Exhibit 10.2

 
TEMPORARY AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS TEMPORARY AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Amendment") is made
and effective this 30th day of September, 2009 by and among AEROGROW
INTERNATIONAL, INC. (“Borrower”), Greg Clarke and H. MacGregor Clarke, both
individual residents of the state of Colorado, Jervis B. Perkins, an individual
resident of the state of Illinois (collectively, the “Validity Guarantors”),
JACK J. WALKER, an individual resident of the state of Colorado (“Guarantor”;
Borrower and Guarantor are collectively referred to herein as “Obligors”) and
FCC, LLC d/b/a First Capital ("Lender").

WHEREAS, Lender and Borrower are parties to a certain Loan and Security
Agreement, dated June 23, 2008 (as amended from time to time, the "Agreement")
pursuant to which Lender makes loans and other extensions of credit to Borrower,
which loans and extensions of credit are secured by security interests upon the
Collateral, and guaranteed unconditionally by Guarantor; and

WHEREAS, the Agreement establishes a secured lending facility limited to a
Borrowing Base, which limits the amount that Borrower may borrow under the
Agreement (“Original Borrowing Base”); and

WHEREAS, the parties desire to increase temporarily the Original Borrowing Base
as hereinafter set forth in order to permit Borrower to borrow increased funds
under the Agreement.

NOW THEREFORE, in consideration of the mutual conditions and agreements set
forth in the Agreement and this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

     1.  
Definitions.  Capitalized terms used in this Amendment, unless otherwise defined
herein, shall have the meaning ascribed to such term in the Agreement.

     2.  
Temporary Amendments.  The amendment herein shall only be applicable beginning
October 1, 2009 and ending November 15, 2009 (“Temporary Amendment Period”).  On
November 16, 2009, the increase to the Original Borrowing Base herein shall
become null and void and the Borrowing Base shall revert to the Original
Borrowing Base.

     3.  
Temporary Increase to the Original Borrowing Base.  This Amendment represents a
temporary increase in the Original Borrowing Base.  As such, on November 16,
2009 Borrower shall repay the loans under the Agreement in an amount sufficient
to comply with the Original Borrowing Base in effect.  Subject to the conditions
set forth below, the Agreement is amended for the term of the Temporary
Amendment Period by deleting Item 1(a)(ii)(B)(2) of the Schedule to the
Agreement and replacing it with the following:

(i) from October 1, 2009 through November 15, 2009, the first two paragraphs of
Item 1(a)(ii)(B)(2) of the Schedule shall read:

 
(2)
As outlined below, the percentage (%) of the dollar value (determined at the
lower of cost or market value) of Eligible Inventory;

 

  Period (July 2009 through March 2010)    %     July 2009 through November 15,
2009        80 %   November 16 through November 30, 2009     70 %   December
2009      65 %   January 2010      60 %   February 2010 through March 2010      
50 %

 
 
4.
Conditions.  The effectiveness of this Amendment is subject to the following
conditions precedent (unless specifically waived in writing by Lender):

 
(a)
Borrower shall have executed and delivered such other documents and instruments
as Lender may require.

 
(b)
All proceedings taken in connection with the transactions contemplated by this
Amendment and all documents, instruments and other legal matters incident
thereto shall be satisfactory to Lender and its legal counsel.

 
(c)
No Default shall be continuing.

 
(d)
There shall have occurred no material adverse change in the business,
operations, financial condition, profits or prospects of Borrower, or in the
Collateral.

 
(e)
Borrower shall pay a document fee to Lender in the amount of $1,500
(“Documentation Fee”).  The Documentation Fee shall be earned at closing of this
Amendment and is non-refundable.

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5.           Representations and Warranties of Obligors.  Each Obligor
represents and warrants that (a) no Default exists under the Agreement; (b) the
representations and warranties of Borrower contained in the Agreement were true
and correct in all material respects when made and continue to be true and
correct in all material respects on the date hereof; (c) the execution, delivery
and performance by Borrower of this Amendment and the consummation of the
transactions contemplated hereby are within the corporate power of Borrower and
have been duly authorized by all necessary corporate action on the part of
Borrower, do not require any approval or consent, or filing with, any
governmental agency or authority, do not violate any provisions of any law, rule
or regulation or any provision of any order, writ, judgment, injunction, decree,
determination or award presently in effect in which Borrower is named or
any provision of the charter documents of Borrower and do not result in a breach
of or constitute a default under any agreement or instrument to which Borrower
is a party or by which it or any of its properties are bound; (d) this Amendment
constitutes the legal, valid and binding obligation of Obligors, enforceable
against Obligors in accordance with its terms; (e) all payroll taxes required to
be withheld from the wages of Borrower's employees have been paid or deposited
when due; (f) each Obligor is entering into this Amendment freely and
voluntarily with the advice of legal counsel of his or its own choosing; (g)
each has freely and voluntarily agreed to the releases, waivers and undertakings
set forth in this Amendment; (h) each understands that this increase in the
Original Borrowing Base is temporary and that the Borrowing Base will
automatically revert to the Original Borrowing Base on November 16, 2009; and
(i) each understands that any amounts outstanding, due and owing to Lender in
excess of the Original Borrowing Base on November 16, 2009 shall be immediately
due and payable to Lender.

