<PAGE>

                                                                     Exhibit 4.3
                                                                     -----------

              AMENDMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT

          THIS AMENDMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT (this

"Amendment"), dated as of March 21, 2002, is entered into by and among
----------
LEARNINGSTAR CORP., a Delaware corporation ("Parent"), EARLYCHILDHOOD LLC, a
                                             ------
California limited liability company ("ECH"), SMARTERKIDS.COM, INC., a Delaware
                                       ---
corporation ("SK"), and EDUCATIONAL PRODUCTS, INC., a Texas corporation ("EPI";
              --                                                          ---
EPI, together with ECH are referred to hereinafter each individually as a

"Borrower", and individually and collectively, jointly and severally, as the
---------
"Borrowers"), each of the lenders that is a signatory to this Amendment
----------
(together with its successors and permitted assigns, individually, a "Lender"
                                                                      ------
and, collectively, the "Lenders"), and GMAC BUSINESS CREDIT, LLC, a Delaware
                        -------
limited liability company, as the arranger and administrative agent for the
Lenders (in such capacity, together with its successors, if any, in such
capacity, "Agent" and together with the Lenders, collectively, the "Lender
           -----                                                    ------
Group"):

                              W I T N E S S E T H
                              -------------------

          WHEREAS, Parent, Borrowers and the Lender Group are parties to that
certain Loan and Security Agreement, dated as of April 30, 2001, as amended by
that certain Amendment Number One to Loan and Security Agreement dated as of
March 13, 2002 (as amended, restated, supplemented, or modified from time to
time, the "Loan Agreement");
           --------------

          WHEREAS, the Borrowers have requested that the Lender Group and
consent to the amendment of the Loan Agreement to, among other changes, amend
the minimum Availability covenant contained in Section 7.20(a)(i); and
                                               ------------------

          WHEREAS, subject to the satisfaction of the conditions set forth
herein, the Lender Group is willing to so consent to the amendment of the Loan
Agreement on the terms set forth herein.

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1.   DEFINITIONS.  Capitalized terms used herein and not otherwise defined
     -----------
herein shall have the meanings ascribed to them in the Loan Agreement, as
amended hereby.

2.   AMENDMENTS TO LOAN AGREEMENT.
     ----------------------------

     (a)  Section 1.1 of the Loan Agreement is hereby amended by inserting the
          -----------
     following new definitions in their proper alphabetical location:

          "Elliott Control Agreement" means that certain account control
           -------------------------
agreement, dated contemporaneously herewith, by and among Ronald Elliott, Agent
and Wells Fargo Bank, N.A., a national banking association, which is in form and
substance reasonably satisfactory to Agent.

                                       1
<PAGE>

          "Elliott Security Agreement" means that certain security agreement,
           --------------------------
dated contemporaneously herewith, by and between Ronald Elliott and Agent, which
is in form and substance reasonably satisfactory to Agent.

          "Elliott Limited Guaranty" means that certain limited guaranty, dated
           ------------------------
contemporaneously herewith, by Ronald Elliott in favor of Agent, for the benefit
of the Lender Group, in a maximum aggregate amount which does not exceed
$500,000, which is in form and substance reasonably satisfactory to Agent.

          "Second Amendment Fee" has the meaning set forth in Section 2.11(e).
           --------------------                               ---------------

          "Second Amendment" means that certain Amendment Number Two to Loan and
           ----------------
Security Agreement, dated as of March 21, 2002, among Parent, Borrowers and the
Lender Group.

