Exhibit
3.7


CERTIFICATE
OF DESIGNATIONS OF


SERIES
A CONVERTIBLE PREFERRED STOCK


OF


AEROGROW
INTERNATIONAL, INC.


a Nevada
corporation





Pursuant
to Section 78.1955 of the


Nevada
Revised Statutes





The
undersigned, on behalf of AeroGrow International, Inc., a Nevada corporation
(the “Company”),
hereby certifies that pursuant to the authority contained in Article Four of the
Company’s Articles of Incorporation, as amended (the “Articles of
Incorporation”), and in accordance with the provisions of the Nevada
Revised Statutes (the “NRS”) ,
the Company’s Board of Directors (the “Board”)
has adopted the following resolutions creating a series of its preferred stock
designated as Series A Convertible Preferred Stock:




Whereas, the Articles of
Incorporation provides for a class of shares known as preferred stock, par value
$0.001 per share, and 20,000,000 of which are issuable from time to time in one
or more series (the “Preferred
Stock”); and




Whereas, the Board is authorized to
determine or alter the rights, preferences, privileges and restrictions granted
to or imposed upon any wholly unissued shares of Preferred Stock, to fix the
number of shares constituting any such series, and to determine the designation
thereof, or any of them.




Now,
Therefore, Be It Resolved, that the Board hereby fixes
and determines the designations of, the number of shares constituting, and the
rights, preferences, privileges and restrictions relating to, a new series of
Preferred Stock as follows:




A.  Designation.  The
series of Preferred Stock is hereby designated Series A Convertible Preferred
Stock with a par value of $0.001 per share (the "Series A
Preferred").




B.  Authorized
Shares.The number of authorized shares constituting the
Series A Preferred shall be 18,000 shares of such series.




C.  The
rights, preferences, privileges, restrictions and other matters relating to the
Series A Preferred are as follows:




1.  Dividend
Rights.




(a)  Series A Preferred
Dividend.Subject to the rights of any series of Preferred
Stock of the Company that may come into existence from time to time, the holders
of shares of Series A Preferred, in preference to the holders of any other
capital stock of the Company, will be entitled to receive when, as and if
declared by the Board, but only out of funds that are legally available
therefor, cumulative cash dividends at the rate of eight percent (8%) of the
Original Issue Price (as defined below) per annum on each outstanding share of
Series A Preferred (as adjusted for any stock splits, stock dividends,
combinations, recapitalizations or the like after the filing date hereof). Such
cumulative dividends will be payable only when, as and if declared by the
Board.




(b)  The
“Original
Issue Price” of the Series A Preferred shall be $1,000.00 per
share.




(c)  So long
as any shares of Series A Preferred are outstanding, the Company shall not pay
or declare any dividend, whether in cash or property, or make any other
distribution on the Company’s common stock, par value $0.001 (the “Common
Stock”), or purchase, redeem or otherwise acquire for value any shares of
Common Stock until all dividends set forth in Section 1(a) above shall have been
paid or declared and set apart, except for acquisitions of Common Stock by the
Company pursuant to agreements which permit the Company to repurchase such
shares at cost upon termination of services to the Company or in exercise of the
Company's right of first refusal upon a proposed transfer.




(d)  In the
event dividends are paid on any share of Common Stock, the Company shall pay an
additional dividend on all outstanding shares of Series A Preferred in a per
share amount equal (on an as-if-converted to Common Stock basis) to the amount
paid or set aside, and in the same form of consideration, for each share of
Common Stock.




(e)  The
provisions of Sections 1(c) and 1(d) shall not apply to:




(i)  a
dividend payable in Common Stock to which the provisions Section 4 apply;
or




(ii)  any
repurchase of any outstanding securities of the Company that is approved by the
Board, including the affirmative vote of the representatives of the Series A
Directors (defined below).




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(f)  The right
of the holders of Series A Preferred to receive payments of dividends under
Section 1(a) may be waived by the holders of a majorityof the outstanding
Series A Preferred voting together as a single class.




2.  Voting
Rights.




(a)  General
Rights.  Each holder of shares of Series A Preferred shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which such shares of Series A Preferred could be converted (pursuant to
Section 4 hereof) immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent and shall
have voting rights and powers equal to the voting rights and powers of the
Common Stock and shall be entitled to notice of any stockholders’ meeting in
accordance with the Bylaws of the Company.  Except as otherwise
provided herein or as required by law, the Series A Preferred shall vote
together with the Common Stock as a single class on an as-if-converted to Common
Stock basis at any annual or special meeting of the stockholders and not as a
separate class, and may act by written consent in the same manner as the Common
Stock with respect to any question upon which holders of Common Stock have the
right to vote.