6.           Reaffirmation of Obligations.  Borrower hereby ratifies and
reaffirms the Agreement and all of its obligations and liabilities
thereunder.  Each Guarantor hereby ratifies and reaffirms the validity, legality
and enforceability of the Guaranty and agrees that such Guaranty is and shall
remain in full force and in effect until all the Obligations have been paid in
full. Borrower and each Guarantor acknowledges and agrees that all terms and
provisions, covenants and conditions of the Agreement shall be and remain in
full force and effect and constitute the legal, valid, binding and enforceable
obligations of Borrower and each Guarantor that is a party thereto in accordance
with their respective terms as of the date hereof. Although each Guarantor has
been informed of the matters set forth herein and has acknowledged and agreed to
same, each Guarantor understands that Lender has no obligation to inform any
Guarantor of such matters in the future or to seek any Guarantor’s
acknowledgment or agreement to future amendments or waivers, and nothing herein
shall create such a duty.  Borrower shall pay to Lender all costs and expenses,
including legal fees, incurred by Lender in connection with preparation,
negotiation and closing of this Amendment.

7.           Ratification.  The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions of the
Agreement, and shall not be deemed to be a consent to the modification or waiver
of any other term or condition of the Agreement.  Except as expressly modified
and superseded by this Amendment, the terms and provisions of the Agreement are
ratified and confirmed and shall continue in full force and effect.

8.           No Novation, etc.  This Amendment is not intended to be, nor shall
it be construed to create, a novation or accord and satisfaction, and the
Agreement, as amended hereby, shall remain in full force and
effect.  Notwithstanding any prior mutual temporary disregard of any of the
terms of the Agreement, the parties agree that the terms of the Agreement shall
be strictly adhered to on and after the date hereof, except as expressly
modified by this Amendment.

9.           Release of Claims.  To induce Lender to enter into this Amendment,
each Obligor hereby releases, acquits and forever discharges Lender, and
Lender's officers, directors, agents, employees, successors and assigns, from
all liabilities, claims, demands, actions or causes of action of any kind (if
any there be), whether absolute or contingent, due or to become due, disputed or
undisputed, liquidated or unliquidated, at law or in equity, or known or
unknown, that any one or more of them now have or ever have had against Lender
up to and including the date of this Amendment, whether arising under or in
connection with the Agreement or otherwise.

10.           Non-Waiver of Default.  Neither this Amendment, Lender’s
forbearance hereunder nor Lender's continued making of loans or other extensions
of credit at any time extended to Borrower in accordance with the Agreement
shall be deemed a waiver of or consent to any Default.  Obligors agree that such
Defaults shall not be deemed to have been waived, released or cured by virtue of
advances, loans or other extensions of credit at any time extended to Borrower,
Lender's agreement to forbear pursuant to the terms of this Amendment or the
execution of this Amendment.

11.           Severability.  Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment, and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

12.           Counterparts.  This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which taken
together shall be one and the same instrument.

13.           Successors and Assigns.  This Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, heirs and personal representatives.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed under seal and delivered by their respective duly authorized officers
on the date first written above.

FCC, LLC d/b/a First Capital
 
By:/s/ Lee E. Elmore                                    
      Lee E.
Elmore                                                                           
      Senior Vice
President                                                                                     

Aerogrow International, Inc.
 
By:/s/ Jervis B. Perkins
      Jervis B. Perkins, President and
      Chief Executive
Officer                                                                           

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ACKNOWLEDGMENT AND AGREEMENT

The undersigned Guarantor acknowledges the foregoing Temporary Amendment to Loan
and Security Agreement and agrees that his Guaranty in favor of Lender dated
January 1, 2009 (as may be amended) remains in full force and effect, subject to
no right of offset, claim or counterclaim.

 GUARANTOR

/s/ Jack J. Walker
(L.S.)
Jack J. Walker, Individually

ACKNOWLEDGMENT AND AGREEMENT OF VALIDITY GUARANTORS

The undersigned, Validity Guarantors in respect of the indebtedness of Borrower
to Lender, hereby (a) acknowledge receipt of the foregoing Temporary Amendment;
(b) consent to the terms and execution thereof; (c) acknowledge that the
Obligations of Borrower under the Loan Agreement may have increased; (d)
reaffirm their obligations to Lender pursuant to the terms of the Validity
Agreement to which they are a party; and (e) acknowledge that Lender may amend,
restate, extend, renew or otherwise modify the Loan Agreement and any
indebtedness or agreement of Borrower, or enter into any agreement or extend
additional or other credit accommodations, without notifying or obtaining the
consent of the undersigned and without impairing the liability of the
undersigned under any Validity Agreement for all of each Borrower’s present and
future indebtedness to Lender.

/s/ Jervis B.
Perkins                                                                
Jervis B. Perkins

/s/ H. MacGregor
Clarke                                                                           
H. MacGregor Clarke

 
 

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