     (b)  Section 2.11 of the Loan Agreement is hereby amended by deleting the
          ------------
word "and" at the end of clause (c), and by amending and restating clause (d) as
follows:

          "(d)  First Amendment Fee.  For the ratable benefit of each of the
Lenders, a fee of $75,000 (the "First Amendment Fee"), which First Amendment Fee
                                -------------------
shall be charged to each Borrower's Loan Account and shall be fully earned and
non-refundable as of March 20, 2002, and"

     (c)  Section 2.11 of the Loan Agreement is hereby amended by inserting the
          ------------
following new clause (e) immediately following clause (d):

          "(e)  Second Amendment Fee. For the ratable benefit of each of the
Lenders, a fee of $25,000 (the "Second Amendment Fee"), which Second Amendment
                                --------------------
Fee shall be charged to each Borrower's Loan Account and shall be fully earned
and non-refundable as of the date of the Second Amendment."

     (d)  Section 7.20(a)(i) of the Loan Agreement hereby is amended and
          ------------------
restated in its entirety as follows:

          (i) Minimum Availability.  (A) On each date on or before July 31,
2002, Excess Availability in excess of $2,500,000, and (B) on each date after
July 31, 2002, Excess Availability in excess of $4,000,000; provided, however
                                                            --------  -------
that on the last day of each fiscal quarter (or the immediately preceding
Business Day if the last day of a fiscal quarter is not a Business Day) and
ending on the next succeeding Business Day, the foregoing may be satisfied by
any combination of Qualified Cash (maintained in an account in Agent's name) or
Excess Availability aggregating in excess of (x) $2,500,000 on each date on or
before July 31, 2002, and (y) $4,000,000 on each date after July 31, 2002.

3.   CONDITIONS PRECEDENT.
     --------------------

                                       2
<PAGE>

     (a)  The satisfaction of each of the following shall constitute conditions
     precedent to the effectiveness of this Amendment:

          (i)    The representations and warranties in the Loan Agreement and
                 the other Loan Documents shall be true and correct in all
                 material respects on and as of the date hereof, as though made
                 on such date (except to the extent that such representations
                 and warranties relate solely to an earlier date);

          (ii)   Agent shall have received the reaffirmation and consent of each
                 Guarantor attached hereto as Exhibit A, duly executed and
                                              ---------
                 delivered by an authorized official of each Guarantor;

          (iii)  Agent shall have received the Elliott Limited Guaranty, in form
                 and substance reasonably satisfactory to Agent, duly executed
                 and delivered by Ronald Elliott;

          (iv)   Agent shall have received the Elliott Security Agreement, in
                 form and substance reasonably satisfactory to Agent, duly
                 executed and delivered by Ronald Elliott and Agent;

          (v)    Agent shall have received the Elliott Control Agreement, in
                 form and substance reasonably satisfactory to Agent, duly
                 executed and delivered by Ronald Elliott, Agent and Wells Fargo
                 Bank, N.A., a national banking association;

          (vi)   No Default or Event of Default shall have occurred and be
                 continuing on the date hereof or as of the date of the
                 effectiveness of this Amendment, except for any such Defaults
                 or Events of Defaults that would exist but for the
                 effectiveness of this Amendment; and

          (vii)  No injunction, writ, restraining order, or other order of any
                 nature prohibiting, directly or indirectly, the consummation of
                 the transactions contemplated herein shall have been issued and
                 remain in force by any Governmental Authority against any
                 Obligor or the Lender Group.

4.   REPRESENTATIONS AND WARRANTIES.  Parent and each Borrower hereby represents
     ------------------------------

and warrants to the Agent that (a) the execution, delivery, and performance of
this Amendment and of the Loan Agreement, as amended by this Amendment, are
within Parent's and such Borrower's corporate powers, have been duly authorized
by all necessary corporate action, and are not in contravention of any law,
rule, or regulation, or any order, judgment, decree, writ, injunction, or award
of any arbitrator, court, or governmental authority, or of the terms of its
charter or bylaws, or of any contract or undertaking to which it is a party or
by which any of its properties may be bound or affected, and (b) this Amendment
and the Loan Agreement, as amended by this Amendment, constitute Parent's and
each Borrower's legal, valid, and binding obligation, enforceable against Parent
and each

                                       3
<PAGE>

Borrower in accordance with its terms, and (c) this Amendment has been duly
executed and delivered by Parent and each Borrower.

