Document:

Exhibit
                4.5 

            	
              Execution
                Copy

            

    

     

    

       

       

      ESCROW
        AGREEMENT

       

      THIS
        ESCROW AGREEMENT
        (this
“Agreement”)
        is
        made and entered into as of December 19, 2005 FUTUREMEDIA
        PLC, a
        corporation organized and existing under the laws of England and Wales (the
        “Company”);
        the
        Buyer(s) listed on the Securities Purchase Agreement, dated the date
        hereof (also referred to as the “Investor(s)”),
        and
DAVID
        GONZALEZ, ESQ.,
        as
        Escrow Agent hereunder (the “Escrow
        Agent”).

       

       

      BACKGROUND

       

      WHEREAS,
        the
        Company and the Investor(s) have entered into a Securities Purchase Agreement
        (the “Securities
        Purchase Agreement”),
        dated
        as of the date hereof, pursuant to which the Company proposes to sell secured
        convertible notes (the “Convertible
        Notes”)
        which
        shall be convertible into the Company’s Ordinary Shares (as evidenced by
        American Depositary Shares, as evidenced by American Depositary Receipts
        by
        selling shareholders (the “Ordinary
        Shares”),
        for a
        total purchase price of Two Million Five Hundred Thousand Dollars ($2,500,000).
        The Securities Purchase Agreement provides that the Investor(s) shall deposit
        the purchase amount in a segregated escrow account to be held by Escrow Agent
        in
        order to effectuate a disbursement to the Company at a closing to be held
        as set
        forth in the Securities Purchase Agreement (the “Closing”).

       

      WHEREAS,
        the
        Company intends to sell Convertible Notes (the “Offering”).

       

      WHEREAS,
        Escrow
        Agent has agreed to accept, hold, and disburse the funds deposited with it
        in
        accordance with the terms of this Agreement.

       

      WHEREAS,
        in
        order to establish the escrow of funds and to effect the provisions of the
        Securities Purchase Agreement, the parties hereto have entered into this
        Agreement.

       

      NOW
        THEREFORE,
        in
        consideration of the foregoing, it is hereby agreed as follows:

       

      1.  Definitions.
        The
        following terms shall have the following meanings when used herein:

       

      a.  “Escrow
        Funds”
shall
        mean the funds deposited with Escrow Agent pursuant to this
        Agreement.

       

      b.  “Joint
        Written Direction” shall
        mean a written direction
        executed by the Investor(s) and the Company directing Escrow Agent to disburse
        all or a portion of the Escrow Funds or to take or refrain from taking any
        action pursuant to this Agreement.

       

      c.  “Escrow
        Period”
shall
        begin with the commencement of the Offering and shall terminate upon the
        earlier
        to occur of the following dates:

       

      (i)  The
        date
        upon which Escrow Agent confirms that it has received in the Escrow Account
        all
        of the proceeds of the sale of the Convertible Notes; 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (ii)  The
        expiration of twenty (20) days from the date of commencement of the Offering
        (unless extended by mutual written agreement between the Company and the
        Investor(s) with a copy of such extension to Escrow Agent); or

       

      (iii)  The
        date
        upon which a determination is made by the Company and the Investor(s) to
        terminate the Offering prior to the sale of all the Convertible
        Notes.

       

      During
        the Escrow Period, the Company and the Investor(s) are aware that they are
        not
        entitled to any funds received into escrow and no amounts deposited in the
        Escrow Account shall become the property of the Company or the Investor(s)
        or
        any other entity, or be subject to the debts of the Company or the Investor(s)
        or any other entity.

       

      2.  Appointment
        of and Acceptance by Escrow Agent.
        The
        Investor(s) and the Company hereby appoint Escrow Agent to serve as Escrow
        Agent
        hereunder. Escrow Agent hereby accepts such appointment and, upon receipt
        by
        wire transfer of the Escrow Funds in accordance with Section 3 below, agrees
        to
        hold, invest and disburse the Escrow Funds in accordance with this Agreement.
        The Company hereby acknowledges that the Escrow Agent is general counsel
        to the
        Investor(s), a partner in the general partner of the Investor(s), and counsel
        to
        the Investor(s) in connection with the transactions contemplated and referred
        herein. The Company agrees that in the event of any dispute arising in
        connection with this Escrow Agreement or otherwise in connection with any
        transaction or agreement contemplated and referred herein, the Escrow Agent
        shall be permitted to continue to represent the Investor(s) and the Company
        will
        not seek to disqualify such counsel. 

       

      3.  Creation
        of Escrow Funds.
        On or
        prior to the date of the commencement of the Offering, the parties shall
        establish an escrow account with the Escrow Agent, which escrow account shall
        be
        entitled as follows: Futuremedia PLC/Cornell Capital Partners, LP Escrow
        Account
        for the deposit of the Escrow Funds. The Investor(s) will instruct subscribers
        to wire funds to the account of the Escrow Agent as follows:

       

      
        	
                Bank:

              	
                Wachovia,
                  N.A. of New Jersey

              
	
                Routing
                  #:

              	
                031201467

              
	
                Account
                  #:

              	
                2000014931134

              
	
                Name
                  on Account:

              	
                David
                  Gonzalez Attorney Trust Account

              
	
                Name
                  on Sub-Account:

              	
                Futuremedia
                  PLC/Cornell Capital Partners, LP Escrow Account

              
	 	 

      

      4.  Deposits
        into the Escrow Account.
        The
        Investor(s) agrees that they shall promptly deliver funds for the payment
        of the
        Convertible Notes to Escrow Agent for deposit in the Escrow
        Account.

       

      5.  Disbursements
        from the Escrow Account.

       

      a.  The
        Escrow Agent will continue to hold such funds until Cornell Capital Partners,
        LP
        on behalf of the Investor(s) and Company execute a Joint Written Direction
        directing the Escrow Agent to disburse the Escrow Funds pursuant to Joint
        Written Direction signed by the Company and the Investor(s). In disbursing
        such
        funds, Escrow Agent is authorized to rely upon such Joint Written Direction
        from
        the Company and the Investor(s) and may accept any signatory from the Company
        listed on the signature page to this Agreement and any signature from the
        Investor(s) that the Escrow Agent already has on file.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      b.  In
        the
        event Escrow Agent does not receive the amount of the Escrow Funds from the
        Investor(s), Escrow Agent shall notify the Company and the Investor(s). Upon
        receipt of payment instructions from the Company, Escrow Agent shall refund
        to
        each subscriber without interest the amount received from each Investor(s),
        without deduction, penalty, or expense to the subscriber. The purchase money
        returned to each subscriber shall be free and clear of any and all claims
        of the
        Company, the Investor(s) or any of their creditors.

       

      c.  In
        the
        event Escrow Agent does receive the amount of the Escrow Funds prior to
        expiration of the Escrow Period, in no event will the Escrow Funds be released
        to the Company until such amount is received by Escrow Agent in collected
        funds.
        For purposes of this Agreement, the term “collected funds” shall mean all funds
        received by Escrow Agent which have cleared normal banking channels and are
        in
        the form of cash.

       

      6.  Collection
        Procedure.
        Escrow
        Agent is hereby authorized to deposit the proceeds of each wire in the Escrow
        Account.

