AeroGrow International, Inc. (Form: 8-K, Received: 07/21/2016 14:10:46)

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): July 15, 2016

AeroGrow International, Inc.

(Exact name of registrant as specified in charter)

	Delaware
	(State or other jurisdiction of incorporation)

001-33531	46-0510685
(Commission File Number)	(IRS Employee Identification No.)

6075 Longbow Drive, Suite 200, Boulder, Colorado	80301
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (303) 444-7755

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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 July 15, 2016, AeroGrow International, Inc. (the “Company”) entered a $6.0 Million Term Loan Agreement with The Scotts Miracle-Gro Company. The funding will provide general working capital to support anticipated growth as the Company expands its retail and its direct-to-consumer sales channels. The proceeds will be made available as needed in increments of $500,000 not to exceed $6.0 million with a due date of April 15, 2017. Interest will be charged at the stated rate of 10% and will be paid quarterly in arrears on the 15 ^th day of each June, September, December and March.

As previously reported in a Current Report on Form 8-K filed with the SEC on April 23, 2013, the Company entered into a strategic alliance with The Scotts Miracle-Gro Company in which, among other things, the Company issued: (i) 2,649,007 shares of Series B Convertible Preferred Stock to a wholly owned subsidiary of Scotts Miracle-Gro; and (ii) a warrant to purchase shares of the Company’s common stock for an aggregate purchase price of $4.0 million. The Term Loan was approved by disinterested members of the Company’s Board of Directors.

The foregoing description of the $6.0 Million Term Loan Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text of the agreement, which is filed as Exhibit 10.1 hereto and are incorporated herein by reference.

On July 15, 2016, AeroGrow International, Inc. (the “Company”) and The Scotts Miracle-Gro Company entered into an amendment to the Collaboration Services Agreement, first dated April 22, 2013 and executed as part of the initial Securities Purchase Agreement, the details of which were disclosed in the Current Report on Form 8-K filed with the SEC on April 23, 2013. The Company and The Scotts Miracle-Gro Company entered into an amendment to the Collaboration Services Agreement to amend the scope and types of services the Company will provide on behalf of The Scotts Miracle-Gro Company.

On July 15, 2016, AeroGrow International, Inc. (the “Company”) and The Scotts Miracle-Gro Company entered into an amendment to the Supply Chain Services Agreement, first dated April 22, 2013 and executed as part of the initial Securities Purchase Agreement, the details of which were disclosed in the Current Report on Form 8-K filed with the SEC on April 23, 2013. The Company and The Scotts Miracle-Gro Company entered into an amendment to the Supply Chain Services Agreement to amend the scope of services the Company will provide to assist with providing products manufacturing and delivery to The Scotts Miracle-Gro Company.

On July 15, 2016, AeroGrow International, Inc. (the “Company”) and The Scotts Miracle-Gro Company entered into an amendment to the Brand License Agreement, first dated April 22, 2013 and executed as part of the initial Securities Purchase Agreement, the details of which were disclosed in the Current Report on Form 8-K filed with the SEC on April 23, 2013. The Company and The Scotts Miracle-Gro Company entered into an amendment to the Brand License Agreement to amend the additional territory for sales of the Company to include France and Germany.

On July 15, 2016, AeroGrow International, Inc. (the “Company”) and The Scotts Miracle-Gro Company entered into an amendment to the Technology License Agreement, first dated April 22, 2013 and executed as part of the initial Securities Purchase Agreement, the details of which were disclosed in the Current Report on Form 8-K filed with the SEC on April 23, 2013. The Company and The Scotts Miracle-Gro Company entered into an amendment to the Technology License Agreement to amend the additional territory for sales of the Company and calculation of additional territories royalty payment.

On July 15, 2016, AeroGrow International, Inc. (the “Company”) and The Scotts Miracle-Gro Company entered into an amendment to the Warrant to Purchase Shares of Common Stock, first dated April 22, 2013 and executed as part of the initial Securities Purchase Agreement, the details of which were disclosed in the Current Report on Form 8-K filed with the SEC on April 23, 2013. The Company and The Scotts Miracle-Gro Company entered into an amendment to the Warrant to Purchase Shares of Common Stock to amend the exercise price definition in combination with the foregoing agreements.

The foregoing descriptions of the Amendments above do not purport to be complete and is qualified in its entirety by reference to the full text of such amendments, which is filed as Exhibit 10.2, 10.3, 10.4, 10.5, 10.6 and 10.7 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant .

The information set forth in Item 1.01 above is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number		Description

10.1		Term Loan and Security Agreement
10.2		First Amendment to Collaboration Services Agreement
10.3		First Amendment to Supply Chain Services Agreement
10.4		Second Amendment to Brand License Agreement
10.5		Second Amendment to Technology License Agreement
10.6		Second Amendment to Warrant to Purchase Shares of Common Stock
10.7		Waiver on Amendments
99.1		Press Release Issued by AeroGrow International, Inc. on July 21, 2016

Portions of this report and the press release filed as Exhibit 99.1 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.

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.
	(Registrant)

Date: July 21, 2016	By:	/s/ Grey H. Gibbs
		Grey H. Gibbs Principal Accounting Officer

EXHIBIT INDEX

Exhibit Number		Description

10.1		Term Loan and Security Agreement
10.2		First Amendment to Collaboration Services Agreement
10.3		First Amendment to Supply Chain Services Agreement
10.4		Second Amendment to Brand License Agreement
10.5		Second Amendment to Technology License Agreement
10.6		Second Amendment to Warrant to Purchase Shares of Common Stock
10.7		Waiver on Amendments
99.1		Press Release Issued by AeroGrow International, Inc. on July 21, 2016

TERM LOAN AND SECURITY AGREEMENT

THIS TERM LOAN AND SECURITY AGREEMENT (this “ Agreement ”) dated as of July 15, 2016, is made by and among AEROGROW INTERNATIONAL, INC. , a Nevada corporation (the “ Borrower ”), and SMG GROWING MEDIA, INC. , an Ohio corporation (the, “ Lender ”).

RECITALS

WHEREAS, the Borrower has sought financing from unaffiliated third-parties and has been unable to obtain such financing;

WHEREAS, although the Lender is a shareholder of the Borrower, the Borrower has requested that the Lender make a term loan to the Borrower in multiple advances not to exceed $6,000,000 in the aggregate (the “ Term Loan ”) to be used to fund operations related to the Borrower’s existing lines of business; and

WHEREAS, although the Lender is a shareholder of the Borrower, because of the Borrower’s financial needs and inability to obtain financing from unaffiliated third-parties, the Lender is willing to extend the Term Loan on the terms and subject to the conditions set forth herein.

NOW THEREFORE, in consideration of the mutual promises set forth herein and for other valuable consideration, the parties agree as follows:

1. Defined Terms . Capitalized terms used herein shall have the meanings set forth below. Unless otherwise defined herein, terms used herein that are defined in Article 9 of the Uniform Commercial Code, from time to time in effect in the State of Ohio (the “ UCC ”), shall have the meanings given in the UCC.

“ Borrowing Date ” shall have the meaning set forth in Section 2(a) of this Agreement.

“ Borrowing Notice ” shall have the meaning set forth in Section 2(b) of this Agreement.

“ Business Day ” means any day other than a Saturday or Sunday or a day when commercial banks are required or permitted by law to close in New York, New York or Columbus, Ohio.

“ Business Plan ” shall have the meaning set forth in Section 8(c) .

“ Closing Date ” means July 15, 2016.

“ Collateral ” means all of the Borrower’s right, title and interest in the following property, whether now owned or hereafter acquired by the Borrower, and wherever located: (i) all Inventory of the Borrower, (ii) all Receivables of the Borrower and (ii) all products and Proceeds of the foregoing, including without limitation all distributions, dividends, cash, rights, instruments and

other property and proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing.

“ Collateral Access Agreement ” means that certain landlord’s waiver and consent by and among the Borrower, the Lender and the landlord of such leased property where the Borrower’s Inventory is stored.

“ Default ” means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default.

“ Designated Funding Account ” means account #2032347 at First Western Trust Bank (or such other account designated by the Borrower to the Lender in writing) into which the Term Loan will be funded on each Borrowing Date.

“ Event of Default ” shall have the meaning set forth in Section 13 of this Agreement.

“ GAAP ” means generally accepted accounting principles in the United States.

“ Interest Rate ” shall have the meaning set forth in Section 4 of this Agreement.

“ Lien ” means any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any title retention agreement or financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Uniform Commercial Code or comparable law of any jurisdiction).

“ Loan Documents ” means this Agreement, the Collateral Access Agreement and all other agreements, instruments, documents and certificates executed and delivered to, or in favor of, the Lender and including all other powers of attorney, consents, assignments and contracts whether heretofore, now or hereafter executed by or on behalf of the Borrower and delivered to the Lender in connection with this Agreement or the transactions contemplated thereby. Any reference in this Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to such Loan Document as the same may be in effect at any and all times such reference becomes operative.

“ Material Adverse Effect ” means (i) a material adverse effect on the business, operations, results of operations, assets, liabilities or financial condition of the Borrower, (ii) the material impairment of the ability of the Borrower to perform its material obligations under the Loan Documents or (iii) a material adverse effect on the rights and remedies of the Lender under the Loan Documents.

“ Maturity Date ” means April 15, 2017.

“ Maximum Amount ” shall have the meaning set forth in Section 2(a) of this Agreement.

“ Period ” shall have the meaning set forth in Section 11(e)(i) of this Agreement.

“ Person ” means and includes any natural person, corporation, limited partnership, general partnership, limited liability company, joint venture, joint stock company, association, company, trust, bank, trust company, land trust, insurance trust or other organization, whether or not legal entities, and governments and agencies and political subdivisions thereof.

“ Receivable ” means any Account and any other right to payment for goods sold or leased or for services rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or not it has been earned by performance.

“ Responsible Officer ” means the Chief Executive Officer or the Vice President – Accounting and Finance of the Borrower.

“ Secured Obligations ” shall have the meaning set forth in Section 7 of this Agreement.

“ Term Loan ” shall have the meaning set forth in the Recitals of this Agreement.

2. Term Loan .

(a) Upon the terms and subject to the conditions of this Agreement, the Lender shall make the Term Loan to the Borrower in one or more term loan advances (each, a “ Term Loan Advance ”) from time to time from the date hereof until the Maturity Date, each in an amount which, when added to the sum of the principal amount of all Term Loan Advances then outstanding will not exceed $6,000,000 (the “ Maximum Amount ”). Each Term Loan Advance shall be in an amount that is an integral multiple of $500,000 and not less than $500,000. The Lender may endorse and attach a schedule to reflect borrowings evidenced by this Agreement and all payments and prepayments thereon; provided , that any failure to endorse such information shall not affect the obligation of the Borrower to pay amounts evidenced hereby.

(b) The Borrower shall give the Lender prior written notice substantially in the form of Exhibit A attached hereto (a “ Borrowing Notice ”), of each request for a Term Loan Advance. Such notice must be received by the Lender not later than 12:00 p.m. Central Time five Business Days preceding the day on which the Term Loan Advance is requested to be made. Each Borrowing Notice shall be signed by a Responsible Officer of the Borrower and certify that (i) the representations and warranties contained in this Agreement are correct in all material respects on and as of such date, before and after giving effect to the proposed Term Loan Advance as though made on and as of such date, (ii) the proceeds of the Term Loan Advance will be used solely for the purposes described in Section 3 below and (iii) all other conditions to the making of a Term Loan Advance set forth in Section 9 , as applicable, below have been satisfied. On the Borrowing Date, the Lender shall make the requested Term Loan Advance by payment of immediately available funds to the Designated Funding Account.

