AeroGrow International, Inc. (Form: 8-K, Received: 11/30/2011 16:47:51)

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 23, 2011

AEROGROW INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Nevada		000-50888		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:

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

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

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

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

Item 1.01 Entry into a Material Definitive Agreement

On November 30, 2011, AeroGrow International, Inc. (the “Company”) and Pawnee Properties, LLC (“Pawnee”) executed a Third Addendum (the “Third Addendum”) to the lease agreement between the parties dated July 27, 2006 (the “Lease”), pursuant to which AeroGrow leases its headquarters office space from Pawnee. The Third Addendum reduces the square footage leased by the Company from 16,184 sq. ft. to 9,868 sq. ft., reduces the current monthly base rent to $9,046 from $19,261, reduces the Company’s proportionate share of estimated building operating expenses, provides for 3.5% annual increases in the monthly base rent, reduces the security deposit held by Pawnee, and extends the Lease term to September 30, 2014 from January 31, 2012. In addition, the Third Addendum provides for the repayment of past due rent and operating expenses totaling $116,401 on a scheduled basis through March 1, 2014, as further described under the caption “Lease Promissory Note” in Item 2.03 of this Current Report on Form 8-K.

Item 2.03 Creation of a Direct Financial Obligation

On November 23, 2011, the Company closed on the private sale of $242,727 in Series 2011CC 17% secured promissory notes (the “November 23 rd Closing”) backed by a portion of the Company’s prospective credit card receipts, (the “Credit Card Notes”) and a 1% share of the Company’s prospective monthly sales into the network marketing channel for a period of three years following the Company’s first sale into the network marketing channel (the “MLM Revenue Share”) (collectively, the “Credit Card Offering”). Consideration for the Credit Card Notes issued on November 23, 2011 comprised $242,727 in cash. After deducting $10,407 of placement agent sales commissions (5% on third-party investors, 3% on Company-referred investors and 0% on investments by officers and directors of the Company), net cash proceeds to the Company totaled $232,320. In addition, the Company will be obligated to pay a deferred sales commission to the placement agent equal to 10% of the MLM Revenue Share paid to investors in the Credit Card Offering (with the deferred sales commission reduced to 6% for payments to Company-referred investors and 0% on payments to officers and directors), concurrently with the payment of the MLM Revenue Share.

As previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on November 21, 2011, the Company entered into agreements (the “Reinvestment Agreements”) with thirteen investors in the Credit Card Offering, representing approximately 80% of the total amount of Credit Card Notes issued pursuant to the Credit Card Offering and prior to the November 23 rd Closing. Under the terms of the Reinvestment Agreements, the investors agreed to purchase additional Credit Card Notes at face value with the proceeds from payments made by the Company of principal and interest on the Credit Card Notes due on or about November 23, 2011, December 9, 2011, and December 23, 2011 (the “Reinvested Note Payments”). Included in the November 23 rd Closing were Reinvested Note Payments totaling $62,727.

As previously disclosed in Current Reports on Form 8-K filed with the SEC on October 21, 2011 and November 21, 2011, on October 17, 2011 and November 15, 2011, the Company closed on the sale of $1,183,976 in Credit Card Notes pursuant to the Credit Card Offering (the “Prior Closings”). Consideration for the Prior Closings comprised $1,002,500 in cash and the conversion of $181,476 in other obligations of the Company, including $61,476 of deferred compensation owed to executive officers of the Company. After deducting commissions and expenses paid to the placement agent, net cash proceeds to the Company from the Prior Closings totaled $970,962.

The obligation of the Company to repay the Credit Card Notes (from the Prior Closings and the November 23 rd Closing) is severally guaranteed by Jack J. Walker, the Company’s Chairman (up to $445,845), J. Michael Wolfe, the Company’s President and CEO (up to $178,338), and H. MacGregor Clarke, the Company’s Chief Financial Officer (up to $89,169).

The Credit Card Notes bear interest at 17% per annum and have a final maturity of October 1, 2012. 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.

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, purchase inventory, provide other general working capital, and pay commissions and expenses related to the private offering The issuance of the Credit Card Offering (including the terms and obligations of the Reinvestment Agreements) 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 investors who are, or the Company reasonably believed to be, “accredited investors,” as defined in Rule 501(a) of Regulation D under the Securities Act. Because the Credit Card Offering has not been registered under the Securities Act, the securities sold in the Offering are “restricted securities” within the meaning of Rule 144 under the Securities Act, and investors will not be able to sell the securities in the United States absent an effective registration statement or an applicable exemption from registration.