       

      7.  Suspension
        of Performance: Disbursement Into Court.
        If at
        any time, there shall exist any dispute between the Company and the Investor(s)
        with respect to holding or disposition of any portion of the Escrow Funds
        or any
        other obligations of Escrow Agent hereunder, or if at any time Escrow Agent
        is
        unable to determine, to Escrow Agent’s sole satisfaction, the proper disposition
        of any portion of the Escrow Funds or Escrow Agent’s proper actions with respect
        to its obligations hereunder, or if the parties have not within thirty (30)
        days
        of the furnishing by Escrow Agent of a notice of resignation pursuant to
        Section
        9 hereof, appointed a successor Escrow Agent to act hereunder, then Escrow
        Agent
        may, in its sole discretion, take either or both of the following
        actions:

       

      a.  suspend
        the performance of any of its obligations (including without limitation any
        disbursement obligations) under this Escrow Agreement until such dispute
        or
        uncertainty shall be resolved to the sole satisfaction of Escrow Agent or
        until
        a successor Escrow Agent shall be appointed (as the case may be); provided
        however, Escrow Agent shall continue to invest the Escrow Funds in accordance
        with Section 8 hereof; and/or

       

      b.  petition
        (by means of an interpleader action or any other appropriate method) any
        court
        of competent jurisdiction in any venue convenient to Escrow Agent, for
        instructions with respect to such dispute or uncertainty, and to the extent
        required by law, pay into such court, for holding and disposition in accordance
        with the instructions of such court, all funds held by it in the Escrow Funds,
        after deduction and payment to Escrow Agent of all fees and expenses (including
        court costs and attorneys’ fees) payable to, incurred by, or expected to be
        incurred by Escrow Agent in connection with performance of its duties and
        the
        exercise of its rights hereunder.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      c.  Escrow
        Agent shall have no liability to the Company, the Investor(s), or any person
        with respect to any such suspension of performance or disbursement into court,
        specifically including any liability or claimed liability that may arise,
        or be
        alleged to have arisen, out of or as a result of any delay in the disbursement
        of funds held in the Escrow Funds or any delay in with respect to any other
        action required or requested of Escrow Agent.

       

      8.  Investment
        of Escrow Funds.
        Escrow
        Agent shall deposit the Escrow Funds in a non-interest bearing account.

       

      If
        Escrow
        Agent has not received a Joint Written Direction at any time that an investment
        decision must be made, Escrow Agent shall maintain the Escrow Funds, or such
        portion thereof, as to which no Joint Written Direction has been received,
        in a
        non-interest bearing account. 

       

      9.  Resignation
        and Removal of Escrow Agent.
        Escrow
        Agent may resign from the performance of its duties hereunder at any time
        by
        giving thirty (30) days’ prior written notice to the parties or may be removed,
        with or without cause, by the parties, acting jointly, by furnishing a Joint
        Written Direction to Escrow Agent, at any time by the giving of ten (10)
        days’
prior written notice to Escrow Agent as provided herein below. Upon any such
        notice of resignation or removal, the representatives of the Investor(s)
        and the
        Company identified in Sections 13a.(iv) and 13b.(iv), below, jointly shall
        appoint a successor Escrow Agent hereunder, which shall be a commercial bank,
        trust company or other financial institution with a combined capital and
        surplus
        in excess of $10,000,000.00. Upon the acceptance in writing of any appointment
        of Escrow Agent hereunder by a successor Escrow Agent, such successor Escrow
        Agent shall thereupon succeed to and become vested with all the rights, powers,
        privileges and duties of the retiring Escrow Agent, and the retiring Escrow
        Agent shall be discharged from its duties and obligations under this Escrow
        Agreement, but shall not be discharged from any liability for actions taken
        as
        Escrow Agent hereunder prior to such succession. After any retiring Escrow
        Agent’s resignation or removal, the provisions of this Escrow Agreement shall
        inure to its benefit as to any actions taken or omitted to be taken by it
        while
        it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent
        shall
        transmit all records pertaining to the Escrow Funds and shall pay all funds
        held
        by it in the Escrow Funds to the successor Escrow Agent, after making copies
        of
        such records as the retiring Escrow Agent deems advisable and after deduction
        and payment to the retiring Escrow Agent of all fees and expenses (including
        court costs and attorneys’ fees) payable to, incurred by, or expected to be
        incurred by the retiring Escrow Agent in connection with the performance
        of its
        duties and the exercise of its rights hereunder.

       

      10.  Liability
        of Escrow Agent.

       

      a.  Escrow
        Agent shall have no liability or obligation with respect to the Escrow Funds
        except for Escrow Agent’s willful misconduct or gross negligence. Escrow Agent’s
        sole responsibility shall be for the safekeeping, investment, and disbursement
        of the Escrow Funds in accordance with the terms of this Agreement. Escrow
        Agent
        shall have no implied duties or obligations and shall not be charged with
        knowledge or notice or any fact or circumstance not specifically set forth
        herein. Escrow Agent may rely upon any instrument, not only as to its due
        execution, validity and effectiveness, but also as to the truth and accuracy
        of
        any information contained herein, which Escrow Agent shall in good faith
        believe
        to be genuine, to have been signed or presented by the person or parties
        purporting to sign the same and conform to the provisions of this Agreement.
        In
        no event shall Escrow Agent be liable for incidental, indirect, special,
        and
        consequential or punitive damages. Escrow Agent shall not be obligated to
        take
        any legal action or commence any proceeding in connection with the Escrow
        Funds,
        any account in which Escrow Funds are deposited, this Agreement or the Purchase
        Agreement, or to appear in, prosecute or defend any such legal action or
        proceeding. Escrow Agent may consult legal counsel selected by it in any
        event
        of any dispute or question as to construction of any of the provisions hereof
        or
        of any other agreement or its duties hereunder, or relating to any dispute
        involving any party hereto, and shall incur no liability and shall be fully
        indemnified from any liability whatsoever in acting in accordance with the
        opinion or instructions of such counsel. The Company and the Investor(s)
        jointly
        and severally shall promptly pay, upon demand, the reasonable fees and expenses
        of any such counsel.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      b.  Escrow
        Agent is hereby authorized, in its sole discretion, to comply with orders
        issued
        or process entered by any court with respect to the Escrow Funds, without
        determination by Escrow Agent of such court’s jurisdiction in the matter. If any
        portion of the Escrow Funds is at any time attached, garnished or levied
        upon
        under any court order, or in case the payment, assignment, transfer, conveyance
        or delivery of any such property shall be stayed or enjoined by any court
        order,
        or in any case any order judgment or decree shall be made or entered by any
        court affecting such property or any part thereof, then and in any such event,
        Escrow Agent is authorized, in its sole discretion, to rely upon and comply
        with
        any such order, writ judgment or decree which it is advised by legal counsel
        selected by it, binding upon it, without the need for appeal or other action;
        and if Escrow Agent complies with any such order, writ, judgment or decree,
        it
        shall not be liable to any of the parties hereto or to any other person or
        entity by reason of such compliance even though such order, writ judgment
        or
        decree may be subsequently reversed, modified, annulled, set aside or
        vacated.