3. Use of Proceeds . The proceeds of the Term Loan made by the Lender to the Borrower hereunder shall be used solely to fund operations related to the Borrower’s existing lines of business.

4. Interest Rate and Interest Payments .

(a) The unpaid principal balance of the Term Loan Advances outstanding from time to time shall bear interest at a simple rate of interest equal to 10.0% per annum (the “ Interest Rate ”). Interest on all Term Loan Advances outstanding under this Agreement shall be paid quarterly in arrears on the 15th day of each June, September, December and March, beginning on September 15, 2016.

(b) After the occurrence and during the continuation of an Event of Default, interest shall accrue on all amounts due hereunder at the lesser of (i) a rate of 10% per annum above the Interest Rate and (ii) the maximum rate permitted by applicable law. For calculation of interest, a 360-day year basis for the actual number of days elapsed shall be used.

5. Maturity Date and Optional Prepayments .

(a) The Borrower shall repay the entire outstanding principal amount of the Term Loan plus all unpaid accrued interest thereon in cash on or before the Maturity Date.

(b) The Term Loan may be prepaid from time to time, in whole or in part, in an amount greater than or equal to $250,000, without penalty or premium, which prepayments shall be applied in accordance with Section 6 of this Agreement. Amounts repaid or prepaid in respect of the Term Loan may not be reborrowed.

(c) All payments under this Agreement shall be made in lawful money of the United States of America and in immediately available funds to the Lender. Whenever any payments to be made hereunder (including principal and interest) shall be stated to be due on a day on which Lender’s office is not open for business, that payment will be due on the next following Business Day, and any extension of time shall in each case be included in the computation of interest payable on this Agreement.

6. Application of Cash Payments . Payments made by the Borrower pursuant to the terms of this Agreement shall be applied as follows: first , to any unpaid accrued collection costs and expenses incurred pursuant to Section 18 of this Agreement or any other provision of any Loan Document; second , to any unpaid accrued interest on the Term Loan; and third , to the principal balance of the Term Loan in the inverse order of maturity.

7. Security Agreement .

(a) The Borrower hereby grants to the Lender a continuing, first-priority lien on and security interest in the Collateral, to secure the payment in full of the Term Loan and all other obligations of Borrower under this Agreement and any other Loan Document, including any extensions, modifications or renewals hereof (the “ Secured Obligations ”). In addition to any remedies specified herein, the Lender shall have all of the rights and remedies of a secured party under the UCC upon an Event of Default.

(b) The Borrower shall execute, deliver and file, or cause to be executed, delivered and filed, all documents, instruments and notices, in form and substance reasonably satisfactory to the Lender, that are necessary, in the opinion of the Lender, to perfect, maintain, and receive the full benefit of the Lender’s security interest in the Collateral, at such time or times as the Lender shall reasonably request, including, without limitation, filing of all financing statements and continuation statements, providing all notices and placing and maintaining signs. The Borrower hereby authorizes the Lender to file financing statements (and all amendments thereto and continuations thereof) on its behalf.

(c) All Collateral consisting of Inventory (whether now owned or hereafter acquired) is (or will be) located at the locations specified on Schedule 7 . The Collateral is of good and merchantable quality, free from any material defects. None of the Inventory is subject to any licensing, patent, trademark, trade name or copyright with any Person that restricts the Borrower’s ability to manufacture and/or sell such Inventory. The completion of the manufacturing process of such Inventory by a Person other than the Borrower would be permitted under any contract to which the Borrower is a party or to which the Inventory is subject.

(d) The Borrower shall maintain full, accurate and complete records of its Inventory describing the kind, type and quantity of such Inventory, withdrawals therefrom and additions thereto.

(e) In its sole discretion, the Lender may take, or at the request of the Lender, the Borrower will take, a physical verification of the Collateral as often as reasonably desired by the Lender and, in the case of the Borrower conducting the physical verification, a copy of such physical verification shall be promptly thereafter submitted to the Lender. If so requested by the Lender, the Borrower shall execute and deliver to the Lender a confirmatory written instrument, in form and substance satisfactory to the Lender, listing all its Inventory, but any failure to execute or deliver the same shall not limit or otherwise affect the Lender's security interest in and to such Inventory. The Borrower shall deliver to the Lender a monthly report of its Inventory, based upon its perpetual inventory, which shall describe such Inventory by category, item (in reasonable detail) and location and report the then appraised value of such Inventory and its location.

(f) Upon the indefeasible payment in full of all Secured Obligations (other than contingent indemnification obligations) owing to the Lender under this Agreement or the other Loan Documents, the Lender will at the Borrower’s sole cost and expense, and without representation, warranty or recourse, express, statutory or implied, promptly deliver to the Borrower for filing, or authorize the Borrower to prepare and file, termination statements and releases of the Collateral.

8. Conditions to Closing . This Agreement and the obligations of the Lender under this Agreement shall be subject to the prior or concurrent satisfaction of the conditions precedent set forth below:

(a) the Borrower shall have duly executed and delivered to the Lender this Agreement and any other Loan Documents to which it is a party;

(b) the Borrower shall have delivered UCC financing statements and any notices or other documents or instruments in form satisfactory to the Lender necessary to evidence and perfect the security interest in the Collateral granted to the Lender hereunder;

(c) UCC and other Lien searches showing no existing security interests in or Liens on the Collateral, together with such payoff documentation reasonably acceptable to Lender as may be necessary to release any Liens on the Collateral;

(d) the Borrower shall have paid all reasonable out-of-pocket costs and expenses of the Lender that have been invoiced, including, without limitation, all reasonable fees and expenses of Hunton & Williams LLP relating to this Agreement;

(e) each representation or warranty by the Borrower contained herein or in any other Loan Document shall be true and correct on and as of the Closing Date;

(f) no Default or Event of Default (i) shall have occurred and be continuing, or (ii) could reasonably be expected or anticipated to result from the Term Loan;

(g) the making of the Term Loan shall not violate any requirement of applicable law in any material respect and shall not be subject to any injunction or stay; and

(h) upon the filing of any financing statements, the Liens in favor of the Lender shall have been duly perfected and shall constitute first priority Liens, and the Collateral shall be free and clear of all Liens other than Liens in favor of the Lender.

The request and acceptance by the Borrower of the proceeds of the Term Loan shall be deemed to constitute, as of the date of such request or acceptance, a representation and warranty by the Borrower that the conditions in this Section 8 have been satisfied.

9. Conditions to Term Loan Advances .

(a) The Lender shall not be obligated to make any Term Loan Advance (other than the initial Term Loan Advance) unless each of the conditions precedent set forth below have been satisfied:

(i) the Borrower shall have delivered a duly executed Collateral Access Agreement for each leased location where Inventory is located;

(ii) the Borrower shall have delivered (A) corporate resolutions, incumbency certificates, certified organizational documents, good standing certificates and similar documents, in form and substance reasonably satisfactory to the Lender and (B) the 2016-2017 business plan of the Borrower (the “ Business Plan ”) approved by its Board of Directors in June 2016; and

(iii) the Lender shall have received, in each case in form and substance reasonably satisfactory to the Lender, evidence of casualty and liability insurance covering the Borrower (with appropriate endorsements naming the Lender as lender’s loss payee on all policies for casualty insurance and as additional insured on all policies for liability insurance).

(b) The Lender shall not be obligated to make any Term Loan Advance unless each of the conditions precedent set forth below have been satisfied:

(i) the representations and warranties contained in this Agreement are correct in all material respects on and as of such date, before and after giving effect to the proposed Term Loan Advance as though made on and as of such date;

(ii) no Default or Event of Default (A) shall have occurred and be continuing, or (B) could reasonably be expected or anticipated to result from such Term Loan Advance;

(iii) the making of such Term Loan Advance shall not violate any requirement of applicable law in any material respect and shall not be subject to any injunction or stay; and

(iv) after giving effect to any Term Loan Advance, the aggregate outstanding principal amount of all Term Loan Advances shall not exceed the Maximum Amount.

The request and acceptance by the Borrower of the proceeds of any Term Loan Advance shall be deemed to constitute, as of the date of such request or acceptance, (i) a representation and warranty by the Borrower that the conditions in Section 9 , as applicable, have been satisfied and (ii) a reaffirmation by the Borrower of the Borrower’s obligations set forth herein and in the other Loan Documents.

10. Representations and Warranties . The Borrower represents and warrants to the Lender on the date hereof that:

(a) The Borrower (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, (ii) has full corporate power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and (iii) is duly qualified, authorized to do business and in good standing in each jurisdiction in which the conduct of its business requires such qualification or authorization, except to the extent that the failure to be so qualified or authorized or be in good standing could not reasonably be expected to have a Material Adverse Effect.

(b) The Borrower has all necessary corporate power and authority to enter into, and has taken all necessary corporate action to authorize the execution, delivery and performance of, this Agreement and all of the transactions contemplated herein. This Agreement has been duly executed and delivered by the Borrower and constitutes, and the other Loan Documents to which the Borrower is a party when executed and delivered will constitute, the legal, valid and binding obligations of the Borrower, enforceable against it in accordance with their respective terms, except as may be limited by (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally, (ii) the application

of general principles of equity (regardless of whether applied in a proceeding in equity or at law) and (iii) any implied warranty of good faith and fair dealing.

(c) Neither the execution and delivery by the Borrower of this Agreement and the other Loan Documents, nor the performance by the Borrower of its obligations hereunder or thereunder, results or will result in a breach of, or constitutes or will constitute a default under (i) any term or provision of the organizational documents of the Borrower, (ii) any law, rule, regulation, order, judgment, writ, injunction, or decree of any court or governmental entity having jurisdiction over the Borrower or the property of the Borrower or (iii) any loan agreement, mortgage, deed of trust, security agreement or lease, or any other material contract or instrument binding on or affecting the Borrower or the property of the Borrower.

(d) No judgments, orders, writs or decrees are outstanding against it, nor is there now pending or, to the knowledge of a Responsible Officer of the Borrower, any threatened litigation, contested claim, investigation, arbitration, or governmental proceeding by or against the Borrower that (i) individually or in the aggregate would reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Agreement, any other Loan Document or the consummation of the transactions contemplated hereby or thereby.

(e) The Borrower has good and marketable title to all of its assets. None of the Collateral is subject to any deed of trust, pledge, Lien, conditional sale or other title retention agreement, security interest, lease, charge or encumbrance (other than the Lien in favor of the Lender).

(f) Neither any Loan Document nor any written statement furnished by the Borrower, or to the knowledge of a Responsible Officer of the Borrower, by a third person on behalf of the Borrower, in connection with this Agreement (including, but not limited to, any financial statements) contains any untrue statement of a material fact or omits a material fact of which the Borrower is aware that is necessary to make the statements contained therein or herein not misleading. There is no fact of which the Borrower is aware that the Borrower has not disclosed in writing to the Lender that materially affects adversely the properties, business, profits or condition (financial or otherwise, but excluding general economic and real estate market conditions) of the Borrower or the ability of the Borrower to perform its obligations under the Loan Documents.

(g) Since March 31, 2016, no material adverse change has occurred in (i) the business, operations, results of operations, assets, liabilities or financial condition of the Borrower, (ii) the ability of the Borrower to perform its obligations under the Loan Documents or (iii) the ability of the Lender to enforce the Loan Documents and obligations of the Borrower thereunder.