(b)  Separate Vote of Series A
Preferred.  For so long holders of the Series A Preferred hold
twenty-five percent (25%) of the Company’s outstanding capital stock on an
as-converted-to Common Stock basis (as adjusted for any stock splits, stock
dividends, combinations, recapitalizations or the like after the filing date
hereof), in addition to any other vote or consent required herein or by law, the
vote or written consent of the holders of at least a majority of the outstanding
Series A Preferred voting as a single class shall be necessary for effecting or
validating the following actions (including by way of merger or consolidation or
otherwise):




(i)  any
amendment, alteration, repeal or waiver of any provision of the Articles of
Incorporation or the Company’s Bylaws (including any filing of a Certificate of
Designation);




(ii)  any
increase or decrease in the authorized number of shares of Preferred Stock,
including the Series A Preferred;




(iii)  any
authorization or any designation, whether by reclassification or otherwise, of
any new class or series of stock or any other securities convertible into or
exercisable for equity securities of the Company ranking on a parity with or
senior to the Series A Preferred in right of redemption, conversion, liquidation
preference, registration rights, voting or dividends or any increase in the
authorized or designated number of any such new class or series; or




(iv)  the entry
into any agreement to which the Company is a party regarding an Asset Transfer
or Acquisition (each as defined in Section 3) or any other merger (whether
or not the Company is the surviving corporation), consolidation, corporate
reorganization, reclassification or recapitalization of the
Company.




(c)  Election
of Board of Directors.




(i)  For so
long holders of the Series A Preferred hold twenty-five percent (25%) of the
Company’s outstanding capital stock on an as-converted-to Common Stock basis (as
adjusted for any stock splits, stock dividends, combinations, recapitalizations
or the like after the filing date hereof), the holders of Series A Preferred,
voting together as a single class on an as-if-converted to Common Stock basis,
shall be entitled to elect three (3) members of the Board (the “Series A
Directors”)at
each meeting or pursuant to each consent of the Company’s stockholders for the
election of directors, and to remove from office such director and to fill any
vacancy caused by the resignation, death or removal of such
director.  Each Series A Director shall be elected by the affirmative
vote or consent of the holders of at least a majority of the then-outstanding
Series A Preferred outstanding capital stock, voting together as a single class
on an as-converted-to Common Stock basis.




(ii)  The
holders of Common Stock and the then-outstanding Preferred Stock, voting
together as a single class on an as-if-converted to Common Stock basis, shall be
entitled to elect all remaining members of the Board at each meeting or pursuant
to each consent of the Company’s stockholders for the election of directors, and
to remove from office such directors and to fill any vacancy caused by the
resignation, death or removal of such directors.




(iii)  Notwithstanding
the provisions of Section 78.335 of the NRS, any Series A Director may be
removed at any time (with or without cause) by the vote of the holders of at
least a majority of all of the then-outstanding shares of Series A Preferred,
voting as a separate class by (x) written consent, if the consenting holders of
Series A Preferred hold a sufficient number of shares to remove such director at
a meeting of stockholders or (y) in person or by proxy at a special meeting of
holders of shares of Series A Preferred called for such purpose.  A
Series A Director may not be removed by the vote or consent of the holders of
Common Stock.  Any vacancy created by the removal, death or
resignation of a Series A Director may be filled by the remaining Series A
Director(s), provided,
however, that the holders of at least a majority of all of the
then-outstanding shares of Series A Preferred by (x) written consent, if the
consenting holders of Series A Preferred hold a sufficient number of shares to
elect their designee at a meeting of stockholders or (y) in person or by proxy
at a special meeting of holders of shares of Series A Preferred called for such
purpose, may override such appointment by the remaining Series A
Director(s).




3.  Liquidation,
Asset Transfer or Acquisition Rights.




(a)  Liquidation Preference of the Series
A Preferred.Upon any liquidation, dissolution, or winding up
of the Company, whether voluntary or involuntary, or any Acquisition or Asset
Transfer (each, a “Liquidation
Event”), and before any distribution or payment shall be made to the
holders of any Common Stock, subject to the right of any other series of
Preferred Stock that may from time to time come into existence, the holders of
Series A Preferred shall be entitled to be paid out of the assets of the Company
legally available for distribution, or the consideration received in such
Liquidation Event, for each share of Series A Preferred held by them, an amount
per share of Series A Preferred equal to the greater of (i) one and a half (1.5)
times the Original Issue Price (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such shares
after the filing date hereof) plus any accrued but unpaid
cumulative dividends (the “Series A
Liquidation Amount”) or (ii) the amount a share of Series A Preferred
would be entitled to receive in such Liquidation Event if such share of Series A
Preferred were to be converted to Common Stock immediately prior to such
Liquidation Event.  If, upon any such Liquidation Event, the assets of
the Company (or the consideration received in such transaction) shall be
insufficient to make payment in full to all holders of Series A Preferred of the
Series A Liquidation Amount, then such assets (or consideration) shall be
distributed among the holders of Series A Preferred at the time outstanding,
ratably in proportion to the full amounts to which they would otherwise be
respectively entitled to receive.