       

      11.  Indemnification
        of Escrow Agent.
        From and
        at all times after the date of this Agreement, the parties jointly and
        severally, shall, to the fullest extent permitted by law and to the extent
        provided herein, indemnify and hold harmless Escrow Agent and each director,
        officer, employee, attorney, agent and affiliate of Escrow Agent (collectively,
        the “Indemnified
        Parties”)
        against any and all actions, claims (whether or not valid), losses, damages,
        liabilities, costs and expenses of any kind or nature whatsoever (including
        without limitation reasonable attorney’s fees, costs and expenses) incurred by
        or asserted against any of the Indemnified Parties from and after the date
        hereof, whether direct, indirect or consequential, as a result of or arising
        from or in any way relating to any claim, demand, suit, action, or proceeding
        (including any inquiry or investigation) by any person, including without
        limitation the parties to this Agreement, whether threatened or initiated,
        asserting a claim for any legal or equitable remedy against any person under
        any
        statute or regulation, including, but not limited to, any federal or state
        securities laws, or under any common law or equitable cause or otherwise,
        arising from or in connection with the negotiation, preparation, execution,
        performance or failure of performance of this Agreement or any transaction
        contemplated herein, whether or not any such Indemnified Party is a party
        to any
        such action or proceeding, suit or the target of any such inquiry or
        investigation; provided, however, that no Indemnified Party shall have the
        right
        to be indemnified hereunder for liability finally determined by a court of
        competent jurisdiction, subject to no further appeal, to have resulted from
        the
        gross negligence or willful misconduct of such Indemnified Party. If any
        such
        action or claim shall be brought or asserted against any Indemnified Party,
        such
        Indemnified Party shall promptly notify the Company and the Investor(s)
        hereunder in writing, and the Investor(s) and the Company shall assume the
        defense thereof, including the employment of counsel and the payment of all
        expenses. Such Indemnified Party shall, in its sole discretion, have the
        right
        to employ separate counsel (who may be selected by such Indemnified Party
        in its
        sole discretion) in any such action and to participate and to participate
        in the
        defense thereof, and the fees and expenses of such counsel shall be paid
        by such
        Indemnified Party, except that the Investor(s) and/or the Company shall be
        required to pay such fees and expense if (a) the Investor(s) or the Company
        agree to pay such fees and expenses, or (b) the Investor(s) and/or the Company
        shall fail to assume the defense of such action or proceeding, (c) the
        Investor(s) and the Company are the plaintiff in any such action or proceeding
        or (d) the named or potential parties to any such action or proceeding
        (including any potentially impleaded parties) include both the Indemnified
        Party, the Company and/or the Investor(s) and the Indemnified Party shall
        have
        been advised by counsel that there may be one or more legal defenses available
        to it which are different from or additional to those available to the Company
        or the Investor(s). The Investor(s) and the Company shall be jointly and
        severally liable to pay fees and expenses of counsel pursuant to the preceding
        sentence, except that any obligation to pay under clause (a) shall apply
        only to
        the party so agreeing. All such fees and expenses payable by the Company
        and/or
        the Investor(s) pursuant to the foregoing sentence shall be paid from time
        to
        time as incurred, both in advance of and after the final disposition of such
        action or claim. The obligations of the parties under this section shall
        survive
        any termination of this Agreement, and resignation or removal of the Escrow
        Agent shall be independent of any obligation of Escrow Agent.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      The
        parties agree that neither payment by the Company or the Investor(s) of any
        claim by Escrow Agent for indemnification hereunder shall impair, limit,
        modify,
        or affect, as between the Investor(s) and the Company, the respective rights
        and
        obligations of Investor(s), on the one hand, and the Company, on the other
        hand.

       

      12.  Expenses
        of Escrow Agent.
        Except
        as set forth in Section 11 the Company and the Investor(s) jointly and severally
        shall reimburse Escrow Agent for all of its reasonable out-of-pocket expenses,
        including attorneys’ fees, travel expenses, telephone and facsimile transmission
        costs, postage (including express mail and overnight delivery charges), copying
        charges and the like. All of the compensation and reimbursement obligations
        set
        forth in this Section shall be payable upon demand by Escrow Agent. The
        obligations of the Company under this Section shall survive any termination
        of
        this Agreement and the resignation or removal of Escrow Agent.

       

      13.  Warranties.

       

      a.  The
        Investor(s) makes the following representations and warranties to Escrow
        Agent:

       

      (i)  The
        Investor(s) has full power and authority to execute and deliver this Agreement
        and to perform its obligations hereunder.

       

      (ii)  This
        Agreement has been duly approved by all necessary action of the Investor(s),
        including any necessary approval of the limited partner of the Investor(s)
        or
        necessary corporate approval, as applicable, has been executed by duly
        authorized officers of the Investor(s), enforceable in accordance with its
        terms.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      (iii)  The
        execution, delivery, and performance of the Investor(s) of this Agreement
        will
        not violate, conflict with, or cause a default under any agreement of limited
        partnership of Investor(s) or the articles of incorporation or bylaws of
        the
        Investor(s) (as applicable), any applicable law or regulation, any court
        order or administrative ruling or degree to which the Investor(s) is a party
        or
        any of its property is subject, or any agreement, contract, indenture, or
        other
        binding arrangement.

       

      (iv)  Mark
        Angelo has been duly appointed to act as the representative of the Investor(s)
        hereunder and has full power and authority to execute, deliver, and perform
        this
        Escrow Agreement, to execute and deliver any Joint Written Direction, to
        amend,
        modify, or waive any provision of this Agreement, and to take any and all
        other
        actions as the Investor(s)’s representative under this Agreement, all without
        further consent or direction form, or notice to, the Investor(s) or any other
        party.

       

      (v)  No
        party
        other than the parties hereto and the Investor(s)s have, or shall have, any
        lien, claim or security interest in the Escrow Funds or any part thereof.
        No
        financing statement under the Uniform Commercial Code is on file in any
        jurisdiction claiming a security interest in or describing (whether specifically
        or generally) the Escrow Funds or any part thereof.

       

      (vi)  All
        of
        the representations and warranties of the Investor(s) contained herein are
        true
        and complete as of the date hereof and will be true and complete at the time
        of
        any disbursement from the Escrow Funds.

       

      b.  The
        Company makes the following representations and warranties to the Escrow
        Agent:

       

      (i)  The
        Company is
        a
        corporation duly organized, validly existing, and in good standing under
        the
        laws of England and Wales and has full power and authority to execute and
        deliver this Agreement and to perform its obligations hereunder.

       

      (ii)  This
        Agreement has been duly approved by all necessary corporate action of the
        Company, including any necessary shareholder approval, has been executed
        by duly
        authorized officers of the Company, enforceable in accordance with its
        terms.

       

      (iii)  The
        execution, delivery, and performance by the Company of this Agreement is
        in
        accordance with the Securities Purchase Agreement and will not violate, conflict
        with, or cause a default under the certificate of incorporation or bylaws
        of the
        Company, any applicable law or regulation, any court order or administrative
        ruling or decree to which the Company is a party or any of its property is
        subject, or any agreement, contract, indenture, or other binding arrangement,
        including without limitation to the Securities Purchase Agreement, to which
        the
        Company is a party.

       

      (iv)  Leonard
        M. Fertig and Andrew Haire each has been duly appointed to act as the
        representative of the Company hereunder and each has full power and authority
        to
        execute, deliver, and perform this Agreement, to execute and deliver any
        Joint
        Written Direction, to amend, modify or waive any provision of this Agreement
        and
        to take all other actions as the Company’s Representative under this Agreement,
        all without further consent or direction from, or notice to, the Company
        or any
        other party.

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      (v)  No
        party
        other than the parties hereto and the Investor(s)s have, or shall have, any
        lien, claim or security interest in the Escrow Funds or any part thereof.
        No
        financing statement under the Uniform Commercial Code is on file in any
        jurisdiction claiming a security interest in or describing (whether specifically
        or generally) the Escrow Funds or any part thereof.