(h) Borrower has used its best efforts to obtain financing from unaffiliated third-parties and has been unable to obtain such financing.

11. Affirmative Covenants . The Borrower covenants that for so long as this Agreement is outstanding:

(a) The Borrower shall comply in all material respects with all applicable federal, state and local laws, ordinances, regulations and restrictive covenants relating to the Borrower’s businesses and operations.

(b) The Borrower shall maintain its corporate existence and the right to carry on its business and duly procure all necessary renewals and extensions thereof and maintain, preserve and renew all rights, powers, privileges and franchises and conduct its business in the usual and ordinary course; provided , that the Borrower shall not be required to maintain, preserve or renew any such rights, powers, privileges or franchises that are immaterial to the business of the Borrower and if the Borrower reasonably determines that the preservation thereof is no longer desirable in the conduct of the Borrower’s business.

(c) The Borrower shall use the proceeds of the Term Loan solely for the purposes described in Section 3 of this Agreement.

(d) The Borrower shall maintain with financially sound and reputable independent insurers, insurance with respect to its assets and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

(e) The Borrower shall furnish to the Lender:

(i)

as soon as practicable, but in any event within two weeks of the end of each month, quarter and year (each a “ Period ”), an unaudited income statement and statement of cash flows for such Period, and an unaudited balance sheet and statement of stockholders' equity as of the end of such Period and other information reasonably requested by the Lender, all prepared in accordance with GAAP, as applicable (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

(ii)

as soon as practicable, but in any event within the earlier of ninety (90) days after the end of each fiscal year of the Borrower and five (5) days after they become available, (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year, and (iii) a statement of stockholders' equity as of the end of such year, all such financial statements audited and certified by independent public accountants of regionally recognized standing selected by the Borrower;

(iii)

as soon as practicable, but in any event within the earlier of forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year

of the Borrower and five (5) days after they become available, unaudited statements of income and of cash flows for such fiscal quarter, and an unaudited balance sheet and a statement of stockholders' equity as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

(iv)

with respect to the financial statements called for in Section 11(e)(i), Section 11(e)(ii) and Section 11(e)(iii), an instrument executed by the chief financial officer and chief executive officer of the Borrower certifying that such financial statements were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (except as otherwise set forth in Section 11(e)(i) and Section 11(e)(iii)) and fairly present the financial condition of the Borrower and its results of operation for the periods specified therein;

(v)	promptly following the end of each quarter, an up-to-date capitalization table of the Borrower;

(vi)

promptly after any Responsible Officer becoming aware of the occurrence of any Default or Event of Default (but in any event within three Business Days thereafter), a certificate of a Responsible Officer setting forth the details thereof and the action that the Borrower is taking or proposes to take with respect thereto;

(vii)

promptly after any Responsible Officer becoming aware of any event or occurrence that could reasonably be expected to have a Material Adverse Effect (but in any event within three Business Days thereafter), a certificate of a Responsible Officer setting forth the details thereof and the action that the Borrower is taking or proposes to take with respect thereto;

(viii)

promptly upon request, such additional information regarding the financial position or business (including with respect to environmental matters) of the Borrower as the Lender may reasonably request from time to time; and

(ix)	promptly provide notice of any material adverse change in the business or deviation from the Business Plan.

12. Negative Covenants . The Borrower covenants that for so long as this Agreement is outstanding:

(a) The Borrower shall not create, assume, incur or suffer to be created, assumed, incurred or to exist any Lien upon the Collateral (or any part thereof). The Borrower shall not sell, convey, transfer, dispose or permit any sale, conveyance, transfer or disposition of its assets

or any interest therein by operation of law or otherwise, other than sales, conveyances, transfers or dispositions of (i) inventory in the ordinary course of business or (ii) used, worn-out or surplus equipment.

(b) The Borrower shall not create, incur, assume or suffer to exist any indebtedness of the Borrower for borrowed money or guarantee the obligations of any Person, except (i) indebtedness under this Agreement and the other Loan Documents, (ii) indebtedness existing on the Closing Date as set forth on Schedule 12 hereto and (iii) current trade accounts payable under normal trade terms and which arise in the ordinary course of business.

13. Events of Default . Each of the following shall constitute an “ Event of Default ” under this Agreement:

(a) Failure to Pay Principal . The Borrower shall default in any payment of the principal amount of the Term Loan when and as due hereunder;

(b) Other Payment Default . The Borrower shall default in the payment of interest on the Term Loan or any other payment obligation under this Agreement after the same becomes due hereunder and such default shall continue unremedied for three days;

(c) Failure to Observe Other Covenants . The Borrower shall (i) fail to perform or observe any agreement, covenant, condition, provision or term contained in Sections 11(b), 11(c) or 12 or (ii) fail to perform or observe any other term, covenant, warranty or agreement contained (or incorporated by reference) herein or in any other Loan Document and such failure shall continue for a period of 30 days after the earlier to occur of (i) the date upon which a Responsible Officer of the Borrower has actual knowledge of such default and (ii) the date upon which written notice thereof is given to Borrower by the Lender;

(d) Representations and Warranties . Any representation or warranty of the Borrower contained herein on in any other Loan Document shall prove to have been untrue in any material respect when made;

(e) Voluntary Bankruptcy . The Borrower makes an assignment for the benefit of creditors, files a petition in bankruptcy, petitions or applies to any tribunal for any receiver or any trustee of the Borrower or any substantial part of the property of the Borrower or commences any proceeding relating to the Borrower under any reorganization, arrangement, composition, readjustment, liquidation or dissolution law or statute of any jurisdiction, whether in effect now or after this Agreement is executed;

(f) Involuntary Bankruptcy . If, within 60 days after the filing of a bankruptcy petition or the commencement of any proceeding against the Borrower seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, the proceeding shall not have been dismissed, or, if within 30 days after the appointment, without the consent or acquiescence of the Borrower, of any trustee, receiver or liquidator of the Borrower or all or any substantial part of the properties of the Borrower, the appointment shall not have been vacated;

(g) Dissolution . Any action is taken that is intended to result, or results, in the dissolution, liquidation or termination of the existence of the Borrower;

(h) Cross-Default . The Borrower shall fail to pay any principal of any indebtedness owed by the Borrower (excluding the indebtedness of the Borrower hereunder) that is outstanding in a principal amount of $250,000 or more in the aggregate, or any interest or premium thereon, when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration demand or otherwise), and such failure continues after the applicable grace period, if any, specified in the agreement or instrument relating to such indebtedness; any other event occurs or condition exists under any agreement or instrument relating to any such indebtedness and continues after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such indebtedness; or any such indebtedness is declared to be due and payable or is required to be prepaid, redeemed, purchased or defeased (other than by a regularly scheduled required prepayment, redemption, purchase or defeasance), or an offer to prepay, redeem, purchase or defease such indebtedness is required to be made, in each case before the stated maturity thereof; or

(i) Judgments . Any judgment or order for the payment of money in excess of $250,000 is rendered against the Borrower by a court of competent jurisdiction, and either (i) enforcement proceedings are commenced by any creditor upon such judgment or order or (ii) there is any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, is not in effect, unless such judgment or order has been vacated, satisfied, dismissed, or bonded pending appeal or, in the case of a judgment or order the entire amount of which is covered by insurance (subject to applicable deductibles), is the subject of a binding agreement with the plaintiff and the insurer covering payment therefor.

14. Remedies Upon Default .

(a) Upon the occurrence of an Event of Default and during the continuation thereof, the Lender may declare the Term Loan to be due and payable (provided that upon the occurrence of any Event of Default described in Section 13(e) or 13(f) of this Agreement, no such declaration shall be necessary and the acceleration hereinafter described shall occur automatically), whereupon the maturity of the then unpaid balance of the Term Loan shall be accelerated and the same and all interest accrued thereon shall forthwith become due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, anything contained herein or in the other Loan Documents to the contrary notwithstanding, and the Lender may exercise and shall have any and all rights and remedies available under applicable law and the Loan Documents, including with respect to the Collateral.

(b) No right or remedy herein conferred upon the Lender is intended to be exclusive of any other right or remedy contained herein or in any instrument or document delivered in connection with or pursuant to this Agreement, and every such right or remedy contained herein and therein or now or hereafter existing at law or in equity or by statute, or otherwise may be exercised separately or in any combination.

(c) No course of dealing between the Borrower, on the one hand, and the Lender, on the other hand, or any failure or delay on the Lender’s part in exercising any rights or remedies hereunder or under any Loan Document shall operate as a waiver of any rights or remedies of such parties and no single or partial exercise of any rights or remedies hereunder or thereunder shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder.

15. Extensions; Amendments; Waivers . No amendment or waiver of any provision of this Agreement or any other Loan Document, or consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower and the Lender, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

16. Indemnification . The Borrower agrees to indemnify and save the Lender and its officers, directors, employees, advisors and agents harmless from, and compensate the Lender and its officers, directors, employees, advisors and agents for, any and all losses, liabilities, claims, damages and expenses incurred by the Lender and its officers, directors, employees, advisors and agents with respect to, resulting from or in connection with any of the transactions contemplated by this Agreement, including, without limitation, the Borrower’s use of the Term Loan hereunder, except, to the extent that any losses, liabilities, claims, damages and expenses are determined by a final non-appealable decision of a court of competent jurisdiction to have resulted from such indemnified party’s gross negligence or willful misconduct. This agreement by the Borrower to indemnify and defend the Lender and its officers, directors, employees, advisors and agents will survive the payment in full of the Term Loan and the termination of this Agreement. The Borrower shall pay all reasonable out‑of‑pocket expenses incurred by the Lender (including the fees, charges and disbursements of any outside counsel), in connection with the preparation and execution of this agreement and the enforcement or protection of its rights under this Section 16 .

17. Notices . All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii) mailed, certified or registered mail with postage prepaid, (iii) sent by next-day or overnight mail or delivery or (iv) sent by fax, as follows:

if to the Borrower,

AeroGrow International, Inc.
6075 Longbow Drive, Suite 200
Boulder, CO
Fax: (303) 350-4770
Telephone: (303) 350-4770
Attention: Grey Gibbs, Chief Financial Officer

if to the Lender,

SMG Growing Media, Inc.

14111 Scottslawn Road

Marysville, OH 43041

Fax: (937) 578-5078
Telephone: (937) 578-5970
Attention: Ivan C. Smith, Executive Vice President and Secretary

or, in each case, at such other address as may be specified in writing to the other parties hereto.

All such notices, requests, demands, waivers and other communications shall be deemed to have been received (i) if by personal delivery, on the day after such delivery, (ii) if by certified or registered mail, on the third Business Day after the mailing thereof, (iii) if by next-day or overnight mail or delivery, on the day delivered or (iv) if by fax on the next day following the day on which such fax was sent, provided that a copy is also sent by certified or registered mail or by next-day or overnight mail or delivery. Notices delivered through electronic communications to the extent provided in the following paragraph, shall be effective as provided in said paragraph.