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(b)  Deemed
Conversion.  Notwithstanding Section 3(a) above,
solely for purposes of determining the amount each holder of shares of Series A
Preferred is entitled to receive with respect to a Liquidation Event, the Series
A Preferred shall be treated as if all holders of such series had converted such
holder’s shares of such series into shares of Common Stock immediately prior to
the Liquidation Event if, as a result of an actual conversion of the Series A
Preferred (including taking into account the operation of this paragraph (b)
with respect to all  Series A Preferred), holders of such series would
receive (with respect to such series), in the aggregate, an amount greater than
the amount that would be distributed to holders of Series A Preferred which had
not converted such Series A Preferred into shares of Common Stock.  If
holders of Series A Preferred are treated as if they had converted shares of
Series A Preferred into Common Stock pursuant to this paragraph, then such
holders shall not be entitled to receive any distribution pursuant to Section
3(a)(i) that would otherwise be made to holders of such series of Series A
Preferred




(c)  Remaining
Assets.After the payment of the full liquidation preferences
of the Series A Preferred as set forth in Section 3(a) above, the remaining
assets of the Company legally available for distribution in such Liquidation
Event (or the consideration received in such transaction), if any, shall be
distributed to the holders of the Common Stock, pro rata based on the number
of shares of Common Stock held by each holder.




(d)  Acquisition and Asset
Transfer.For the purposes of this Certificate of
Designations: (i) “Acquisition”
shall mean (A) any consolidation, share exchange or merger of the Company with
or into any other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Company immediately prior to
such consolidation, share exchange, merger or reorganization, own less than
fifty percent (50%) of the voting power of the surviving or successor entity (or
in the event stock or ownership interests of an affiliated entity are issued in
such transaction, less than fifty percent (50%) of the voting power of such
affiliated entity) immediately after such consolidation, share exchange, merger
or reorganization; or (B) any transaction or series of related transactions to
which the Company is a party in which in excess of fifty percent (50%) of the
Company’s outstanding voting power is transferred; providedthat an Acquisition
shall not include any transaction or series of transactions principally for bona
fide equity financing purposes in which cash is received by the Company or any
successor or indebtedness of the Company is cancelled or converted or a
combination thereof; and (ii)  “Asset
Transfer” shall mean a sale, lease, conveyance, exclusive license or
other disposition of all or substantially all of the assets of the
Company.  At the election of the holders of at least a majority of the
outstanding Series A Preferred voting together as a single class on an
as-if-converted to Common Stock basis, an Acquisition or Asset Transfer may be
determined not to be considered a Liquidation Event under this Section
3.




(e)  Determination of Value if Proceeds
Other than Cash.In any Acquisition or Asset Transfer, if the
consideration to be received by the Company is other than cash, its value will
be deemed its fair market value as determined in good faith by the Board in
accordance with this Section 3(e).




4.  Conversion
Rights.




The
holders of the Series A Preferred shall have the following rights with respect
to the conversion of the Series A Preferred into shares of Common Stock (the
“Conversion
Rights”):




(a)  Optional
Conversion.  Subject to and in compliance with the provisions
of this Section 4, any shares of Series A Preferred may, at the option of the
holder, be converted at any time into fully-paid and nonassessable shares of
Common Stock.  The number of shares of Common Stock to which a holder
of Series A Preferred shall be entitled upon conversion shall be the product
obtained by multiplying the Series A Preferred Conversion Rate then in effect
(as defined below and as determined as provided in Section 4(b)) by the number
of shares of Series A Preferred being converted.




(b)  Series A Preferred Conversion
Rate.  The conversion rate in effect at any time for conversion
of the Series A Preferred (the “Series A
Preferred Conversion Rate”) shall be the quotient obtained by dividing
the Original Issue Price by the Series A Preferred Conversion Price (as defined
below), calculated as provided in Section 4(c).




(c)  Series A Preferred Conversion
Price. The conversion price for the Series A Preferred shall
initially be $0.20 as of the date of the filing of this Certificate of
Designations (the “Series A
Preferred Conversion Price”).  Such initial Series A Preferred
Conversion Price shall be adjusted from time to time in accordance with this
Section 4.  All references to the Series A Preferred Conversion Price
herein shall mean the Series A Preferred Conversion Price as so
adjusted.




