Exhibit 10.1
 
REVENUE SHARING AGREEMENT

This REVENUE SHARING AGREEMENT ("Agreement") is entered into this ____ day of
October, 2011, by and among the undersigned holders (“Lenders”) of Series CC2011
Secured Promissory Notes ("Notes”) issued by AEROGROW INTERNATIONAL, INC., a
Nevada corporation; and AEROGROW INTERNATIONAL, INC., a Nevada corporation
("Borrower" or the “Company”).

RECITALS

A.           Borrower executed and delivered to Lenders its Series CC2011
Secured Promissory Notes, which Notes total, in the aggregate, $_________.

B.           During April through July 2011, the Company participated in a test
designed to assess the desirability of offering the Company’s products for sale
using a network marketing sales distribution method.  Network marketing, or
multi-level marketing (“MLM”), involves person-to-person direct selling of
products by independent distributors who receive a commission for sales made by
them, and by other independent distributors that they enroll to sell products.

C.           The Company’s management determined that the results of the test of
network marketing distribution suggested that there is an attractive market
opportunity and that the Company should pursue an initiative to sell its
products into the MLM channel of distribution (the “MLM Initiative”).
 
D.           The Lenders will, collectively and in aggregate, receive payments
equal to 1.0% of the Company’s future sales into the MLM distribution channel
(the “MLM Payments”).  The MLM Payments will continue until the earlier to occur
of: (i) $500,000 in MLM Payments having been made to the Lenders; or (ii) the
36th month following the month of the Company’s first sale into the network
marketing channel.

E.           The Company is in the process of developing its strategy and
operational tactics for the MLM Initiative.  The details of the MLM Initiative
and the timing of the MLM Initiative have not been finalized and the Company
therefore cannot estimate the sales, if any, that may be generated if the MLM
Initiative is undertaken at some point in the future.  No assurance can be given
that, if undertaken, the MLM Initiative will be successful, or that the Company
will ultimately choose to implement the MLM Initiative.  In the event the
Company does not pursue the MLM Initiative, no MLM payments will be made to the
Lenders.

AGREEMENT

NOW THEREFORE, for the mutual promises and covenants set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Acknowledgement of Recitals.  Borrower represents that the foregoing Recitals
are true and correct statements of fact.

2. MLM Payments.  Borrower will make the MLM Payments to each Lender
individually out of its general operating funds.  The MLM Payments will be based
on the Company’s revenue from sales into the MLM distribution channel, and will
be subject to the following conditions and limitations.

a.  
The MLM Payments will be made monthly in arrears on the 15th day of each
month.  In the event the 15th day of any given month falls on a day which is a
legal holiday or a day on which banking institutions in the State of Colorado
are authorized or required by law or other government action to close (a
“Non-Business Day”), then the MLM Payments for that month will be made on the
next succeeding day that is not a Non-Business Day.

b.  
In aggregate, the MLM Payments made each month will equal one percent (1%) of
the Company’s sales into the MLM distribution channel for the prior month.

c.  
Each Lender will receive a monthly payment equal to its pro rata share of the
total MLM Payments for that month.  A Lender’s pro rata share will be calculated
by dividing (i) the dollar amount of Notes purchased by the Lender, by (ii) the
total amount of Notes issued by the Company.  (For example, if the Company
issued $1,500,000 in Notes and an individual Lender purchased $300,000 in Notes,
then the Lender’s pro rata share would equal 20 %.)

 
 
 

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d.  
The MLM Payments will begin in the month following the month in which the
Company records its initial sale into the MLM distribution channel and will
continue until the earlier to occur of: (i) $500,000 in aggregate MLM Payments
having been made to the Lenders; or (ii) the 36th month following the month of
the Company’s first sale into the network marketing channel.

3. Lender Statements.  The Company will calculate its sales into the MLM
distribution channel each month.  Concurrent with the MLM Payments each month
the Company will provide a statement to each Lender detailing the MLM sales for
the prior month, the aggregate MLM Payments being made for that month, the
amount being paid to the Lender, the cumulative amount of MLM Payments in
aggregate, and the cumulative amount of MLM Payments made to the Lender.  Until
such time as the Company records its initial sale into the MLM distribution
channel, it shall not be required to provide monthly statements to the Lenders.

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

a.  
Any failure to make the MLM Payments as and when the same shall become due and
payable, and such failure has not been remedied within 15 days after the date on
which notice of such failure has been given;

b.  
The Company shall fail to observe or perform any other covenant, agreement or
warranty contained in, or otherwise commit any breach of, this Agreement or any
other agreement between the Company and the Lenders, and such failure or breach
shall not have been remedied within 30 days after the date on which notice of
such failure or breach shall have been given;

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

5. Remedies.  The Lenders, acting based on a majority vote by principal amount
of the Notes purchased by the Lenders (a “Majority of the Holders”), may declare
a default under Paragraph 4 upon not less than 30 days’ written notice to the
Company.  If the Company fails to cure an Event of Default within such period
(or if the cure cannot be reasonably completed within such period, commence the
cure of the Event of Default and diligently pursue such cure), then the amounts
due to Lenders hereof shall accrue interest at the rate of seventeen percent
(17%) per annum beginning as of the date of the Event of Default, and a Majority
of the Holders may:

a.  
exercise all rights with respect to the amounts owed under this Agreement, or as
permitted by law;

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

c.  
Assert any other remedy available at law or in equity.

 
 
 

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6. Authority to Enter into this Agreement.  Borrower hereby states that it has
the requisite authority to enter into this Agreement and hereby indemnifies the
Lenders from any and all claims or losses which the Lenders may incur as a
result of any party lacking the necessary requisite authority to enter into this
Agreement.  All parties agree to execute any additional documentation or provide
any additional documentation as may be reasonably requested by the Lenders to
properly and further effectuate the terms of this Agreement.

7. Governing Law.  This Agreement shall be governed by the laws of the State of
Colorado.  The prevailing party in any litigation hereunder shall be entitled to
recover reasonable legal fees and costs in addition to all other damages and
remedies at law.

8. Successors Bound/Integration. The provisions of this Agreement shall bind the
respective heirs, executors, personal representatives, administrators,
successors and assigns of the parties hereto.  This Agreement incorporates all
prior discussions and negotiations between the parties and may not be amended
except in writing duly acknowledged by the parties.

9. Severability. The invalidity or unenforceability of any term or provision of
this Agreement shall not affect the validity or enforceability of the remaining
terms and provisions hereof and each provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law.

10. Counterparts.  This Agreement may be separately executed, each of which
shall be considered an original, and when taken together shall constitute the
entire agreement between the parties.

Signature Page Follows

 
 

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IN WITNESS WHEREOF, the undersigned have caused this Revenue Sharing Agreement
to be executed as of the day and year first above written.

AEROGROW INTERNATIONAL, INC.

__________________
By: J. Michael Wolfe
Its:  President and CEO

LENDERS

Name: _______________________________

Joint Holder (if applicable): __________________________

Principal Amount of Note Purchased: _______________

Signature: _____________________________

Joint Holder
Signature (if applicable): ____________________________

Name: _______________________________

Joint Holder (if applicable): __________________________

Principal Amount of Note Purchased: _______________

Signature: _____________________________

Joint Holder
Signature (if applicable): ____________________________