Notices and other communications to the Lender hereunder may be delivered or furnished by electronic communication (including e‑mail) pursuant to procedures approved by the Lender. Unless the Lender otherwise prescribes, notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

18. Expenses .

(a) The Borrower shall pay all reasonable out-of-pocket costs and expenses of the Lender (including reasonable fees and expenses of counsel) in connection with (i) the preparation, execution and delivery of this Agreement and the other Loan Documents and (ii) the administration (after the execution hereof and including advice of counsel for the Lender as to the rights and duties of the Lender with respect thereto) of, and in connection with, the preparation, execution and delivery of, recording or filing of, preservation of rights under, enforcement of, and, after a Default, refinancing, renegotiation or restructuring of, this Agreement and the other Loan Documents, and any amendment, waiver or consent relating thereto (including, but not limited to, after an Event of Default has occurred and is continuing, the reasonable fees and disbursements of counsel for the Lender for such purposes) and, in each case, promptly reimburse the Lender within five Business Days after presentation of an invoice in reasonable detail for all amounts expended, advanced, or incurred by the Lender to satisfy any obligation of the Borrower under this Agreement or any other Loan Document .

(b) The agreements in this Section 18 shall survive the termination of this Agreement and repayment of the Term Loan and all other amounts payable hereunder.

19. Severability . If any provision, including any phrase, sentence, clause, section or subsection, of this Agreement is invalid, inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering such provisions in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision herein contained invalid, inoperative, or unenforceable to any extent whatsoever. Any provision of this Agreement held invalid, inoperative, or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid, inoperative, or unenforceable.

20. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the Borrower and the Lender, and their respective successors and permitted assigns. The Borrower may not assign or delegate its obligations hereunder without the prior written consent of the Lender, which consent may be withheld in the Lender’s sole discretion. The Lender may assign its obligations and the full amount of the Term Loan hereunder.

21. Offset . If an Event of Default occurs hereunder, then the Lender shall have the right to offset any amounts due hereunder against any amounts now or hereafter due from the Lender to the Borrower.

22. Governing Law, Submission to Jurisdiction, etc.

(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, as applied to contracts entered into and to be performed in Ohio.

(b) The Parties hereby irrevocably consent and agree that any legal action, suit or proceeding arising out of or in any way in connection with this Agreement may be instituted or brought in the United States District Court for the Southern District of Ohio. The Parties hereby irrevocably consent and submit to, for themselves and in respect of their property, generally and unconditionally, the jurisdiction of such Court, and to all proceedings in such Court. Further, the Parties irrevocably consent to actual receipt of any summons and/or legal process at their respective addresses as set forth in this Agreement as constituting in every respect sufficient and effective service of process in any such legal action or proceeding. The Parties further agree that final judgment in any such legal action, suit or proceeding shall be conclusive and may be enforced in any other jurisdiction, whether within or outside the United States of America, by suit under judgment, a certified or exemplified copy of which will be conclusive evidence of the fact and the amount of the liability.

(c) The Borrower irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 17 of this Agreement (other than the provisions in Section 17 permitting notices to be delivered by electronic communications). Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

23 . Waiver of Jury Trial . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

24. Counterparts; Integration; Effectiveness; Electronic Execution. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

[SIGNATURES ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective duly authorized representatives as of the day and year first above written.

BORROWER :

AEROGROW INTERNATIONAL, INC.

By: _________________________________

Name: _______________________________

Title: _______________________________

LENDER :

SMG GROWING MEDIA, INC.

By: _________________________________

Name: _______________________________

Title: _______________________________

[Signature Page – Term Loan and Security Agreement]

Exhibit A

Form of Notice of Borrowing

Date: ___________ ___, 201__

To:	SMG Growing Media, Inc., as the Lender under that certain Term Loan and Security Agreement dated as of July 15, 2016 (as extended, renewed, amended or restated from time to time, the “ Loan Agreement ”), by and between the Lender and AeroGrow International, Inc. (the “ Borrower ”)

Ladies and Gentlemen:

The undersigned, the Borrower, refers to the Loan Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2(b) of the Loan Agreement, of the proposed Term Loan Advance specified below:

1. The Business Day of the proposed Term Loan Advance is ___________, ____.

2. The aggregate amount of the proposed Term Loan Advance is $______________.

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Term Loan Advance, before and after giving effect thereto and to the application of the proceeds therefrom:

(a) the representations and warranties contained in the Loan Agreement are correct in all material respects on and as of such date, before and after giving effect to the proposed Term Loan Advance as though made on and as of such date;

(b) the proceeds of the Term Loan Advance will be used solely for the purposes described in Section 3 of the Loan Agreement; and

(c) all other conditions set forth in Section 9 , as applicable, of the Loan Agreement have been satisfied as of the date hereof.

AeroGrow International, Inc.

Name

Title

Schedule 7

Collateral Locations

2201 Lakeview Road
Mexico, MO 65265
Landlord: Cagney Global (previously dba Wilderness Logistics Solutions, Inc.)

From time to time, the Borrower has a small amount of consigned inventory at other third party locations

Schedule 12

Indebtedness

None

FIRST AMENDMENT

COLLABORATION SERVICES AGREEMENT

This FIRST AMENDMENT TO COLLABORATION SERVICES AGREEMENT (this “ Amendment ”) is effective as of July 15, 2016 (the “ Effective Date ”), among The Scotts Company LLC, an Ohio limited liability company having its principal place of business at 14111 Scottslawn Road, Marysville, Ohio 43041 (“ Scotts Company ”), OMS Investments, Inc., a Delaware corporation having its principal place of business at 10250 Constellation Blvd., Suite 2800, Los Angeles, California 90067 (“ OMS ,” and together with Scotts Company, “ Scotts ”), and AeroGrow International, Inc., a Nevada corporation having its principal place of business at 6075 Longbow Dr., Suite 200, Boulder, Colorado 80301 (“ AeroGrow ”). Scotts and AeroGrow are sometimes referred to herein collectively as the “ Parties ” and individually as a “ Party .”

WHEREAS, the Parties are parties to that certain Collaboration Services Agreement, effective as of April 22, 2013 (as amended and supplemented, the “ Collaboration Services Agreement ”); and

WHEREAS, the Parties wish to amend the Collaboration Services Agreement as set forth below.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

DTC and Development Services

1.	Section 1(b) of the Collaboration Services Agreement is hereby amended and restated in its entirety as follows:

“ AeroGrow Services . As Scotts or any of its Affiliates may request from time to time during the term of this Agreement, AeroGrow will perform for Scotts or its Affiliates the following services (collectively, the “ AeroGrow Services ”):

(i) the services set forth under the AeroGrow Information Services heading in the Scope of AeroGrow Services attached hereto as Exhibit B (the “ AeroGrow Information Services ”);

(ii) the services set forth under the AeroGrow DTC Services heading in the Scope of AeroGrow Services attached hereto as Exhibit B (the “ AeroGrow DTC Services ”); and

(iii) the services set forth under the AeroGrow Development Services heading in the Scope of AeroGrow Services attached hereto as Exhibit B (the “ AeroGrow Development Services ”).”

2.	Section 1(d) of the Collaboration Services Agreement is hereby amended and restated in its entirety as follows:

“ No Implied License . Except as set forth on Exhibit B with respect to the AeroGrow DTC Services and AeroGrow Development Services, neither Party shall acquire under this Agreement any license or other intellectual property interest, by implication or otherwise, in any know-how, or Confidential Information disclosed to it under this Agreement or under any intellectual property rights owned or controlled by the other Party or its Affiliates.

3.	Section 2(a) of the Collaboration Services Agreement is hereby amended and restated in its entirety as follows:

“ Scotts Reimbursement . AeroGrow will reimburse Scotts for all reasonable out-of-pocket costs incurred by Scotts in performing the Scotts Services (the “ Scotts Reimbursement ”). No fee or other payment, besides the Scotts Reimbursement, shall be payable by AeroGrow to Scotts for the performance of the Scotts Services un der this Agreement.”

4.	Section 2(b) of the Collaboration Services Agreement is hereby amended and restated in its entirety as follows:

“ AeroGrow Reimbursement and Fees . Scotts will (x) reimburse AeroGrow for all reasonable out-of-pocket costs incurred by AeroGrow in performing the AeroGrow Information Services and (y) pay AeroGrow all service fees for the AeroGrow DTC Services and AeroGrow Development Services as set forth on Exhibit B ((x) and (y) collectively, the “ AeroGrow Reimbursement and Fees ”). No fee or other payment, besides the AeroGrow Reimbursement and Fees, shall be payable by Scotts to AeroGrow for the performance of the AeroGrow Services under this Agreement.”

5.	Section 3(a) of the Collaboration Services Agreement is hereby amended and restated in its entirety as follows:

“ Limited Term . Except as set forth in Sections 3(b) and 3(c), the term of this Agreement will be coterminous with the term of the Brand License Agreement (as defined in the Recitals to this Agreement) and will automatically terminate upon the expiration or the termination of the Brand License Agreement unless the Brand License Agreement is terminated prior to July 15, 2019, in which case the term of this Agreement will be extended until July 15, 2019 solely with respect to the AeroGrow Development Services.”

6.	Section 6 of the Collaboration Services Agreement is hereby amended and restated in its entirety as follows:

“ Ownership . Except as provided for in Exhibit B with respect to the AeroGrow DTC Services and the AeroGrow Development Services: (a) this Agreement and the performance of this Agreement will not affect the ownership of any copyrights

or other intellectual property rights of either Party; (b) neither Party will gain, by virtue of this Agreement, any rights of ownership of copyrights, patents, trade secrets, trademarks or any other intellectual property rights owned by the other Party; (c) except as otherwise set forth in the Transaction Agreements, the Party providing the applicable Service will own all copyrights, patents, trade secrets or other intellectual property rights subsisting in any deliverable that subsists in whole or in part of works developed by such Party for purposes of this Agreement; (d) each Party acknowledges and agrees that each shall retain exclusive ownership of its own respective data and other intellectual property provided to the other pursuant to this Agreement; (e) neither Party shall use the other Party’s data for any purpose other than the performance of, or as otherwise permitted by, this Agreement in accordance with its provisions; and (f) the receiving Party will own all data generated by or for it in the course of performing the applicable Services, and shall at all times have a right to access and be provided with copies of that data.”

7.	Exhibit B to the Collaboration Services Agreement is hereby amended and restated in its entirety by Exhibit B attached to this Amendment.

8.	Section 13(k) of the Collaboration Services Agreement is hereby amended and restated in its entirety as follows:

“(k) Entire Agreement . This Agreement, together with the Transaction Agreements, sets forth the entire agreement between the Parties with respect to the subject matter hereof and supersedes any and all prior or contemporaneous agreements or understands respecting such subject matter. The Exhibits to this Agreement are incorporated into and form an integral part of this Agreement.”

Miscellaneous

Incorporation with Collaboration Services Agreement . This Amendment is executed and delivered pursuant to the Collaboration Services Agreement and shall be subject to the terms and conditions of, and interpreted in accordance with, the Collaboration Services Agreement. Except as amended hereby, the Collaboration Services Agreement and each of the provisions contained therein shall remain in full force and effect as from the Effective Date. Capitalized terms defined in the Collaboration Services Agreement and not otherwise defined herein shall have the meanings given to them in the Collaboration Services Agreement.

10.	Counterparts . This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Amendment.

[Signature page follows]

The Parties have caused this Amendment to be executed as of the Effective Date.

	THE SCOTTS COMPANY LLC By: __________________________________ Name: Title:
	OMS INVESTMENTS, INC. By: __________________________________ Name: Title:
	AEROGROW INTERNATIONAL, INC. By: __________________________________ Name: Title:

[Signature Page to Amendment to Collaboration Services Agreement]

EXHIBIT B

AEROGROW SERVICES

AeroGrow Information Services

·	AeroGrow will provide Scotts with copies of AeroGrow’s consumer lists, including email addresses and all other data regarding those consumers, subject to compliance with applicable law.

