Document:

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:
      _________________________________

     

     

    
      
         

      

      
        20EXHIBIT
      10.16

     

    AEROGROW
      INTERNATIONAL, INC.

     

    SUBSCRIPTION
      AGREEMENT

    
 

    INSTRUCTIONS

    

    

    IMPORTANT:
      PLEASE READ CAREFULLY BEFORE SIGNING.

    SIGNIFICANT
      REPRESENTATIONS ARE CONTAINED IN THIS DOCUMENT.

     

    
      	 	
              1.

            	
              Individual
                Investors
                must complete the requested information on pages 12 and 13 and sign
                the
                signature page on Page 13.

            

    

    

    
      	 	
              2.

            	
              Entity
                Investors
                must complete the requested information on pages 14 and 15 and if
                applicable, page 16 and sign the signature page on page 15 and if
                applicable, page 16.

            

    

    

    
      	 	
              3.

            	
              Every
                Investor
                must complete the NASD questionnaire found on pages 17 through 20,
                and
                sign the signature page on page 21.

            

    

     

    
      	 	
              4.

            	
              Every
                Investor
                must complete Keating Securities, LLC Customer Account Application,
                attached hereto, if the Investor does not have a current Customer
                Account
                Application on file with Keating Securities,
                LLC.

            

    

     

    DELIVER
      THE EXECUTED AGREEMENTS, NASD QUESTIONNAIRE, AND CUSTOMER ACCOUNT APPLICATION
      TO:

    

    Keating
      Securities, LLC

    5252
      DTC Parkway, Suite 1090

    Greenwood
      Village, CO 80111

    Attention:
      Jeff Andrews

    

    ALONG
      WITH PAYMENT FOR THE UNITS SUBSCRIBED FOR

    

    If
      you
      are tendering a check, make it payable to “AeroGrow International, Inc.
      Segregated Account.” If you are paying by wire transfer, please contact Jeff
      Andrews of Keating Securities, LLC for instructions at (720) 889-0134.

    

    If
      you
      have any questions regarding this form, please contact Jeff Andrews of Keating
      Securities, LLC at (720) 889-0134. 

    

    

    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

        
        

      

    

    

    SUBSCRIPTION
      AGREEMENT

     

    AEROGROW
      INTERNATIONAL, INC. (“Company”) and the Investor hereby agree as
      follows:

     

    1.    Subscription
      for Securities.
      I
      (sometimes referred to herein as the “Investor”) hereby subscribe for and agree
      to purchase the number of units (“Units”), consisting of a 10% unsecured
      convertible promissory note in the principal amount of $10,000 due June 30,
      2006
      (“Note”) and 2,000 five-year warrants, each warrant providing for the purchase
      of one share of the Company’s common stock at the exercise price equal to 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 of
      1933, as amended (“Securities Act”) prior to the payment or conversion of the
      Note (“Registered Offering”), 100% of the per share offering price of the
      Company’s common stock in the first such Registered Offering (“Public Offering
      Price”) (“Warrants”), set forth on the signature page hereto upon the terms and
      conditions described in this Agreement. The price per Unit is
      $10,000.

     

    There
      will be a minimum subscription amount of 3 Units per Investor, or $30,000,
      unless the Company and the Placement Agent waive such minimum amount; provided,
      in no case shall fractional Units be offered or sold.

     

    The
      Units
      are being offered in a private placement in accordance with the terms set forth
      in the Confidential Private Placement Memorandum dated June 6, 2005. Capitalized
      terms not defined herein will have the same meaning as set forth in the
      Memorandum. The Units will have the terms and conditions described herein and
      in
      the Memorandum and the Warrants will have the terms and conditions as set forth
      in the Common Stock Purchase Warrant. Keating Securities, LLC. (“Keating
      Securities”) is acting as managing placement agent for the
      offering.

     

    2.    Offering
      Period.
      The
      Units will be offered for sale commencing on the date of the Memorandum and
      continuing until July 21, 2005, unless extended by the Company and Keating
      Securities without notice to investors to a date not later than August 15,
      2005
      (the "Termination Date"); provided, however, that the Offering Period shall
      in
      all events terminate upon the sale of all of the Units.

     

    3.    Investor
      Delivery of Documents and Payment.
      I
      hereby tender (i) to Steele Street State Bank, Denver, Colorado, for deposit
      into the Company’s Segregated Account, the full purchase price of the Units I am
      purchasing by check or wire, and (ii) to Keating Securities, one manually
      executed copy of this Subscription Agreement with the appropriate questionnaires
      therein completed, the completed NASD questionnaire attached to this
      Subscription Agreement and the Customer Account Application (if I have not
      previously provided one to the Placement Agent). If I am using a check, it
      will
      be made payable to “AeroGrow International, Inc. Segregated Account” maintained
      by the Company at Steele Street State Bank. If I am paying by wire transfer,
      I
      will contact Jeff Andrews of Keating Securities for instructions at (720)
      889-0134. Prior to the earlier of a Closing (as defined in Section 5 hereof)
      or
      the Termination Date, my check or wire transfer will be held in the Segregated
      Account maintained by the Company at Steele Street State Bank, which shall
      be a
      non-interest bearing segregated bank account subject to the terms and conditions
      herein. If the Company does not receive and accept my subscription by the
      Termination Date, my payment will be returned to me without interest or
      deduction.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    4.    Acceptance
      or Rejection of Subscription.
      The
      Company and Keating Securities have the right to reject this subscription for
      the Units, in whole or in part for any reason and at any time prior to the
      Closing, notwithstanding prior receipt by me of notice of acceptance of my
      subscription. In the event my subscription is rejected, my payment will be
      returned promptly to me without interest or deduction and this Subscription
      Agreement will have no force or effect. The Units subscribed for herein will
      not
      be deemed issued to or owned by me until one copy of this Subscription Agreement
      has been executed by me and countersigned by the Company and the Closing with
      respect to my subscription has occurred.

     

    5.    Closing
      and Delivery of Securities.
      The
      offering is being made on a “best efforts, no minimum, $3,000,000 maximum”
      basis. There
      is
      no minimum number of Units that must be sold prior to the closing of this
      offering. Accordingly, this offering may be closed at any time and in one or
      more closings for any subscriptions that are received and accepted by the
      Company, without the need for the Company to have sold any minimum number of
      Units. The
      initial closing (“Initial Closing”) may occur at any time, as determined jointly
      by the Company and Keating Securities. Subsequent closings with respect to
      the
      sale of additional Units may take place at any time with respect to
      subscriptions accepted by the Termination Date (each such closing, together
      with
      the Initial Closing, being referred to as the “Closing”). In the event my
      subscription is accepted and there is a Closing, my payment will be released
      to
      the Company and the certificates representing the Notes and the Warrants to
      which I am subscribing for will be delivered promptly to me along with a fully
      executed version of this Agreement.