(d)  Mechanics of
Conversion.  Each holder of Series A Preferred who desires to
convert the same into shares of Common Stock pursuant to this Section 4 shall
surrender the certificate or certificates therefor, duly endorsed, or an
affidavit of loss and a written agreement reasonably acceptable to the Company
to indemnify the Company from any loss, damage, cost or expense incurred by the
Company arising out of or relating to such lost certificate, at the office of
the Company or any transfer agent for the Series A Preferred, and shall give
written notice to the Company at such office that such holder elects to convert
the same.  Such notice shall state the number of shares of Series A
Preferred being converted.  Thereupon, the Company shall promptly
issue and deliver at such office to such holder a certificate or certificates
for the number of shares of Common Stock to which such holder is entitled and
shall promptly pay (i) in cash or, to the extent sufficient funds are not then
legally available therefor, in Common Stock (at the Common Stock’s fair market
value determined in good faith by the Board as of the date of such conversion),
any dividends declared but unpaid thereon and (ii) in cash (at the Common
Stock’s fair market value determined in good faith by the Board as of the date
of conversion) the value of any fractional share of Common Stock otherwise
issuable to any holder of Series A Preferred.  Such conversion shall
be deemed to have been made at the close of business on the date of such
surrender of the certificates representing the shares of Series A Preferred to
be converted, and the person entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder of such shares of Common Stock on such date.  If the conversion
is in connection with an underwritten public offering of securities registered
pursuant to the Securities Act of 1933, as amended (the “Securities
Act”), the conversion may, at the option of any holder tendering such
Series A Preferred for conversion, be conditioned upon the closing with the
underwriters of the sale of securities pursuant to such offering, in which event
any persons entitled to receive Common Stock upon conversion of such Series A
Preferred shall not be deemed to have converted such Series A Preferred until
immediately prior to the closing of such sale of securities.




3




(e)  Adjustment for Stock Splits and
Combinations.  If at any time or from time to time after the
date that the first share of Series A Preferred is issued (the “Series A Original
Issue Date”) the Company effects a split or subdivision of the
outstanding Common Stock without a corresponding split or subdivision of the
Series A Preferred, the Series A Preferred Conversion Price in effect
immediately before that split or subdivision shall be proportionately
decreased.  Conversely, if at any time or from time to time after the
Series A Original Issue Date the Company combines the outstanding shares of
Common Stock into a smaller number of shares without a corresponding combination
of the Series A Preferred, the Series A Preferred Conversion Price in effect
immediately before the combination shall be proportionately
increased.  Any adjustment under this Section 4(e) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.




(f)  Adjustment for Common Stock Dividends
and Distributions.  If at any time or from time to time after
the Series A Original Issue Date the Company pays to holders of Common Stock a
dividend or other distribution payable in additional shares of Common Stock
without a corresponding dividend or other distribution to holders of Series A
Preferred on an as-if converted to Common Stock basis, the Series A Preferred
Conversion Price that is then in effect shall be decreased as of the time of
such issuance, as provided below:




(i)  the
Series A Preferred Conversion Price shall be adjusted by multiplying the Series
A Preferred Conversion Price then in effect by a fraction:




(A)  the
numerator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance, and




(B)  the
denominator of which is the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance plus the number of
shares of Common Stock issued or issuable (including shares of Common Stock
issued or issuable upon exercise of any securities convertible into, or
exchangeable for, shares of, Common Stock) in payment of such dividend or
distribution.




(ii)  if the
Company fixes a record date to determine which holders of Common Stock are
entitled to receive such dividend or other distribution, the Series A Preferred
Conversion Price shall be adjusted according to Section 4(f)(i) above as of the
close of business on such record date and the number of shares of Common Stock
shall be calculated immediately prior to the close of business on such record
date as if such dividend or distribution had been paid or made in full on such
record date; and




(iii)  if such
record date is fixed and such dividend is not fully paid or if such distribution
is not fully made on the date fixed therefor, the Series A Preferred Conversion
Price shall be recomputed accordingly as of the close of business on such record
date and thereafter the Series A Preferred Conversion Price shall be adjusted
pursuant to this Section 4(f) to reflect the actual payment of such dividend or
distribution.




