Item 1.01 Entry into a Material Definitive Agreement.
On July 10, 2014, AeroGrow International, Inc. (the "Company") entered a $4.5
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 three advances of up to $1.0
million, $1.5 million, and $2.0 million in July, August, and September,
respectively with a due date of February 15, 2015. Interest will be charged at
the stated rate of 10%, but will paid in shares of AeroGrow common stock, valued
at a price per share equal to the Series B Preferred Conversion Price on the
date the Term Loan is paid in full.
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. As
reported in the Company's Annual Report on Form 10-K for the year ended March
31, 2014, The Scotts Miracle-Gro Company and its affiliates beneficially own
approximately 30.2% of the Company's common stock (on an as-converted
basis). The Term Loan was approved by disinterested members of the Company's
Board of Directors.
The foregoing description of the $4.5 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.
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
Item 3.02 Unregistered Sales of Equity Securities
To the extent that the Company has agreed to issue common stock as interest on
the$4.5 Million Term Loan Agreement, the information set forth in Item 1.01
above is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
Exhibit Number Description
10.1 Term Loan and Security Agreement
99.1 Press Release Issued by AeroGrow International, Inc. on July
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