       

      (vi)  All
        of
        the representations and warranties of the Company contained herein are true
        and
        complete as of the date hereof and will be true and complete at the time
        of any
        disbursement from the Escrow Funds.

       

      14.  Consent
        to Jurisdiction and Venue.
        In the
        event that any party hereto commences a lawsuit or other proceeding relating
        to
        or arising from this Agreement, the parties hereto agree that the United
        States
        District Court for the District of New Jersey shall have the sole and exclusive
        jurisdiction over any such proceeding. If all such courts lack federal subject
        matter jurisdiction, the parties agree that the Superior Court Division of
        New
        Jersey, Chancery Division of Hudson County shall have sole and exclusive
        jurisdiction. Any of these courts shall be proper venue for any such lawsuit
        or
        judicial proceeding and the parties hereto waive any objection to such venue.
        The parties hereto consent to and agree to submit to the jurisdiction of
        any of
        the courts specified herein and agree to accept the service of process to
        vest
        personal jurisdiction over them in any of these courts.

       

      15.  Notice.
        All
        notices and other communications hereunder shall be in writing and shall
        be
        deemed to have been validly served, given or delivered five (5) days after
        deposit in the United States mails, by certified mail with return receipt
        requested and postage prepaid, when delivered personally, two Business Days
        delivered to any internationally recognized courier, or one Business Day
        when
        transmitted by facsimile transmission and upon confirmation of receipt and
        addressed to the party to be notified as follows:

       

      
        	
                If
                  to Investor(s), to:

              	
                Cornell
                  Capital Partners, LP

              
	 	
                101
                  Hudson Street - Suite 3700

              
	 	
                Jersey
                  City, NJ 07302

              
	 	
                Attention: Mark
                  Angelo

              
	 	
                                   
                  Portfolio Manager

              
	 	
                Telephone: (201)
                  985-8300

              
	 	
                Facsimile:
                   (201)
                  985-8266

              
	 	 
	
                If
                  to Escrow Agent, to:

              	
                Troy
                  Rillo, Esq.

              
	 	
                101
                  Hudson Street - Suite 3700

              
	 	
                Jersey
                  City, NJ 07302

              
	 	
                Telephone: (201)
                  985-8300

              
	 	
                Facsimile: (201)
                  985-8266

              

      

       

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      
        	
                If
                  to the Company, to:

              	
                Futuremedia
                  PLC

              
	 	
                Nile
                  House, Nile Street

              
	 	
                Brighton,
                  East Sussex BN1 1HW, United Kingdom 

              
	 	
                Attention: Leonard
                  M. Fertig, CEO

              
	 	
                Telephone: +44
                  1273 829700

              
	 	
                Facsimile: +44
                  1273 829702

              
	 	 
	
                With
                  a copy to:

              	
                Brown
                  Rudnick

              
	 	
                8
                  Clifford Street

              
	 	
                London,
                  W1S 2LQ

              
	 	
                Attention: Mark
                  A. Dorff

              
	 	
                Telephone: +44
                  20 7851 6005

              
	 	
                Facsimile: +44
                  20 7851 6100

              
	 	 

      

      

       

      Or
        to
        such other address as each party may designate for itself by like
        notice.

       

      16.  Amendments
        or Waiver.
        This
        Agreement may be changed, waived, discharged or terminated only by a writing
        signed by the parties hereto. No delay or omission by any party in exercising
        any right with respect hereto shall operate as waiver. A waiver on any one
        occasion shall not be construed as a bar to, or waiver of, any right or remedy
        on any future occasion.

       

      17.  Severability.
        To the
        extent any provision of this Agreement is prohibited by or invalid under
        applicable law, such provision shall be ineffective to the extent of such
        prohibition, or invalidity, without invalidating the remainder of such provision
        or the remaining provisions of this Agreement.

       

      18.  Governing
        Law.
        This
        Agreement shall be construed and interpreted in accordance with the internal
        laws of the State of New Jersey without giving effect to the conflict of
        laws
        principles thereof.

       

      19.  Entire
        Agreement.
        This
        Agreement constitutes the entire Agreement between the parties relating to
        the
        holding, investment, and disbursement of the Escrow Funds and sets forth
        in
        their entirety the obligations and duties of the Escrow Agent with respect
        to
        the Escrow Funds.

       

      20.  Binding
        Effect.
        All of
        the terms of this Agreement, as amended from time to time, shall be binding
        upon, inure to the benefit of and be enforceable by the respective heirs,
        successors and assigns of the Investor(s), the Company, or the Escrow
        Agent.

       

      21.  Execution
        of Counterparts.
        This
        Agreement and any Joint Written Direction may be executed in counter parts,
        which when so executed shall constitute one and same agreement or
        direction.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      22.  Termination.
        Upon the
        first to occur of the disbursement of all amounts in the Escrow Funds pursuant
        to Joint Written Directions or the disbursement of all amounts in the Escrow
        Funds into court pursuant to Section 7 hereof, this Agreement shall terminate
        and Escrow Agent shall have no further obligation or liability whatsoever
        with
        respect to this Agreement or the Escrow Funds.

       

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      

      

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      

      IN
        WITNESS WHEREOF
        the
        parties have hereunto set their hands and seals the day and year above set
        forth.

       

       

        	 	 	 
	 	
                Futuremedia
                  PLC

              
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
                

                Name: Leonard
                  Fertig

                
                  Title: CEO

                

              

      

      
        	 	 	 
	 	
                Cornell
                  Capital Partners, LP

              
	 
 	 
 	 
 
	 	
                By: Yorkville
                  Advisors, LLC
                  
                  Its: General
                    Partner

                

              

      

      
        	 	 	 
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
                

                Name: Mark
                  Angelo

                
                  Title: Portfolio
                    Manager

                

              

      

      
        	 	 	 
	 	 
	 	
                Escrow
                  Agent

              
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
                

                Name: David
                  Gonzalez, Esq.

              

      

       

      
        
           

        

        
          10EXHIBIT
        4.2

       

      THIS
        WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
        THE
        SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR APPLICABLE STATE
        SECURITIES LAWS. THIS WARRANT AND THE WARRANT SHARES ISSUABLE UPON EXERCISE
        OF
        THIS WARRANT MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE
        OF
        SUCH REGISTRATION OR PURSUANT TO AN EXEMPTION THEREFROM UNDER THE SECURITIES
        ACT
        AND SUCH STATE LAWS, SUPPORTED BY AN OPINION OF COUNSEL, REASONABLY SATISFACTORY
        TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. THIS
        WARRANT AND THE COMPANY'S SUBSCRIPTION AGREEMENT WITH THE HOLDER SET FORTH
        THE
        COMPANY’S OBLIGATIONS TO REGISTER FOR RESALE THE WARRANT SHARES. A COPY OF SUCH
        SUBSCRIPTION AGREEMENT IS AVAILABLE FOR INSPECTION AT THE COMPANY’S OFFICE.

      

      THIS
        WARRANT MAY NOT, IN ANY EVENT, BE TRANSFERRED TO ANY PERSON OR ENTITY THAT
        IS
        NOT AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501, PROMULGATED UNDER
        THE
        ACT.

       

      ___________
        Warrants

      

      Void
        after 5:00 p.m., Colorado time on _______________, 2010

      

      COMMON
        STOCK

      PURCHASE
        WARRANT

      

      OF

      

      AEROGROW
        INTERNATIONAL, INC.

