to the satisfaction of the conditions
      set forth in the subscription agreement between the Company and each purchaser
      of Units.

    


    (e) At
      the
      Closing, the Company shall:

     

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

     

    (2) Issue
      and
      deliver the shares of Common Stock and the Warrants with respect to the Units
      to
      subscribers as described in the Memorandum.

    


    (3) Issue
      and
      deliver the Agent Warrants to the Placement Agent as provided
      hereunder.

     

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

     

    (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. 

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    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.

    


    (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

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

       

    

    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. 

    


    
      
         

      

      
        16

        
          

        

      

      
         

      

       

    

    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. 

    


    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.

    


    

      
        	 	
                If
                  to the Company:

              	
                Aero
                  Grow International, Inc.

              
	 	 	
                900
                  28th
                  Street, Suite 201

              
	 	 	
                Boulder,
                  CO 80303

              
	 	 	
                Attn:
                  W. Michael Bissonnette, CEO

              
	 	 	
                (303)
                  444-7755 

              
	 	 	
                (303)
                  444-0406 telecopy

              
	 	 	 
	 	 	 
	 	
                If
                  to the Placement Agent

              	
                Keating
                  Securities, LLC

              
	 	 	
                5251
                  DTC Parkway, Suite 1090

              
	 	 	
                Greenwood
                  Village, CO 80111

              
	 	 	
                Attn:
                  Timothy J. Keating, President

              
	 	 	
                (720)
                  889 -0131

              
	 	 	
                (720)
                  889-0139 telecopy

              


      



    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 Closing of the Offering, 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 and as the Company’s exclusive financial advisor for
      any merger or acquisition involving 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 an construed in accordance with
      the
      laws of the state of Colorado without regard to such state’s conflicts of law
      principles.

    


    
      
         

      

      
        17

        
          

        

      

      
         

      

       

    

    (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 contest 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.

     

    (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.

    


    
      
         

      

      
        18

        
          

        

      

      
         

      

       

    

    (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.

    


    (l) 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.

    


    [Remainder
      of this page intentionally left blank.]

    


    
      
         

      

      
        19

        
          

        

      

      
         

      

       

    

    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 hereof shall constitute a binding agreement between you, as the
      Placement Agent, and the Company.

    


    Aero
      Grow International, Inc.

     

    


    By:
      ___________________________________

          
      W. Michael Bissonnette, CEO

     

    


    ACCEPTED
      AND AGREED TO:

    


    Keating
      Securities, LLC

    


    


    By:
      ___________________________________

          
      Timothy J. Keating, President      

    


    


    Date:
      _________________________________

     

     

    
      
         

      

      
        20