(g)  Adjustment for Reclassification,
Exchange, Substitution, Reorganization, Merger or
Consolidation.  If at any time or from time to time after the
Series A Original Issue Date, the Common Stock issuable upon the conversion of
the Series A Preferred is changed into the same or a different number of shares
of any class or classes of stock, whether by recapitalization, reclassification,
merger, consolidation or otherwise (other than an Acquisition or Asset Transfer
(as defined in Section 3) or a subdivision or combination of shares or stock
dividend or a reorganization, merger, consolidation or sale of assets provided
for elsewhere in this Section 4), in any such event each holder of Series A
Preferred shall then have the right to convert such stock into the kind and
amount of stock and other securities and property receivable upon such
recapitalization, reclassification, merger, consolidation or other change by
holders of the maximum number of shares of Common Stock into which such shares
of Series A Preferred could have been converted immediately prior to such
recapitalization, reclassification, merger, consolidation or change, all subject
to further adjustment as provided herein or with respect to such other
securities or property by the terms thereof.  In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 4 with respect to the rights of the holders of Series A Preferred
after the capital reorganization to the end that the provisions of this Section
4 (including adjustment of the Series A Preferred Conversion Price then in
effect and the number of shares issuable upon conversion of the Series A
Preferred) shall be applicable after that event and be as nearly equivalent as
practicable.  As a condition to any such recapitalization,
reclassification, merger, consolidation or other transaction contemplated above,
the Company shall reserve a sufficient number of the shares or securities, or a
sufficient amount of the property, received or to be received to allow for the
conversion of all outstanding shares of Series A Preferred in accordance with
this Section 4(g).




(h)  Sale
of Shares Below Series A Preferred Conversion Price.




(i)  If at any
time or from time to time after the Series A Original Issue Date, the Company
issues or sells, or is deemed by the express provisions of this Section 4(h) to
have issued or sold, Additional Shares of Common Stock (as defined below), other
than as provided in Sections 4(e), 4(f) or 4(g) above, without consideration (in
which case the Company shall be deemed to have received an aggregate of $0.001
of consideration for all such Additional Shares of Common Stock issued or deemed
to be issued) or for an Effective Price (as defined below) less than the then
effective Series A Preferred Conversion Price (a “Qualifying
Dilutive Issuance”), then and in each such case, the then existing Series
A Preferred Conversion Price shall be reduced, as of the opening of business on
the date of such issue or sale, to a price determined by multiplying the Series
A Preferred Conversion Price in effect immediately prior to such issuance or
sale by a fraction:




(A)  the
numerator of which shall be (x) the number of shares of Common Stock deemed
outstanding (as determined below) immediately prior to such issue or sale, plus
(y) the number of shares of Common Stock that the Aggregate Consideration (as
defined below) received or deemed received by the Company for the total number
of Additional Shares of Common Stock so issued would purchase at such
then-existing Series A Preferred Conversion Price, and




(B)  the
denominator of which shall be the number of shares of Common Stock deemed
outstanding (as determined below) immediately prior to such issue or sale plus
the total number of Additional Shares of Common Stock so issued.




For the
purposes of the preceding sentence, the number of shares of Common Stock deemed
to be outstanding as of a given date shall be the sum of (x) the number of
shares of Common Stock outstanding immediately preceding the event giving rise
to the Qualifying Dilutive Issuance, (y) the number of shares of Common Stock
into which the then outstanding shares of Series A Preferred could be converted
if fully converted immediately preceding the event giving rise to the Qualifying
Dilutive Issuance, and (z) the number of shares of Common Stock that could be
obtained through the exercise or conversion of all other vested rights, options
and convertible securities outstanding immediately preceding the event giving
rise to the Qualifying Dilutive Issuance.




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(ii)  No
adjustment shall be made to the Series A Preferred Conversion Price in an amount
less than one cent per share.  Any adjustment otherwise required by
this Section 4(h) that is not required to be made due to the preceding sentence
shall be included in any subsequent adjustment to the Series A Preferred
Conversion Price.




(iii)  For the
purpose of making any adjustment required under this Section 4(h), the aggregate
consideration received by the Company for any issue or sale of securities (the
“Aggregate
Consideration”) shall be defined as: (A) to the extent it consists of
cash, be computed at the net amount of cash received by the Company after
deduction of any underwriting or similar commissions, compensation or
concessions paid or allowed by the Company in connection with such issue or sale
but without deduction of any expenses payable by the Company in connection with
such issue or sale, (B) to the extent it consists of property other than cash,
be computed at the fair value of that property as determined in good faith by
the Board, and (C) if Additional Shares of Common Stock, Convertible Securities
(as defined below) or rights or options to purchase either Additional Shares of
Common Stock or Convertible Securities are issued or sold together with other
stock or securities or other assets of the Company for a consideration that
covers both, be computed as the portion of the consideration so received that
may be reasonably determined in good faith by the Board to be allocable to such
Additional Shares of Common Stock, Convertible Securities or rights or
options.