       

      AEROGROW
        INTERNATIONAL, INC., a Nevada corporation (the “Company”), hereby certifies
        that, for value received,
        ______________ (the
        “Warrant Holder”) is the owner of the number of common stock purchase warrants
        (“Warrants”) specified above, each of which entitles the holder thereof to
        purchase, at any time during the period commencing on the Commencement Date
        (as
        defined herein) and ending on the Expiration Date (as defined herein), one
        fully
        paid and non-assessable share of common stock, par value $.001 per share
        (“Common Stock”), of the Company at a purchase price equal to the Exercise Price
        (as defined in Section 1.2) in lawful money of the United States of America
        in
        cash, subject to adjustment as hereinafter provided. These Warrants are part
        of
        the duly authorized issuance of Units of the Company, limited in aggregate
        principal amount to $3,000,000 of notes included in said Units, issued or
        to be
        issued by the Company pursuant to a certain private placement memorandum
        dated
        June 6, 2005.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      1.  WARRANT;
        EXERCISE PRICE.

       

      1.1  Each
        Warrant shall entitle the Warrant Holder the right to purchase one share
        of
        Common Stock of the Company (individually, a “Warrant Share” severally, the
“Warrant Shares”). 

       

      1.2  The
        purchase price payable upon exercise of each Warrant (“Exercise Price”) shall be
        the lesser of (i) $5.01 per share, or (ii) if a registered public offering
        of
        securities by the Company is declared effective under the Securities Act
        prior
        to the payment or conversion of the Notes (“Registered Offering”), 100% of the
        per share offering price of Common Stock in the first such Registered Offering
        (“Public Offering Price”). The Exercise Price and number of Warrant Shares
        purchasable pursuant to each Warrant are subject to adjustment as provided
        in
        Section 8. 

       

      2.  EXERCISE
        OF WARRANT; EXPIRATION DATE.
        

       

      2.1  This
        Warrant is exercisable during the period commencing on ___________, 2005
        [the
        closing date]
        (“Commencement Date”) and ending on the Expiration Date (as defined below in
        Section 2.5), in whole or from time to time in part, at the option of the
        Warrant Holder, upon surrender of this Warrant to the Company together with
        a
        duly completed form of exercise attached hereto and payment of an amount
        equal
        to the then applicable Exercise Price multiplied by the number of Warrant
        Shares
        then being purchased upon such exercise.

       

      2.2  Each
        exercise of this Warrant shall be deemed to have been effected immediately
        prior
        to the close of business on the day on which this Warrant shall have been
        surrendered to the Company as provided in Section 2.1. At such time, the
        person
        or persons in whose name or names any certificates for Warrant Shares shall
        be
        issuable upon such exercise as provided in subsection 2.3 below shall be
        deemed
        to have become the holder or holders of record of the Warrant Shares represented
        by such certificates.

       

      2.3  Within
        three business days after the exercise of the purchase right represented
        by this
        Warrant, the Company at its expense will use its best efforts to cause to
        be
        issued in the name of, and delivered to, the Warrant Holder, or, subject
        to the
        terms and conditions hereof, to such other individual or entity as such Warrant
        Holder (upon payment by such Warrant Holder of any applicable transfer taxes)
        may direct: 

       

      (a)  a
        certificate or certificates for the number of full Warrant Shares to which
        such
        Warrant Holder shall be entitled upon such exercise plus, in lieu of any
        fractional share to which such Warrant Holder would otherwise be entitled,
        cash
        in an amount determined pursuant to Section 2.4 hereof, and 

       

      (b)  in
        case
        such exercise is in part only, a new Warrant or Warrants (dated the date
        hereof)
        of like tenor, stating on the face or faces thereof the number of shares
        currently stated on the face of this Warrant minus the number of such shares
        purchased by the Warrant Holder upon such exercise as provided in subsection
        2.1
        (prior to any adjustments made thereto pursuant to the provisions of this
        Warrant).

       

      
        
          
          

        

        
          -
            2
            -

          
            

          

        

        
          
          

        

      

       

      2.4  The
        Company shall not be required upon the exercise of this Warrant to issue
        any
        fractional shares, but shall make an adjustment thereof in cash on the basis
        of
        the “last sale price” (as defined below) of the Company's Common Stock on the
        trading day immediately prior to the date of exercise. For purposes of this
        Section 2.4, “last sale price” shall mean (i) if the Common Stock is listed on a
        national securities exchange or quoted on the Nasdaq National Market, Nasdaq
        SmallCap Market or NASD OTC Bulletin Board (or successor such as the Bulletin
        Board Exchange), the last sale price of the Common Stock in the principal
        trading market for the Common Stock as reported by the exchange, Nasdaq or
        the
        NASD, as the case may be; (ii) if the Common Stock is not listed on a national
        securities exchange or quoted on the Nasdaq National Market, Nasdaq SmallCap
        Market or the NASD OTC Bulletin Board (or successor such as the Bulletin
        Board
        Exchange), but is traded in the residual over-the-counter market, the closing
        bid price for the Common Stock on the last trading day preceding the date
        in
        question for which such quotations are reported by the Pink Sheets, LLC or
        similar publisher of such quotations; and (iii) if the fair market value
        of the
        Common Stock cannot be determined pursuant to clause (i) or (ii) above, such
        price as the Board of Directors of the Company shall determine, in good faith.
        

       

      2.5  The
        term
“Expiration Date” shall mean 5:00 p.m., Colorado time on ____________, 2010
[five-year
        anniversary of the closing date],
        or if
        such date shall in the State of Colorado be a holiday or a day on which banks
        are authorized to close, then 5:00 p.m., Colorado time the next following
        day
        which in the State of Colorado is not a holiday or a day on which banks are
        authorized to close or in the event of any merger, consolidation, or sale
        of
        substantially all the assets of the Company as, an entirety, resulting in
        any
        distribution to the Company’s stockholders, prior to the Expiration Date, the
        Warrant Holder shall have the right to exercise this Warrant commencing at
        such
        time through the Expiration Date into the kind and amount of shares of stock
        and
        other securities and property (including cash) receivable by a holder of
        the
        number of shares of Common Stock into which this Warrant might have been
        exercisable immediately prior thereto.

       

      2.6  The
        Company has engaged Keating Securities, LLC (“Keating”), on an exclusive basis,
        as its agent for the solicitation of this Warrant. In each instance in which
        a
        Warrant is exercised through the solicitation by Keating, the Company will
        pay
        from the proceeds received upon exercise of the Warrant, a fee of 5% of the
        purchase price to Keating. Notwithstanding the foregoing, no fee shall be
        payable to Keating under this Section 2.6 in the event the Registered Offering
        is declared effective under the Securities Act prior the first anniversary
        of
        the final closing of the Unit offering to which this issuance relates. The
        provisions of this Section 2.6 may not be modified, amended or deleted without
        the prior written consent of Keating.

       

      2.7  This
        Warrant is redeemable by the Company, in whole and not in part, on fifteen
        (15)
        days prior written notice at a redemption price of $0.0001 per share of Common
        Stock underlying this Warrant, at any time commencing the date of first issuance
        of this Warrant, provided an effective registration statement is in effect
        covering the Warrant Shares, and further provided that on all twenty of the
        trading days ending on the third day prior to the day on which the redemption
        notice is given, (i) the “last sale price,” as defined in Section 2.4 hereof,
        has been at least $7.50 per share of Common Stock, as adjusted for the events
        set forth in Section 8 hereof, and (ii) the average daily trading volume
        (as
        adjusted to exclude the highest and lowest volume trading days for the period)
        exceeds 50,000 shares per day. The redemption notice shall be mailed to the
        Warrant Holder at its, his or her address appearing on the books and records
        of
        the Company. Warrant Holders will have the right to exercise this Warrant
        until
        the close of business on the date fixed for redemption.

