8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 28, 2010

AEROGROW INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Nevada		001-33531		46-0510685
(State or Other Jurisdiction of		(Commission File Number)		(I.R.S. Employer
Incorporation)				Identification No.)
	6075 Longbow Dr. Suite 200, Boulder, Colorado		80301
	(Address of Principal Executive Offices)		(Zip Code)

Registrant's Telephone Number, Including Area Code:  (303) 444-7755

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.03.  Creation of a Direct Financial Obligation

On October 28, 2010, AeroGrow International, Inc. (the “Company”) closed on the private sale of $900,000 in 15% secured convertible promissory notes backed by a portion of the Company’s prospective credit card receipts, (the “Credit Card Notes”) and 3,000,000 warrants to purchase the Company’s common stock (the “Credit Card Warrants”) (collectively, the “Credit Card Offering”). Consideration for the Credit Card Offering comprised $900,000 in cash.  Net cash proceeds to the Company after deducting a 2% sales commission (1% on Company-referred investors) paid to the Company’s placement agent, totaled $882,500.  In addition, the Company will pay a 3% deferred sales commission (2% on Company-referred investors) to the placement agent concurrently with the r epayment of principal of the Credit Card Notes.

The Company intends to use the proceeds from the Credit Card Offering to invest in advertising and marketing programs to support its direct-to-consumer business, provide general working capital, pay commissions and expenses related to the private offering, and repay certain outstanding obligations.  The issuance of the Credit Card Offering was conducted in reliance upon exemptions from registration requirements under the Securities Act of 1933 (the “Securities Act”), including, without limitation, those under Rule 506 of Regulation D (as promulgated under the Securities Act).  The Credit Card Offering was offered and sold only to four (4) investors who are, or the Company reasonably believed are, “accredited investors,” as defined in Rule 501(a) of Regulation D under the Securities Act. &# 160;Because the Credit Card Offering has not been registered under the Securities Act, the securities sold in the Offering, including the Credit Card Notes, Credit Card Warrants and shares of common stock underlying the Credit Card Notes and Warrants are “restricted securities” within the meaning of Rule 144 under the Securities Act, and investors will not be able to sell their Credit Card Notes (or the shares of the Company’s common stock issuable upon conversion of the Credit Card Notes or exercise of the Credit Card Warrants) in the United States absent an effective registration statement or an applicable exemption from registration.

J. Michael Wolfe, the Company’s Chief Operating Officer and a greater than 10% beneficial owner in the Company, invested $25,000 in the Credit Card Offering.  H. MacGregor Clarke, a Director of the Company, its Chief Financial Officer, and a greater than 5% beneficial owner, also invested $25,000 in the Credit Card Offering.

The Credit Card Notes bear interest at 15% per annum, have a final maturity of July 28, 2011, and can be converted at any time into common shares of the Company at a conversion price of $0.18 per share.  20% of the Company’s daily credit card receipts will be held in escrow with First Western Trust Bank under an Escrow and Account Control Agreement to fund bi-weekly payments of principal and interest to the investors in the Credit Card Offering.

Each Credit Card Warrant entitles the holder to purchase one share of the Company's common stock at a price of $0.20 per share, and contains customary anti-dilution rights (for stock splits, stock dividends and sales of substantially all the Company’s assets) and piggyback registration rights.  The Warrants expire October 28, 2015.

The obligation of the Company to repay the Notes is severally guaranteed by Jack J. Walker, the Company’s Chairman and CEO (up to $500,000), Mr. Wolfe (up to $200,000) and Mr. Clarke (up to $100,000).  The guarantors have executed a Contribution Agreement between and among themselves to enforce the limited several guaranties; and the Company has executed an Indemnity Agreement to hold harmless the guarantors from any future liability under the guaranties.

For nominal consideration, the Company sold a total of 800,000 warrants to purchase the Company’s common stock to the placement agent.  500,000 of the placement agent warrants have an exercise price of $0.18 per share of common stock.  300,000 of the placement agent warrants have an exercise price of $0.20 per share of common stock.  The placement agent warrants have a five year term and contain a cashless exercise provision.

Item 3.02.  Unregistered Sales of Equity Securities

The information set forth under Item 2.03 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 3.02.

Item 9.01  Exhibits

(d)   Exhibits

4.1          Form of Credit Card Note

4.2          Form of Credit Card Warrant

10.1        Form of Guaranty

10.2        Contribution Agreement

10.3        Indemnity Agreement

10.4        Escrow and Account Control Agreement with First Western Trust Bank.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AeroGrow International, Inc.
DATED:  November 3, 2010	By:           /s/ H. MacGregor Clarke
	H. MacGregor Clarke
	Chief Financial Officer and Treasurer

EX-4.1

Exhibit 4.1

THIS SECURED CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

No. [2010B-1]   U.S.  $_______

Original Issue Date:  October ____, 2010

 SECURED 15% CONVERTIBLE PROMISSORY NOTE

DUE JULY 21, 2011 [nine months from Initial Closing date]

           THIS PROMISSORY NOTE is one of a duly authorized issue of  Secured Convertible Promissory Notes of  AEROGROW INTERNATIONAL, INC., a Nevada corporation, (the “Company”), designated as its Series 2010B  Secured 15% Convertible Promissory Notes (the “Promissory Notes”) due on July 21, 2011 [nine months from Initial Closing date] (the “Maturity Date”), in an aggregate principal amount of up to $1.5 million plus accrued but unpaid interest.

           FOR VALUE RECEIVED, the Company promises to pay to  , the registered holder hereof (the "Holder"), the principal sum ofand 00/100  Dollars (US $________)  and to pay interes t on the principal sum outstanding from time to time in arrears at the rate of 15% per annum, accruing from October ____, 2010 (“Issue Date”) and payable in accordance with Section 4 hereof.  Accrual of interest shall commence on the first such business day to occur after the Issue Date and shall continue to accrue on a daily basis until payment in full of the principal sum has been made or duly provided for.

           The Company shall pay principal and accrued interest on or before the Maturity Date.

           This Promissory Note is being issued pursuant to the terms of the Subscription Agreement (the “Subscription Agreement”), to which the Company and the Holder (or the Holder’s predecessor in interest) are parties.  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Subscription Agreement.

           This Promissory Note is subject to the following additional provisions.

           Section 1.      Collateral, and Pari Passu.

(a)This Promissory Note is one of a series of Promissory Notes known as the Series 2010B  Secured 15% Convertible Promissory Notes in an aggregate principal amount of up to $1.5 million plus accrued but unpaid interest.  No payments will be made to the holder of this Promissory Note unless a proportional payment (based on outstanding principal amount) is made with respect to all other Promissory Notes of the Series.  Upon liquidation, this Promissory Note will be treated in pari passu with all other Promissory Notes of the Series.

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(b)The repayment of this Promissory Note is secured by an assignment of a portion of the Company’s credit card receivables.  The security interest is held under an Escrow/Account Control Agreement dated October 21, 2010 for the benefit of all holders of Promissory Notes issued as part of this Series.  The rights of the Noteholders under the Escrow/Account Control Agreement are further subject to the provisions of an Agreement Among Lenders executed concurrently therewith.
 

Section 2.     No Sale or Transfer.  This Promissory Note may not be sold, transferred, assigned, hypothecated or divided into two or more Promissory Notes of smaller denominations except to the extent such sale, transfer, assignment, hypothecation or division is in compliance with federal and applicable state securities laws, the compliance with which must be established to the reasonable satisfaction of the Company.

Section 3.     Limitations on Debt.  Until all Promissory Notes issued in this Series are repaid in full or converted into shares of Common Stock in accordance with their terms, the Company may not create, incur, assume, or suffer to exist any other indebtedness, except for (a) indebtedness existing on the date hereof, together with any renewals, extensions, refinancing, substitution or modifications thereof, and (b) indebtedness incurred in the ordinary course of business.

Section 4.     Provisions Regarding Payment of Interest.     The Company will enter into an Escrow and Account Control Agreement with First Western Trust Bank pursuant to which 20% of all Company credit card receipts will be paid bi-weekly to the holders of the Series 2010B Notes.  Payments will first be applied to accrued and unpaid interest, with the balance to outstanding principal. If not paid previously, all interest will be payable, in cash, to the Holder at the Maturity Date.

                Section 5.     (a)           “Event of Default” wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i) Any default in the payment of the principal of or interest on this Promissory Note as and when the same shall become due and payable, (whether on the Maturity Date or by acceleration or otherwise);

(ii)The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of, this Promissory Note, the Escrow/Account Control Agreement or any other agreement between the Company and the holder hereof, and such failure or breach shall not have been remedied within 30 days after the date on which notice of such failure or breach shall have been given;

(iii)The Company shall commence a voluntary case under the United States Bankruptcy Code or insolvency laws as now or hereafter in effect or any successor thereto (the “Bankruptcy Code”); or an involuntary case is commenced against the Company under the Bankruptcy Code and the petition is not controverted within 30 days, or is not dismissed within 60 days, after commencement of such involuntary case; or a “custodian” (as defined in the Bankruptcy Code) is appointed for, or takes charge of, all or any substantial part of the property of the Company or the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolut ion, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or there is commenced against the Company any such proceeding which remains undismissed for a period of 60 days; or the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company suffers any appointment of any custodian or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or the Company makes a general assignment for the benefit of creditors; or the Company shall fail to pay, or shall state that it is unable to pay its debts generally as they become due; or the Company shall call a meeting of all of its creditors with a view to arranging a composition or adjustment of its debts; or the Company shall by any act or failure to act indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or ot her action is taken by the Company for the purpose of effecting any of the foregoing.

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(b)           Remedies.  The Holder, together with all other holders of Promissory Notes based on a majority vote by principal amount of the Holders of all other Promissory Notes (a “Majority of the Holders”), may declare a default under Section 5(a)(i) upon not less than 30 days’ written notice to the Company.  If the Company fails to cure an Event of Default within such period (or if the cure cannot be reasonably completed within such period, commence the cure of the Event of Default and diligently pursue such cure), then the principal amount hereof together with all accrued and unpaid interest shall accrue interest at the rate of fifteen (15%), and a Majority of the Holders may:

(i) Declare all amounts due under the Promissory Notes immediately due and owing and exercise all rights with respect thereto under the Escrow/Account Control Agreement or permitted by law;

(ii) Apply to a court with its seat in Colorado that has jurisdiction over the Company for the appointment of a receiver to manage the assets and operations of the Company;

(iii) Assert any other remedy available at law or in equity.

                Section 6.     Prepayment.  The Company may prepay this Promissory Note in whole or in part at any time prior to the Maturity Date.