AeroGrow DTC Services

Services :

AeroGrow will provide Scotts and its Affiliates with Direct to Consumer fulfillment capabilities with respect to products of Scotts’ and its Affiliates, including:

·	Consumer service, including order entry and processing and payment collection.

·	Product storage and order fulfillment through its third-party fulfillment center.

·	Web-site development (in some cases, Scotts may develop its own websites and transmit orders to AeroGrow).

·	Assistance in analysis of customers, trends and buying patterns.

·	Development of a customer database.

·	Design and implementation of testing around marketing message, appropriate products for the channel and pricing.

·	Returns processing.

AeroGrow shall cause its third-party fulfillment center to accept shipment of and store products of Scotts and its Affiliates at its fulfillment center in an orderly manner, in accordance with substantially the same degree of care that is exercised to protect AeroGrow’s own goods, and in substantially the same manner and under the same storage conditions that are utilized with respect to AeroGrow’s own goods. The title to Scotts’ or its Affiliates’ products that are subject to the AeroGrow DTC Services shall not transfer from Scotts or its applicable Affiliate to AeroGrow.

Limitations :

AeroGrow will support all of Scotts’ and its Affiliates’ direct fulfillment needs (to the extent requested by Scotts and its Affiliates; however , AeroGrow will not be expected to significantly expand its computer systems or its fulfillment center in order to meet Scotts’ or its Affiliates’ needs. If such expansion is necessary, the Parties will meet and work in good faith towards a reasonable solution. For the avoidance of doubt, the AeroGrow DTC Services shall be applicable to any

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products or product categories selected by Scotts or its Affiliates and shall not be limited to hydroponic growing systems or related products.

Geography :

United States of America and Canada only.

Exclusivity :

AeroGrow will not perform similar services for any other third party. Scotts and its Affiliates shall have no obligation to use any AeroGrow DTC Services and there shall be no restriction on Scotts or its Affiliates obtaining services similar to or substitutable for the AeroGrow DTC Services from other third-parties or performing such services on their own.

Service Level :

AeroGrow will perform the AeroGrow DTC Services in good faith, in accordance with all applicable laws and in substantially the same manner and pursuant to the same standards, quality and degree of care as provided by AeroGrow for its own products and business (but in no event less than a commercially reasonable standard of performance).

PCI

Compliance:

To the extent AeroGrow stores, transmits or processes any cardholder data (as such term is defined in the Payment Card Industry Data Security Standard, version 3.0, as the same may be succeeded, modified or amended from time to time (“ PCI ”)) in connection with performing the AeroGrow DTC Services, AeroGrow will comply with PCI as it relates to the system elements and portions of the cardholder data environment (as such terms are defined in PCI) for which AeroGrow is responsible pursuant to the performance of the AeroGrow DTC Services, and perform all tasks and activities required under PCI or otherwise to validate compliance with PCI. AeroGrow will promptly deliver to Scotts copies of all documentation necessary to verify such compliance or otherwise requested by Scotts in connection with such compliance at no additional charge to Scotts.

Privacy:

AeroGrow will establish information security program and policies with respect to Customer Data (as defined below) which: (i) ensures the security and confidentiality thereof; (ii) protects against any anticipated threats or hazards to the security or integrity thereof; and (iii) protects against any unauthorized use thereof or access thereto. AeroGrow will also establish and maintain network and internet security procedures, protocols, security gateways and firewalls with respect thereto. All of the foregoing will be no less rigorous than those currently maintained by AeroGrow, and none of the foregoing will be less rigorous than what is standard in the industry for the applicable AeroGrow DTC Services.

“ Customer Data ” means: (i) all data and information generated, provided or submitted by, or caused to be generated, provided or submitted by, Scotts or its Affiliates in connection with the AeroGrow DTC Services; (ii) all data and information collected, generated or submitted by, or caused to be generated, provided or submitted by, AeroGrow, its representatives and/or their Affiliates and subcontractors; (iii) all such data and information processed or stored, and/or then provided to or for Scotts or its Affiliates, as part of the AeroGrow DTC

B-2

Services; and (iv) all data and information, regardless of the media in which it is contained, (1) relating to an identified or identifiable natural person or (2) defined as “personal information” (or an equivalent term) under applicable privacy law.

Security:

If AeroGrow becomes aware of any Security Breach (as defined below), AeroGrow will, at its sole cost and expense: (i) as promptly as practicable notify Scotts of such Security Breach; (ii) perform a root cause analysis thereon; (iii) investigate such Security Breach and report its findings to Scotts; (iv) provide Scotts with a remediation plan for its approval to address the Security Breach and prevent any further incidents; (v) once approved, remediate such Security Breach in accordance with such approved plan; (vi) conduct a forensic investigation to determine what systems, data and information have been affected by such Security Breach and provide all of the results and related reporting to Scotts for its review; and (vii) cooperate with Scotts and, at Scotts’ request, any law enforcement or regulatory officials, credit reporting companies, and credit card associations investigating such Security Breach. If requested by Scotts, AeroGrow will allow Scotts and its designees to conduct a forensic investigation of the Security Breach. AeroGrow will reimburse Scotts for all internal and external costs associated with addressing and responding to the Security Breach incurred by Scotts or its Affiliates in connection with any such Security Breach, unless the Security Breach is caused by the acts or omissions of Scotts or its Affiliates. Scotts will make the final decision on notifying any third party of the Security Breach, and the implementation of any other remedies, including the remediation plan.

AeroGrow will provide Scotts and its representatives with reasonable access to AeroGrow’s systems, policies and procedures relating to intrusion detection and interception with respect to AeroGrow’s systems used to provide the AeroGrow DTC Services for the purpose of examining, testing and assessing those systems, policies and procedures.

“ Security Breach ” means (i) any circumstance pursuant to which applicable security law requires notification of such breach to be given to affected parties or other activity in response to such circumstance or (ii) any actual, attempted, suspected or threatened circumstance that compromises, or could reasonably be expected to compromise, either physical security measures or systems security measures required pursuant to the performance of the AeroGrow DTC Services.

Service Fees :

The fee for the AeroGrow DTC Services shall be the out-of-pocket direct costs incurred by AeroGrow for the AeroGrow DTC Services, as outlined below. The costs outlined below are intended to reflect AeroGrow’s actual out-of-pocket direct costs for performing the AeroGrow DTC Services. To the extent AeroGrow’s actual out-of-pocket direct costs for performing the AeroGrow DTC Services vary from the costs outlined below, the Parties will negotiate an appropriate adjustment in good faith.

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DTC Costs Charged to Scotts by AeroGrow
Item	Warehouse Function	Cost
1	Receiving per Pallet (minimum fee 1 pallet)	$10.00 per pallet received
1	40” x 48” x no more than 52” high	$10.00 per pallet received
2	Monthly Storage Fee per Bin	$8.00 per bin per month
3	Fulfillment - 1st Item on a D2C order	$1.52 per first item in an order
4	Fulfillment - Additional Item(s) per Order	$0.35 per additional item
5	Corrugate/Dunnage/Shipping Supplies Cost per Order	$0.78 per order
6	Returns Processing	$1.45 per returned order
7	Shipping Costs	Actual costs passed through ⁽¹⁾
8	Credit Card/Sales Tax processing	Actual processing costs passed through
Notes:
(1) Shipping costs will include regular shipping rates plus typical surcharges related to fuel, residential delivery, etc.

In addition, Scotts will also pay AeroGrow $50,000 on each of July 15, 2017 and July 15, 2018, provided that this Agreement remains in effect as of such date.

Royalty :

Scotts or its applicable Affiliate will pay AeroGrow a royalty of 2.0% times its net sales of products fulfilled by AeroGrow pursuant to the AeroGrow DTC Services, determined in accordance with United States generally accepted accounting principles and practices applied consistently throughout the periods involved.

AeroGrow Development Services

Services :

AeroGrow (through its own expertise or through its network of suppliers) to provide turn-key product design and development for Large-Sized Products and Lighting Products (as such terms are defined in the Technology License Agreement), as well as enhancements or redesigns of such products, for Scotts and its Affiliates. AeroGrow will provide any personnel, hardware, software and equipment necessary or desirable to support such development and design.

Scotts and its Affiliates, with the assistance of AeroGrow, will define the strategic direction and specific deliverables for the AeroGrow Development Services, and

B-4

will agree in advance on an approximate budget for any out-of-pocket development costs at the onset of a project, such as certifications or testing.

Scotts and its Affiliates, with the assistance of AeroGrow, will define functional and performance objectives of prototype and production Large-Sized Products and Lighting Products and define cost targets of future production Large-Sized Products and Lighting Products. Scotts and its Affiliates, with the assistance of AeroGrow, will define a product and performance evaluation plan for the Large-Sized Products and Lighting Products.

AeroGrow will perform the AeroGrow Development Services in good faith, in accordance with all applicable laws and in substantially the same manner and pursuant to the same standards, quality and degree of care as provided by AeroGrow for its own products and business (but in no event less than a commercially reasonable standard of performance).

Without limiting the foregoing, AeroGrow represents and warrants that and will at all times ensure that, the AeroGrow Development Services and the Large-Sized Products and Lighting Products developed pursuant to the AeroGrow Development Services and the Project IP developed following the date hereof or the commercialization of any thereof does not infringe, misappropriate or otherwise violate the Intellectual Property (as such term is defined in the Technology License Agreement) or contractual rights of any third party.

Process :

AeroGrow and Scotts each will assign a project manager within such party’s organization who is to be accountable for the support of all AeroGrow Development Services processes and objectives and communication with respect thereto.

Existing IP :

OMS shall exclusively own all right, title and interest in and to all Intellectual Property (as such term is defined in the Technology License Agreement) of AeroGrow or its Affiliates that is primarily related to Large-Sized Products and Lighting Products (“ Existing Project IP ”) and AeroGrow hereby assigns to OMS its entire right, title and interest in and to any Existing Project IP. AeroGrow represents and warrants that and will at all times ensure that neither the Existing Project IP nor the commercialization thereof infringes, misappropriates or otherwise violates the Intellectual Property (as such term is defined in the Technology License Agreement) or contractual rights of any third party. For the avoidance of doubt, nothing set forth in this Agreement shall result in the assignment or transfer of any Intellectual Property of Scotts or its Affiliates to AeroGrow.

Project IP :

Scotts will own, and AeroGrow hereby assigns to Scotts its entire right, title and interest in and to, any Intellectual Property (as such term is defined in the Technology License Agreement) conceived, developed, reduced to practice or made in the performance of the AeroGrow Development Services by any of

B-5

AeroGrow or otherwise related to Large-Sized Products or Lighting Products and conceived, developed or reduced to practice following the date hereof (collectively, with the Existing Project IP, the “ Project IP ”). AeroGrow and its Affiliates agree to promptly disclose in writing to Scotts any Project IP.

Cooperation :

AeroGrow agrees to execute, and to cause its employees and contractors to execute, without further consideration, any further documents and instruments that may be necessary, lawful and proper to secure to OMS its interest and title in the Project IP.

Term :

Through July 15, 2019, unless the Agreement is terminated pursuant to Section 3(b) or 3(c) prior to such date or the Parties agree in writing to extend the term for the AeroGrow Development Services beyond such date. For the avoidance of doubt, all Project IP assigned to OMS or required to be assigned to OMS pursuant hereto shall continue to be owned exclusively by OMS following the expiration or termination of this Agreement.

Service Fee:

$40,000 per quarter (pro-rated as necessary).

