ex10-6.htm


    Exhibit
10.6

     

     

    IRREVOCABLE
STANDBY LETTER OF CREDIT

     

    LETTER OF
CREDIT NUMBER:

     

    DATE:
JUNE 25, 2008

     

    BENEFICIARY:  BENEFACTOR
FUNDING CORP., 249 CLAYTON STREET, SUITE 200, DENVER, COLORADO,
80206

     

     

    WE HEREBY
ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. stb08200116 IN YOUR FAVOR
BY ORDER OF AEROGROW INTERNATIONAL, INC., 6075 LONGBOW DRIVE, SUITE 200,
BOULDER, COLORADO, 80301 (“AEROGROW”), FOR ANY SUM OR SUMS NOT EXCEEDING
USD$38,193.66 (US DOLLARS THIRTY-EIGHT THOUSAND ONE HUNDRED NINETY-THREE AND
66/100), SUBJECT TO THE BELOW SCHEDULE, AVAILABLE UPON PRESENTATION OF YOUR
DRAFTS AT SIGHT ON FIRST NATIONAL BANK.

     

    AUTOMATIC
INCREASE/DECREASE SCHEDULE:

     

    SCHEDULE
DATE                                  ACTION                                AMOUNT

    7/30/2008                                                   DECREASE
BY                     
$36,725.91

     

    DRAFTS
MUST BE ACCOMPANIED BY:

     

    YOUR
SIGNED STATEMENT CERTIFYING AS FOLLOWS:

     

    WE HEREBY
CERTIFY THAT THE AMOUNT OF THIS DRAWING REPRESENTS AN AMOUNT WHICH BENEFACTOR
FUNDING CORP. (“BFC”) IS OBLIGATED TO PAY (THE “DETERMINED AMOUNT”) ON ACCOUNT
OF A CLAIM ASSERTED AGAINST BFC RELATING TO A PAYMENT RECEIVED BY BFC FROM
LINENS ‘N THINGS CANADA CORP OR ANY AFFILIATE THEREOF WHICH IS SUBJECT TO A
STATE OR FEDERAL OR CANADIAN INSOLVENCY STATUTE, OR SIMILAR COMMON LAW
PROCEEDING.  TEN DAYS HAVE PASSED SINCE BFC HAS MADE DEMAND ON
AEROGROW FOR PAYMENT TO BFC OF THE DETERMINED AMOUNT AND AEROGROW HAS FAILED TO
HONOR SUCH DEMAND.

     

    DRAFTS
DRAWN UNDER THIS CREDIT ARE TO BE ENDORSED HEREON AND BEAR THE CLAUSE, ''DRAWN
UNDER FIRST NATIONAL BANK, LETTER OF CREDIT REFERENCE NUMBER STB08200116 DATED
JUNE 25, 2008.''

     

    PARTIAL
DRAWS ARE PERMITTED.

     

    IT IS A
CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL HAVE AUTOMATICALLY RENEWING ONE
(1) YEAR TERMS UNLESS WE GIVE BENEFICIARY AT LEAST THIRTY (30) DAYS BUT NOT MORE
THAN SIXTY (60) DAYS PRIOR WRITTEN NOTICE THAT WE ELECT NOT TO RENEW THE LETTER
OF CREDIT FOR ANY SUCH ADDITIONAL PERIOD.  SUCH NOTICE SHALL BE SENT
VIA FEDERAL EXPRESS OR OTHER GENERALLY RECOGNIZED NATIONAL OVERNIGHT CARRIER,
ACTUALLY RECEIVED BY BENEFICIARY.  IN THE EVENT WE GIVE BENEFICIARY
NOTICE THAT WE ELECT NOT TO RENEW FOR SUCH ADDITIONAL PERIODS, BENEFICIARY MAY
IMMEDIATELY DRAW UPON THIS LETTER OF CREDIT UP TO THE FULL FACE AMOUNT. SUCH
DRAWING SHALL BE ACCOMPANIED BY (i) YOUR DRAFTS AT SIGHT ON FIRST NATIONAL BANK,
AND (ii) YOUR SIGNED STATEMENT CERTIFYING AS FOLLOWS:

     

    THIS
DRAWING IS BEING MADE AS A RESULT OF FIRST NATIONAL BANK’S REFUSAL TO RENEW
LETTER OF CREDIT NUMBER STB08200116.

     

    WE HEREBY
ENGAGE WITH YOU THAT ANY DRAFT DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF
THIS LETTER OF CREDIT WILL BE DULY HONORED ON THE PRESENTATION AT OUR OFFICE AT
1620 DODGE STREET, ATTN:  GLOBAL BANKING GROUP, OMAHA, NE 68197-1096,
VIA COURIER SERVICE OR REGISTERED MAIL, ON OR BEFORE THE EXPIRATION DATE AS
SPECIFIED ABOVE.

     

    THIS
LETTER OF CREDIT SETS FORTH IN FULL TERMS OF OUR UNDERTAKING, AND SUCH
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE
TO ANY NOTE, DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN OR IN WHICH
THIS LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES
AND ANY SUCH REFERENCE SHALL NOT BE DEEMED TO BE INCORPORATED HEREIN BY
REFERENCE TO ANY NOTE, DOCUMENT OR AGREEMENT.

     

    EXCEPT SO
FAR AS OTHERWISE STATED, THIS LETTER OF CREDIT IS SUBJECT TO THE RULES OF THE
INTERNATIONAL STANDBY PRACTICES AS ADOPTED BY THE INTERNATIONAL CHAMBER OF
COMMERCE, WHICH ARE IN EFFECT AT THE TIME OF ISSUANCE OF THIS LETTER OF
CREDIT.

     

    FIRST
NATIONAL BANK

     

     

    ______________________________________

    (AUTHORIZED
SIGNATURE)