                Section 7.     Definitions.  For the purposes hereof, the following terms shall have the following meanings:

“Business Day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of Colorado are authorized or required by law or other government action to close.

“Company” means AeroGrow International, Inc., a Nevada corporation.

“Conversion Amount” shall mean the total of unpaid principal and accrued but unpaid interest at the date such amount is determined.

“Conversion Price” shall mean $0.18 per share.

“Conversion Shares” shall mean the shares of the Company’s common stock issued or issuable upon conversion of the Promissory Notes.

“Promissory Notes” means the Promissory Notes, or any of them, as the context may require.

“Holder” means any Person who is a registered holder of this Promissory Note as listed in the books of the Company.

“Interest Payment Date” is as defined in the paragraph entitled “FOR VALUE RECEIVED,” above.

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“Majority of the Holders” is as defined in Section 5(b).

“Market Price” at any date shall be deemed to be (i) if the principal trading market for such securities is any exchange, the last reported sale price, on each Trading Day for which determination is made as officially reported on any consolidated tape, (ii) if the principal market for such securities is the over-the-counter market, the closing prices (or, if no closing price, the closing bid price) on such Trading Days as set forth by Nasdaq or other registered exchange or the OTC Bulletin Board (whichever is the principal market for the Company’s common stock) as reported at http://finance.yahoo.com or, (iii) if the security is not quoted on Nasdaq or other registered exchange or the OT C Bulletin Board, the average bid and asked price as set forth on www.pinksheets.com or (if not available) in the National Quotation Bureau sheet listing such securities for such day.  Notwithstanding the foregoing, if there is no reported closing price or bid price, as the case may be, on any of the ten trading days preceding the event requiring a determination of Market Price hereunder, then the Market Price shall be determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it.

“Material Adverse Effect” means a material adverse effect upon the business, operations, properties, assets or condition (financial or otherwise) of the Company taken as a whole.

“Maturity Date” means the date defined in the first paragraph or (if earlier) the date of any prepayment or acceleration.

“Original Issue Date” shall mean the date this Promissory Note is purchased by the initial holder.

“Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

“Strike Price” means the Conversion Price, as adjusted as set forth in Section 8(d), below.

“Trading Day” means a day in which the market on which shares of the Company’s common stock are principally traded is open for trading, whether or not any shares of the Company’s common stock are actually traded on that day.

                Section 8.     Conversion.

a.           Voluntary Conversion.  At any time before this Promissory Note has been paid, upon written notice to the Company, the Holder may convert the Conversion Amount into shares of the Company’s common stock by dividing the Conversion Amount by the Conversion Price.

b.           Intentionally omitted.

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c.           Limitation on Conversion.                                           Notwithstanding any other provision hereof, in no event (except (i) as specifically provided herein as an exception to this provision, or (ii) while there is outstanding a tender offer for any or all of the shares of the Company’s Common Stock or (iii) for a Holder who is immediately prior to the conversion of this Promissory Note is the beneficial owner of five  percent or more of the iss ued and outstanding shares of the Company’s Common Stock) shall the Holder be entitled to convert any portion of this Promissory Note, or shall the Company have the obligation to convert such Promissory Note (and the Company shall not have the right to pay interest hereon in shares of Common Stock) to the extent that, after such conversion or issuance of stock in payment of interest, the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Promissory Notes or other convertible securities or of the unexercised portion of warrants or other rights to purchase Common Stock), and (2) the number of shares of Common Stock issuable upon the conversion of the Promissory Notes with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of t he outstanding shares of Common Stock (after taking into account the shares to be issued to the Holder upon such conversion).  For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, except as otherwise provided in clause (1) of such sentence.  The Holder, by its acceptance of this Promissory Note, further agrees that if the Holder transfers or assigns any of the Promissory Notes to a party who or which would not be considered such an affiliate, such assignment shall be made subject to the transferee’s or assignee’s specific agreement to be bound by the provisions of this Section 8(c) as if such transferee or assignee were the original Holder hereof.  Nothing herein shall preclude the Holder from disposing of a sufficient number of other shares of Common Stock beneficially owned by the Holder so as to thereafter permit the continued conversion of this Promissory Note. The provisions of this paragraph 8(c) (i) shall not apply to any Holder who, without regard to this Note and the underlying Conversion Shares is the beneficial owner, within the meaning of Rule 13d-3) of 5% or more of the Company’s issued and outstanding shares of common stock, and (ii) can be waived by agreement of the Company and the Holder.

d.           Manner of Conversion.                                           Voluntary conversion provided for in paragraph 8(a) above shall be effectuated by faxing a Notice of Conversion (as defined below) to the Company as provided in this paragraph.  The Notice of Conversion shall be executed by the Holder of this Promissory Note and shall evidence such Holder's intention to convert this Promissory Note or a specified portion hereof in the form annexed hereto as Exhibit A. No fractional shares of Common Stock or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.  The date on which notice of conversion is given (the "Conversion Date") shall be deemed to be the date on which the Holder faxes or otherwise delivers the conversion notice ("Notice of Conversion") to the Company so that it is received by the Company on or before such specified date, provided that, if such conversion would convert the entire remaining principal of this Promissory Note, the Holder shall deliver to the Company the original Promissory Notes being converted no later than five (5) business days thereafter.  Facsimile delivery of the Notice of Conversion shall be accepted by the Company at facsimile number 303-350-4770, Attention : Greg Clarke.  Certificates representing Common Stock upon conversion (“Conversion Certificates”) will be delivered to the Holder at the ad dress specified in the Notice of Conversion (which may be the Holder’s address for notices as contemplated by the Subscription Agreement or a different address), via express courier, by electronic transfer or otherwise, as provided in Section 8(e)(iii) below, and, if interest is paid by Common Stock, the Interest Payment Date. The Holder shall be deemed to be the holder of the shares issuable to it in accordance with the provisions of this Section 8(d) on the Conversion Date.

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e.           Nature of Common Stock Issued.

                      (i)           When issued upon conversion of the Promissory Notes pursuant to Section 8(a) or (b) hereof, the Conversion Shares will be legally and validly issued, fully-paid and non-assessable.

                      (ii)           Upon any conversion, this Promissory Note will be deemed cancelled and of no further force and effect, representing only the right to receive the Conversion Shares, regardless whether the Holder delivers this Promissory Note to the Company for cancellation.

                      (iii)           As soon as possible after a conversion has been effected (and subject to the Holder having returned the Promissory Note to the Company for cancellation), the Company will deliver to the converting holder a certificate or certificates representing the Conversion Shares issuable by reason of such conversion in such name or names and such denomination or denominations as the converting holder has specified.  If any fractional share of common stock would be issuable upon any conversion, the Company will pay the holder of the Conversion Shares an amount equal to the Market Price of such fractional share.

                      (iv)           The issuance of certificates for shares of Conversion Shares will be made without charge.

                      (v)           The Company will not close its books against the transfer of the Conversion Shares issued or issuable in any manner which interferes with the conversion of this Promissory Note.

f.           Conversion Price Dilution Adjustment.  In order to prevent dilution of the conversion rights granted under this Section, the Conversion Price and the Strike Price will be subject to adjustment from time to time pursuant to this Section 8f.

                      (i)           If the Company at any time subdivides (by any stock split, stock dividend or otherwise) its outstanding shares of common stock into a greater number of shares, the Conversion Price and the Strike Price in effect immediately prior to such subdivision will be proportionately reduced, and if the Company at any time combines (by reverse stock split or otherwise) its outstanding shares of common stock into a smaller number of shares, the Conversion Price and the Strike Price in effect immediately prior to such combination will be proportionately increased.

                      (ii)           In the event of a judicial or non-judicial dissolution of the Company, the conversion rights and privileges of the Holder shall terminate on a date, as fixed by the Board of Directors of the Company, not more than 45 days and not less than 30 days before the date of such dissolution. The reference to shares of common stock herein shall be deemed to include shares of any class into which said shares of common stock may be changed.

                      (iii)           Adjustment for Dividends.  In the event the Company shall make or issue, or shall have issued, or shall fix a record date for the determination of holders of common stock entitled to receive a dividend or the distribution (other than a distribution otherwise provided for herein) payable in (a) securities of the Company other than shares of common stock or (b) assets (including cash paid or payable out of capital or capital surplus or surplus created as a result of a revaluation of property, but excluding the cumulative dividends payable with respect to an autho rized series of Preferred Stock), then and in each such event provision shall be made so that the holders of Promissory Notes shall receive upon conversion thereof in addition to the number of shares of common stock receivable thereupon, the number of securities or such other assets of the Company which they would have received had their Promissory Notes been converted into common stock on the date of such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities or such other assets receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this paragraph  with respect to Holders.

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                      (iv)           Adjustment for Capital Reorganization or Reclassification.  If the common stock issuable upon the conversion of the Promissory Notes shall be changed into the same or different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise then and in each such event the holder of the Promissory Notes shall have the right thereafter to convert such Promissory Notes and receive the kind an amount of shares of stock and other securities and property receivable upon such reorganization, reclassification or other change by holders of the number of shares of common stock into which such Promissory Note might have been converted immediately prior to such reorganization, reclassification or change, all subject to further adjustment as provided herein.

                      (v)           Adjustment of Number of Shares.  Anything in this Certificate to the contrary notwithstanding, in case the Company shall at any time issue Common Stock or convertible securities by way of dividend or other distribution on any stock of the Company or subdivide or combine the outstanding shares of Common Stock, the Strike Price shall be proportionately decreased in the case of such issuance (on the day following the date fixed for determining shareholders entitled to receive such dividend or other distribution) or decreased in the case of such subdivision or increa sed in the case of such combination (on the date that such subdivision or combination shall become effective).

                      (vi)           No Adjustment for Small Amounts.  Anything in this paragraph to the contrary notwithstanding, the Company shall not be required to give effect to any adjustment in the Strike Price unless and until the net effect of one or more adjustments, determined as above provided, shall have required a change of the Strike Price by at least one cent, but when the cumulative net effect of more than one adjustment so determined shall be to change the actual Strike Price by at least one cent, such change in the Strike Price shall thereupon be given effect.

                Section 9.     No Impairment.  Except as expressly provided herein, no provision of this Promissory Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Promissory Note at the time, place, and rate, and in the coin or currency, herein prescribed.  This Promissory Note is a direct obligation of the Company.

                Section 10.   No Rights as a Shareholder.  This Promissory Note shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings.

                Section 11.   Limitation of Recourse.  No recourse shall be had for the payment of the principal of, or the interest on, this Promissory Note, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waive d and released.