     

    6.    Conditions
      to Closing.
      The
      Closing of this offering is conditioned on the Company effecting a 1-for-5
      reverse split of the Company’s outstanding Common Stock prior to the Initial
      Closing (“Reverse Split”). All securities in this offering are adjusted for and
      take into account the Reverse Split.

     

    7.    Offering
      to Accredited Investors.
      This
      offering is limited to accredited investors as defined in Section 2(15) of
      the
      Securities Act of 1933, as amended (“Securities Act”), and Rule 501 promulgated
      thereunder, and is being made without registration under the Securities Act
      in
      reliance upon the exemptions contained in Sections 3(b), 4(2) and/or 4(6) of
      the
      Securities Act, and Rule 506 of Regulation D, promulgated as part of the rules
      and regulations under the Securities Act, and applicable state securities laws.
      As indicated by the responses on the signature page hereof, the Investor is
      an
      accredited investor within the meaning of Section 2(15) of the Securities Act
      and Rule 501 promulgated thereunder.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    8.    Registration
      Rights.

     

    8.1.  Filing
      of Registration Statement.
      The
      Company will file, on one occasion only, a registration statement under the
      Securities Act filed with the Securities and Exchange Commission (“Commission”)
      to register for re-offer and re-sale, the Common Stock into which the Notes
      may
      be converted, the Common Stock underlying the Warrants included in the Units
      and
      the Common Stock underlying the warrants received upon conversion of the Notes
      (collectively, “Registrable Securities”) on behalf of the Investors (or
      subsequent holders, referred to together as the “Holders”).
      The
      registration statement will be filed within sixty (60) days after the final
      Closing of this offering and the Company will use its commercially reasonable
      efforts to have the registration statement declared effective within one hundred
      fifty (150) days after the final Closing. Each Holder will provide upon request,
      such information as the Company may require for inclusion in the registration
      statement. All costs associated with the registration of the Registrable
      Securities, other than brokerage commissions incurred by the Holders in
      connection with resales of the Registrable Securities, shall be borne by the
      Company. The Registrable Securities and the Common Stock underlying the warrants
      to be issued to Placement Agents under this offering will be included on the
      registration statement. If the Registration Statement is not declared effective
      within 150 days of the Closing Date, for any reason, other than adverse market
      conditions as determined by the Placement Agent in its sole discretion,
      investors holding Notes with a principal amount of not less than $2,000,000
      in
      the aggregate may demand, on a one-time basis, the registration of the
      Registrable Securities and any Penalty Shares on a registration statement
      covering only the foregoing securities, unless the demanding Holders first
      consent in writing to the
      continuation of efforts to achieve effectiveness of the Registration Statement
      if previously filed by the Company. Upon
      effectiveness of any new or continued registration statement, the Company shall
      promptly file a Form 8-A to register its common stock under section 12(g) of
      the
      Exchange Act of 1934, as amended (“Exchange Act”) to the extent that such shares
      of Common Stock are not already registered. As long as the Notes remain
      outstanding, the Company shall provide to each purchaser: (i) quarterly
      financial statements prepared in accordance with GAAP within 45 days after
      the
      end of each quarter, and (ii) annual audited financial statements prepared
      in
      accordance with 90 days after the end of each fiscal year end, unless such
      financial statements are included in periodic reports under the Exchange Act,
      which are timely filed.

     

    8.2.  Effective
      and Current.
      The
      Company will use its reasonable commercial efforts to keep the registration
      statement which registers the Registrable Securities pursuant hereto effective
      and the related prospectus current until the earlier of the date by which all
      of
      the Registrable Securities has been sold or the date that the Registrable
      Securities may be sold pursuant to Rule 144(k) promulgated under the Securities
      Act as provided in Section 8.5 hereof.

     

    8.3.  Amended
      Prospectus.
      The
      Company will notify each Holder of such Registrable Securities as expeditiously
      as possible following the effectiveness of the registration statement on which
      the Registrable Securities are registered, and/or of any request by the
      Securities and Exchange Commission (“Commission”) for the amending or
      supplementing of such registration statement or prospectus. If the prospectus
      is
      amended to comply with the requirements of the Securities Act, the Holders,
      if
      requested by the Company, will immediately cease making offers of the
      Registrable Securities and return all prospectuses to the Company, and the
      Company will promptly provide the Holders with revised prospectuses to enable
      the Holders to resume making offers of the Registrable Securities. The Company
      will promptly notify the Holders, if after delivery of a prospectus to the
      Holders, that, in the judgment of the Company, it is advisable to suspend use
      of
      the prospectus delivered to the Holders due to pending material developments
      or
      other events that have not yet been publicly disclosed and as to which the
      Company believes public disclosure would be detrimental to the Company. Upon
      receipt of such notice, each such Holder will immediately discontinue any sales
      of Registrable Securities pursuant to such registration statement until such
      Holder has received copies of a supplemented or amended prospectus or until
      such
      Holder is advised in writing by the Company that the then current prospectus
      may
      be used and has received copies of any additional or supplemental filings that
      are incorporated or deemed incorporated by reference in such prospectus.
      Notwithstanding anything to the contrary herein, the Company will not exercise
      its rights under this subsection to suspend sales of Registrable Securities
      for
      a period in excess of 60 days in any 365-day period.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    8.4.  Indemnification.