       

      
        
          
          

        

        
          -
            3
            -

          
            

          

        

        
          
          

        

      

       

      3.  REGISTRATION
        AND TRANSFER ON COMPANY BOOKS.
        

       

      3.1  The
        Company (or an agent of the Company) will maintain a register containing
        the
        names and addresses of the Warrant Holders. Any Warrant Holder may change
        its,
        his or her address as shown on the warrant register by written notice to
        the
        Company requesting such change. 

       

      3.2  The
        Company shall register upon its books any transfer of a Warrant upon surrender
        of same as provided in Section 5. 

       

      4.  RESERVATION
        OF SHARES.
        The
        Company will at all times reserve and keep available, solely for issuance
        and
        delivery upon the exercise of this Warrant, such Warrant Shares and other
        stock,
        securities and property, as from time to time shall be issuable upon the
        exercise of this Warrant. As
        long
        as the Warrant shall be outstanding, the Company shall use its best efforts
        to
        cause all Warrant Shares issuable upon exercise of the Warrants to be listed
        (subject to official notice of issuance) on each securities exchange (or,
        if
        applicable on Nasdaq or the OTC Bulletin Board or any successor trading market)
        on which the Common Stock is then listed and/or quoted. 

       

      5.  EXCHANGE,
        TRANSFER, ASSIGNMENT OR LOSS OR MUTILATION OF WARRANTS.
        This
        Warrant is exchangeable, without expense, at the option of the Warrant Holder,
        upon presentation and surrender hereof to the Company for other warrants
        of
        different denominations entitling the holder thereof to purchase in the
        aggregate the same number of shares of Common Stock purchasable hereunder.
        Subject to the terms of Section 6, upon surrender of this Warrant to the
        Company
        at its principal office or at the office of its transfer agent, if any, with
        the
        Assignment Form annexed hereto duly executed and funds sufficient to pay
        any
        transfer tax, the Company shall, without charge, execute and deliver a new
        Warrant in the name of the assignee named in such instrument of assignment
        and
        this Warrant shall be promptly canceled. This Warrant may be divided or combined
        with other warrants which carry the same rights upon presentation hereof
        at the
        principal office of the Company together with a written notice specifying
        the
        names and denominations in which new Warrants are to be issued and signed
        by the
        Warrant Holder hereof. The term “Warrant” as used herein includes any Warrants
        into which this Warrant may be divided or exchanged. Upon receipt by the
        Company
        of reasonable evidence of the ownership of and the loss, theft, destruction
        or
        mutilation of this Warrant and, in the case of loss, theft or destruction,
        of
        indemnity reasonably satisfactory to the Company, or, in the case of mutilation,
        upon surrender and cancellation of the mutilated Warrant, the Company shall
        execute and deliver in lieu thereof a new Warrant of like tenor and date
        representing an equal number of Warrants. 

       

      6.  LIMITATION
        ON EXERCISE AND SALES.
        Each
        holder of this Warrant acknowledges that this Warrant and the Warrant Shares
        have not been registered under the Securities Act, as of the date of issuance
        hereof and agrees not to sell, pledge, distribute, offer for sale, transfer
        or
        otherwise dispose of this Warrant, or any Warrant Shares issued upon its
        exercise, in the absence of: (i) an effective registration statement under
        the
        Securities Act as to this Warrant or such Warrant Shares, as the case may
        be,
        under any applicable Blue Sky or state securities law then in effect, or
        (ii) an
        opinion of counsel, satisfactory to the Company, that such registration and
        qualification are not required. In addition, this Warrant only may be
        transferred to a transferee who certifies in writing to the Warrant Holder
        and
        to the Company that such transferee is an “accredited investor” within the
        meaning of Rule 501(a) promulgated by the Commission under the Securities
        Act.

       

      
        
          
          

        

        
          -
            4
            -

          
            

          

        

        
          
          

        

      

       

       

      The
        Company shall be under no obligation to issue the shares covered by such
        exercise unless and until the Warrant Holder shall have executed the form
        of
        exercise annexed hereto that states that at the time of such exercise that
        it is
        then an “accredited investor” within the meaning of Rule 501(c) promulgated by
        the Commission under the Securities Act, is acquiring such shares for its
        own
        account, and will not transfer the Warrant Shares unless pursuant to an
        effective and current registration statement under the Securities Act or
        an
        exemption from the registration requirements of the Securities Act and any
        other
        applicable restrictions, in which event the Warrant Holder shall be bound
        by the
        provisions of a legend or legends to such effect that shall be endorsed upon
        the
        certificate(s) representing the Warrant Shares issued pursuant to such exercise.
        In such event, the Warrant Shares issued upon exercise hereof shall be imprinted
        with a legend in substantially the following form: 

       

      “This
        security has been acquired for investment and has not been registered under
        the
        Securities Act of 1933, as amended, or applicable state securities laws.
        This
        security may not be sold, pledged or otherwise transferred in the absence
        of
        such registration or pursuant to an exemption therefrom under said Act and
        such
        laws, supported by an opinion of counsel, reasonably satisfactory to the
        Company
        and its counsel, that such registration is not required.”

       

      7.  REGISTRATION
        RIGHTS OF WARRANT HOLDER.
        The
        Company has agreed to file and to use its best efforts to have declared
        effective a registration statement with the Commission to register for resale
        the Warrant Shares purchasable under this Warrant on a registration statement
        (the “Registration Statement”), in accordance with and subject to the terms and
        conditions of the registration rights discussed in Section 8 of the Subscription
        Agreement signed by the original Holder of this Warrant and accepted by the
        Company in connection with the offering to which these Warrants relate. These
        registration rights shall inure to the benefit of the transferees of this
        Warrant and the Warrant Shares.

       

      8.  ADJUSTMENT
        OF PURCHASE PRICE AND NUMBER OF SHARES DELIVERABLE.
        The
        Exercise Price and the number of Warrant Shares purchasable pursuant to each
        Warrant shall be subject to adjustment from time to time as hereinafter set
        forth in this Section 8: 

       

      (a)  In
        case,
        prior to the expiration of this Warrant by exercise or by its terms, the
        Company
        shall issue any shares of its Common Stock as a stock dividend or subdivide
        the
        number of outstanding shares of its Common Stock into a greater number of
        shares, then in either of such cases, the then applicable Exercise Price
        per
        Warrant Share purchasable pursuant to this Warrant in effect at the time
        of such
        action shall be proportionately reduced and the number of Warrant Shares
        at that
        time purchasable pursuant to this Warrant shall be proportionately increased;
        and conversely, in the event the Company shall reduce the number of outstanding
        shares of Common Stock by combining such shares into a smaller number of
        shares,
        then, in such case, the then applicable Exercise Price per Warrant Share
        purchasable pursuant to this Warrant in effect at the time of such action
        shall
        be proportionately increased and the number of Warrant Shares at that time
        purchasable pursuant to this Warrant shall be proportionately decreased.
        If the
        Company shall, at any time during the life of this Warrant, declare a dividend
        payable in cash on its Common Stock and shall at substantially the same time
        offer to its stockholders a right to purchase new Common Stock from the proceeds
        of such dividend or for an amount substantially equal to the dividend, all
        Common Stock so issued shall, for the purpose of this Warrant, be deemed
        to have
        been issued as a stock dividend. Any dividend paid or distributed upon the
        Common Stock in stock of any other class of securities convertible into shares
        of Common Stock shall be treated as a dividend paid in Common Stock to the
        extent that shares of Common Stock are issuable upon conversion
        thereof.