                Section 12.   Form of Payments.  All payments contemplated hereby to be made “in cash” shall be made in immediately available good funds of United States of America currency by wire transfer to an account designated in writing by the Holder to the Company (which account may be changed by notice similarly given).  All payments of cash and each delivery of shares of Common Stock issuable to the Holder as contemplated hereby shall be made to the Holder at the address last appearing on the Promissory Note Register of the Company as designated in writing by the Holder from ti me to time; except that the Holder can designate, by notice to the Company, a different delivery address for any one or more specific payments or deliveries.

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                Section 13.   Investment Intent.  The Holder of the Promissory Note, by acceptance hereof, agrees that this Promissory Note is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Promissory Note or the shares of Common Stock issuable upon conversion thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities.

                Section 14.   Denominations.  The Promissory Notes will initially be issued in denominations determined by the Company, but are exchangeable for an equal aggregate principal amount of Promissory Notes of different denominations, as requested by the Holder surrendering the same.  No service charge will be made for such registration or transfer or exchange.

                Section 15.   Income Tax Withholding.  The Company shall be entitled to withhold from all payments of principal of, and interest on, this Promissory Note any amounts required to be withheld under the applicable provisions of the United States income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith.

                Section 16.    Limitation on Transfer.  This Promissory Note has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (the "Act"), and other applicable state and foreign securities laws and the terms of the Subscription Agreement.  In the event of any proposed transfer of this Promissory Note, the Company may require, prior to issuance of a new Promissory Note in the name of such other person, that it receive reasonable transfer documentation that is sufficient to evidence that such proposed transfer complies with the Act and other applicable state and foreign securities laws and the terms of the Subscription Agreement.  Prior to due presentment for transfer of this Promissory Note, the Company and any agent of the Company may treat the person in whose name this Promissory Note is duly registered on the Company's Promissory Note Register as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Promissory Note be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.

                Section 17.   Mutilated, Lost or Stolen Promissory Notes.  If this Promissory Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Promissory Note, or in lieu of or in substitution for a lost, stolen or destroyed Promissory Note, a new Promissory Note for the principal amount of this Promissory Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Promissory Note, and of the ownership hereof, and adequate indemnity, if requested, all reasonably satisfactory to the Company.

                Section 18.   Governing Law.  This Promissory Note shall be governed by and construed in accordance with the laws of the State of Colorado.  Each of the parties consents to the exclusive jurisdiction of the federal courts whose districts encompass any part of Boulder, Colorado, or the state courts of the State of Colorado sitting in Boulder County, Colorado in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non co veniens, to the bringing of any such proceeding in such jurisdictions. To the extent determined by such court, the Company shall reimburse the Holder for any reasonable legal fees and disbursements incurred by the Holder in enforcement of or protection of any of its rights under any of this Promissory Note.

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                Section 19.   Waiver of Jury Trial; No Other Waivers.    The Company and the Holder hereby waive the right to a trial by jury in any action, proceeding or counterclaim in respect of any matter arising out or in connection with this Promissory Note.  Any waiver by the Company or the Holder of a breach of any provision of this Promissory Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Promissory Note.  The failure of the Company or the Holder to insist upon strict adheren ce to any term of this Promissory Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Promissory Note.  Any waiver must be in writing.

                Section 20.   Severability. If any provision of this Promissory Note is invalid, illegal or unenforceable, the balance of this Promissory Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.

                Section 21.   Obligations Due on a Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day (or, if such next succeeding Business Day falls in the next calendar month, the preceding Business Day in the appropriate calendar month).

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer duly authorized for such purpose, as of the date first above indicated.

                           AEROGROW INTERNATIONAL, INC.

                           By:________________________________

                                 Jack J. Walker, Chairman and CEO

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NOTICE OF CONVERSION

(To be Executed by the Registered Holder

in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $__________ principal amount of the Note (defined below) and $___________ in accrued and unpaid interest due under the Note into shares of common stock, par value $.001 per share (“Common Stock”), of AeroGrow International, Inc., a Nevada corporation (the “Company”), as of the date written below.  If securities are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates.  No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.  The original certificate evide ncing the Note is delivered herewith (or evidence of loss, theft or destruction thereof).

The Company shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).

Name of DTC Prime Broker:  

Account Number:                                                                                                                                   &# 160;  

In lieu of receiving shares of Common Stock issuable pursuant to this Notice of Conversion by way of a DWAC Transfer, the undersigned hereby requests that the Company issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

Name:  

Address: 

The Company shall issue and deliver shares of Common Stock to an overnight courier not later than three business days following receipt of the original Note(s) to be converted, and shall make payments pursuant to the Notes for the number of business days such issuance and delivery is late.

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable to the undersigned upon conversion of the Note shall be made pursuant to registration of the securities under the Securities Act of 1933, as amended (the “Act”), or pursuant to an exemption from registration under the Act.

Date of Conversion:

Applicable Conversion Price: 

Number of Shares of Common Stock to be Issued Pursuant to

Conversion of the Notes: 

Signature: 

Name: 

Address: 

SS or Tax I.D. No.

EX-4.2

Exhibit 4.2

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").  NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND UNDER PROVISIONS OF APPLICABLE STATE SECURITIES LAWS.

Warrant 2010B_______________

STOCK PURCHASE WARRANT

To Purchase _______________ Shares of Common Stock of

AEROGROW INTERNATIONAL, INC.

THIS CERTIFIES that, for value received, _________________________________, or assigns (the "Holder"), is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time on or after the date of issuance of this Warrant (the "Initial Exercise Date") and on or prior to the close of business on ________________ (the "Termination Date") unless sooner terminated in accordance with the Agreement as hereinbelow defined but not thereafter, to subscribe for and purchase from AeroGrow International, Inc., a Nevada corporation (the "Company"), up to ______________________________ (_______________) shares (the "Warrant Shares") of Common Stock, $0.001 par value per share of the Company (the "Common Stock").  The purchase price of one share of Common Stock (the "Exercise Price") under this Warrant shall be $0.20. The Exercise Price and the number of shares for which the Warrant is exercisable shall be subject to adjustment as provided herein.

1.           Transferability of Warrant.  Prior to the expiration hereof and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed.

2.           Authorization of Shares.  The Company covenants that all shares of Common Stock which may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3.           Exercise of Warrant.

(a)           Except as provided in Paragraph 3(b) herein, exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date, and before the close of business on the Termination Date, or such earlier date on which this Warrant may terminate as provided elsewhere in this Warrant, by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered holder hereof at the address of such holder appearing on the books of the Company) and upon payment of the Exercise Price of the shares thereby purchased in the man ner provided for herein, and all taxes required, if any, to be paid by Holder prior to the issuance of such shares pursuant to Paragraph 5.  Upon such exercise, the holder of this Warrant shall be entitled to receive a certificate for the number of shares of Common Stock so purchased. Certificates for shares purchased hereunder shall be delivered to the holder hereof within three (3) business days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised.  If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing th e rights of Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(b)           Notwithstanding any other provision hereof, in no event (except (i) as specifically provided herein as an exception to this provision, or (ii) while there is outstanding a tender offer for any or all of the shares of the Company’s Common Stock) shall the Holder be entitled to exercise any portion of this Warrant, nor shall the Company have the obligation to accept the exercise of such Warrant to the extent that, after such exercise or issuance of stock in payment of interest, the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of the War rants or other convertible securities or of the unexercised portion of other options or warrants or other rights to purchase Common Stock), and (2) the number of shares of Common Stock issuable upon the exercise of the Warrants with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock (after taking into account the shares to be issued to the Holder upon such conversion).  For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, except as otherwise provided in clause (1) of such sentence.  The Holder, by its acceptance of this Warrant, further agrees that if the Holder transfers or assigns any of the Warrants to a party who or which would not be considered such an affiliate, such assignment shall be made subject to the transferee’s or assignee’s specific agreement to be bound by the provisions of this Paragraph 3(b) as if such transferee or assignee were the original Holder hereof.  Nothing herein shall preclude the Holder from disposing of a sufficient number of other shares of Common Stock beneficially owned by the Holder so as to thereafter permit the continued exercise of this Warrant. The provisions of this paragraph 3(b) (i) shall not apply to any Holder who, without regard to this Warrant and the underlying Warrant Shares is the beneficial owner, within the meaning of Rule 13d-3 of 5% or more of the Company’s issued and outstanding shares of common stock, (ii) can be waived by agreement of the Company and the Holder, and (iii) shall terminate in the event the Company exercises its right to redeem the Warrants pursuant to the provisions of paragraph 17 of this Warrant Certificate.

4.           Manner of Payment.  The exercise price of each Warrant shall be paid in cash, certified funds or wire transfer at the time the Warrant is exercised.

5.           No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the Exercise Price.

6.           Charges, Taxes and Expenses.  Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the holder of this Warrant or in such name or names as may be directed by the holder of this Warrant; provided, however, that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the holder of this Warrant, this Warrant when surrendered for exercise shall be acc ompanied by the Assignment Form attached hereto duly executed by the holder hereof; and provided further, that upon any transfer involving the issuance or delivery of any certificates for shares of Common Stock, the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

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7.           Closing of Books.  The Company will not close its shareholder books or records in any manner which prevents the timely exercise of this Warrant.

8.           Transfer, Division and Combination.

(a)           Subject to compliance with any applicable securities laws (including the provision to the Company of an opinion of counsel for the assignor of this Warrant), transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be exercised by a new Holder for the purchase of shares of Common Stock without having a new Warrant issued.

(b)           This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by Holder or its agent or attorney.  Subject to compliance with Paragraph 8(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c)           The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Paragraph 8.

(d)           The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

9.           No Rights as Shareholder until Exercise.  This Warrant does not entitle the holder hereof to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.  Upon the exercise (as defined in Paragraph 3(a)), the Warrant Shares so purchased shall be and be deemed to be issued to such holder as the record owner of such shares as of the close of business on the later of the date of such exercise.

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10.           Loss, Theft, Destruction or Mutilation of Warrant.  The Company represents and warrants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant certificate or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

11.           Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

12.           Adjustments of Exercise Price and Number of Warrant Shares.

(a)           Stock Splits, etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following, (an “Adjustment Event”): The Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (iv) issue any shares of its capital stock in a reclassification of the Common Stock. Upon th e occurrence of an Adjustment Event,  the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the holder of this Warrant shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which he would have owned or have been entitled to receive had such Warrant been exercised in advance thereof.  Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the holder of this Warrant shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per such Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of t he Company resulting from such adjustment.  An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such Adjustment Event.