Lease Promissory Note

On November 30, 2011, the Company executed a promissory note (the “Lease Promissory Note”) in the principal amount of $116,401 in favor of Pawnee. The Lease Promissory Note details the terms and conditions pursuant to which the Company will pay to Pawnee past due rent and building operating expenses related to the Company’s headquarters lease. The Lease Promissory Note carries an interest rate of 6% per annum for the first twelve months, and 8% per annum thereafter. Payments of principal and interest are due on the first day of each month during the periods: (i) December 2011 through April 2012 (aggregate payments for the period of $45,000); (ii) November 2012 through April 2013 (aggregate payments for the period of $45,000); and (iii) November 2013 through March 2014 (aggregate payments for the period of $36,064, which amount will be reduced by $4,500 in the event that all payments due are made on a timely basis). The Lease Promissory Note can be prepaid at any time, at the option of the Company, without penalty. In the event of a default in payment, the interest rate would be increased to 15% per annum and Pawnee would have the option to (i) declare the Lease Promissory Note to be immediately payable, or (ii) add the accrued interest to the principal balance.

Portions of this report may constitute “forward-looking statements” as defined by federal law. Although the Company believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the “safe harbor” protections provided under the Private Securities Litigation Reform Act of 1995. Additional information about issues that could lead to material changes in the Company’s performance is contained in the Company’s filings with the Securities and Exchange Commission, particularly in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2011.

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.

	By: /s/ H. MacGregor Clarke
	H. MacGregor Clarke
	Chief Financial Officer and Treasurer

DATED: November 30, 2011

THIRD ADDENDUM

THIS ADDENDUM, made and entered into as of the 30 th day of September, 2011, to that Lease dated July 27, 2006, by and between PAWNEE PROPERTIES, LLC, a Colorado limited liability company (herein called “Landlord”) and AEROGROW INTERNATIONAL, INC. a Nevada corporation (herein called “Tenant”).

The parties hereto agree to modify said Lease, effective October 1, 2011, as follows:

1. Paragraph 1b is modified to read as follows:

b. "Base Rent" or “Basic Rental” shall have the meaning as set forth in Paragraph 4 hereof.

2. Paragraph 1l is modified to read as follows:

l. “Parking Spaces” shall mean forty-one (41) unassigned and uncovered parking spaces in areas on the Property, which Landlord designates from time-to-time for parking by tenants in the Building.

3. Paragraph 1m is modified to read as follows:

m. "Premises" shall mean those certain premises located on the second floor of the Building known as Suite 200, which the parties agree is comprised of approximately 9,868 rentable square feet as depicted on Exhibit A attached hereto.

4. Paragraph 1n is modified to read as follows:

n. "Primary Lease Term." Subject to adjustment as set forth in Paragraph 3b below, the term of the Lease shall commence at 12:01 a.m. on the 1st day of January, 2007 and shall terminate at 12:00 midnight on the 30th day of September, 2014, a term of seven (7) years and 9 months.

5. Paragraph 1t is modified to read as follows:

t. “Security Deposit" shall mean the sum of FIFTEEN THOUSAND FOURTEEN AND 47/100’s Dollars ($15,014.47).

6. Paragraph 1w is modified to read as follows:

w. "Tenant's Pro Rata Share" shall mean 26.2135%. This percentage is calculated by dividing the Premises square footage by 95% of the Rentable Area. In the event Tenant at any time during the Primary Lease Term, or any extensions thereof, leases additional space in the Building, Tenant's Pro Rata Share shall be recomputed by dividing the total rentable square footage of the Premises then being leased by Tenant (including any additional space) by 95% of the Rentable Area and the resulting percentage shall become Tenant's Pro Rata Share.

7. Paragraph 4 is modified to read as follows:

RENT . Tenant agrees to pay to Landlord as Base Rent, without prior notice or demand, the following amounts:

Schedule of Base Rent

Month(s)	Monthly Base Rent		Annual Base Rent

Nov 3, 2006-Nov 30, 2006	$	8,093.40	$	8,093.40	(Partial Month)

December 2006	$	12,558.19	$	12,558.19	(Only 1 Month)

Jan 2007-Feb 2007	$	0.00

March 2007-Feb 2008	$	15,759.00	$	189,108.00

March 2008-Feb 2009	$	17,510.00	$	210,120.00

March 2009-Feb 2010	$	18,385.50	$	220,626.00

March 2010-Feb 2011	$	18,385.50	$	220,626.00

March 2011-Sept 2011	$	19,261.00	$	134,827.00	(Only 7 Months)

Oct 2011-Sept 2012	$	9,045.67	$	108,548.04

Oct 2012-Sept 2013	$	9,362.27	$	112,347.24

Oct 2013-Sept 2014	$	9,689.95	$	116,279.40

Total Base Rent:			$	1,333,133.27

Tenant shall begin to pay the Base Rent on the date the Primary Lease Term commences and thereafter on the first day of each month during the term hereof. All Rents shall be paid in advance, without notice, set off, abatement, counterclaim, deduction or diminution, at the Colorado Group, 3434 47 th Street, Suite 220, Boulder, Colorado 80301, Attn: Susan Chrisman, or at such place as Landlord from time-to-time designates in writing. Tenant shall pay its first installment of Basic Rent to Landlord simultaneously with its execution of this Lease. In addition, Tenant shall pay to Landlord Tenant's Pro Rata Share of Operating Expenses as provided herein and such other charges as are required by the terms of this Lease to be paid by Tenant which shall be referred to herein as "Additional Rent." Landlord shall have the same rights as to the Additional Rent as it has in the payment of Base Rent.