FIRST AMENDMENT

SUPPLY CHAIN SERVICES AGREEMENT

This FIRST AMENDMENT TO SUPPLY CHAIN SERVICES AGREEMENT (this “ Amendment ”) is effective as of July 15, 2016 (the “ Effective Date ”), among The Scotts Company LLC, an Ohio limited liability company having its principal place of business at 14111 Scottslawn Road, Marysville, Ohio 43041 (“ Scotts Company ”), OMS Investments, Inc., a Delaware corporation having its principal place of business at 10250 Constellation Blvd., Suite 2800, Los Angeles, California 90067 (“ OMS ,” and together with Scotts Company, “ Scotts ”), and AeroGrow International, Inc., a Nevada corporation having its principal place of business at 6075 Longbow Dr., Suite 200, Boulder, Colorado 80301 (“ AeroGrow ”). Scotts and AeroGrow are sometimes referred to herein collectively as the “ Parties ” and individually as a “ Party .”

WHEREAS, the Parties are parties to that certain Supply Chain Services Agreement, effective as of April 22, 2013 (as amended and supplemented, the “ Services Agreement ”); and

WHEREAS, the Parties wish to amend the Services Agreement as set forth below.

Large-Sized Products and Lighting Products Services

1.	Exhibit A of the Services Agreement is hereby amended and restated in its entirety with the Exhibit A attached hereto.

2.	Section 2(a) of the Services Agreement is hereby amended and restated in its entirety as follows:

“ Fee . In payment of the Services performed (including any materials provided in connection therewith) pursuant to this Agreement, Scotts will pay AeroGrow an annual fee equal to seven percent of the cost of goods of all products that Scotts purchases from AeroGrow or a vendor (in each case, to the extent the Services were performed with respect to such Products) in exploiting the Hydroponic IP outside the U.S. over the course of each Contract Year during the term of this Agreement with the exception of any Large-Sized Products or Lighting Products (the “ Fee ”).”

3.	Section 3(a) of the Services Agreement is hereby amended and restated in its entirety as follows:

“ Limited Term . Except as set forth in Sections 3(b) and 3(c), the term of this Agreement will be coterminous with the term of the Technology License Agreement (as defined in the Recitals to this Agreement) and will automatically terminate upon the termination or expiration of the Technology License Agreement unless the Technology License Agreement is terminated prior to July 15, 2019,

in which case the term of this Agreement will be extended until July 15, 2019 solely with respect to the Large-Sized Products and Lighting Products Services.”

4.	The following definitions are hereby added to Section 12(j) of the Services Agreement:

“‘Large-Sized Products’ has the meaning set forth in the Technology License Agreement.”

“‘Lighting Products’ has the meaning set forth in the Technology License Agreement.”

5.	Exhibit A to the Services Agreement is hereby amended and restated in its entirety by Exhibit A attached to this Amendment.

Miscellaneous

Incorporation with Services Agreement . This Amendment is executed and delivered pursuant to the Services Agreement and shall be subject to the terms and conditions of, and interpreted in accordance with, the Services Agreement. Except as amended hereby, the Services Agreement and each of the provisions contained therein shall remain in full force and effect as from the Effective Date. Capitalized terms defined in the Services Agreement and not otherwise defined herein shall have the meanings given to them in the Services Agreement.

7.	Counterparts . This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Amendment.

[Signature page follows]

The Parties have caused this Amendment to be executed as of the Effective Date.

	THE SCOTTS COMPANY LLC By: __________________________________ Name: Title:
	OMS INVESTMENTS, INC. By: __________________________________ Name: Title:
	AEROGROW INTERNATIONAL, INC. By: __________________________________ Name: Title:

[Signature Page to Amendment to Supply Chain Services Agreement]

EXHIBIT A

SCOPE OF SERVICES

Upon request, AeroGrow will assist Scotts and its Affiliates with vendor selection, vendor management and logistics management to get products that Scotts requests manufactured and delivered to the locations that Scotts requests. AeroGrow shall have no payment or other obligations to such vendors in connection with such products.

SECOND AMENDMENT

BRAND LICENSE AGREEMENT

This SECOND AMENDMENT TO BRAND LICENSE AGREEMENT (this “ Amendment ”) is effective as of July 15, 2016 (the “ Effective Date ”), between OMS Investments, Inc., a Delaware corporation having offices at 10250 Constellation Blvd., Suite 2800, Los Angeles, California 90067 (“ Licensor ”), and AeroGrow International, Inc., a Nevada corporation having offices at 6075 Longbow Dr., Suite 200, Boulder, Colorado 80301 (“ Licensee ”). Licensor and Licensee are sometimes referred to herein collectively as the “ Parties ” and individually as a “ Party ”.

WHEREAS, the Parties are parties to that certain Brand License Agreement, dated as of April 22, 2013 (as amended and supplemented, the “ Brand License Agreement ”); and

WHEREAS, the Parties wish to amend the Brand License Agreement as set forth below.

1.	France . The Additional Territory Term Sheet No. 2 attached as Exhibit A hereto is attached to, and made a part of, the Brand License Agreement.

2.	Germany . The Additional Territory Term Sheet No. 3 attached as Exhibit B hereto is attached to, and made a part of, the Brand License Agreement.

3.	Section 14.2 . The following sentence shall be added to the end of Section 14.2 :

“For the avoidance of doubt, Licensee shall not be permitted to renew any license terminated under Section 14.3(b).”

Incorporation with Brand License Agreemen t. This Amendment is executed and delivered pursuant to the Brand License Agreement and shall be subject to the terms and conditions of, and interpreted in accordance with, the Brand License Agreement. Except as amended hereby, the Brand License Agreement and each of the provisions contained therein shall remain in full force and effect as from the Effective Date. Capitalized terms defined in the Brand License Agreement and not otherwise defined herein shall have the meanings given to them in the Brand License Agreement.

5.	Counterparts . This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Amendment.

[Signature page follows]

The Parties have caused this Amendment to be executed as of the Effective Date.

	OMS INVESTMENTS, INC. By: __________________________________ Name: Title:
	AEROGROW INTERNATIONAL, INC. By: __________________________________ Name: Title:

[Signature Page to Amendment to Brand License Agreement]

EXHIBIT A

BRAND LICENSE AGREEMENT

ADDITIONAL TERRITORY TERM SHEET NO. 2

This Additional Territory Term Sheet No. 2 (this “ Term Sheet ”) dated July 15, 2016, is attached to, and made a part of, the Brand License Agreement (as amended and supplemented, “ Brand License ”) by and between OMS Investments, Inc. (“ Licensor ”) and AeroGrow International, Inc. (“ Licensee ”) dated April 22, 2013.

Unless otherwise defined herein, capitalized terms shall have the meanings set forth in the Brand License.

Additional Territory :

France

Termination Rights (for purposes of Section 14.3(b)(ii)):

A minimum of US$1,500,000 in Net Sales for the 12 months ending March 31, 2020, and for each subsequent Contract Year.

Retailers/Channels of Trade:

Licensee may only sell Licensed Products to retailers in France that sell exclusively through the e-commerce channel of trade, including online and television sales (e.g., Amazon and QVC).

Additional Terms:

None.

This Term Sheet incorporates all the rights, duties, and obligations extended to both parties under the Brand License relating to the subject matter herein. This Term Sheet and the Brand License shall be read together and any conflict in terms shall be resolved with deference to the terms contained in this Term Sheet.

Exhibit A

EXHIBIT B

BRAND LICENSE AGREEMENT

ADDITIONAL TERRITORY TERM SHEET NO. 3

This Additional Territory Term Sheet No. 3 (this “ Term Sheet ”) dated July 15, 2016, is attached to, and made a part of, the Brand License Agreement (as amended and supplemented, “ Brand License ”) by and between OMS Investments, Inc. (“ Licensor ”) and AeroGrow International, Inc. (“ Licensee ”) dated April 22, 2013.

Unless otherwise defined herein, capitalized terms shall have the meanings set forth in the Brand License.

Additional Territory :

Germany

Termination Rights (for purposes of Section 14.3(b)(ii)):

A minimum of US$1,500,000 in Net Sales for the 12 months ending March 31, 2020, and for each subsequent Contract Year.

Retailers/Channels of Trade:

Licensee may only sell Licensed Products to retailers in Germany that sell exclusively through the e-commerce channel of trade, including online and television sales (e.g., Amazon and QVC).

Additional Terms:

None.

Exhibit B

SECOND AMENDMENT

TECHNOLOGY LICENSE AGREEMENT

This SECOND AMENDMENT TO TECHNOLOGY LICENSE AGREEMENT (this “ Amendment ”) is effective as of July 15, 2016 (the “ Effective Date ”), between OMS Investments, Inc., a Delaware corporation having offices at 10250 Constellation Blvd., Suite 2800, Los Angeles, California 90067 (“ OMS ”), and AeroGrow International, Inc., a Nevada corporation having offices at 6075 Longbow Dr., Suite 200, Boulder, Colorado 80301 (“ AeroGrow ”). OMS and AeroGrow are sometimes referred to herein collectively as the “ Parties ” and individually as a “ Party ”.

WHEREAS, the Parties are parties to that certain Technology License Agreement, dated as of April 22, 2013 (as amended and supplemented, the “ Technology License Agreement ”); and

WHEREAS, the Parties wish to amend the Technology License Agreement as set forth below.

1.	Definitions .

The following definitions shall be added to Section 1 of the Technology License Agreement:

“DTC Channel” means direct to consumer marketing, sales, and distribution, exclusively through www.aerogrow.com and www.amazon.com , in each case exclusively in the United States.

“Large-Sized Products” means hydroponic and/or aeroponic garden systems that may include LED lighting, a wireless communication system, and/or a touchscreen user interface, which are primarily designed or intended to reside on a floor or other non-countertop location. Any product having a footprint (or potential footprint) of 1.75 square feet or larger and any product capable of growing plants in excess of 30 inches will be considered a Large-Sized Product. For the avoidance of doubt, the stackable bookcase products under development as of the date hereof by AeroGrow in the currently contemplated form will not be considered a Large-Sized Product.

“Lighting Products” means LED bulbs, lamps, panels and systems designed for hydroponic and/or aeroponic growing applications and that may be used as standalone lighting or as a component of hydroponic and/or aeroponic growing applications, including without limitation 12-,

24-, and 36-Watt LED bulbs and 45-Watt LED panels having a customized spectral output for hydroponic and/or aeroponic applications.

“Project IP” means the Intellectual Property, including Developed IP, assigned to OMS pursuant to the AeroGrow Development Services pursuant to and as defined in the Collaboration Services Agreement.

The definition of Hydroponic IP is hereby amended and restated in its entirety as follows:

“Hydroponic IP” means the OMS Intellectual Property set forth in Schedule 1 to this Agreement and the Project IP.

The definition of Licensed Products is hereby amended and restated in its entirety as follows:

“ Licensed Products” means the AeroGarden 3, the AeroGarden 7, the AeroGarden Extra, the AeroGarden Ultra and any additional aeroponic or hydroponic products developed by AeroGrow in the future, and associated seed kits.

2.	China . The Additional Territory Term Sheet No. 2 attached as Exhibit A hereto is attached to, and made a part of, the Technology License Agreement.

3.	France . The Additional Territory Term Sheet No. 3 attached as Exhibit B hereto is attached to, and made a part of, the Technology License Agreement.

4.	Germany . The Additional Territory Term Sheet No. 4 attached as Exhibit C hereto is attached to, and made a part of, the Technology License Agreement.