5.   CONSTRUCTION.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
     ------------

ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED IN THE STATE OF CALIFORNIA.

6.   ENTIRE AMENDMENT; EFFECT OF AMENDMENT.  This Amendment, and terms and
     -------------------------------------
provisions hereof, constitute the entire agreement among the parties pertaining
to the subject matter hereof and supersedes any and all prior or contemporaneous
amendments relating to the subject matter hereof. Except for the amendments to
the Loan Agreement expressly set forth in Section 2 hereof, the Loan Agreement
                                          ---------
and other Loan Documents shall be and remain in full force and effect in
accordance with their respective terms and are hereby ratified and confirmed in
all respects. Except as expressly set forth herein, the execution, delivery, and
performance of this Amendment shall not operate as a waiver of or as an
amendment of any right, power, or remedy of the Lender Group as in effect prior
to the date hereof. The amendments and other agreements set forth herein are
limited to the specifics hereof, shall not apply with respect to any facts or
occurrences other than those on which the same are based, shall not excuse
future non-compliance with the Loan Agreement, and shall not operate as a waiver
of or consent to any further or other matter, under the Loan Documents. To the
extent any terms or provisions of this Amendment conflict with those of the Loan
Agreement or other Loan Documents, the terms and provisions of this Amendment
shall control. This Amendment is a Loan Document.

7.   COUNTERPARTS; TELEFACSIMILE EXECUTION.  This Amendment may be executed in
     -------------------------------------
any number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Amendment by
signing any such counterpart. Delivery of an executed counterpart of this
Amendment by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Amendment. Any party delivering an
executed counterpart of this Amendment by telefacsimile also shall deliver an
original executed counterpart of this Amendment, but the failure to deliver an
original executed counterpart shall not affect the validity, enforceability, and
binding effect of this Amendment.

8.   MISCELLANEOUS.
     -------------

     (a)  Upon the effectiveness of this Amendment, each reference in the Loan
Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like
import referring to the Loan Agreement shall mean and refer to the Loan
Agreement as amended by this Amendment.

     (b)  Upon the effectiveness of this Amendment, each reference in the Loan
Documents to the "Loan Agreement", "thereunder", "therein", "thereof" or words
of like import referring to the Loan Agreement shall mean and refer to the Loan
Agreement as amended by this Amendment.

                                       4
<PAGE>

          IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered as of the date first written above.

                         LEARNINGSTAR CORP.,
                         a Delaware corporation

                         By:     /s/ Richard Delaney
                            ----------------------------------
                         Name:  Richard Delaney
                              --------------------------------
                         Title:   Chief Financial Officer
                               -------------------------------


                         EARLYCHILDHOOD LLC,
                         a California limited liability company

                         By:     /s/ Judith McGuinn
                            ----------------------------------
                         Name:  Judith McGuinn
                              --------------------------------
                         Title:   Chief Operating Officer
                               -------------------------------

                         SMARTERKIDS.COM, INC.,
                         a Delaware corporation

                         By:     /s/ Judith McGuinn
                            ----------------------------------
                         Name:  Judith McGuinn
                              --------------------------------
                         Title:   President
                               -------------------------------

                         EDUCATIONAL PRODUCTS, INC.,
                         a Texas corporation

                         By:     /s/ Judith McGuinn
                            ----------------------------------
                         Name:  Judith McGuinn
                              --------------------------------
                         Title:   President
                               -------------------------------

                         GMAC BUSINESS CREDIT, LLC,
                         a Delaware limited liability company,
                         as Agent and as a Lender

                         By:     /s/ David M. Grabosky
                            ----------------------------------
                         Name:   David M. Grabosky
                              --------------------------------
                         Title:    Vice President
                               -------------------------------