(iv)  For the
purpose of the adjustment required under this Section 4(h), if the Company
issues or sells (x) Preferred Stock or other stock, options, warrants, purchase
rights or other securities convertible into or exchangeable for, Additional
Shares of Common Stock (such convertible stock or securities being herein
referred to as “Convertible
Securities”) or (y) rights or options for the purchase of Additional
Shares of Common Stock or Convertible Securities, and if the Effective Price of
such Additional Shares of Common Stock issued or deemed to be issued as provided
below is less than the Series A Preferred Conversion Price, in each case the
Company shall be deemed to have issued at the time of the issuance of such
rights or options or Convertible Securities the maximum number of Additional
Shares of Common Stock issuable upon exercise or conversion thereof and to have
received as consideration for the issuance of such shares an amount equal to the
total amount of the consideration, if any, received by the Company for the
issuance of such rights or options or Convertible Securities, plus:




(A)  in the
case of such rights or options, the minimum amounts of consideration, if any,
payable to the Company upon the exercise of such rights or options;
and




(B)  in the
case of Convertible Securities, the minimum amounts of consideration, if any,
payable to the Company upon the conversion thereof (other than by cancellation
of liabilities or obligations evidenced by such Convertible Securities); provided thatif the minimum amounts
of such consideration cannot be ascertained, but are a function of antidilution
or similar protective clauses, the Company shall be deemed to have received the
minimum amounts of consideration without reference to such clauses.




(C)  If the
minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options or Convertible Securities is reduced over time or
on the occurrence or non-occurrence of specified events other than by reason of
antidilution adjustments, the Effective Price shall be recalculated using the
figure to which such minimum amount of consideration is reduced; provided further, that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options or Convertible Securities is subsequently
increased, the Effective Price shall be again recalculated using the increased
minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options or Convertible Securities.  In
either such case, the Series A Preferred Conversion Price shall be readjusted
accordingly.




(D)  No
further adjustment of the Series A Preferred Conversion Price, as adjusted upon
the issuance of such rights, options or Convertible Securities, shall be made as
a result of the actual issuance of Additional Shares of Common Stock or the
exercise of any such rights or options or the conversion of any such Convertible
Securities.  If any such rights or options or the conversion privilege
represented by any such Convertible Securities shall expire without having been
exercised, the Series A Preferred Conversion Price as adjusted upon the issuance
of such rights, options or Convertible Securities shall be readjusted to the
Series A Preferred Conversion Price that would have been in effect had an
adjustment been made on the basis that the only Additional Shares of Common
Stock so issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of conversion
of such Convertible Securities, and such Additional Shares of Common Stock, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise, plus the consideration, if any, actually received by the
Company for the granting of all such rights or options, whether or not
exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities, providedthat such
readjustment shall not apply to prior conversions of Series A
Preferred.




(v)  Notwithstanding
any other provisions of this Section 4(h), except to the limited extent provided
for in Section 4(h)(iv), no adjustment of the Series A Preferred Conversion
Price pursuant to this Section 4(h) shall have the effect of increasing such
Series A Preferred Conversion Price above the Series A Preferred Conversion
Price in effect immediately prior to such adjustment.




(vi)  For the
purpose of making any adjustment to the Series A Preferred Conversion Price
required under this Section 4(h), “Additional Shares
of Common Stock” shall mean all shares of Common Stock issued by the
Company or deemed to be issued pursuant to this Section 4(h) (including shares
of Common Stock subsequently reacquired or retired by the Company), other
than:




(A)  shares of
Common Stock issued upon conversion of the Series A Preferred or as a dividend
or distribution on the Series A Preferred;




(B)  shares of
Common Stock and/or options, warrants or other Common Stock purchase rights and
the Common Stock issued pursuant to such options, warrants or other rights
issued or issuable to employees, officers or directors of, or consultants or
advisors to, the Company or any of its subsidiaries pursuant to stock purchase
or stock option plans or other similar arrangements approved by the
Board;




(C)  shares of
Common Stock issued pursuant to the exercise of Convertible Securities
outstanding as of the Series A Original Issue Date;




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(D)  shares of
Common Stock or Convertible Securities issued pursuant to any equipment loan or
commercial credit or leasing arrangement, real property leasing arrangement or
debt financing from a bank or similar financial institution entered into
primarily for non-equity financing purposes approved by the Board;




(E)  shares of
Common Stock issued in connection with any stock split, stock dividend,
reclassification or similar non-economic event by the Company;




(F)  shares of
Common Stock or Convertible Securities issued pursuant to a transaction or
series of related transactions with respect to which the holders of at least a
majority of the outstanding shares of the Series A Preferred have waived any
adjustment of the Series A Preferred Conversion Price pursuant to this Section
4(h) in connection with the issuance of such securities;




(G)  shares of
Common Stock and/or Convertible Securities issued for consideration other than
cash pursuant to a merger, consolidation, acquisition, strategic alliance or
similar business combination by the Board;




(H)  all
securities issued or issuable to the purchasers of Series A Preferred pursuant
to the Series A Preferred Stock and Warrant Purchase Agreement dated on or about
the Series A Original Issue Date (the “Series A Purchase
Agreement”), including warrants to purchase Series A Preferred, shares of
Series A Preferred (whether issued initially pursuant to the Series A Purchase
Agreement or upon the exercise of warrants) and all shares of Common Stock
issued or issuable upon conversion of Series A Preferred; and




(I)  all
securities issued or issuable to the purchasers of Series A Preferred pursuant
to agreements with investors entered into subsequent to the Series A Original
Issue Date but which agreements contain terms that are substantially similar to
the Series A Purchase Agreement.