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(b)           Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.  In case (i) the Company shall (A) reorganize its capital, (B) reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or (C) sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation (a “Fundamental Change”) and, (ii) pursuant to the terms of such Fundamental Change, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then the holder of this Warrant shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such Fundamental Change by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event.  In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined by resolution of the Board of Directors of the Company) in order to provide for adjustments of shares of Common Stock for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12.  For purposes of this Paragraph 12, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock.  The foregoing provisions of this Paragraph 12 shall similarly apply to successive Fundamental Changes.

(c)           Anti-Dilution Provisions.

(i)           Adjustment for Dividends.  In the event the Company shall make or issue, or shall have issued, or shall fix a record date for the determination of holders of common stock entitled to receive a dividend or the distribution (other than a distribution otherwise provided for herein) payable in (a) securities of the Company other than shares of Common Stock or (b) assets (including cash paid or payable out of capital or capital surplus or surplus created as a result of a revaluation of property, but excluding the cumulative dividends payable with respect to an authorized series of Preferred Stock), then and in each such event provision shall be made so that the holders of Warrants sh all receive upon exercise thereof in addition to the number of shares of Common Stock receivable thereupon, the number of securities or such other assets of the Company which they would have received had their Warrants been exercised into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the exercise date, retained such securities or such other assets receivable by them as aforesaid during such period, giving application to all adjustments called for during such period under this paragraph  with respect to Warrantholders.

(ii)           Adjustment for Capital Reorganization or Reclassification.  If the common stock issuable upon the exercise of the Warrants shall be changed into the same or different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise then and in each such event the holder of the Warrants shall have the right thereafter to exercise such Warrants and receive the kind an amount of shares of stock and other securities and property receivable upon such reorganization, reclassification or other change by holders of the number of shares of common stock into which such Warrant might have been exercised immediately prior to such reorganization, rec lassification or change, all subject to further adjustment as provided herein.

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(iii)           Adjustment of Number of Shares.  Anything in this Certificate to the contrary notwithstanding, in case the Company shall at any time issue Common Stock or Convertible Securities by way of dividend or other distribution on any stock of the Company or subdivide or combine the outstanding shares of Common Stock, the Exercise Price shall be proportionately decreased in the case of such issuance (on the day following the date fixed for determining shareholders entitled to receive such dividend or other distribution) or decreased in the case of such subdivision or increased in the case of such combination (on the date that such subdivision or combination shall become effective).

(iv)           No Adjustment for Small Amounts.  Anything in this paragraph to the contrary notwithstanding, the Company shall not be required to give effect to any adjustment in the Exercise Price unless and until the net effect of one or more adjustments, determined as above provided, shall have required a change of the Exercise Price by at least one cent, but when the cumulative net effect of more than one adjustment so determined shall be to change the actual Exercise Price by at least one cent, such change in the Exercise Price shall thereupon be given effect.

(v)           Number of Shares Adjusted.  Upon any adjustment of the Exercise Price, the Holder of this Warrant shall thereafter (until another such adjustment) be entitled to purchase, at the new Exercise Price, the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares of Common Stock initially issuable upon exercise of this Warrant by the Exercise Price in effect on the date hereof and dividing the product so obtained by the new Exercise Price.

(vi)           Common Stock Defined.  Whenever reference is made in this paragraph 12 to the issue or sale of shares of Common Stock, the term "Common Stock" shall mean the Common Stock of the Company of the class authorized as of the date hereof and any other class of stock ranking on a parity with such Common Stock.  However, subject to the provisions of paragraph 12 hereof, shares issuable upon exercise hereof shall include only shares of the class designated as Common Stock of the Company as of the date hereof.

13.           Voluntary Adjustment by the Company.  The Company may at any time during the term of this Warrant, (i) extend the Termination Date or (ii) reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

14.           Notice of Adjustment.  Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall promptly mail by registered or certified mail, return receipt requested, to the holder of this Warrant notice of such adjustment or adjustments setting forth the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the com putation by which such adjustment was made.  Such notice, in absence of manifest error, shall be conclusive evidence of the correctness of such adjustment.

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15.           Notice of Corporate Action.  If at any time:

(a)           the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b)           there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

(c)           there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least 30 days' prior written notice of the record date for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 30 days' prior written notice of the date when the same shall take place.  Such notice in accordance with the foregoing clause also shall specify (i) the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on w hich any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up.  Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 18(d).

16.           Authorized Shares.  The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to as sure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation,  or of any domestic securities exchange upon which the Common Stock may be listed.

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The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder against impairment.  Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (c) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

Upon the request of Holder, the Company will at any time during the period this Warrant is outstanding acknowledge in writing, in form reasonably satisfactory to Holder, the continuing validity of this Warrant and the obligations of the Company hereunder.

Before taking any action which would cause an adjustment reducing the current Exercise Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Exercise Price.

17.           Redemption.   The Company shall have the right to redeem any or all outstanding and unexercised Warrants evidenced by this Certificate at a redemption price of $0.001 per Warrant upon fourteen (14) days' written notice in the event (i) a Registration Statement registering for sale under the Securities Act of 1933, as amended (the "Act"), the shares of the Company's Common Stock issuable upon exercise of the Warrant, has been filed with the Securities and Exchange Commission and is in effect on the date of written notice and the redemption date contained therein, (ii) there exists on the date of written notice a public trading market for the Company's Common Stock and such shares are l isted for quotation on the NASDAQ Stock Market or OTC Electronic Bulletin Board,  (iii) the public trading price of the Company's Common Stock has equaled or exceeded 150% of the Exercise Price, as then in effect, for twenty (20) or more consecutive Trading Days immediately preceding the date of such notice, and (iv) the average daily trading volume of the Common Stock for the twenty (20) consecutive Trading Days immediately preceding the date of such notice was at least 1,000,000 shares.  On each occasion that the Company elects to exercise its rights of redemption, the Company must mail such written notice within ten (10) days following the satisfaction of all of the foregoing conditions.  The holders of the Warrants called for redemption shall have the right to exercise the Warrants evidenced hereby until the close of business on the date next preceding the date fixed for redemption.  On or after the date fixed for redemption, the holder hereof shall have no rights with respect to this Warrant except the right to receive $0.001 per Warrant upon surrender of this Certificate.

18.           Registration Rights.

(a)           Subject to the various provisions of this paragraph, if at any time the Company proposes to register any of its Common Stock under the Act in connection with the public offering of such securities solely for cash on a form that would also permit the registration of the Common Stock issuable upon exercise of this Warrant (the "Warrant Stock"), the Company shall promptly give Warrantholder written notice of such determination, and the Company, subject to the provisions of this paragraph 18, shall use its best efforts to cause to be registered under the Act all of the Warrant Stock evidenced by this Certificate.

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(b)           In connection with any offering involving an underwriting of shares being issued by the Company as described in Paragraph 18(a) above, the Company shall not be required under Paragraph 18(a) hereof to include Holder's Warrant Stock in such underwriting unless it accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by it, and then only in such quantity as will not, in the written opinion of the underwriters, jeopardize the success of the offering by the Company.  If the total number of shares of Warrant Stock to be included in such offering is an amount of securities that the underwriters state in their written opinion jeopardizes the success of the offering, the Company shall only be required to include in the offering so many of the shares of Warrant Stock as the underwriters opine (in writing) will not jeopardize the success of the offering, subject to the following provisions and exceptions:

(c)           Except as provided in Paragraph 18(d) below, all limitations on the number of shares of Warrant Stock to be included in the applicable underwriting shall be pro rata with respect to the number of shares of Warrant Stock reserved for issuance pursuant to outstanding Warrants of the same class as the Warrants represented by this Certificate.  If Holder disapproves of the terms of any such underwriting, it may elect to withdraw therefrom by written notice to the Company and the underwriter, and any shares excluded or withdrawn from such underwriting shall be withdrawn from registration.

(d)           Notwithstanding any provision to the contrary elsewhere herein; (i) if Directors and Officers of the Company elect to include any shares of Common Stock held by them in any registration effected by the Company as described in Paragraph 18(a) hereof, then such shares, subject to the underwriter's opinion and percentage limitations described in Paragraph (d)(ii) immediately following, shall be considered entitled to  "piggyback registration" rights under Paragraph 18(c) hereof, and (ii) if the underwriter for an underwriting contemplated under Paragraph 18(a) hereof determines that marketing factors permit the registration of securities other than those offered for the Company's account in such underwriting ("Piggybacked Securities"), the registratio n rights granted elsewhere herein to the Holder shall apply to such number of the registrable securities requested to be registered by such Directors and Officers.

(e)           In connection with the preparation and filing of the Registration Statement, the Company agrees to (i) use its best efforts to cause such Registration Statement to become and remain effective until the Termination Date; (ii) prepare and file with the SEC such amendments and supplements to such Registration Statement as may be necessary to keep such Registration Statement effective until the Termination Date; (iii) furnish to the Holder such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act of 1933, as amended (the "Act"), and such other documents as Holder may reasonably request in order to facilitate the disposition of the shares of Common Stock; and (iv) use its best efforts to regist er and qualify the shares of Common Stock covered by such Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall be identified by the warrant holders for the distribution of the securities covered by the Registration Statement.

(f)           All expenses incurred in connection with the registration, offering and distribution of the shares of Common Stock underlying this Warrant including fees and disbursements of counsel, shall be borne by the Company, including, without limitation, Securities and Exchange Commission filing fees, Blue Sky filing fees, printing costs, accounting fees costs, transfer agent fees, and any other miscellaneous costs and disbursements.  Each Holder participating in the Registration shall be liable for any and all underwriting discounts, brokerage commissions or other fees or expenses incurred in connection with the sale or other disposition by Holder of the shares of Common Stock covered by the Registration Statement.

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(g)           To the extent permitted by law, Holder will indemnify and hold harmless the Company, and its directors, officers, employees, agents and representatives, as well as its controlling persons (within the meaning of the Act) against any losses, claims, damages, liabilities, or expenses, including without limitation, attorney's fees and disbursements, which arise out of or are based upon any violation by Holder of the Act or under the Securities Exchange Act of 1934, or any rule or regulation promulgated thereunder applicable to Holder, or arise out of or are based upon any untrue statement or omission of Holder in the Subscription Agreement between the Company and Holder, or arise out of or are based upon any untrue statement or alleged untrue statement of any materia l fact contained in the Registration Statement, 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, but only to the extent that such untrue statement or alleged untrue statement or omission, or alleged omission was made in such Registration Statement in reliance upon and in conformity with information furnished by Holder in writing, expressly for use in connection with such Registration Statement.