     

    (a)  The
      Company will indemnify the Holders of the Registrable Securities to be sold
      pursuant to any registration statement hereunder, the officers and directors
      of
      each Holder, each underwriter of such Registrable Securities and each person,
      if
      any, who controls such Holders or underwriters within the meaning of Section
      15
      of the Securities Act or Section 20(a) of the Exchange Act, or any state
      securities law or regulation, against all loss, claim, damage, expense or
      liability (including all reasonable attorneys’ fees and other expenses
      reasonably incurred in investigating, preparing or defending against any claim
      whatsoever incurred by the indemnified party in any action or proceeding between
      (A) the indemnified party and any third party or otherwise or (B) the indemnitor
      and the indemnified party only with respect to an action or proceeding to
      enforce the indemnification provisions of this Section 8.4(a) to which any
      of
      them may become subject under the Securities Act, the Exchange Act or any other
      statute or at common law or otherwise under the laws of any of the United States
      or foreign countries, arising from such registration statement or based upon
      any
      untrue statement or alleged untrue statement of a material fact contained in
      (x)
      any preliminary prospectus, the registration statement or prospectus (as from
      time to time each may be amended and supplemented); (y) any post-effective
      amendment or amendments or any new registration statement and prospectus in
      which is included the Registrable Securities; or (z) any application or other
      document or written communication (collectively called “application”) executed
      by the Company or based upon written information furnished by the Company in
      any
      jurisdiction in order to qualify the Registrable Securities under the securities
      laws thereof or filed with the Commission, any state securities commission
      or
      agency or any securities exchange; or the omission or alleged omission therefrom
      of a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading, unless such statement or omission is made in reliance upon,
      and
      in conformity with, written information furnished to the Company by and with
      respect to such registered holders (“Purchaser Information”) expressly for use
      in any preliminary prospectus, the registration statement or prospectus, or
      any
      amendment or supplement thereof, or in any application, as the case may be,
      or
      unless the indemnities failed to deliver a final prospectus in which the
      material misstatement or omission was corrected. Subject to the foregoing
      provisions of this paragraph, the Company will reimburse such Holder,
      underwriter and each such controlling person for any legal or any other expenses
      reasonably incurred by such Holder, underwriter or controlling person in
      connection with investigating or defending any such loss, claim, damage,
      liability or action. The Company agrees promptly to notify such Holders of
      the
      commencement of any litigation or proceedings against the Company or any of
      its
      officers, directors or controlling persons in connection with the issue and
      sale
      or resale of the Registrable Securities or in connection with the registration
      statement or prospectus.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    (b)  The
      Holders agree to indemnify and hold harmless the Company, the officers and
      directors of the Company and each person, if any, who controls the Company
      within the meaning of Section 15 of the Securities Act or Section 20(a) of
      the
      Exchange Act against all loss, claim, damage, expense or liability to which
      the
      Company or such controlling person may become subject, under the Securities
      Act
      or otherwise insofar as such losses, claims, damages, expenses or liabilities
      (or actions in respect thereof) arise out of or are based upon Purchaser
      Information that is included or relied upon by the Company in the registration
      statement or prospectus or any amendment or supplement thereto or in any
      application; and will reimburse the Company, officer, director and each such
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating or defending any such loss, claim, damage,
      liability or action, provided that such loss, claim, damage, expense or
      liability is found ultimately to arise out of or be based upon such Purchaser
      Information.

     

    (c)  Any
      party
      entitled to indemnification hereunder (“Indemnified Party”) will permit the
      Company to assume the defense of any such claim or any litigation resulting
      therefrom; provided, that counsel for the Company, who will conduct the defense
      of such claim or litigation, will be approved by the Indemnified Party (whose
      approval shall not be unreasonably withheld). The Indemnified Party may
      participate in such defense at such party’s expense; provided, however, that the
      Company will pay such expense if representation of such Indemnified Party by
      the
      counsel retained by the Company would be inappropriate due to actual or
      potential differing interests between the Indemnified Party and any other party
      represented by such counsel in such proceeding; provided further that in no
      event will the Company be required to pay the expenses of more than one law
      firm
      per jurisdiction as counsel for the Indemnified Party. The Company is also
      responsible for the expenses of such defense if the Company does not elect
      to
      assume such defense. The Company, in the defense of any such claim or litigation
      may not, except with the consent of each Indemnified Party, consent to entry
      of
      any judgment or enter into any settlement which does not include as an
      unconditional term thereof the giving by the claimant or plaintiff to such
      Indemnified Party of a release from all liability in respect of such claim
      or
      litigation, and no Indemnified Party may consent to entry of any judgment or
      settle such claim or litigation without the prior written consent of the
      Company, which consent may not be unreasonably withheld.

     

    8.5.  Periodic
      Reporting.
      The
      Company agrees that during the period commencing on the effectiveness of any
      registration statement with respect to the Company’s securities and continuing
      until the Holder can sell his Registrable Securities without restriction under
      Rule 144(k) promulgated under the Securities Act and all restrictive legends
      under the Securities Act are removed from the certificates representing such
      securities and any stop transfer order for such certificates is removed, it
      will
      timely file all reports due pursuant to the Exchange Act and it will not
      terminate its obligation to file periodic reports under the Exchange Act or
      Securities Act.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    8.6.  Expiration
      of Registration Rights.
      Notwithstanding anything to the contrary contained herein, such registration
      is
      not required to be continued for any Holder of Registrable Securities if in
      the
      opinion of counsel to the Company, the Holder can sell his Registrable
      Securities without restriction under Rule 144(k) promulgated under the
      Securities Act and all restrictive legends under the Securities Act are removed
      from the certificates representing such securities and any stop transfer order
      for such certificates is removed.

     

    8.7.  Successors.
      The
      registration rights granted to the Holders inure to the benefit of all the
      Holder’s successors, heirs, pledges, assignees, transferees and purchasers of
      the Notes, Warrants or underlying Common Stock, subject to the limitations
      imposed by interpretations of the SEC regarding selling security holder
      registration statements.

     