References
to Common Stock in the subsections of this clause (vi) above shall mean all
shares of Common Stock issued by the Company or deemed to be issued pursuant to
this Section 4(h).  The “Effective
Price” of Additional Shares of Common Stock shall mean the quotient
determined by dividing the total number of Additional Shares of Common Stock
issued or sold, or deemed to have been issued or sold by the Company under this
Section 4(h), into the Aggregate Consideration received, or deemed to have been
received by the Company for such issue under this Section 4(h), for such
Additional Shares of Common Stock.  In the event that the number of
shares of Additional Shares of Common Stock or the Effective Price cannot be
ascertained at the time of issuance, such Additional Shares of Common Stock
shall be deemed issued immediately upon the occurrence of the first event that
makes such number of shares or the Effective Price, as applicable,
determinable.




(vii)  In the
event that the Company issues or sells, or is deemed to have issued or sold,
Additional Shares of Common Stock in a Qualifying Dilutive Issuance (the “First Dilutive
Issuance”), then in the event that the Company issues or sells, or is
deemed to have issued or sold, Additional Shares of Common Stock in a Qualifying
Dilutive Issuance other than the First Dilutive Issuance pursuant to the same
instruments as the First Dilutive Issuance (a “Subsequent
Dilutive Issuance”), then and in each such case upon a Subsequent
Dilutive Issuance the Series A Preferred Conversion Price shall be reduced to
the Series A Preferred Conversion Price that would have been in effect had the
First Dilutive Issuance and each Subsequent Dilutive Issuance all occurred on
the closing date of the First Dilutive Issuance.




(i)  Other
Distributions.Subject to the terms of Section 1, in the event
the Company shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by the Company or other persons, assets
(excluding cash dividends) or options or rights not referred to in this Section
4, then, in each such case for the purpose of this Section 4, the holders of
Series A Preferred shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Company into which their shares of Series A Preferred are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Company entitled to receive such distribution.




(j)  Certificate of
Adjustment.  In each case of an adjustment or readjustment of
the Series A Preferred Conversion Price for the number of shares of Common Stock
or other securities or property issuable upon conversion of the Series A
Preferred, if such series of the Series A Preferred is then convertible pursuant
to this Section 4, the Company, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and prepare a certificate
showing such adjustment or readjustment, and shall mail such certificate, by
first class mail, postage prepaid, to each registered holder of such series of
the Series A Preferred at the holder’s address as shown in the Company’s
books.  The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (i) the Aggregate Consideration
received or deemed to be received by the Company for any Additional Shares of
Common Stock issued or sold or deemed to have been issued or sold, (ii) the
Series A Preferred Conversion Price at the time in effect, (iii) the number of
Additional Shares of Common Stock issued or sold or deemed to have been issued
or sold, and (iv) the type and amount, if any, of other securities or property
that at the time would be received upon conversion of such series of the Series
A Preferred.




(k)  Notices of Record
Date.  Upon (i) any taking by the Company of a record of the
holders of any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution, or (ii)
any Acquisition (as defined in Section 3) or other capital reorganization of the
Company, any reclassification or recapitalization of the capital stock of the
Company, any merger or consolidation of the Company with or into any other
corporation, or any Asset Transfer (as defined in Section 3), or any Liquidation
Event or other voluntary or involuntary dissolution, liquidation or winding up
of the Company, the Company shall mail to each holder of Series A Preferred at
least ten (10) days prior to (x) the record date, if any, specified therein, or
(y) if no record date is specified, the date upon which such action is to take
effect (or, in either case, such shorter period approved by the holders of at
least a majority of the then outstanding Series A Preferred voting together as a
single class on an as-if-converted to Common Stock basis) a notice specifying
(A) the date on which any such record is to be taken for the purpose of such
dividend or distribution and a description of such dividend or distribution, (B)
the date on which any such Acquisition, reorganization, recapitalization,
reclassification, transfer, consolidation, merger, Asset Transfer, Liquidation
Event, dissolution, liquidation or winding up is expected to become effective,
and (C) the date, if any, that is to be fixed as to when the holders of record
of Common Stock (or other securities) shall be entitled to exchange their shares
of Common Stock (or other securities) for securities or other property
deliverable upon such Acquisition, reorganization, recapitalization,
reclassification, transfer, consolidation, merger, Asset Transfer, Liquidation
Event, dissolution, liquidation or winding up.