(h)           To the extent permitted by law, the Company will indemnify and hold harmless Holder, including its officers, directors, employees, agents, and representatives, against any losses, claims, damages, liabilities, or expenses, including without limitation attorney's fees and disbursements, to which Holder may become subject under the Act to the extent that such losses, claims, damages or liabilities arise out of or are based upon any violation by the Company of the Act or under the Securities Exchange Act of 1934, or any rule or regulation promulgated thereunder applicable to the Company, or arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in the Registration Statement, 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, or arise out of any violation by the Company of any rule or regulation promulgated under the Act applicable to the Company and relating to action or inaction required of the Company in connection with such Registration Statement; provided, however, that the indemnity agreement contained in this paragraph shall not apply to any loss, damage or liability to the extent that same arises out of or is based upon an untrue statement or omission made in connection with such Registration Statement in reliance upon and in conformity with information furnished in writing expressly for use in connection with such Registration Statement by Holder.

(i)           Holder undertakes to comply with all applicable laws governing the distribution of securities in connection with Holder's sale of Common Stock of the Company acquired pursuant to the exercise of this Warrant, including, without limitation, Regulation M under the Securities Exchange Act of 1934, and to notify the Company of any changes in Holder's plan of distribution, including the determination of the public offering price and any dealer concession or discount so that the Company can sticker or amend the Registration Statement as the Company deems appropriate in its sole discretion.

19.           Miscellaneous.

(a)           Jurisdiction. This Warrant shall be binding upon any successors or assigns of the Company.  This Warrant shall constitute a contract under the laws of Colorado without regard to its conflict of law, principles or rules, and be subject to arbitration pursuant to the terms set forth in the Agreement.

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(b)           Restrictions.  The holder hereof acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws and by the Agreement.

(c)           Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date.  If the Company fails to comply with any provision of this Warrant, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or rem edies hereunder.

(d)           Notices.  Any notice, request or other document required or permitted to be given or delivered to the holder hereof by the Company shall be delivered in accordance with the notice provisions of the Agreement.

(e)           Limitation of Liability.  No provision hereof, in the absence of affirmative action by Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of Holder hereof, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f)           Remedies.  Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(g)           Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h)           Cooperation.  The Company shall cooperate with Holder in supplying such information as may be reasonably necessary for Holder to complete and file any information reporting forms presently or hereafter required by the SEC as a condition to the availability of an exemption from the Securities Act for the sale of any Warrant or any Warrant Shares.

(i)           Indemnification.  The Company agrees to indemnify and hold harmless Holder from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against Holder in any manner relating to or arising out of any failure by the Company to perform or observe in any material respect any of its covenants, agreements, undertakings or obligations set forth in this Warrant; provided, however, that the Company will not be liable hereunder to the extent that any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, c osts, attorneys' fees, expenses or disbursements are found in a final non-appealable judgment by a court to have resulted from Holder's negligence, bad faith or willful misconduct in its capacity as a stockholder or warrantholder of the Company.

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(j)           Amendment.  This Warrant may be modified or amended or the provisions hereof waived only with the written consent of the Company and the Holder.

(k)           Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(l)           Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated:  October 21, 2010

AEROGROW INTERNATIONAL, INC., a Nevada

corporation

By: 

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NOTICE OF EXERCISE

To:           AEROGROW INTERNATIONAL, INC.

The undersigned hereby elects to purchase ________ shares of Common Stock (the "Common Stock"), of AEROGROW INTERNATIONAL, INC., pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below:

_______________________________

(Name)

_______________________________

(Address)

_______________________________

Dated:_____________________

______________________________

Signature

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby

assigned to __________________________________________________________ whose address is

________________________________________________________________________________.

Dated:  ______________, _______

Holder's Signature:                               ___________________________________

Holder's Address:                                 ___________________________________

      ___________________________________

Signature Guaranteed:  ______________________________________

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EX-10.1

Exhibit 10.1

GUARANTY AGREEMENT

THIS GUARANTY AGREEMENT (this “Guaranty”) dated as of the 21st day of October, 2010, is from Jack J. Walker, J. Michael  Wolfe and H. MacGregor Clarke (each a “Guarantor” and collectively "Guarantors"), to and for the benefit of the holders of Series 2010B 15% Secured Convertible Notes of AeroGrow International, Inc., a Nevada corporation (“Borrower”), collectively (“Lenders”). Each of the Lenders is intended to be an express direct beneficiary of the guaranties contained herein.

Recitals

A. Lenders have purchased from Borrower up to an aggregate of $1,000,000 in Series 2010B Secured Convertible Notes (the “Loan”).

B.The Loan will be evidenced by Borrower’s separate Promissory Notes to each Lender participating in the Loan (the "Notes").

C.As security for the amounts loaned to Borrower by Lender as described above, Borrower has executed an Escrow/Account Control Agreement with First Western Trust Bank (“Escrow Agent”).

D.Each Guarantor acknowledges that he will benefit from Lenders making the Loan to Borrower.

F. This Guaranty is executed and delivered to Lender by Guarantors to induce Lenders to advance the Loan.  Guarantor acknowledges and agrees that Lenders would not advance the Loan unless Guarantors executed and delivered this Guaranty.

Agreement

IN CONSIDERATION of Lenders advancing the Loan to Borrower and the benefits to be derived by Guarantor from the Loans and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantors individually agree as follows:

1.Guarantee.

(a)Each Guarantor severally and unconditionally guarantees to Lenders the full and prompt payment, in lawful money of the United States, upon demand when due, whether at maturity or by acceleration or otherwise, of all of Borrower’s currently advanced and future indebtedness, including, without limitation, all of Borrower’s present and future obligations under the Notes (and all modifications, amendments, restatements, extensions and renewals thereof), whether for principal, interest or otherwise, and whether absolute or contingent, primary or secondary, direct or indirect, voluntary or involuntary, liquidated or unliquidated, including, without limitation, all increases in the principal amount of such obligations above the current amount (the “Obligations”); provided, however, that each Guarantor’s maximum liability under this Guaranty (“Maximum Liability”) shall be the following:

H. MacGregor Clarke – up to a maximum of $100,000;

J. Michael Wolfe – up to a maximum of $200,000; and,

Jack J. Walker – up to a maximum of $500,000.

(b)In addition, Guarantors agree to pay Lenders, pro rata, any and all expenses including, without limitation, reasonable attorneys’ fees, court costs and related legal expenses incurred by Lenders in connection with the enforcement of this Guaranty, provided that the aggregate liability of each Guarantor shall not exceed the Maximum Liability of each Guarantor.

2.Obligations Absolute.  The obligations of the Guarantors hereunder are primary, absolute, unconditional, and are intended as a continuing guaranty of payment and performance by Borrower up to the Maximum Liability of each Guarantor.  Lenders’ rights of recovery shall exist notwithstanding any right or power of Borrower or anyone else to assert any claim or defense as to the genuineness, regularity, validity or enforceability of any of the Obligations, any collateral security therefor, any guaranty thereof or any of the Notes.

3.No Impairment of Liability.  Guarantors agree that each Guarantor’s liability hereunder will not be released, reduced, impaired or affected by any one or more of the following events: (a) the assumption of liability by any other person (whether as guarantor or otherwise) for payment or performance under the Notes; (b)  the subordination, relinquishment or discharge of Lender’s rights relating to the Notes(c) the loss or impairment of any right of subrogation of Guarantor; (d) the full or partial release from liability of Borrower or any other person now or hereafter liable for payment of performance under th e Notes; (e) the insolvency, bankruptcy, reorganization, discharge, waiver or other exoneration of Borrower or any other person now or hereafter liable for payment or performance under the Notes; (f) the renewal, consolidation, extension, modification, rearrangement or amendment from time to time of the Notes or of the terms of any one or more of the Notes, including, without limitation, the extension of the maturity date of the Notes; (g) the failure, delay, waiver or refusal by Lenders to exercise any right or remedy held by Lenders under the Notes; (h) Lender’s application of any monies available to Lenders in payment or reduction of any of the Obligations in such manner and such amounts and at such times and in such order of priority as Lenders may see fit to the payment or reduction of such portions of the Obligations as Lenders may elect; (i) the sale, encumbrance, transfer or other modification of the ownership of Borrower or Borrower’s assets, or the change in the financial condition or management of Borrower; (j) the invalidity, unenforceability or insufficiency of any one or more of the Notes or any collateral securing payment or performance thereunder; or (k) the failure of Guarantors to receive notice of any one or more of the foregoing actions or events.

Each Guarantor specifically acknowledges and agrees that Lenders may, at their option and without notice to or further consent of any Guarantor, take any of the foregoing actions and that if Lenders elect to take any of the foregoing actions or any of the foregoing events occur, that such actions or events shall in no way reduce, affect, impair or limit the liability of any Guarantor hereunder.

4.Waivers by Guarantors.  Each Guarantor hereby expressly waives (a) diligence, presentment, protest, notice of dishonor, demand for payment, notice of nonpayment or nonperformance; (b) notice of the acceptance of this Guaranty; (c) notice of the existence or creation of all or any part of the Obligations; (d) notice of termination as to future liability given by any other Guarantor; (e) notice of demand, advertisement or notice of time or place of sale of any collateral securing any of the Obligations; (f) all presentments, demands for performance, notices of nonperformance, protests and all other notices whats oever; (g) any right to require Lenders to proceed against Borrower, or any other Guarantor,  or any security held in relation to the Obligations or to pursue any other right or remedy in Lenders’ power; (h) any right to contest the enforcement of this Guaranty by virtue of any statute of limitations or other law varying the terms of this Guaranty; (i) any other defense available to Guarantor in law or in equity; and (j) the right to interpose counterclaims or setoffs of any kind or description in any litigation arising under this Guaranty.

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5.No Reliance by Guarantor.  Each Guarantor acknowledges and agrees that he has performed his own independent investigation of the financial condition of Borrower and has not relied upon Lenders for such investigation.  Each Guarantor hereby waives and agrees not to assert or take advantage of any duty on the part of Lenders to disclose to any Guarantor any facts it may now or hereunder know about Borrower or any collateral for the Loan, it being understood and agreed that each Guarantor is fully responsible for being and keeping informed of the financial condition of Borrower and of all circumstances bearing on the risk of nonpaym ent of any indebtedness hereby guaranteed.

6.Remedies.

(a)Lenders may, at Lenders’ option, upon the occurrence of an Event of Default (as such term is defined in the Notes), proceed to enforce this Guaranty directly against any Guarantor   without first proceeding against Borrower, any other Guarantor or any other person liable for payment or performance under the Notes.