    8.8.  Penalties.
      The
      Company and Holder agree that Holder will suffer damages if the Company fails
      to
      fulfill certain of its filing date and other obligations pursuant to Sections
      8.1 and 8.5 hereof and that it would not be possible to ascertain the extent
      of
      such damages with precision. Accordingly, the Company hereby agrees to pay
      liquidated damages (“Liquidated Damages”) to the Holder under the following
      circumstances: (a) if the Registration Statement is not filed by the Company
      on
      or prior to 60 days after the final Closing in the offering (such an event,
      a
“Filing Default”); (b) if the Registration Statement is not declared effective
      by the SEC on or prior to 150 days after the final Closing in the offering
      (such
      an event, an “Effectiveness Default”); or (c) if, pursuant to the Company’s
      obligations under Section 8.5 hereof, the Company does not file its required
      periodic reports under the Exchange Act when due (such an event, a “Reporting
      Default” and together with a Filing Default and an Effectiveness Default, a “SEC
      Default”). In the event of an SEC Default, the Company shall as Liquidated
      Damages pay to Holder, for each 30-day period of an SEC Default, an amount
      equal
      to 1% of the aggregate purchase price paid for the Units purchased in the
      offering pursuant to this Agreement up to a maximum aggregate of 24 months
      of
      SEC Defaults. The Company shall pay the Liquidated Damages in shares of Common
      Stock, priced at $2.00 per share as follows: (i) in connection with a Filing
      Default, on the 61st day after the Initial Closing, and each 30th day thereafter
      until the Registration Statement is filed with the SEC; (ii) in connection
      with an Effectiveness Default, on the 151st
      day
      after the Initial Closing, and each 30th day thereafter until the Registration
      Statement is declared effective by the SEC; or (iii) in connection with a
      Reporting Default, on the 31st
      consecutive day of after a Reporting Default has occurred, provided that if
      the
      Reporting Default has been cured, then such days during which a Reporting
      Default were accruing will be added to any future Reporting Default period
      for
      the purposes of calculating the payment of the liquidated damages provided
      for
      in this provision. Notwithstanding the foregoing, there shall be no penalty
      for
      a delay in filing or effectiveness caused by adverse market conditions as
      determined by the Placement Agent in it sole discretion.

     

    8.9.  Lock-up
      Provisions.
      Notwithstanding the Registration Rights or an effective Registration Statement
      for the Conversion Shares and Underlying Common Stock, each Investor will be
      contractually prohibited from selling or transferring any Conversion Shares
      or
      Underlying Common Stock until the 180th day following the closing of the
      Registered Offering, unless the underwriter agrees to an earlier
      date.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    9.    Investor
      Representations and Warranties.

     

    9.1.  Investor
      Representations.
      I am
      aware that, except for any rescission rights that may be provided under
      applicable laws, I am not entitled to cancel, terminate or revoke this
      subscription, and any agreements made in connection herewith will survive my
      death or disability. In order to induce the Company to issue and sell the Units
      to me, I represent and warrant that the information relating to me stated herein
      is true and complete as of the date hereof and will be true and complete as
      of
      the date on which my purchase of Units becomes effective. If, prior to the
      final
      consummation of the offer and sale of the Units, there should be any change
      in
      such information or any of the information becomes incorrect or incomplete,
      I
      agree to notify the Company and supply the Company promptly with corrective
      information.

     

    9.2.  Information
      About the Company.

     

    (a)  I
      have
      read the Memorandum relating to this offering and all exhibits listed therein
      and fully understand the Memorandum, including the “Risk Factors” contained
      therein. I have been given access to full and complete information regarding
      the
      Company and have utilized such access to my satisfaction for the purpose of
      verifying the information included in the Memorandum and exhibits thereto,
      and I
      have either met with or been given reasonable opportunity to meet with officers
      of the Company for the purpose of asking reasonable questions of such officers
      concerning the terms and conditions of the offering of the Units and the
      business and operations of the Company, and all such questions have been
      answered to my full satisfaction. I also have been given an opportunity to
      obtain any additional relevant information to the extent reasonably available
      to
      the Company. I have received all information and materials regarding the Company
      that I have reasonably requested. After my reading of the materials about the
      Company, I understand that there is no assurance as to the future performance
      of
      the Company.

     

    (b)  I
      have
      received no representation or warranty from the Company or Keating Securities
      or
      any of their respective officers, directors, employees or agents in respect
      of
      my investment in the Company. I am not participating in the offering as a result
      of or subsequent to: (i) any advertisement, article, notice or other
      communication published in any newspaper, magazine or similar media or broadcast
      over television, radio or the Internet, or (ii) any seminar or meeting whose
      attendees have been invited by any general solicitation or general
      advertising.

     

    9.3.  Speculative
      Investment.
      I am
      aware that the Units are a speculative investment that involves a high degree
      of
      risk including, but not limited to, the risk of losses from operations of the
      Company and the total loss of my investment. I have such knowledge and
      experience in financial and business matters as to be capable of evaluating
      the
      merits and risks of an investment in the Units and have obtained, in my
      judgment, sufficient information from the Company to evaluate the merits and
      risks of an investment in the Company. I have not utilized any person as my
      purchaser representative (as defined in Regulation D) in connection with
      evaluating such merits and risks and have relied solely upon my own
      investigation in making a decision to invest in the Company. I have been urged
      to seek independent advice from my professional advisors relating to the
      suitability of an investment in the Company in view of my overall financial
      needs and with respect to the legal and tax implications of such investment.
      I
      believe that the investment in the Units is suitable for me based upon my
      investment objectives and financial needs, and I have adequate means for
      providing for my current financial needs and contingencies and have no need
      for
      liquidity with respect to my investment in the Company. The investment in the
      Company does not constitute all or substantially all of my investment
      portfolio.

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    9.4.  Restrictions
      on Transfer.
      I
      understand that (i) none of the Registrable Securities have been registered
      under the Securities Act or the securities laws of certain states in reliance
      on
      specific exemptions from registration, (ii) no securities administrator of
      any
      state or the federal government has recommended or endorsed this offering or
      made any finding or determination relating to the fairness of an investment
      in
      the Company, and (iii) the Company is relying on my representations and
      agreements for the purpose of determining whether this transaction meets the
      requirements of the exemptions afforded by the Securities Act and certain state
      securities laws. Other than as set forth herein, I acknowledge that there is
      no
      assurance that the Company will file any registration statement for the
      securities I am purchasing, that such registration statement, if filed, will
      be
      declared effective or, if declared effective, that the Company will be able
      to
      keep it effective until I sell the securities registered thereon. Furthermore,
      I
      agree to furnish the Company with such information regarding myself and the
      distribution of the securities proposed by me as the Company may request in
      connection with any registration, qualification or compliance with the Company’s
      registration obligations set forth herein.

     

    9.5.  Investment
      Representation.
      I am
      purchasing the Units for my own account for investment and not with a view
      to,
      or for sale in connection with, any subsequent distribution of the securities,
      nor with any present intention of selling or otherwise disposing of all or
      any
      part of the Registrable Securities. I
      understand that, although there is a public market for the Registrable
      Securities, there is no assurance that such market will continue and there
      is no
      market at present for the Warrants and it is unlikely that a market will ever
      develop for the Warrants in the future. I understand and agree that the
      Registrable Securities cannot be resold, pledged, assigned or otherwise disposed
      of unless they are subsequently registered under the Securities Act and under
      applicable securities laws of certain states, or an exemption from such
      registration is available.
      I
      understand that, except as set forth herein, the Company is under no obligation
      to register the securities or to assist me in complying with any exemption
      from
      such registration under the Securities Act or any state securities laws. I
      hereby authorize the Company to place a legend denoting the restrictions on
      the
      certificates representing the securities.