       

      
        
          
          

        

        
          -
            5
            -

          
            

          

        

        
          
          

        

      

       

      (b)  In
        case,
        prior to the expiration of this Warrant by exercise or by its terms, the
        Company
        shall be recapitalized by reclassifying its outstanding Common Stock, (other
        than a change in par value to no par value), or the corporation or a successor
        corporation shall consolidate or merge with or convey all or substantially
        all
        of its or of any successor corporation’s property and assets to any other
        corporation or corporations (any such other corporations being included within
        the meaning of the term “successor corporation” hereinbefore used in the event
        of any consolidation or merger of any such other corporation with, or the
        sale
        of all or substantially all of the property of any such other corporation
        to,
        another corporation or corporations), then, as a condition of such
        recapitalization, consolidation, merger or conveyance, lawful and adequate
        provision shall be made whereby the holder of this Warrant shall thereafter
        have
        the right to purchase, upon the basis and on the terms and conditions specified
        in this Warrant, in lieu of the Warrant Shares theretofore purchasable upon
        the
        exercise of this Warrant, such shares of stock, securities or assets as may
        be
        issued or payable with respect to, or in exchange for the number of Warrant
        Shares theretofore purchasable upon the exercise of this Warrant, had such
        recapitalization, consolidation, merger, or conveyance not taken place; and
        in
        any such event, the rights of the Warrant Holder to any adjustment in the
        number
        of Warrant Shares purchasable upon the exercise of this Warrant, as hereinbefore
        provided, shall continue and be preserved in respect of any stock which the
        Warrant Holder becomes entitled to purchase.

       

      (c)  In
        case
        the Company at any time while this Warrant shall remain unexpired and
        unexercised shall sell all or substantially all of its property or dissolve,
        liquidate, or wind up its affairs, lawful provision shall be made as part
        of the
        terms of any such sale, dissolution, liquidation or winding up, so that the
        holder of this Warrant may thereafter receive upon exercise hereof in lieu
        of
        each Warrant Share that it would have been entitled to receive, the same
        kind
        and amount of any securities or assets as may be issuable, distributable
        or
        payable upon any such sale, dissolution, liquidation or winding up with respect
        to each share of Common Stock of the Company, provided, however, that in
        any
        case of any such sale or of dissolution, liquidation or winding up, the right
        to
        exercise this Warrant shall terminate on a date fixed by the Company; such
        date
        so fixed to be not earlier than 5:00 p.m., Colorado time, on the forty-fifth
        day
        next succeeding the date on which notice of such termination of the right
        to
        exercise this Warrant has been given by mail to the registered holder of
        this
        Warrant at its address as it appears on the books of the Company.

       

      
        
          
          

        

        
          -
            6
            -

          
            

          

        

        
          
          

        

      

       

      (d)  No
        adjustment in the per share Exercise Price shall be required unless such
        adjustment would require an increase or decrease in the Exercise Price by
        at
        least $0.01; provided, however, that any adjustments that by reason of this
        subsection are not required to be made shall be carried forward and taken
        into
        account in any subsequent adjustment. All calculations under this Section
        8
        shall be made to the nearest cent or to the nearest 1/100th of a share, as
        the
        case may be.

       

      (e)  The
        Company will not, by amendment of its Certificate of Incorporation or through
        any reorganization, transfer of assets, consolidation, merger, dissolution,
        issue or sale of securities or any other voluntary action, avoid or seek
        to
        avoid the observance or performance of any of the terms to be observed or
        performed hereunder by the Company but will at all times in good faith assist
        in
        the carrying out of all the provisions of this Section 8 and in the taking
        of
        all such actions as may be necessary or appropriate in order to protect against
        impairment of the rights of the Warrant Holder to adjustments in the Exercise
        Price.

       

      (f)  Upon
        the
        happening of any event requiring an adjustment of the Exercise Price hereunder,
        the Company shall give written notice thereof to the Warrant Holder stating
        the
        adjusted Exercise Price and the adjusted number of Warrant Shares resulting
        from
        such event and setting forth in reasonable detail the method of calculation
        and
        the facts upon which such calculation is based.

       

      9.  VOLUNTARY
        ADJUSTMENT BY THE COMPANY.
        The
        Company may, at its option, at any time during the term of the Warrants,
        reduce
        the then current Exercise Price to any amount deemed appropriate by the Board
        of
        Directors of the Company and/or extend the date of the expiration of the
        Warrants. 

       

      10.  RIGHTS
        OF THE HOLDER.
        The
        Warrant Holder shall not, by virtue hereof, be entitled to any rights of
        a
        stockholder in the Company, either at law or equity, and the rights of the
        Warrant Holder are limited to those expressed in the Warrant and are not
        enforceable against the Company except to the extent set forth herein.

       

      11.  NOTICES
        OF RECORD DATE.
        In
        case: 

       

      (a)  the
        Company shall take a record of the holders of its Common Stock (or other
        stock
        or securities at the time deliverable upon the exercise of this Warrant)
        for the
        purpose of entitling or enabling them to receive any dividend or other
        distribution, or to receive any right to subscribe for or purchase any shares
        of
        any class or any other securities, or to receive any other right, or

       

      (b)  of
        any
        capital reorganization of the Company, any reclassification of the capital
        stock
        of the Company, any consolidation or merger of the Company with or into another
        corporation (other than a consolidation or merger in which the Company is
        the
        surviving entity), or any transfer of all or substantially all of the assets
        of
        the Company, or 

       

      (c)  of
        the
        voluntary or involuntary dissolution, liquidation or winding-up of the Company,
        then, and in each such case, the Company will mail or cause to be mailed
        to the
        Warrant Holder a notice specifying, as the case may be, (i) the date on which
        a
        record is to be taken for the purpose of such dividend, distribution or right,
        and stating the amount and character of such dividend, distribution or right,
        or
        (ii) the effective date on which such reorganization, reclassification,
        consolidation, merger, transfer, dissolution, liquidation or winding-up is
        to
        take place, and the time, if any is to be fixed, as of which the holders
        of
        record of Common Stock (or such other stock or securities at the time
        deliverable upon the exercise of this Warrant) shall be entitled to exchange
        their shares of Common Stock (or such other stock or securities) for securities
        or other property deliverable upon such reorganization, reclassification,
        consolidation, merger, transfer, dissolution, liquidation or winding-up.
        Such
        notice shall be mailed at least twenty days prior to the record date or
        effective date for the event specified in such notice, provided that the
        failure
        to mail such notice shall not affect the legality or validity of any such
        action.

       

      
        
          
          

        

        
          -
            7
            -

          
            

          

        

        
          
          

        

      

       

      12.  SUCCESSORS.
        The
        rights and obligations of the parties to this Warrant will inure to the benefit
        of and be binding upon the parties hereto and their respective heirs,
        successors, assigns, pledgees, transferees and purchasers. Without limiting
        the
        foregoing, the registration rights referred to in Section 7 of this Warrant
        shall inure to the benefit of the Warrant Holder and all the Warrant Holder’s
        successors, heirs, pledgees, assignees, transferees and purchasers of this
        Warrant and the Warrant Shares.