(b)Upon the occurrence of an Event of Default, each Guarantor agrees to pay to Lenders, upon demand, the full amount (subject to the Maximum Liability of each Guarantor) that would be payable hereunder as if all Obligations were then due and payable.  Each Guarantor further agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, if payment, or any part thereof, of the Obligations is rescinded or must otherwise be returned by Lenders upon the insolvency, bankruptcy or reorganization of Borrower, such Guarantor or any other person or otherwise, all as though such payment to Lenders had not been made.

(c)Upon the occurrence of an Event of Default, Lenders shall be entitled to file any claims or take any action or institute any proceedings which Lenders may deem necessary or desirable for the enforcement of this Guaranty or otherwise to enforce the rights of Lenders. In addition, any Lender shall be entitled to exercise any and all other remedies available to Lenders under any applicable law.

(d)No delay or neglect on the part of any Lender in the exercise of any right or remedy existing under law or by virtue of this Guaranty shall operate as a waiver thereof, but such rights and remedies shall continue in full force and effect until specifically waived or released by an instrument in writing executed by Lenders and designated as a waiver or release; and no single or partial exercise by Lenders of any right or remedy shall preclude further exercise thereof or the exercise of any other right or remedy.

(e)Nothing herein contained will limit Lenders in exercising any rights held under any one or more of the Notes.  In the event of any default under the Notes, Lenders will be entitled to selectively and successively enforce any one or more of the rights held by Lenders and such action will not be deemed a waiver of any other right held by Lenders.  All of the remedies of Lenders under this Guaranty and the Notes are cumulative and not alternative.

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7.Waiver of Subrogation.  Until the Obligations are paid in full, each Guarantor hereby irrevocably waives any claims or other rights which it may now or hereafter acquire against Borrower that arise from the existence or performance of such Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy Lenders have against Borrower or any collateral which Lenders now or hereafter acquire, whether or not such claim, remedy or right arises in equity or under contract, statute or common la w, by any payment made hereunder or otherwise including, without limitation, the right to take or receive from Borrower, directly or indirectly, in cash or other property or setoff or in any other manner, payment or security on account of such claim or other rights.  Any agreement between a Guarantor and Borrower which is in any respect contrary to the foregoing shall be null and void and of no force or effect.  If any amount shall be paid to a Guarantor in violation of the preceding sentences and the Obligations shall not have been paid in full, such amount shall be deemed to have been paid to Borrower for the benefit of Lenders and shall be held in trust for Lenders’ benefit and shall forthwith be paid to Lenders to be held and/or credited and applied to the Obligations, whether matured or unmatured.  Each Guarantor hereby indemnifies Lenders against any and all costs, claims, losses or liabilities, including reasonable attorneys’ fees, which they may at any time s ustain or incur as result of preference claims in bankruptcy on behalf of Borrower’s bankruptcy estate, up to the Maximum Liability of each Guarantor.  This Guaranty shall be continuing, and, if Lenders are required by applicable bankruptcy or other law to disgorge any monies previously paid to it by Borrower, Guarantors shall be liable according to the terms hereof, notwithstanding that the books and records of Lenders may previously have shown the obligations to have been fully repaid or that Lenders may have informed such Guarantor or taken other affirmative actions to release this Guaranty. Lenders are entitled to specific performance of Guarantors’ obligations of the provisions of this Guaranty, including, but not limited to, the provisions of this Section 7.

8.Amendments.  No provision or term of this Guaranty may be amended, modified, revoked, supplemented, waived or otherwise changed except by a written instrument duly executed by Guarantor and Lender and designated as an amendment, supplement or waiver.

9.Transfer of Assets.  Guarantors will not voluntarily or involuntarily transfer title to any material assets or take any other action or suffer the same to be done, other than in the ordinary course of business, which would have a material adverse effect on Guarantors’ ability to fulfill its obligations to Lenders hereunder.

10.Notices.  Any notice given to any party in connection with this Guaranty shall be in writing, shall be (a) hand delivered, (b) sent by registered or certified mail, return receipt requested, postage prepaid, or (c) sent by Federal Express or other nationally recognized overnight courier service, and if hand delivered shall be deemed received when delivered, if mailed shall be deemed received three days after having been deposited in the United States mail, postage prepaid, and if sent by Federal Express or other nationally recognized overnight courier service shall be deemed received one business day after having been depos ited with Federal Express or other nationally recognized overnight courier service if designated for next day delivery, addressed as follows:

If to Guarantor:                     Jack J. Walker

6075 Longbow Drive

Boulder, CO 80301

J. Michael  Wolfe

6075 Longbow Drive

Boulder, CO 80301

H. MacGregor Clarke

6075 Longbow Drive

Boulder, CO 80301

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If to Lender to: [Placement Agent] as Agent under Agreement Among Lenders

[Placement Agent Address]

with a copy, which shall not constitute notice, to:

Clifford L. Neuman, Esq.

1507 Pine Street

Boulder, CO 80302

Any party may change its address for the giving of notice by notice hereunder.

11.Captions and Pronouns.  The captions and headings of the various sections of this Guaranty are for convenience only, and are not to be construed as confining or limiting in any way the scope or intent of the provisions hereof.

12.Binding Effect.  This Guaranty shall be binding on Guarantors and their successors and permitted assigns, and shall inure to the benefit of Lenders and all successors and permitted assigns of Lenders.

13.Rights Cumulative.  Each right, power and remedy of Lenders under this Guaranty and the Notes are cumulative and in addition to every other right, power or remedy existing or implied, given now or hereafter existing, at law or in equity, and each and every right, power and remedy set forth herein or otherwise so existing may be exercised from time to time as often and in such order as may be deemed expedient by Lenders, and the exercise or the beginning of the exercise of one right, power or remedy shall not be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy; and no delay or omission of Le nders in the exercise of any right, power or remedy accruing hereunder or arising otherwise shall impair any such right, power or remedy, or be construed to be a waiver of any default or acquiescence therein.

14.Waiver.  Lenders shall not be deemed to have waived any provision of this Guaranty or any Loan Document unless such waiver is in writing and is signed by Lenders.

15.Provisions Several/Illegality.  The unenforceability or invalidity of any provision or provisions hereof shall not render any other provision or provisions herein contained unenforceable or invalid and in lieu of each such illegal, invalid or unenforceable provision there shall be added automatically as a part of this Guaranty a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable.

16.Choice of Law.  This Guaranty has been negotiated, executed and delivered in Colorado, and is intended to be construed in accordance with the laws of the State of Colorado (excluding the choice of law doctrines thereof).

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IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty as of the date first above written.

/s/ Jack J. Walker                                                                                

Jack J. Walker

/s/ J. Michael Wolfe                                                                                     

J. Michael Wolfe

/s/ H. MacGregor Clarke                                                                    

H. MacGregor Clarke

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EX-10.2

Exhibit 10.2

CONTRIBUTION AGREEMENT

This Contribution Agreement (this “Agreement”), effective the 25th day of October, 2010, is entered into by and among the following shareholders of AeroGrow International, Inc., a Nevada corporation (“AeroGrow” or the “Company”):  Jack J. Walker (“Walker”), H. MacGregor Clarke (“Clarke”) and J. Michael Wolfe (“Wolfe”) (each a “Guarantor” and together the “Guarantors”)

Recitals

A.           The Guarantors have each individually guaranteed certain corporate obligations of the Company to repay up to an aggregate of $1.5 million in 15% Convertible Notes (the “Notes”) pursuant to a written Guaranty dated October 21, 2010 (the “Guaranty”).  For the purposes of this Agreement, any individual obligation or liability of any of the Guarantors to satisfy or pay an obligation or liability of the Company under the Notes shall be referred to as the “Obligation”.

B. The Guarantors desire to allocate among themselves in a fair and equitable manner their respective liabilities for the Obligation incurred by any of them.

Agreement

NOW, THEREFORE, in consideration of the mutual covenants, promises and agreements herein below set forth, the parties hereto agree as follows:

1.             Each Guarantor covenants and agrees that he will be liable for and pay his Fair Share, as defined herein, of any Obligation incurred by any Guarantor or Guarantors under the Guaranty.

2.             In the event any payment or distribution is made on any date by a Guarantor (a “Funding Guarantor”) in satisfaction of the Obligation, which payment exceeds such Guarantor’s Fair Share as of such date (an “Overpayment”), such Funding Guarantor shall be entitled to a contribution from each of the other Guarantors in the amount of such other Guarantor’s Fair Share Shortfall as of such date, with the result that all such contributions will cause each Guarantor's Aggregate Payments to equal his Fair Share as of such date.

3.             In the event of an Overpayment, the Funding Guarantor shall provide written notice thereof to each of the other Guarantors within 30 days after the date on which the Overpayment is made (the “Overpayment Notice”).  The Overpayment Notice shall state (i) the amount of the payment or distribution made by the Funding Guarantor, (ii) the Fair Share as of the date that such payment or distribution was made and (iii) the Fair Share Shortfall demanded from each Guarantor.  Within 10 days after receipt of an Overpayment Notice, each Guarantor must either (i) submit to the Funding Guarantor the amount of such Guarantor’s Fair Share Shortfall as demanded in the Overpayment Notice or (ii) reply in writing that such Guarantor disputes the amount demanded and provide a detailed explanation thereof.  If the Funding Guarantor and any other Guarantor cannot agree on the amount, if any, owed to the Funding Guarantor within 60 days after the payment or distribution by the Funding Guarantor, then the parties shall submit the matter to mandatory binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules. In any such arbitration proceeding, the prevailing party shall be entitled to recover all costs incurred in connection therewith, including attorneys’ fees.

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4.The following definitions shall be used in this agreement:

(a)           “Fair Share” means, as of any date of determination, an amount equal to (i) the Fair Share Percentage multiplied by (ii) the aggregate amount paid or distributed on or before such date by all Guarantors under the Obligation.

(b)           “Fair Share Percentage” means the following percentage as to each Guarantor:

Walker:  62.5%

Wolfe:   25.0%

Clarke:   12.5%

(c)           “Fair Share Shortfall” means, with respect to a Guarantor as of any date of determination, the excess, if any, of the Fair Share of such Guarantor over the Aggregate Payments of such Guarantor.

(d)           “Aggregate Payments” means, as of any date of determination with respect to a Guarantor, an amount equal to (i) the aggregate amount of all payments and distributions made on or before such date by the Guarantor in respect of the Obligation (including any contributions to a Funding Guarantor) minus (ii) the aggregate amount of all payments received on or before such date by the Guarantor from the other Guarantors as contributions under Section 2.