     

    9.6.  Entity
      Authority.
      If the
      Investor is a corporation, partnership, company, trust, employee benefit plan,
      individual retirement account, Keogh Plan or other tax-exempt entity, it is
      authorized and qualified to become an investor in the Company and the person
      signing this Subscription Agreement on behalf of such entity has been duly
      authorized by such entity to do so.

     

    9.7.  No
      Offer Until Determination of Suitability.
      I
      acknowledge that any delivery to me of the documents relating to the offering
      of
      the Units prior to the determination by the Company of my suitability will
      not
      constitute an offer of the Units until such determination of suitability is
      made.

     

    9.8.  For
      Florida Residents.
      None of
      the Units, Notes or underlying Common Stock and Warrants have been registered
      under the Florida Securities Act, by reason of specific exemptions thereunder
      relating to the limited availability of the offering. Pursuant to Section
      517.061(11) of the Florida Securities Act, when sales are made to five (5)
      or
      more persons in Florida, any sale made pursuant to Subsection 517.061(11) of
      the
      Florida Securities Act will be voidable by such Florida purchaser either within
      three days after the first tender of consideration is made by the purchaser
      to
      the issuer or an agent of the issuer, or within three days after the
      availability of the privilege is communicated to such purchaser, whichever
      occurs later. In addition, as required by Section 517.061(11)(a)(3), Florida
      Statutes and by Rule 3-500.05(a) thereunder, if I am a Florida resident I may
      have, at the offices of the Company, at any reasonable hour, after reasonable
      notice, access to the materials set forth in the Rule that the Company can
      obtain without unreasonable effort or expense.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    10.    Indemnification.
      I
      hereby agree to indemnify and hold harmless the Company and Keating Securities,
      their respective officers, directors, stockholders, employees, agents and
      attorneys against any and all losses, claims, demands, liabilities, and expenses
      (including reasonable legal or other expenses incurred by each such person
      in
      connection with defending or investigating any such claims or liabilities,
      whether or not resulting in any liability to such person or whether incurred
      by
      the indemnified party in any action or proceeding between the indemnitor and
      indemnified party or between the indemnified party and any third party) to
      which
      any such indemnified party may become subject, insofar as such losses, claims,
      demands, liabilities and expenses (a) arise out of or are based upon any untrue
      statement or alleged untrue statement of a material fact made by me and
      contained herein or (b) arise out of or are based upon any breach by me of
      any
      representation, warranty or agreement made by me contained herein. Keating
      Securities is a third-party beneficiary of this Section and this Section may
      not
      be modified or amended without the prior written agreement of Keating
      Securities.

     

    11.    Severability;
      Remedies.
      In the
      event any parts of this Subscription Agreement are found to be void, the
      remaining provisions of this Subscription Agreement are nevertheless binding
      with the same effect as though the void parts were deleted.

     

    12.    Governing
      Law and Jurisdiction.
      This
      Subscription Agreement will be deemed to have been made and delivered in
      Colorado and will be governed as to validity, interpretation, construction,
      effect and in all other respects by the internal laws of the State of Colorado.
      Each of the Company and the Investor hereby (i) agrees that any legal suit,
      action or proceeding arising out of or relating to this Subscription Agreement
      will 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 for such suit, action or
      proceeding, (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, (iv) agrees to
      accept and acknowledge service of 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 and (v)
      agrees that service of process upon it mailed by certified mail to its address
      set forth on my signature page will be deemed in every respect effective service
      of process upon it in any suit, action or proceeding.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    13.    Counterparts.
      This
      Subscription Agreement may be executed in one or more counterparts, each of
      which will be deemed an original but all of which together will constitute
      one
      and the same instrument. The execution of this Subscription Agreement may be
      by
      actual or facsimile signature.

     

    14.    Benefit.
      Except
      as otherwise set forth herein, this Subscription Agreement is binding upon
      and
      inures to the benefit of the parties hereto (and Keating Securities to the
      extent it is a third-party beneficiary hereof) and their respective heirs,
      executors, personal representatives, successors and assigns. Keating Securities
      is a third-party beneficiary with respect to any sections hereof that so state
      or that otherwise indicate that Keating Securities would be entitled to rely
      on
      the representations, warranties or covenants made by me therein.

     

    15.    Notices.
      All
      notices, offers, acceptance and any other acts under this Subscription Agreement
      (except payment) must be in writing, and is sufficiently given if delivered
      to
      the addressees in person, by overnight courier service, or, if mailed, postage
      prepaid, by certified mail (return receipt requested), and will be effective
      three days after being placed in the mail if mailed, or upon receipt or refusal
      of receipt, if delivered personally or by courier or confirmed telecopy, in
      each
      case addressed to a party. All communications to me should be sent to my
      preferred address on the signature page hereto. All communications to the
      Company should be sent to:

     

    
      
        	 	
                AEROGROW
                  INTERNATIONAL, INC.

              
	 	
                900
                  28th
                  Street, Suite 201

              
	 	
                Boulder,
                  CO 80303

              
	 	
                Tel:
                  303-444-7755

              
	 	
                Fax:
                  303-444-0406

              
	 	 
	 	
                (or
                  to such person, address, and telephone and fax number set forth
                  in the
                  Company’s last filing with the SEC) 

              
	 	 
	
                and

              	
                Keating
                  Securities, LLC

              
	 	
                5251
                  DTC Parkway, Suite 1090

              
	 	
                Greenwood
                  Village, CO 80111

              
	 	
                Attn:
                  Timothy J. Keating

              
	 	
                Tel.:
                  (720) 889-0131

              
	 	
                Fax:
                  (720) 889-0135

              

      

    

     

    16.    Oral
      Evidence.
      This
      Subscription Agreement constitutes the entire agreement between the parties
      with
      respect to the subject matter hereof and supersedes all prior oral and written
      agreements between the parties hereto with respect to the subject matter hereof.
      This Subscription Agreement may not be changed, waived, discharged, or
      terminated orally, but rather, only by a statement in writing signed by the
      party or parties against which enforcement or the change, waiver, discharge
      or
      termination is sought.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    17.    Section
      Headings.
      Section
      headings herein have been inserted for reference only and will not be deemed
      to
      limit or otherwise affect, in any matter, or be deemed to interpret in whole
      or
      in part, any of the terms or provisions of this Subscription
      Agreement.