       

      13.  CHANGE
        OR WAIVER.
        Any
        term of this Warrant may be changed or waived only by an instrument in writing
        signed by the party against whom enforcement of the change or waiver is sought.
        

       

      14.  HEADINGS.
        The
        headings in this Warrant are for purposes of reference only and shall not
        limit
        or otherwise affect the meaning of any provision of this Warrant.

       

      15.  GOVERNING
        LAW.
        This
        Warrant shall be governed by and construed in accordance with the laws of
        the
        State of Colorado as such laws are applied to contracts made and to be fully
        performed entirely within that state between residents of that state except
        to
        the extent the laws of the State of Nevada mandatorily apply because the
        Company
        is incorporated in the State of Nevada.

       

      16.  JURISDICTION
        AND VENUE.
        The
        Company (i) agrees that any legal suit, action or proceeding arising out
        of or
        relating to this Warrant shall be instituted exclusively in the District
        Court,
        City and County of Denver or in the United States District Court for the
        District of Colorado, (ii) waives any objection to the venue of any such
        suit,
        action or proceeding and the right to assert that such forum is not a convenient
        forum, and (iii) irrevocably consents to the jurisdiction of the District
        Court,
        City and County of Denver, and the United States District Court for the District
        of Colorado in any such suit, action or proceeding, and the Company further
        agrees to accept and acknowledge service or any and all process that may
        be
        served in any such suit, action or proceeding in the District Court, City
        and
        County of Denver or in the United States District Court for the District
        of
        Colorado in person or by certified mail addressed as provided in the following
        Section.

       

      17.  MAILING
        OF NOTICES, ETC.
        All
        notices and other communications under this Warrant (except payment) shall
        be in
        writing and shall be sufficiently given if delivered to the addressees in
        person, by Federal Express or similar overnight courier service, or if mailed,
        postage prepaid, by certified mail, return receipt requested, as
        follows:

       

      
        
          
          

        

        
          -
            8
            -

          
            

          

        

        
          
          

        

      

       

      
        
          	 	
                  Registered
                    Holder:

                	To
                  his or her last known address as indicated on the Company’s books and
                  records.
	 	 	 
	 	
                  The
                    Company: 

                	To
                  the Company’s Chief Executive Officer at the
                  address of the Company’s principal office as set forth in the last filing
                  by the Company with the SEC 

        

      

       

      or
        to
        such other address as any of them, by notice to the others, may designate
        from
        time to time. Notice shall be deemed given (a) when personally delivered,
        (b)
        the scheduled delivery date if sent by Federal Express or other overnight
        courier service or (c) the fifth day after sent by certified mail.

       

      IN
        WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
        duly
        authorized officer as of the _____ day of _______________, 2005.

       

      
        	 	 	 
	 	AEROGROW
                INTERNATIONAL, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Name:
                  W. Michael Bissonnette

                Title:
                  CEO and President

              

      

      
        
          
          

        

        
          -
            9
            -

          
            

          

        

        
          
          

        

      

      Notice
        of Exercise

      To
        Be
        Executed by the Warrant Holder

      In
        Order
        to Exercise Warrants

       

      The
        undersigned Warrant Holder hereby irrevocably elects to exercise ______ Warrants
        represented by this Warrant, and to purchase the shares of Common Stock issuable
        upon the exercise of such Warrants, and requests that certificates for such
        shares of Common Stock shall be issued in the name of 

       

      PLEASE
        INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

      

      
        	  

      

       

      
        
          

        

      

       

      
        
          

        

      

      (please
        print or type name and address)

      

      and
        be
        delivered to

       

      
        
          

        

      

       

      
        
          

        

      

      (please
        print or type name and address)

      

      and
        if
        such number of Warrants shall not be all the Warrants evidenced by this Warrant,
        that a new Warrant for the balance of such Warrants be registered in the
        name
        of, and delivered to, the registered Warrant Holder at the address stated
        above.

      

      The
        undersigned hereby represents and warrants to the Company that it is an
“Accredited Investor” within the meaning of Rule 501(c) of the Securities Act of
        1933, as amended (the “Securities Act”), and is acquiring these securities for
        its own account and not with a view to, or for sale in connection with, any
        distribution thereof, nor with any present intention of distributing or selling
        the same. The undersigned further represents that it does not have any contract,
        agreement, understanding or arrangement with any person to sell, transfer
        or
        grant the shares of Common Stock issuable under this Warrant. The undersigned
        understands that the shares it will be receiving are “restricted securities”
        under Federal securities laws inasmuch as they are being acquired from AEROGROW
        INTERNATIONAL, INC., in transactions not including any public offering and
        that
        under such laws, such shares may only be sold pursuant to an effective and
        current registration statement under the Securities Act or an exemption from
        the
        registration requirements of the Securities Act and any other applicable
        restrictions, in which event a legend or legends will be placed upon the
        certificate(s) representing the Common Stock issuable under this Warrant
        denoting such restrictions. The undersigned understands and acknowledges
        that
        the Company will rely on the accuracy of these representations and warranties
        in
        issuing the securities underlying the Warrant.

      

      
        	
                Dated:
                  _______________________________

              	 	    

	 	 	
                (Signature
                  of Registered Holder)

              
	 	 	 

      

       

      
        
          
          

        

        
          -
            10
            -

          
            

          

        

        
          
          

        

      

      ASSIGNMENT
        FORM

      To
        be
        executed by the Warrant Holder

      In
        order
        to Assign Warrants

      

      FOR
        VALUE
        RECEIVED,____________________________________ hereby sell, assigns and transfer
        unto

       

      PLEASE
        INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

       

      
        	  

      

       

      
        
          

        

      

       

      
        
          

        

      

       

      
        
          
(Please
          print or type name and address)

      

       

      ______________________
        of the Warrants represented by this Warrant, and hereby irrevocably constitutes
        and appoints ________________________ Attorney to transfer this Warrant on
        the
        books of the Company, with full power of substitution in the
        premises.

       

      
        	
                Dated:
                  ______________________

              	 	    

	 	 	
                (Signature
                  of Registered Holder)

              
	 	 	 
	 	 	    

	 	 	
                (Signature
                  Guaranteed)

              
	 	 	 

      

       

      THE
        SIGNATURE ON THE EXERCISE FORM OR THE ASSIGNMENT FORM MUST CORRESPOND TO
        THE
        NAME AS WRITTEN UPON THE FACE OF THIS WARRANT IN EVERY PARTICULAR, WITHOUT
        ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED
        BY A
        COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK
        EXCHANGE, COLORADO STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR MIDWEST STOCK
        EXCHANGE.

       

      CERTIFICATION
        OF STATUS OF TRANSFEREE

      TO
        BE EXECUTED BY THE TRANSFEREE OF THIS WARRANT

      

      The
        undersigned transferee hereby certifies to the registered holder of this
        Warrant
        and to AEROGROW INTERNATIONAL, INC. that the transferee is an “accredited
        investor” within the meaning of Rule 501 of Regulation D promulgated under the
        Securities Act of 1933, as amended.

       

      
        	
                Dated:
                  _____________________

              	 	    

	 	 	
                (Signature
                  of Transferee)

              

      

       

      
 

      
        
          
          

        

        -
          11
          -

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