5.             (a)           This Agreement will be governed by and construed in accordance with the laws of the State of Colorado, excluding that body of law known as conflicts of laws.

(b)           If any provision of this Agreement is found invalid or unenforceable, that provision will be enforced to the maximum extent permissible and the other provisions of this Agreement will remain in force.

(c)           All written notices shall be addressed to the applicable Guarantor as set forth on the signature page hereto.  Written notices shall be deemed given, when addressed to the other party as set forth herein, three days after sent by registered or certified mail, one day after sent by overnight courier of national repute or on the same day when delivered in person or when sent by facsimile, provided that the sending party can provide written evidence of its successful transmission to the applicable facsimile number.  The notification information of either party may be changed by notifying the other party of such change in accordance with this Section 4(c).

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(d)           No failure of either party to exercise or enforce any of its rights under this Agreement will act as a waiver of such rights, unless, and then only to the extent of, any written waiver delivered to the other party.

(e)           This Agreement is the complete and exclusive agreement between the parties with respect to the subject matter hereof, superseding and replacing any and all prior agreements, letters of intent, communications, and understandings (both written and oral) regarding such subject matter.  This Agreement may only be modified by a written document executed by both parties.

(f)           The parties may execute this Agreement in any number of counterparts, each of which will be deemed an original.  An executed counterpart delivered by facsimile or other electronic transmission shall be effective to bind the party delivering such counterpart.

IN WITNESS WHEREOF, the parties have executed this Contribution Agreement as of the date first above written.

/s/ Jack J. Walker	/s/ J. Michael Wolfe
Jack J. Walker	J. Michael Wolfe
/s/ H. MacGregor Clarke
H. MacGregor Clarke

3

EX-10.3

Exhibit 10.3

INDEMNITY AGREEMENT

THIS INDEMNITY AGREEMENT is made and entered into effective the 25th day of October, 2010, between AeroGrow International, Inc., a Nevada corporation (“AeroGrow” or the “Company”), Jack J. Walker (“Walker”), J. Michael Wolfe (“Wolfe”) and H. MacGregor Clarke (“Clarke”).  (Walker, Wolfe and Clarke shall be referred to individually as a “Guarantor” and collectively as “Guarantors” or “Indemnitees”).

Recitals

A.           The Company has undertaken a private placement of its 15% Convertible Notes in the maximum aggregate amount of $1.5 million (the “Notes”).

B.            The Company’s obligation to repay the Notes to the holders thereof (“Lenders”) has been guaranteed by Walker, Wolfe and Clarke pursuant to a Guaranty Agreement (the “Guaranty”).

C.           Guarantors have required as a condition to their Guaranty of the Company’s obligations under the Notes that the Company indemnify them against any liability they may incur as a result of their Guaranty.

1.           NOW, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency whereof are hereby acknowledged, the Company, for itself, its successors and assigns, (“Indemnitors”) hereby agrees to defend, indemnify and hold harmless Guarantors, together with their respective agents, representatives, successors and assigns, (“Indemnitees”) from and against any and all claims, debts, liabilities, obligations and damages of whatsoever kind or description, known or unknown, direct or indirect, at law or in equity, whether now existing or arising in the future, including any and all judgments and/or awards to which they may become subject under any federal, state or local statute, rule regulation or o rder, or at common law or otherwise, arising out of or in connection with their Guaranty of the Notes, or any act or omission related thereto,  for or on behalf of the Company; and the Company further agrees to defend, indemnify and hold harmless Indemnitees against any and all costs and expenses, including reasonable legal fees and costs incurred and related to the foregoing.

2.           Upon the occurrence of any event which would give rise to a claim by Indemnitees against, or to a rights of defense and indemnity against Indemnitor hereunder, or in the event that any suit, action, proceeding, investigation or claim is begun, made or instituted as a result of which Indemnitor may become obligated to Indemnitees hereunder, Indemnitees shall give written notice to Indemnitor of the occurrence of such event and shall identify Indemnitees’ choice of counsel to represent such  investigation, claim or proceedings, provided that the failure of Indemnitees to give notice  shall not affect the indemnification obligations of Indemnitor hereunder.  Indemnitees shall have the exclusive right to so defend, contest or protect a gainst such matter utilizing the counsel of Indemnitees’ choice (who shall be reasonably acceptable to Indemnitor). Indemnitor shall have the right, but not the obligaition, to participate at its own expense in the defense thereof by counsel of their choice.  Indemnitees shall not pay, acknowledge, compromise or settle any such claim without the consent of Indemnitor, unless such payment, acknowlegment, compromise or settlement results in a full and complete release and discharge of Indemnitor from any liability.

3.           All expenses incurred by Indemnitees for which indemnification hereunder is provided and after any final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction, or a settlement shall have been consummated, Indemnitees shall forward to Indemnitor written notice of any sums due and owing by them pursuant to this Agreement and Indemnitor shall pay all of the sums due and owing to Indemnitees within ten days of such notice.

INDEMNITOR

AeroGrow International, Inc.

By:   /s/ Jack J. Walker, Chairman and CEO

INDEMNITEES

/s/ Jack J. Walker                                                                                     

Jack J. Walker

/s/ J. Michael Wolfe               

J. Michael Wolfe

/s/ H. MacGregor Clarke         

H. MacGregor Clarke

EX-10.4

Exhibit 10.4

ESCROW AND ACCOUNT CONTROL AGREEMENT

This Escrow and Account Control Agreement (this “Agreement”) is entered into as of October 21, 2010, by and among AeroGrow International, Inc. (the “Company”), and First Western Trust Bank (in its capacity as escrow holder and Escrow Agent, the “Escrow Agent”).

RECITALS

This Agreement is entered into in reference to the following facts:

A.           The Company has issued or plans to issue to various lenders (the “Lenders”) its Series 2010B Secured Convertible Promissory Notes (the “Notes”) in the aggregate principal amount of up to $1.5 million. To secure repayment of the Notes, the Company has agreed to transfer and assign all of its future credit card receipts (the “Receipts”) to a newly established account with the Escrow Agent (the “Account” or “Escrow Account”) from which Account a portion of the Receivables will be disbursed to the Lenders and the remaining portion of the Receivables will be disbursed to the Company in accordance with the terms of this Agreement. The assignment of the Receipts shall continue until such time as the Notes have been paid in full.

B.            The Escrow Agent is willing to act in such capacity, subject to the terms and conditions hereof.

C.            Each Lender shall be deemed an express beneficiary of the terms of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows.

ARTICLE 1 – ESCROW FUNDS

1.1           Appointment of Escrow Agent.  The Company hereby appoints the Escrow Agent to act as escrow holder for the Receipts under the terms of this Agreement.  The Escrow Agent hereby accepts such appointment, subject to the terms, conditions and limitations hereof.

1.2           Escrow Account.  Immediately following the Escrow Agent’s execution of this Agreement and prior to the date of the commencement of the Offering, the parties shall establish a segregated account at First Western Trust Bank (the "Escrow Account”) for the sole purpose of receiving, holding and disbursing the Receipts in accordance with the terms hereof.   The account shall be a demand deposit account, and deposits in such Escrow Account will not bear interest and will not otherwise be invested by the Escrow Agent on behalf of the Company or the Lenders.

1.3           Deposits in Escrow.

(a)           The Company shall execute and deliver to Litle & Co., its credit card service Processor (“Processor”) written authorization and instruction in such form as may be required by Processor to cause all of the Company’s Receipts to be transferred and deposited into the Escrow Account until such time as the Notes have been paid in full. The authorization and instruction from the Company to the Processor shall be irrevocable for so long as any of the Notes are outstanding and unpaid. The Escrow Agent shall deposit and hold all Receipts in the Escrow Account at all times until such funds are disbursed therefrom in accordance with the terms hereof.&# 160; The Company shall have the right to engage new Processors during the term hereof; provided that such successor Processor is subject to the same authorization and instruction.

(b)           The Company and [Placement Agent], as Placement Agent, shall jointly prepare and certify in writing to the Escrow Agent  a schedule setting forth the name and address of each Lender and Noteholder, including the principal amount of each Note held by such Lender (“Lender Schedule”). The Lender Schedule, when executed by both the Company and [Placement Agent], shall be conclusive and binding on all parties hereto.   The Escrow Agent shall be permitted to rely upon the accuracy of such Lender Schedule and shall not be required to verify or confirm the accuracy thereof.

(c)           The Receipts in the form of cash or its equivalent are deemed deposited into the Escrow Account when delivered to the Escrow Agent.  Any Receipts deposited in the form of a check, draft or similar instrument are deemed deposited only when such item is collected by the Escrow Agent (hereinafter, “Collected Funds”).

(d)           The Receipts shall be disbursed by the Escrow Agent from the Escrow Account by wire transfer of funds or by check payable to the appropriate distributee at the address set forth herein, with respect to the Company, and in accordance with the information provided to the Escrow Agent in the Lender Schedule pursuant to Section 1.3(b), with respect to each Lender.

ARTICLE 2 – DISBURSEMENT PROCEDURES

2.1           Disbursement of Receipts.  The Escrow Agent shall receive and disburse the Receipts in accordance with the following procedures:

(a)           For the purposes of this Agreement, the Lenders’ share of the Receipts (“Lenders’ Share”) shall be 20% and the Company’s share of the Receipts (“Company’s Share”) shall be 80.

(b)           Each Lender shall participate in the Lenders’ Share on a proportionate basis and pari passu based upon the principal amount of each Note held by the Lender (the “Lender’s Interest”).  Each Lender’s Interest shall be determined based upon the Lender Schedule and shall not be modified during the term of this Agreement except be agreement in writing signed by the Company and the Lender and acknowledged by the Escrow Agent.

(c)           On a daily basis, the Escrow Agent shall disburse to the Company by wire transfer the Company’s Share of the Receipts.  Escrow Agent shall have the right to deduct from the Company’s Share any accrued and unpaid Escrow Agent Fees as provided for in this Agreement.

(d)           On a bi-weekly basis, the Escrow Agent shall disburse to each Lender by wire transfer the Lender’s Interest in the Lenders’ Share, without deduction or interest.

(e)           The Escrow Agent shall not be required to take any action under this Section 2.1 until it shall have received the Receipts and the Lender Schedule duly certified by the Company.  The Escrow Agent shall not be required to release any funds that constitute the Receipts unless the funds represented thereby are Collected Funds.