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(l)  Automatic
Conversion.




(i)  Each
share of Series A Preferred shall automatically be converted into shares of
Common Stock, based on the then-effective Series A Preferred Conversion Price,
at any time upon the affirmative election of the holders of at least a majority
of the then outstanding shares of the Series A Preferred voting together as a
single class on an as-if-converted to Common Stock basis.




(ii)  Upon the
occurrence of the events specified in Section 4(l)(i) above, the outstanding
shares of  Series A Preferred shall be converted automatically without
any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Company or its
transfer agent and the holder thereof shall have all rights with respect to the
Common Stock to be received regardless of the timing of the delivery of new
stock certificates; provided,however, that the Company
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion unless the certificates evidencing such
shares of Series A Preferred are either delivered to the Company or its transfer
agent as provided below, or the holder notifies the Company or its transfer
agent that such certificates have been lost, stolen or destroyed and executes an
agreement reasonably satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection with such certificates.  Upon
the occurrence of such automatic conversion of any series of the Series A
Preferred, the holders of such series of the Series A Preferred shall surrender
the certificates representing such shares at the office of the Company or any
transfer agent for the Series A Preferred.  Thereupon, there shall be
issued and delivered to such holder promptly at such office and in its name as
shown on such surrendered certificate or certificates, a certificate or
certificates for the number of shares of Common Stock into which the shares of
such series of the Series A Preferred surrendered were convertible on the date
on which such automatic conversion occurred, and any dividends declared but
unpaid thereon shall be paid in accordance with the provisions of Section
4(d).




(m)  Fractional
Shares.  No fractional shares of Common Stock or Series A
Preferred shall be issued upon conversion of any Series A
Preferred.  All shares of Common Stock (including fractions thereof)
or Series A Preferred, as applicable, issuable in connection with the conversion
of shares of Series A Preferred by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share.  If, after the aforementioned aggregation, the
conversion would result in the issuance of any fractional share, the Company
shall, in lieu of issuing any fractional share, pay cash equal to the product of
such fraction multiplied by the Common Stock’s or Series A Preferred’s fair
market value as applicable (as determined in good faith by the Board) on the
date of conversion.




(n)  Reservation of Stock Issuable Upon
Conversion.  The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of the Series A Preferred,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series A
Preferred.  If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
then outstanding shares of the Series A Preferred, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.




(o)  Notices.  Any notice
required by the provisions of this Section 4 shall be in writing and shall be
deemed effectively given: (i) upon personal delivery to the party to be
notified; (ii) when sent by confirmed electronic mail or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day; (iii) five (5) business days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one (1)
business day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with verification of receipt.  All
notices shall be addressed to each holder of record at the address of such
holder appearing on the books of the Company.




(p)  Payment of
Taxes.  The Company will pay all taxes (other than taxes based
upon income) and other governmental charges that may be imposed with respect to
the issue or delivery of shares of Common Stock upon conversion of shares of
Series A Preferred, excluding any tax or other charge imposed in connection with
any transfer involved in the issue and delivery of shares of Common Stock in a
name other than that in which the shares of Series A Preferred so converted were
registered.




(q)  No Dilution or Impairment. The
Company will not, by amendment of this Certificate of Designation or its
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in carrying out the provisions of this Section 4 and
in the taking of all such action as may be necessary or appropriate in order to
protect the Conversion Rights of the holders of the shares of Series A Preferred
against impairment.




5.  No
Reissuance of Series A Preferred.




Any
shares of Series A Preferred that are redeemed or otherwise acquired by the
Company or any of its subsidiaries by reason or purchase, conversion, or
otherwise shall be automatically and immediately canceled and shall not be
reissued, sold or transferred.  Neither the Company nor any of its
subsidiaries may exercise any voting or other rights granted to the holders of
Series A Preferred following redemption.




6.  Waiver.




Any of
the rights, powers, preferences and other terms of the Series A Preferred set
forth herein may be waived on behalf of all holders of Series A Preferred by the
affirmative written consent or vote of the holders of at least a majority of the
then outstanding shares of Series A Preferred voting as a single class on an
as-if-converted to Common Stock basis.




[The remainder of this page is
intentionally left blank.]


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In
Witness Whereof,AeroGrow International, Inc. has caused this Certificate of Designations
of Series A Convertible Preferred Stock to be executed by its Chief Executive
Officer, this 30th day of June, 2009.






AeroGrow
      International, Inc.By:
                /s/ Jervis
      B.
      PerkinsName: Jervis B.
      PerkinsTitle: Chief
      Executive Officer














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