5.	License Grant .

Section 2.1 of the Technology License Agreement is hereby amended and restated in its entirety as follows:

2.1 License Grant.

(a) Subject to the terms and conditions of this Agreement, OMS hereby grants to AeroGrow an exclusive license under the Hydroponic IP to make, use, sell, distribute, offer to sell, and import Licensed Products in the Territory during the Term of this Agreement ; provided that with respect to Large-Sized Products and Lighting Products, the foregoing license grant shall be restricted to marketing, sales and distribution through the DTC Channel. AeroGrow further agrees that it will not make, use, sell, distribute, offer to sell or import any products having a footprint (or potential footprint) of 1.5 square feet or larger in any channels specifically targeted to hydroponic growers, regardless of whether such products utilize Hydroponic IP.

(b) Notwithstanding the foregoing exclusive license grant in Section 2.1(a) and without limitation, OMS reserves the right for OMS and its Affiliates and contractors to use (i) the Hydroponic IP for Research Purposes and to develop, make, have made, use, offer to sell, sell, and distribute Large-Sized Products and/or Lighting Products, and (ii) US Patent 8,261,486 with respect to any products.

6.	Right to Sublicense

Section 2.2 of the Technology License Agreement is hereby amended and restated in its entirety as follows:

2.2 Limited Right to Sublicense.

(a) Except as provided in Section 2.2(b), the license grant in Section 2.1 does not include the right for AeroGrow to grant sublicenses to others to use the Hydroponic IP in any manner or in connection with any goods or services, but AeroGrow may permit the distribution by third party distributors of Licensed Products in the Territory in accordance with this Agreement.

(b) AeroGrow shall be permitted to grant written sublicenses of the rights granted to AeroGrow in Section 2.1 to third parties to make and use Licensed Products in China and to offer to sell and sell Licensed Products to end user consumers in China but not to any person or entity for subsequent sale, resale, or distribution outside of China; provided that AeroGrow shall have provided a copy of the proposed sublicense agreement to OMS prior to execution thereof, and AeroGrow shall have received OMS’ written approval of the proposed sublicense agreement and the proposed sublicensee prior to execution, which OMS may grant or withhold in its reasonable judgment. In any such sublicense agreement: (i) such sublicense agreement shall refer to this Agreement and shall contain terms and conditions no less restrictive than those in this Agreement with respect to the sublicensed obligations; (ii) in such sublicense agreement, the sublicensee shall agree in writing to be bound to OMS by terms and conditions that are substantially similar to, or less favorable to the sublicensee than, the corresponding terms and conditions of this Agreement; (iii) such sublicense agreement shall contain terms granting OMS and its Affiliates a worldwide, royalty-free, nonexclusive license under any improvements and intellectual property therein created by the sublicensee in the exercise of the sublicense; (iv) AeroGrow shall remain primarily responsible for compliance by its sublicensees with all applicable terms of the sublicense agreement; (v) any sublicense rights granted by AeroGrow in a sublicense agreement shall terminate effective upon any termination of the license from OMS to AeroGrow under Section 2.1 with respect to such sublicensed rights; (vi) such sublicensees shall not have the right to grant any further sublicenses; (vii) AeroGrow

shall provide a copy of the executed sublicense agreement to OMS within fourteen days after execution thereof; and (viii) for the avoidance of doubt, AeroGrow shall have no right to grant any sublicense to use any Trademarks of OMS or its Affiliates.

(c) OMS shall be permitted to terminate the grant of any sublicense in the event that the sublicensee breaches any material term of the sublicense agreement and AeroGrow shall cooperate with OMS in effecting such termination.

(d) In any sublicense agreement granted under this Section 2.2, AeroGrow shall obligate the sublicensee to pay AeroGrow a sublicense fee approved in advance by OMS (“Sublicense Fee”).

7.	Royalty Payment .

Section 3.1 of the Technology License Agreement is hereby amended and restated in its entirety as follows:

3.1 Royalty Payment. AeroGrow shall pay OMS a royalty of (a) two percent (2%) times Net Sales of Licensed Products and (b) fifty percent (50%) times Sublicense Fees for Licensed Products in China.

8.	Rights Related to Project IP .

New Section 5.3 is hereby added to the Technology License Agreement as follows:

5.3 Licenses Relating to Project IP. Subject to the terms and conditions of this Agreement, AeroGrow hereby grants to OMS and its Affiliates a worldwide, royalty-free, perpetual, irrevocable, transferrable, nonexclusive license under any Developed IP not transferred to OMS pursuant to the AeroGrow Development Services pursuant to and as defined in the Collaboration Services Agreement, to develop, make, have made, use, sell, distribute, offer to sell, and import Large-Sized Products and Lighting Products.

9.	Section 8.2 .

The following sentence shall be added to the end of Section 8.2:

“For the avoidance of doubt, AeroGrow shall not be permitted to renew any license terminated under Section 8.3(b).”

10.

Incorporation with Technology License Agreemen t. This amendment is executed and delivered pursuant to the Technology License Agreement and shall be subject to the terms and conditions of, and interpreted in accordance with, the Technology License Agreement. Except as amended hereby, the Technology License Agreement and each of

the provisions contained therein shall remain in full force and effect as from the Effective Date. Capitalized terms defined in the Technology License Agreement and not otherwise defined herein shall have the meanings given to them in the Technology License Agreement. For purposes of the Technology License Agreement, as amended hereby, AeroGrow will not be considered an affiliate of OMS.

11.	Counterparts . This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Amendment.

[Signature page follows]

The Parties have caused this Amendment to be executed as of the Effective Date.

	OMS INVESTMENTS, INC. By: ____________________________________ Name: Title:
	AEROGROW INTERNATIONAL, INC. By: ____________________________________ Name: Title:

[Signature Page to Amendment to Technology License Agreement]

EXHIBIT A

TECHNOLOGY LICENSE AGREEMENT

ADDITIONAL TERRITORY TERM SHEET NO. 2

This Additional Territory Term Sheet No. 2 (this “ Term Sheet ”) dated July 15, 2016, is attached to, and made a part of, the Technology License Agreement (as amended and supplemented, “ Technology License ”) by and between OMS Investments, Inc. (“ OMS ”) and AeroGrow International, Inc. (“ AeroGrow ”) dated April 22, 2013.

Unless otherwise defined herein, capitalized terms shall have the meanings set forth in the Technology License.

Additional Territory :

China

Termination Rights (for purposes of Section 8.3(b)(ii)):

None.

Retailers/Channels of Trade:

No restriction.

Additional Terms:

•

The scope of the license to AeroGrow in China is more restricted than as set forth in Section 2.1 of the Technology License. In particular, AeroGrow shall be permitted to grant a nonexclusive sublicense pursuant to Section 2.2, but AeroGrow itself shall not be permitted to otherwise exercise the license grant in Section 2.1 in China.

•	The nonexclusive sublicense grant in Section 2.2 is intended to permit the AeroGrow sublicensee to make, use, offer for sale, and sell Licensed Products using the Hydroponic IP in China during the Term but only for end user consumer in China, and not for export of Licensed Products out of China.

•

The sublicensee shall be restricted from making, using, selling, offering for sale, and importing any products having a footprint (or potential footprint) of 1.5 square feet or larger in any channels specifically targeted to hydroponic growers regardless of whether such products utilize Hydroponic IP.

This Term Sheet incorporates all the rights, duties, and obligations extended to both parties under the Technology License relating to the subject matter herein. This Term Sheet and the Technology License shall be read together and any conflict in terms shall be resolved with deference to the terms contained in this Term Sheet.

Exhibit A

EXHIBIT B

TECHNOLOGY LICENSE AGREEMENT

ADDITIONAL TERRITORY TERM SHEET NO. 3

This Additional Territory Term Sheet No. 3 (this “ Term Sheet ”) dated July 15, 2016, is attached to, and made a part of, the Technology License Agreement (as amended and supplemented, “ Technology License ”) by and between OMS Investments, Inc. (“ OMS ”) and AeroGrow International, Inc. (“ AeroGrow ”) dated April 22, 2013.

Unless otherwise defined herein, capitalized terms shall have the meanings set forth in the Technology License.

Additional Territory :

France

Termination Rights (for purposes of Section 8.3(b)(ii)):

A minimum of US$1,500,000 in Net Sales for the 12 months ending March 31, 2020, and for each subsequent Contract Year.

Retailers/Channels of Trade:

AeroGrow may only sell Licensed Products to retailers in France that sell exclusively through the e-commerce channel of trade, including online and television sales (e.g., Amazon and QVC).

Additional Terms:

None.

Exhibit B

EXHIBIT C

TECHNOLOGY LICENSE AGREEMENT

ADDITIONAL TERRITORY TERM SHEET NO. 4

This Additional Territory Term Sheet No. 4 (this “ Term Sheet ”) dated July 15, 2016, is attached to, and made a part of, the Technology License Agreement (as amended and supplemented, “ Technology License ”) by and between OMS Investments, Inc. (“ OMS ”) and AeroGrow International, Inc. (“ AeroGrow ”) dated April 22, 2013.

Unless otherwise defined herein, capitalized terms shall have the meanings set forth in the Technology License.

Additional Territory :

Germany

Termination Rights (for purposes of Section 8.3(b)(ii)):

A minimum of US$1,500,000 in Net Sales for the 12 months ending March 31, 2020, and for each subsequent Contract Year.

Retailers/Channels of Trade:

AeroGrow may only sell Licensed Products to retailers in Germany that sell exclusively through the e-commerce channel of trade, including online and television sales (e.g., Amazon and QVC).

Additional Terms:

None.

Exhibit C

SECOND AMENDMENT

WARRANT

PURCHASE SHARES OF COMMON STOCK

This SECOND AMENDMENT TO WARRANT TO PURCHASE SHARES OF COMMON STOCK (this “ Amendment ”) is effective as of July 15, 2016 (the “ Effective Date ”), between SMG Growing Media, Inc., an Ohio corporation having offices at 14111 Scottslawn Road, Marysville, Ohio 43041 (the “ Warrantholder ”), and AeroGrow International, Inc., a Nevada corporation having offices at 6075 Longbow Drive, Suite 200, Boulder, Colorado 80301 (the “ Company ”). The Warrantholder and the Company are sometimes referred to herein collectively as the “ Parties ” and individually as a “ Party ”.

WHEREAS, the Parties are parties to that certain Warrant to Purchase Shares of Common Stock (as amended and supplemented, the “ Warrant ”), issued April 22, 2013 pursuant to that certain Securities Purchase Agreement, dated as of April 22, 2013, by and between the Parties; and

WHEREAS, the Parties wish to amend the Warrant as set forth below.