     

    18.    Survival
      of Representations, Warranties and Agreements.
      The
      representations, warranties and agreements contained herein will survive the
      delivery of, and the payment for, the Units.

     

    19.    Acceptance
      of Subscription.
      The
      Company may accept this Subscription Agreement at any time for all or any
      portion of the Securities subscribed for by executing a copy hereof as provided
      and notifying me within a reasonable time thereafter.

     

     

    [SIGNATURE
      PAGES FOLLOW]

     

     

     

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    

     

    SIGNATURE
      PAGE FOR
      INDIVIDUAL INVESTORS
      -
      COMPLETE ALL INFORMATION

     

    

    Name:
      ________________________________________________ Name
      of Joint Investor
      (if
      any): ____________________________________

     

    Residence
      Address:
      __________________________________________________________________________________________________

    

    Telephone:
      (H)_______________________________ (W)_______________________________________
      Fax __________________________

     

    Occupation:__________________________________________________Employer:_______________________________________________

    

    Business
      Address:
      ___________________________________________________________________________________________________

    

    Send
      communications to:
       ̈ Home
          ̈ Office     ̈ E-Mail:
      ______________________________________________________________________

    

    Age:
      _______________

    

    Social
      Security Number:
      ____________________

    

    Check
      manner in which securities are to be held:

    

    
      	
               ̈ Individual
                Ownership

            	
               ̈ Tenants
                in Common

            	
               ̈ Joint
                Tenants with
Right
                of Survivorship
(both
                parties must sign)

            
	 	 	 
	
               ̈ Community
                Property

            	 	
               ̈ Other
                (please indicate)

              _______________________

            
	 	 	 

    

    Amount
      of Investment:

    

    Number
      of
      Units (minimum of 3 Units per Investor) :______________

    

    Corresponding
      dollar amount ($10,000 multiplied by number of Units):
      $_______________

     

    Accredited
      Investor Status For Individuals.
      (INVESTORS THAT ARE CORPORATIONS, LIMITED LIABILITY COMPANIES, PARTNERSHIPS,
      REVOCABLE TRUSTS, IRREVOCABLE TRUSTS, EMPLOYEE BENEFIT PLAN TRUSTS AND
      INDIVIDUAL RETIREMENT ACCOUNTS SHOULD IGNORE THE FOLLOWING QUESTIONS AND PROCEED
      TO THE ENTITY SIGNATURE PAGE). 

     

    (a)  I
      am an
      accredited investor within the meaning of Section 2(15) of the Securities Act
      and Rule 501 promulgated thereunder because (check any boxes that
      apply):

     

    
      	
              
                o

              

            	
              My
                individual annual income during each of the two most recent years
                exceeded
                $200,000 and I expect my annual income during the current year will
                exceed
                $200,000.

            

    

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    
      	
              o

            	
              If
                I am married, my joint annual income with my spouse during each of
                the two
                most recent years exceeded $300,000 and I expect my joint annual
                income
                with my spouse during the current year will exceed
                $300,000.

            
	 	 
	
              o

            	
              My
                individual or joint (together with my spouse) net worth (including
                my
                home, home furnishings and automobiles) exceeds
                $1,000,000.

            

    

     

    (b)  The
      aggregate value of my assets is approximately $___________.

     

    (c)  My
      aggregate liabilities are approximately $___________.

     

    (d)  My
      current and expected income is:

    
      	
              YEAR

            	
              INCOME

            
	
              2005
                (Estimated)

            	
              $

            
	
              2004
                (Actual)

            	
              $

            
	
              2003
                (Actual)

            	
              $

            

    

    

    I
      hereby
      confirm the information set forth above is true and correct in all respects
      as
      of the date hereof and will be on the date of the purchase of Units.

    

    
      	
               

              ALL
                INVESTORS MUST SIGN AND PRINT NAME BELOW

               

              Signature:_____________________________________________

               

              Print
                Name:____________________________________________

               

              Date:_________________________________________________

               

              Signature:_____________________________________________

               

              Print
                Name:____________________________________________

               

              Date:_________________________________________________

               

            	
               

              The
                foregoing subscription is accepted and the Company hereby agrees
                to be
                bound by its terms.

               

              AEROGROW
                INTERNATIONAL, INC.

               

               

              By:____________________________________________________

               

              Name:__________________________________________________

               

              Title:___________________________________________________

               

              Date:___________________________________________________

            

    

    

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    SIGNATURE
      PAGE FOR ENTITY
      INVESTORS
      -
      COMPLETE ALL INFORMATION

    

    Name
      of Entity:
      _______________________________________________________________________________________________

     

    Address
      of Principal Office:______________________________________________________________________________________

    

    Telephone:
      ______________________________________________________________ Fax:
      ________________________________

    

    Taxpayer
      Identification Number:
      ____________________________

    

    Check
      type of Entity:

    
      	
               ̈

               

            	
              Employee
                Benefit Plan Trust

               

            	 	
               ̈

               

            	
              Limited
                Partnership

               

            	 	
               ̈

               

            	
              General
                Partnership

               

            	 	
               ̈

               

            	
              Individual
                Retirement Account

               

            
	 	 	 	 	 	 	 	 	 	 	 
	
               ̈

               

            	
              Limited
                Liability Company

               

            	 	
               ̈

               

            	
              Revocable
                Trust

               

            	 	
               ̈

               

            	
              Corporation

               

            	 	
               ̈

               

            	
              Other

              (please
                indicate)

               

            

    

    

    
      	 	
               ̈

            	
              Irrevocable
                Trust (If the Investor is an Irrevocable Trust, a supplemental
                questionnaire must be completed by the person directing the decision
                for
                the trust to determine by accredited investor status. Please contact
                Keating Securities for a copy of such supplemental
                questionnaire.)

            

    

    

    Amount
      of Investment:

    

    Number
      of
      Units (minimum 3 Units per Investor):______________

    

    Corresponding
      dollar amount ($10,000 multiplied by number of Units):
      $_______________

    

    Date
      of Formation or incorporation:
      ____________ State
      of Formation:
      _____________________

    

    Describe
      the business of the Entity:
      _________________________________________________________________________________

    

    _____________________________________________________________________________________________________________

    

    List
      the names and positions
      of the
      executive officers, managing members, partners or trustees authorized to act
      with respect to investments by the Entity generally and specify who has the
      authority to act with respect to this investment.