2.2   Statements and Confirmations.

(a)   The Escrow Agent shall provide the Company and each Lender with Account Statements

 and Confirmations (“Statements”) no less frequently than monthly. The Escrow Agent will use reasonable effort to notify the Lenders and the Company if any other person claims that it has an interest in the Receipts or the Account.  If any third party requests that that the Escrow Agent enter into an agreement to comply with instructions originated by such third party, or inquires of Escrow Agent whether Escrow Agent has entered into such an agreement with any other person or entity, or inquires of Escrow Agent regarding the existence or non-existence of any adverse claims or interests in or to the Account, Escrow Agent agrees th at it will use reasonable efforts promptly to advise such third party of the existence of this agreement in favor of Lender.

(b)           The Company will prepare and deliver to each Lender, [Placement Agent] and the Escrow Agent  monthly statements reflecting all payment of principal and interest made to the Lenders by the Escrow Agent and setting forth the outstanding and unpaid balance of principal and interest remaining outstanding and unpaid as of the date of each statement.

2.3   Covenants of Escrow Agent

(a)   Escrow Agent will not comply with any instructions originated by either the

Company or a Lender unless in writing signed by both parties.

(b)           Escrow Agent shall neither undertake nor permit any disbursements of the Receipts in the Account except in strict conformity and compliance with this Agreement.

(c)           Escrow Agent subordinates in favor of Lenders any security interest, lien or right of set-off it may have, now or in the future, against the Account or the Receipts in the Account.

(d)           Escrow Agent will not agree with any third party that Escrow Agent will comply with instructions originated by a third party, unless consented to in writing by the Company and each Lender.

(e)           Escrow Agent shall not allow any third party to perfect a security interest in the Receipts or the Account.

ARTICLE 3 – GENERAL ESCROW PROCEDURES

3.1           Accounts and Records.  The Escrow Agent shall keep accurate books and records of all transactions hereunder.  Upon final disbursement of the Receipts which retires in full the Company’s obligations to Lenders under the Notes, the Escrow Agent shall deliver to the Company and Placement Agent a complete accounting of all transactions relating to the Receipts.

3.2           Duties.  The Escrow Agent’s duties and obligations hereunder shall be determined solely by the express provisions of this Agreement.  The Escrow Agent’s duties and obligations are purely ministerial in nature, and nothing in this Agreement shall be construed to give rise to any fiduciary obligations of the Escrow Agent with respect to the Lenders or to the other parties to this Agreement.  The Escrow Agent is not charged with any duties or responsibilities with respect to the Notes or any related document and shall not otherwise have a duty to be concerned with the terms thereof.  For purposes of commun ications and directives, the Escrow Agent shall only accept instructions from the Company or the Lenders as may be required by this Agreement.  The Escrow Agent shall not be required to notify or obtain the consent, approval, authorization or order of court or governmental body or of any Lender or any other person to perform its obligations under this Agreement.

3.3           Disputes.  If there is any disagreement or the presentation of any adverse claim or demand in connection with the disbursement of the Receipts, the Escrow Agent, at its option, after providing written notice to the Company and the Lenders of such disagreement or adverse claim or demand, may refuse to comply with any such claims or demands during the continuance of such disagreement and may refrain from delivering any item affected hereby, and in so doing, the Escrow Agent shall not become liable to the undersigned or to any other person, due to its failure to comply with such adverse claim or demand.  If the Company and Lenders do not provide satisfactory assurances to the Escrow Agent that it may act in accordance with the other provisions of this Agreement, then the Escrow Agent shall be entitled to continue, without liability, to refrain and refuse to act until:

(a)           authorized to disburse the Receipts by an order from a court purporting to have jurisdiction over the parties and the Receipts, after which time the Escrow Agent shall be entitled to act in conformity with such order; or

(b)           the Escrow Agent (i) shall have been notified that all differences shall have been adjusted by agreement, and (ii) shall have been directed in writing to take certain actions with respect to the Receipts subject to the adverse claim or demand, signed jointly or in counterpart by the Company, the Lenders and by all persons making adverse claims or demands, at which time the Escrow Agent shall be protected in acting in compliance therewith.

At any time prior to the Escrow Agent’s receipt of a court order or a notice, as provided in Section 3.3(a) or Section 3.3(b), the Escrow Agent may, but is not required to, file a suit in interpleader and deposit the Receipts with the District Court and obtain an order from the court requiring the parties to interplead and litigate in such court adverse claims or demands raised pursuant to this Section 3.3.  If such interpleader suit is brought, the Escrow Agent shall ipso facto be fully released and discharged from all ob ligations to further perform any and all duties or obligations imposed upon it in relation to the disputed amount.  The Company agrees to reimburse the Escrow Agent for all costs, expenses and reasonable attorney’s fees expended or incurred by the Escrow Agent in connection with such adverse claim or demand, the amount thereof to be fixed and judgment thereof to be rendered by the court in such lawsuit.  In addition and without the institution of legal proceedings, the Escrow Agent shall have the right to consult with attorneys or other advisors of its choosing concerning its rights, duties or obligations hereunder, and the Company shall pay or reimburse the Escrow Agent for all costs, fees and expenses thereby incurred.

3.4           Liability Limited.  The Escrow Agent shall not be liable to anyone whatsoever by any reason of error of judgment or for any act done or step taken or omitted by it in good faith or for any mistake of fact or law or for anything which it may do or refrain from doing in connection herewith unless caused by or arising out of its own gross negligence or willful misconduct.  In no event shall the Escrow Agent be liable for any indirect, special, consequential or punitive damages.  The Company and Placement Agent represent to the Escrow Agent that they have and shall continue to solicit the advice of their respective counsel regar ding compliance with all applicable state and federal securities laws in connection with the offer and sale of the Units, and that they will act in accordance with such laws.  The Escrow Agent shall have no responsibility to ensure the Company’s or Placement Agent’s compliance with any such securities laws in connection with the Offering.

3.5           Reliance on Documents, Etc.  The Escrow Agent may rely on and shall be protected in acting in reliance upon any instructions or directions furnished to it in writing or pursuant to any provisions of this Agreement and shall be entitled to treat as genuine, and as the document it purports to be, any letter, paper or other document furnished to it and believed by it to be genuine and to have been signed and presented by the proper party or parties.  The Company and Lenders shall not include the Escrow Agent’s name in any document unless such document has been approved in writing by the Escrow Agent, except with regard to those doc uments pertaining to and referring to the Escrow Agent’s functions as escrow holder pursuant to this Agreement.

3.6           Indemnification.  The Company agrees to indemnify, defend and hold harmless the Escrow Agent from and against all losses, damages, costs, charges, payments, liabilities and expenses, including all costs of litigation, investigation and reasonable legal fees incurred by the Escrow Agent and arising directly or indirectly out of its role as Escrow Agent pursuant to this Agreement, except as caused by its willful misconduct or gross negligence.  The Company hereby agrees that the Escrow Agent does not assume any responsibility for the failure of any other of the parties to make payments or perform the conditions of this Agreement as set forth herein.  The Escrow Agent may consult with counsel of its choice and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel.  The provisions of this Section 3.6 shall survive the termination of this Agreement.

3.7           Resignation.  The Escrow Agent may resign as the escrow holder at any time by giving thirty (30) days prior written notice thereof to all other parties.  Upon notice of resignation by the Escrow Agent, the other parties shall appoint a replacement escrow holder within that thirty (30) day period.  The Escrow Agent may deliver the Receipts to the replacement escrow holder upon (a) notice of the appointment of a new escrow holder, and (b) payment to the Escrow Agent in full of all fees then due and payable to the Escrow Agent.  If no such replacement or substitute has been appointed within 30 days of the Escrow Agent ’s notice of resignation, then the Escrow Agent, at the expense of the Company, may petition any court of competent jurisdiction for the appointment of a successor escrow holder.  Upon appointment of successor escrow holder, the Escrow Agent shall forward all documents and deposits pertaining to the escrow to the successor, and the Escrow Agent shall thereafter have no duties or obligations hereunder.

ARTICLE 4 – FEE

4.1           Fee.           The Company agrees to pay the fees of the Escrow Agent, which unless otherwise agreed to in writing, shall be $1,500.00 annually, to first be assessed upon the initial opening of the Escrow Account and each subsequent anniversary date thereafter.  In furtherance of the foregoing, the Escrow Agent is expressly authorized and directed, but shall not be obligated, to charge against and withdraw from the Account, any service charge fees incurred in accordance with the service charge schedule of the Escrow Agent, including wire transfer fees of $20.00 per domestic wire and $40.00 per i nternational wire.

ARTICLE 5 – GENERAL PROVISIONS

5.1           Notice.  Any notice, request, demand or other communication provided for hereunder to be given shall be in writing and shall be delivered personally, by certified mail, return receipt requested, postage prepaid, or by transmission by a telecommunications device, and shall be effective (a) on the day when personally served, including delivery by overnight mail and courier service, (b) on the third business day after its deposit in the United States mail, and (c) on the business day of confirmed transmission by telecommunications device.  The addresses of the parties hereto (until notice of a change thereof is served as provided in this Section 5.1) shall be as follows:

To the Escrow Agent: First Western Trust Bank 233 Milwaukee Street Denver, CO 80206 Attn: Hudson Mead, Managing Director	To the Company: AeroGrow International, Inc. 6075 Longbow Dr., Suite 200 Boulder, CO 80301 Attn: Greg Clarke, CFO Phone (303) 444-7755
To the Placement Agent: [Placement Agent] [Placement Agent Address]

5.2           Effect of Agreement.  This Agreement shall inure to the benefit of, and be binding upon, the respective successors and assigns of the parties hereto.

5.3           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado.

5.4           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but which together shall constitute one and the same instrument.  Delivery of an executed counterpart of this Agreement by facsimile shall be equally effective as delivery of a manually executed counterpart of this Agreement.  Any party delivering an executed counterpart by facsimile also shall deliver a manually executed counterpart of this Agreement, but failure to do so shall not affect the validity, enforceability or binding effect of this Agreement.

5.5           Final Agreement.  This Agreement is intended by the Escrow Agent and the Company, and the Placement Agent to be the final, complete and exclusive expression of the agreement between them.  This Agreement supersedes any and all prior oral or written agreements relating to the subject matter hereof.  No modification, rescission, waiver, release or amendment of any provision of this Agreement shall be made, except by a written agreement signed by the parties hereto by a duly authorized officer thereof.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date and the year first above written.

THE COMPANY: AeroGrow International, Inc. By:                                                       Name: Greg Clarke Title: CFO	THE ESCROW AGENT: First Western Trust Bank By:                                                       Name: Hudson Mead Title: Managing Director
THE PLACEMENT AGENT: [Redacted] By: ___________________________