                                      S-1
<PAGE>

                                   Exhibit A
                                   ---------

                           REAFFIRMATION AND CONSENT

          All capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in that certain Loan and Security
Agreement by and among LEARNINGSTAR CORP., a Delaware corporation ("Parent"),
EARLYCHILDHOOD LLC, a California limited liability company ("ECH"),
SMARTERKIDS.COM, INC., a Delaware corporation ("SK"), and EDUCATIONAL PRODUCTS,
INC., a Texas corporation ("EPI"; EPI, together with ECH are referred to
hereinafter each individually as a "Borrower", and individually and
collectively, jointly and severally, as the "Borrowers"), each of the lenders
that is a signatory thereto as a lender (together with its successors and
permitted assigns, individually, "Lender" and, collectively, "Lenders"), and
GMAC BUSINESS CREDIT, LLC, a Delaware limited liability company, as the arranger
and administrative agent for the Lenders (in such capacity, together with its
successors, if any, in such capacity, "Agent" and together with the Lenders,
collectively, the "Lender Group"), dated as of April 30, 2001, as amended by
that certain Amendment Number One to Loan and Security Agreement dated as of
March 13, 2002 (as amended, restated, supplemented or otherwise modified, the
"Loan Agreement"), or in Amendment Number Two to Loan and Security Agreement,
dated as of March 21, 2002 (the "Amendment"), among Parent, Borrowers and Lender
Group.  The undersigned hereby (a) represent and warrant to the Lender Group
that the execution, delivery, and performance of this Reaffirmation and Consent
are within its powers, have been duly authorized by all necessary action, and
are not in contravention of any law, rule, or regulation, or any order,
judgment, decree, writ, injunction, or award of any arbitrator, court, or
governmental authority, or of the terms of its charter or bylaws, or of any
contract or undertaking to which it is a party or by which any of its properties
may be bound or affected; (b) consents to the transactions contemplated by the
Amendment; (c) acknowledges and reaffirms its obligations owing to the Lender
Group under the Guaranty and any other Loan Documents to which it is a party;
and (d) agrees that the Guaranty and each of the other Loan Documents to which
it is a party is and shall remain in full force and effect.  Although the
undersigned has been informed of the matters set forth herein and has
acknowledged and agreed to same, it understands that the Lender Group has no
obligations to inform it of such matters in the future or to seek its
acknowledgment or agreement to future amendments, and nothing herein shall
create such a duty.  Delivery of an executed counterpart of this Reaffirmation
and Consent by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Reaffirmation and Consent.  Any party
delivering an executed counterpart of this Reaffirmation and Consent by
telefacsimile also shall deliver an original executed counterpart of this
Reaffirmation and Consent but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Reaffirmation and Consent.  This Reaffirmation and Consent shall be
governed by the laws of the State of California.

                           [signature page follows]
<PAGE>

          IN WITNESS WHEREOF, the undersigned have each caused this
Reaffirmation and Consent to be executed as of the date of the Amendment.

                         LEARNINGSTAR CORP.,
                         a Delaware corporation

                         By:     /s/ Richard Delaney
                            ----------------------------------
                         Name:  Richard Delaney
                              --------------------------------
                         Title:   Chief Financial Officer
                               -------------------------------


                         EARLYCHILDHOOD LLC,
                         a California limited liability company

                         By:     /s/ Judith McGuinn
                            ----------------------------------
                         Name:  Judith McGuinn
                              --------------------------------
                         Title:   Chief Operating Officer
                               -------------------------------

                         SMARTERKIDS.COM, INC.,
                         a Delaware corporation

                         By:     /s/ Judith McGuinn
                            ----------------------------------
                         Name:  Judith McGuinn
                              --------------------------------
                         Title:   President
                               -------------------------------

                         EDUCATIONAL PRODUCTS, INC.,
                         a Texas corporation

                         By:     /s/ Judith McGuinn
                            ----------------------------------
                         Name:  Judith McGuinn
                              --------------------------------
                         Title:   President
                               -------------------------------