    

    
      	
              Name

            	
              Position

            	
              Authority
                for this investment (yes or no)

            
	 	 	 
	 	 	 

    

    

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    

    Accredited
      Investor Status for Entities.
      

     

    (a)    Check
      all
      boxes which apply (IRA Entities can skip this question and go to
      (b)):

     

    
      	 	
              o

            	
              The
                Entity was not
                formed for the specific purpose of investing in the
                Company

            

    

    
      	 	
              o

            	
              The
                Entity has total assets in excess of $5 million
                dollars

            

    

    
      	 	
              o

            	
              For
                Employee Benefit Plan Trusts Only:
                The decision to invest in the Company was made by a plan fiduciary,
                as
                defined in Section 3(21) of ERISA, who is either a bank, insurance
                company
                or registered investment advisor.

            

    

     

    (b)    If
      you
      did not check the first two of the three boxes in Question (a) or
      if the
      Entity is an Individual Retirement Account, a Self-directed Employee Benefit
      Plan Trust or an Irrevocable Trust, list the name of each person
      who:

     

    (i)  owns
      an
      equity interest in the Entity (i.e., each shareholder if the Entity is a
      corporation, each member if the Entity is a limited liability company and each
      partner if the Entity is a partnership); or

     

    (ii)  is
      a
      grantor for the revocable trust or Individual Retirement Account;
      or

     

    (iii)  is
      the
      person making the investment decision for a self-directed Employee Benefit
      Plan
      Trust; or

     

    (iv)  is
      the
      person making the investment decisions for an Irrevocable Trust.

     

                                                      
      ___________________________  __________________________

     

                                                      
      ___________________________  __________________________

    

    EACH
      PERSON LISTED ABOVE MUST SEPARATELY COMPLETE AND SUBMIT TO THE COMPANY THE
      ANSWERS TO THE QUESTIONS FOLLOWING THE SIGNATURE BOX BELOW AND SIGN THE WRITTEN
      CONFIRMATION IMMEDIATELY FOLLOWING.

    

    
      	
              INVESTOR:

               

               

               

              ____________________________________________________

              Signature
                of Authorized Signatory

               

              Name:_______________________________________________

              Title:________________________________________________

              Date:________________________________________________

               

            	
              The
                foregoing subscription is accepted and the Company hereby agrees
                to be
                bound by its terms.

               

               

              AEROGROW
                INTERNATIONAL, INC.

               

              By:_______________________________________________

              Name:_____________________________________________

              Title:______________________________________________

              Date:______________________________________________

            

    

    

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    

    

    Accredited
      Investor Questions for Entity equity owners and investment decision
      makers

     

    (a)    I
      am an
      accredited investor within the meaning of Section 2(15) of the Securities Act
      and Rule 501 promulgated thereunder because (check any boxes that
      apply):

     

    
      	
              o

            	
              My
                individual annual income during each of the two most recent years
                exceeded
                $200,000 and I expect my annual income during the current year will
                exceed
                $200,000.

            
	 	 
	
              o

            	
              If
                I am married, my joint annual income with my spouse during each of
                the two
                most recent years exceeded $300,000 and I expect my joint annual
                income
                with my spouse during the current year will exceed
                $300,000.

            
	 	 
	
              o

            	
              My
                individual or joint (together with my spouse) net worth (including
                my
                home, home furnishings and automobiles) exceeds
                $1,000,000.

            

    

     

    (b)    The
      aggregate value of my assets is approximately $___________.

     

    (c)    My
      aggregate liabilities are approximately $___________.

     

    (d)    My
      current and expected income is:

     

    
      	
              YEAR

            	
              INCOME

            
	
              2005
                (Estimated)

            	
              $

            
	
              2004
                (Actual)

            	
              $

            
	
              2003
                (Actual)

            	
              $

            

    

    

    I
      hereby
      confirm the information set forth above is true and correct in all respects
      as
      of the date hereof and will be on the date of the purchase of
      Units.

     

    Date:__________________________________                           
      __________________________________

     Name:

    

    

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    

    AEROGROW
      INTERNATIONAL, INC.

    

    NASD
      QUESTIONNAIRE

    
 

    

    INSTRUCTIONS

    

    

    IMPORTANT:
      PLEASE READ CAREFULLY BEFORE SIGNING. SIGNIFICANT REPRESENTATIONS ARE CONTAINED
      IN THIS QUESTIONNAIRE.

     

    
      	 	
              1.

            	
              READ
                ALL DEFINITIONS ON PAGES 18 AND 19 BEFORE ANSWERING ANY
                QUESTIONS.

            

    

    

    
      	 	
              2.

            	
              EVERY
                PERSON MUST ANSWER QUESTIONS 1 THROUGH 7 AND SIGN ON PAGE
                21.

            

    

     

    If
      you
      have any questions regarding this questionnaire, please call Richard Kranitz,
      Esq., at Kranitz & Phillip, (262) 375-0625.

    

    

    

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    

    DEFINITIONS
      FOR NASD QUESTIONNAIRE

    

    

    
      	Affiliate:	
              An
                Affiliate of any person (for purposes hereof a “person” includes a
                partnership, corporation or other legal entity such as a trust or
                estate)
                is a person which controls, is controlled by or is under common control
                with such person. For purposes of this
                definition:

            

    

    

    (i)    a
      person
      should be presumed to control a Member of the NASD if the person beneficially
      owns 10% or more of the outstanding voting securities of a Member of the NASD
      which is a corporation, or beneficially owns a partnership interest in 10%
      or
      more of the distributable profits or losses of a Member of the NASD which is
      a
      partnership;

    

    (ii)   a
      Member
      of the NASD should be presumed to control a person if the Member of the NASD
      and
      Persons Associated with a Member of the NASD beneficially own 10% or more of
      the
      outstanding voting securities of a person which is a corporation, or
      beneficially own a partnership interest in 10% or more of the distributable
      profits or losses of a person which is a partnership; and

    

    (iii)   a
      person
      should be presumed to be under common control with a Member of the NASD
      if:

    

    (1)    the
      same
      person controls both the Member of the NASD and such person by beneficially
      owning 10% or more of the outstanding voting securities of the Member of the
      NASD and other such person which is a corporation, or by beneficially owning
      a
      partnership interest in 10% or more of the distributable profits or losses
      of
      the Member of the NASD and other such person which is a partnership;
      or

    

    (2)    a
      person
      having the power to direct or cause the direction of the management or policies
      of the Member of the NASD also has the power to direct or cause the direction
      of
      the management or policies of the other entity in question.