Exercise Price

1.	Exercise Price . The definition of Exercise Price is hereby amended and restated in its entirety as follows:

““ Exercise Price ” per a share of Common Stock means the quotient obtained by dividing (a) an amount equal to (i) 1.34 times the trailing twelve months Adjusted Net Sales (as defined below) of the Company, plus (ii) the aggregate exercise price of outstanding In-The-Money Derivative Securities, minus (iii) Debt Outstanding (as defined below) of the Company, plus (iv) cash and cash equivalents, by (b) the total shares of Capital Stock of the Company outstanding on a Common Stock equivalent basis, including outstanding in-the-money options and warrants (excluding this Warrant) based on the Market Price of the Common Stock as of the Business Day immediately preceding the date of exercise (“ In-The-Money Derivative Securities ”). “ Adjusted Net Sales ” means (A) the net sales of the Company outside of any additional territory (“ Additional Territory ”) added under the terms of the Technology License Agreement, dated April 22, 2013, between the Company and OMS Investments, Inc., as amended (the “ Technology License Agreement ”), and not related to products of the Company sold outside of any Additional Territory, directly or indirectly, under U.S. GAAP, plus (B) the cost to The Scotts Company, LLC or its Affiliates for products (other than Large-Sized Products or Lighting Products (as such terms are defined in the

Technology License Agreement)) that exploit the Hydroponic IP (as defined in the Technology License Agreement) but are not included in the net sales of the Company. “ Debt Outstanding ” means the total liabilities of the Company under U.S. GAAP, less those liabilities associated with working capital (such as accounts payable of the Company) under U.S. GAAP. An example of the calculation of the Exercise Price is attached hereto as Annex B .”

Miscellaneous

Incorporation with Warrant . This Amendment is executed and delivered pursuant to the Warrant and shall be subject to the terms and conditions of, and interpreted in accordance with, the Warrant. Except as amended hereby, the Warrant and each of the provisions contained therein shall remain in full force and effect as from the Effective Date. Capitalized terms defined in the Warrant and not otherwise defined herein shall have the meanings given to them in the Warrant.

3.	Counterparts . This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Amendment.

[Signature page follows]

The Parties have caused this Amendment to be executed as of the Effective Date.

	SMG GROWING MEDIA, INC. By: __________________________________ Name: Title:
	AEROGROW INTERNATIONAL, INC. By: __________________________________ Name: Title:

[Signature Page to Amendment to Warrant]

WAIVER

This WAIVER (this “ Waiver ”) is made and entered into as of July 15, 2016, by and between SMG Growing Media, Inc., an Ohio corporation having its principal place of business at 14111 Scottslawn Road, Marysville, Ohio 43041 (the “ Investor ”), and AeroGrow International, Inc., a Nevada corporation having its principal place of business at 6075 Longbow Dr., Suite 200, Boulder, Colorado 80301 (“ AeroGrow ”). The Investor and AeroGrow are sometimes referred to herein collectively as the “ Parties ” and individually as a “ Party .”

WHEREAS, the Parties are parties to that certain Securities Purchase Agreement, dated as of April 22, 2013 (the “ Purchase Agreement ”), pursuant to which the Investor purchased shares of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share;

WHEREAS, in conjunction with the execution of the Purchase Agreement, the Company filed a Certificate of Designations of Series B Convertible Preferred Stock with the Secretary of State of the State of Nevada on April 19, 2013 (the “ Certificate of Designations ”);

WHEREAS, the Parties are parties to that certain Investor Rights Agreement, dated as of April 22, 2013 (the “ Investor Rights Agreement ”);

WHEREAS, the Company intends to enter into a series of transactions with the Investor and its affiliates on or about the date hereof, including the execution of: (i) that certain Second Amendment to Warrant to Purchase Shares of Common Stock between the Parties; (ii) that certain Second Amendment to Technology License Agreement between OMS Investments, Inc., a Delaware corporation (“ OMS ”), and the Company; (iii) that certain Second Amendment to Brand License Agreement between OMS and the Company; (iv) that certain First Amendment to Supply Chain Services Agreement among The Scotts Company LLC, an Ohio limited liability company (“ Scotts ”), OMS and the Company; (v) that certain First Amendment to Collaboration Services Agreement among Scotts, OMS and the Company (the documents referred to in clauses (i) through (v), collectively, the “ Amendments ”); and (vi) that certain Term Loan and Security Agreement between the Parties (the “ Term Loan ”); and

WHEREAS, in connection with the execution of the Amendments and the Term Loan and the consummation of the transactions contemplated thereby, the Investor is willing to waive certain provisions of the Certificate of Designations and the Investor Rights Agreement, all subject to the terms and conditions of this Waiver.

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

1. Waivers .

(a) Notwithstanding the terms of the Certificate of Designations, the Investor hereby waives its rights pursuant to Section 2(b) of the Certificate of Designations to vote on or consent to the execution of the Amendments and the Term Loan and the consummation of the transactions contemplated thereby, solely with respect thereto.

(b) Notwithstanding the terms of the Investor Rights Agreement, the Investor hereby waives its rights pursuant to Section 5.4 of the Investor Rights Agreement for a Series B Director (as such term is defined in the Investor Rights Agreement) to vote on the execution of the Amendments and the Term Loan and the consummation of the transactions contemplated thereby, solely with respect thereto.

2. Effective Date . This Waiver will become effective upon the execution hereof by the Parties and the consummation of the transactions contemplated by the Amendments and the Term Loan.

3. Miscellaneous .

(a) Continuing Effect; No Other Waivers . Except as expressly provided herein, all of the terms and conditions of the Certificate of Designations and the Investor Rights Agreement are and shall remain in full force and effect. This Waiver shall not be deemed a consent or waiver, express or implied, by the Investor to any breach of or deviation from any other agreement, covenant or condition of the Certificate of Designations or the Investor Rights Agreement not expressly referenced herein or of any other breach or deviation from any other agreement, covenant or condition contained in any other contract or arrangement that any of the Parties or their respective affiliates are a party to.

(b) Amendment; Waiver . This Waiver may be amended, and the observance of or compliance with any provision hereof by any Party may be waived, only by the written agreement of the Parties.

(c) Successors and Assigns . Except as otherwise provided herein, the provisions of this Waiver shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the Parties.

(d) Third Parties . Nothing in this Waiver, express or implied, is intended to confer upon any person, other than the Parties and their respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Waiver except as expressly provided in this Waiver.

(e) Governing Law . This Waiver shall be governed by and construed exclusively in accordance with the internal laws of the State of Ohio, as applied to contracts entered into and to be performed in Ohio.

(f) Counterparts . This Waiver may be executed in one or more counterparts (including, without limitation, facsimile counterparts), each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

(g) Headings . The headings and captions used in this Waiver are used for convenience only and are not to be considered in construing or interpreting this Waiver.

(h) Severability . If one or more provisions of this Waiver are held to be unenforceable under applicable law, then such provision(s) shall be excluded from this Waiver and the balance of this Waiver shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

[Signature pages follow]

IN WITNESS WHEREOF, the Parties have caused this Waiver to be executed and delivered as of the date first above written.

	SMG GROWING MEDIA, INC. By: __________________________________ Name: Title:
	AEROGROW INTERNATIONAL, INC. By: __________________________________ Name: Title:

[Signature Page to Waiver]

Exhibit 99.1

AeroGrow Finalizes a Series of Operational Agreements and a $6 .0 million Term Loan

Agreement with Scotts Miracle-Gro

BOULDER, CO--(Marketwired – July 21, 2016) - AeroGrow International, Inc. (OTCQB: AERO) ("AeroGrow" or the "Company"), which is the manufacturer and distributor of the world’s leading indoor gardening systems – the AeroGarden line of Smart Countertop Gardens® , announced today a series of operational agreements as well as a term loan agreement with the Scotts Miracle-Gro Company (“SMG”).

The operational agreements call for expansion of AeroGrow’s business scope in six areas:

1.	Expansion of the international territories in which AeroGrow can sell its products to include France and Germany through Amazon, web and television channels (this in addition to the company previously being granted the UK territory).

2.	AeroGrow has been given the rights to establish a distributor relationship to sell AeroGarden products in China.

3.	AeroGrow will assist the Scotts Miracle-Gro Company with its Direct-to-Consumer business, namely providing technical, fulfillment and operational support to Scotts and its affiliates. AeroGrow will receive a retainer for these services plus a percentage of any net sales generated by SMG.

4.	AeroGrow will assist the Scotts Miracle-Gro Company with various product development initiatives, primarily related to large-scale gardens and various consumer lighting initiatives, and will be compensated for these efforts on a retainer basis.

5.	AeroGrow has been granted the right to distribute large scale growing products on Amazon and AeroGarden.com.

6.	AeroGrow has been granted the right to distribute a series of consumer-focused lighting products on Amazon and on AeroGarden.com.

In addition, AeroGrow has received a line of strategic financing in the form of a short term loan from the Scotts Miracle-Gro Company. The funding will provide general working capital to support anticipated growth as the Company expands its retail and its direct-to-consumer sales channels and launches new product introductions. The proceeds total up to $6.0 million with an interest rate of 10%. The interest will be paid quarterly in cash and the due date is April 15, 2017.

Details of these agreements are available in the 8-K that was filed earlier today.

“I am very pleased that our partners at the Scotts Miracle-Gro Company have once again demonstrated their confidence in AeroGrow, our line of products and our expanding business” said President and Chief Executive Officer, J. Michael Wolfe. This is evidenced by not only providing us with the short-term working capital we need to support our continued growth and new product introductions in the coming year, but by also allowing us to continue our international expansion efforts and entrusting us to provide direct-to-consumer and product development services to Scotts Miracle-Gro Company. The working capital loan has a 10% stated interest rate and will be paid in cash (rather than stock) and thus will not be dilutive to our existing shareholders. We believe these agreements further set the stage for what we anticipate will be an exciting fiscal 2017 and beyond at AeroGrow."

About AeroGrow International, Inc.

Headquartered in Boulder, Colorado, AeroGrow International, Inc. is the leader in the rapidly growing indoor gardening category. AeroGardens allow anyone to grow farmer's market fresh herbs, salad greens, tomatoes, chili peppers, flowers and more, indoors, year-round, so simply and easily that no green thumb is required. With an AeroGarden…you can grow anything! In April 2013, AeroGrow entered into a strategic partnership with Scotts Miracle-Gro to continue to expand the indoor gardening market. For more information, visit http://www.aerogrow.com.

As previously reported in a Current Report on Form 8-K filed with the SEC on April 23, 2013, the Company announced that Scotts Miracle-Gro made a $4.5 million equity investment and IP acquisition with the Company, resulting in a 30% beneficial ownership interest in AeroGrow. In the process, AeroGrow took steps to entirely eliminate its long term debt, restructured the balance sheet to facilitate potential future transactions, and gained a valuable partnership for growth. The agreement affords AeroGrow the use of the globally recognized and highly trusted Miracle-Gro brand name while also providing AeroGrow a broad base of support in marketing, distribution, supply chain logistics, R&D, and sourcing.

Forward-Looking Statements

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements by J. Michael Wolfe and/or the Company, statements regarding growth of the AeroGarden product line, ability to raise capital, optimism related to the business, potential dilution to common stockholders, expanding revenue in both the retail and direct-to-consumer sales channels, market acceptance of developments and enhancements to our product line, improved margins and profitability, and other statements in this press release are forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Such statements are based on current expectations, estimates and projections about the Company's business. Words such as expects, anticipates, intends, plans, believes, sees, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. Actual results could vary materially from the description contained herein due to many factors including continued market acceptance of the Company's products or the need to raise additional capital. In addition, actual results could vary materially based on changes or slower growth in the indoor garden market; the potential inability to realize expected benefits and synergies; domestic and international business and economic conditions; changes in customer demand or ordering patterns; changes in the competitive environment including pricing pressures or technological changes; technological advances; shortages of manufacturing capacity; future production variables impacting excess inventory and other risk factors listed from time to time in the Company's Securities and Exchange Commission (SEC) filings, including in "Item 1A Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2016. The forward-looking statements contained in this press release speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release.

Company Representative:

Grey Gibbs Senior Vice President of Finance and Accounting

grey@aerogrow.com

303-444-7755