8. Paragraph 32 is modified to read as follows:

FIRST RIGHT OF REFUSAL. Intentionally Deleted.

9. Landlord shall have the right to terminate this Lease four (4) months after delivering to Tenant written notice of intent to terminate. Tenant agrees to vacate the Premises within four (4) months after receipt by Tenant of said written notice. Tenant shall pay the final month’s Rent on a prorated basis.

10. Tenant shall have the right to use the server/computer room located on the first floor in the former Premises, at no charge to Tenant. Landlord shall have the right to terminate Tenant’s use of the server/computer room with fifteen (15) days written notice. Tenant agrees to vacate the server/computer room within fifteen (15) days after receipt by Tenant of said written notice.

11. Landlord and Tenant agree that Tenant owes past due rent for June, July, August, and September, 2011, plus interest accrued at the rate of 6%, for a total of $116,401.38, and after deducting $9,411.98, for Tenant’s reduction in Security Deposit. Tenant shall pay said $116,401.38, by executing and delivering to Landlord, a promissory note bearing interest at the rate of six percent (6%) per annum for the first twelve (12) months and eight percent (8%) per annum thereafter, a copy of which is attached to this Addendum. After Tenant has vacated the former portion of the Premises, as shown on Exhibit A, Landlord and Tenant at Tenant’s option, shall inspect the Premises to determine what damages, in excess of ordinary wear and tear, may have been caused by Tenant. Once Landlord has determined the cost of any damages for which Tenant is liable, and said amount has been approved by Tenant, said amount shall be added to the promissory note and the monthly payments shall be recalculated.

12. Other than as modified herein, all terms and conditions of the Lease shall remain unchanged.

IN WITNESS WHEREOF, the undersigned have executed this document as of the date above written.

LANDLORD:		TENANT:
PAWNEE PROPERTIES, LLC		AEROGROW INTERNATIONAL, INC.


By: /s/ Steven P. Chrisman		By: /s/ H. MacGregor Clarke
Steven P. Chrisman		H. MacGregor Clarke
Manager		Chief Financial Officer
864 W. South Boulder Road, Suite 200		6075 Longbow Drive, Suite 200
Louisville, Colorado 80027		Boulder, Colorado 80301

$116,401.38 Date: October 1, 2011

FOR VALUE RECEIVED, the undersigned, AEROGROW INTERNATIONAL, INC., (“Maker") promises to pay to the order of PAWNEE PROPERTIES, LLC ("Holder") at 864 W. South Boulder Road, Suite 200, Louisville, CO 80027, or such place designated by Holder, the sum of One Hundred Sixteen Thousand Four Hundred One and 38/100 Dollars ($116,401.38), at an interest rate of six percent (6%) per annum for the first twelve months and eight percent (8%) per annum thereafter, with interest compounded monthly.

Payments of principal and interest shall be paid as follows:

1.	$7,500.00 commencing on November 1, 2011 and continuing on the 1st day of each month thereafter to, and including, April 1, 2012.

2.	$7,500.00 commencing on November 1, 2012 and continuing on the 1st day of each month thereafter to, and including, April 1, 2013.

3.	$7,500.00 commencing on November 1, 2013 and continuing on the 1st day of each month thereafter to, and including, February 1, 2014.

4.	$6,064.41 on March 1, 2014, at which time all unpaid principal and interest shall be paid in full.

If Maker makes all payments in a timely manner as agreed above, the final payment shall be reduced by $4,500.00.

Maker’s payment shall not be considered late if it is received within five (5) calendar days after its due date.

Maker shall have the privilege of prepayment in any amount at any time without penalty, and interest shall cease on all sums prepaid. Prepayments shall first be applied to interest, then to principal.

If this Note is not paid when due or declared due hereunder, the entire principal and accrued interest thereon shall draw interest at the rate of fifteen percent (15%) per annum, and the Holder shall have the right but not the obligation to declare the Note to be due immediately, or that the accrued interest shall be added to the principal balance, subject to a 15 day grace period for Maker to remedy any late payment during which time interest shall accrue at fifteen percent (15%) per annum. The Maker hereof waives presentment for payment, protest, notice of nonpayment and of protest, and agrees to any extension of time of payment and partial payments before, at or after maturity, and if this Note or interest thereon is not paid when due, or suit is brought, agrees to pay all reasonable costs of collection, including a reasonable sum for attorneys' fees.

This Note shall be binding upon the successors and assigns of Maker and shall be interpreted in accordance with the laws of the State of Colorado. In the event Holder takes any action or files any proceeding connected with this Note, the undersigned promises to pay to Holder reasonable attorneys’ fees and all reasonable costs relating to such action and proceeding. Any failure of Holder hereof to exercise any right shall not be construed as a waiver of the right to exercise the same or any other right at any time and from time to time thereafter.

AEROGROW INTERNATIONAL, INC.

/s/ H. MacGregor Clarke ___

By: H. MacGregor Clarke

Title: Chief Financial Officer

Due Date: March 1, 2014