    

    
      	
              Immediate

              Family:

            	
               

              The
                “Immediate Family” of any person, including an employee of or Person
                Associated with a Member of the NASD, includes the parents, mother-in-law,
                father-in-law, husband or wife, brother or sister, brother-in-law
                or
                sister-in-law, son-in-law or daughter-in-law, and children of such
                person
                or any other individual who is supported, directly or indirectly,
                to a
                material extent by such person.

            

    

    

    
      	
              Member
                of

              the
                NASD:

            	
               

              A
                “Member of the NASD” is any broker or dealer admitted to membership in the
                NASD.

            

    

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

     

    
      
        	NASD:	
                The
                  National Association of Securities Dealers,
                  Inc.

              

      

    

     

    
      Person
        

      Associated
        

      with
        a Member 

      of
        the NASD:      A
“Person
        Associated with a Member of the NASD” is every sole proprietor, partner,
        officer, director or branch manager of any Member of the NASD, or any natural
        person occupying a similar status or performing similar functions, or any
        natural person engaged in the investment banking or securities business who
        is
        directly or indirectly controlling or controlled by such Member of the NASD
        (for
        example, any employee), whether or not any such person is registered or exempt
        from registration with the NASD. 

    

    

    Print
      Name:__________________________

    

    
      	1.	
              State
                whether you or any of your Affiliates or any members of your Immediate
                Family are

            

    

     

    (a)    a
      Member
      of the NASD;

     

     ̈ Yes     ̈ No

     

    (b)    a
      Person
      Associated with a Member of the NASD; or

     

     ̈ Yes     ̈ No

     

    (c)    an
      Affiliate of a Member of the NASD.

     

     ̈ Yes     ̈ No

     

    
      
        	
                2.

              	
                State
                  whether you or any of your Affiliates own stock or other securities
                  of any
                  Member of the NASD or an Affiliate of a Member of the
                  NASD.

              

      

      
        	 	 

      

    

     ̈ Yes     ̈ No

     

    
      
        	
                3.

              	
                State
                  whether you or any of your Affiliates have made a subordinated
                  loan to any
                  Member of the NASD.

              

      

      
        	 	 

      

    

     ̈ Yes     ̈ No

     

    
      	
              4.

            	
              If
                you marked “Yes” to any of the questions above, please briefly describe
                the facts below, giving the names of the Members of the NASD to which
                your
                answer refers (including, for example, percentage of ownership, amount
                of
                loan and interest payable, applicable dates, names of Affiliates,
                immediate family, etc.).

            

    

     

    
      
        

      

    

     

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

    

     

    
      
        

      

    

     

    
      
        

      

    

     

    
      
        

      

    

     

    State
      whether you are an Immediate Family member of a partner of Kranitz &
      Phillip, counsel to AeroGrow.

     

     ̈ Yes     ̈ No

     

    
      
        	6.	
                (a)    State
                  whether you provide any consulting or other services to
                  AeroGrow.

              

      

      
        	 	 

      

    

     ̈ Yes     ̈ No

     

    If
      you
      marked “Yes”, please briefly describe such services, including cash and non-cash
      compensation received and attach copies of written agreements or correspondence
      describing such services.

     

    
      
        

      

    

     

    
      
        

      

    

     

    
      
        

      

    

     

    
      
        

      

    

     

    
      	 	
              (b)

            	
              Please
                identify any of the following relationships you have with the Placement
                Agent or any other Member of the
                NASD.

            

    

    
      
         

        
          
            
              	
                      None

                    	
                       ̈

                    
	
                      Advisor

                    	
                       ̈

                    
	
                      Officer

                    	
                       ̈

                    
	
                      Director

                    	
                       ̈

                    
	
                      Trustee

                    	
                       ̈

                    
	
                      Founder

                    	
                       ̈

                    
	
                      Registered
                        Representative 

                    	
                       ̈

                    
	
                      5%
                        Stockholder

                    	
                       ̈

                    
	
                      Employee

                    	
                       ̈

                    
	
                      Immediate
                        Family

                    	
                       ̈

                    
	
                      Broker/Dealer

                    	
                       ̈

                    
	
                      Promoter

                    	
                       ̈

                    
	
                      Consultant

                    	
                       ̈

                    
	
                      Finder

                    	
                       ̈

                    
	
                      Bridge
                        Lender

                    	
                       ̈

                    

            

             

             

            
              
                
                

              

              
                -21-

                
                  

                

              

              
                
                

              

            

             

            
              	
                      General
                        Partner

                    	
                       ̈

                    
	
                      Limited
                        Partner

                    	
                       ̈

                    
	
                      Equity
                        Investor

                    	
                       ̈

                    
	
                      Client
                        or Customer

                    	
                       ̈

                    
	
                      Subordinated
                        Debt Holder

                    	
                       ̈

                    
	
                      Other

                    	
                       ̈

                    

            

          

        

         

      

    

    Please
      describe the nature of any relationship identified above. For example, if you
      are an advisor, promoter, consultant or finder, describe the compensation you
      received; if you are an equity investor, state the class of securities and
      percentage interest you hold; and if you are an Immediate Family Member,
      describe the exact relationship, including the name of the person to whom you
      are related and the position such person holds with Underwriter or such other
      Member of the NASD. Identify the Member of the NASD:

     

    
      
        

      

    

     

    
      
        

      

    

     

    
      
        

      

    

     

    
      
        	
                7.

              	
                State
                  whether you have any oral and/or written agreements with any Member
                  of the
                  NASD or Person Associated With a Member of the NASD concerning
                  the
                  disposition of your securities of
                  AeroGrow.

              

      

      
        	 	 

      

    

     ̈ Yes     ̈ No

     

    If
      you
      marked “Yes”, please briefly describe such agreement and attach copies of
      written agreements or correspondence describing such arrangement.

     

    
      
        	 	
                I
                  hereby affirm that the answers to the above NASD Questionnaire
                  are true
                  and correct as of the date set forth
                  below.

              

      

      
        	 	 

      

      
        	 	 

      

    

    Date:
      ________________________     _________________________________   
      __________________________________

                                                                          
      (Sign
      Name)                                                           
      (Print
      Name)

     

     

    
      
        
        

      

      -22-

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