Exhibit
10.3




WAIVER





This Waiver (the "Waiver") is made and
entered into this 19th day of November, 2009 by and between AeroGrow
International, Inc., a Nevada corporation (“Borrower”) Jack J. Walker, a
resident of the state of Colorado (the “Limited Guarantor”), Jervis B. Perkins
and H. MacGregor Clarke, both residents of the state of Colorado (collectively,
the “Validity Guarantors”), and FCC, LLC, d/b/a First Capital, a Florida limited
liability company (“Lender”).





WHEREAS, Lender and Borrower are
parties to a certain Loan and Security Agreement, dated June 23, 2008, and all
amendments thereto (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





WHEREAS, Borrower is in default under
the Agreement; and





WHEREAS, Borrower has requested that
Lender waive such default and Lender is willing to do so on the terms and
conditions set forth herein.





NOW THEREFORE, in consideration of the
foregoing premises, 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 Waiver, unless otherwise defined herein, shall have the
meaning ascribed to such term in the Agreement.





2.           Waiver of Certain
Defaults.  Borrower hereby acknowledges and agrees that
Borrower is in default under Section 6 of the Agreement and Item 21(a) of the
Schedule to the Agreement as a result of Borrower’s failure to comply with the
required fixed charge coverage ratio for September 30, 2009 (the “Existing
Default”).  Lender hereby waives the Existing
Default.  Lender hereby reserves its rights and remedies with respect
to any Default other than the Existing Default.





3.           
Conditions.  The
effectiveness of this Waiver 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
Waiver and all documents, instruments and other legal matters incident thereto
shall be satisfactory to Lender and its legal counsel;





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





4.           Restatement of
Representations.  Borrower hereby restates, ratifies and
reaffirms each and every term, condition representation and warranty heretofore
made by it under or in connection with the execution and delivery of the Waiver
and the other Loan Documents as fully as though such representations and
warranties had been made on the date hereof and with specific reference to this
Waiver and the Loan Documents with the exception of Section 4(a)(iv) of the Loan
Agreement, which is hereby qualified by Borrower’s disclosure of the existence
of an adversarial proceeding in bankruptcy court with Linens ‘N Things regarding
a claim of preferential payment.











5.           No Other
Changes.  Except as set forth herein, the Agreement shall be
and remain in full force and effect as originally written, and shall constitute
the legal, valid, binding and enforceable obligation of Borrower to
Lender.





6.           Fees.   For
and in consideration of the waiver of the Existing Default, Borrower agrees to
pay to Lender a waiver fee in the amount of $10,000, which is a fee for the
waiver of the Existing Default, not interest or charges for the use of money,
and is due, payable, fully earned and non-refundable as of the date of this
Waiver.





7.           No
Defaults.  To induce Lender to enter into this Waiver, Borrower
hereby represents and warrants that, as of the date hereof, and after giving
effect to the terms hereof, there exists no other Default under the Agreement or
any of the other Loan Documents.





8.           Release.  To
induce Lender to enter into this Waiver, Borrower (a) acknowledges and agrees
that no right of offset, defense, counterclaim, claim or objection exists in
favor of Borrower against Lender arising out of or with respect to the
Agreement, the other Loan Documents, the Obligations, or any other arrangement
or relationship between Lender and Borrower, and (b) 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 Waiver, whether arising
under or in connection with the Agreement or otherwise.





9.           No Obligation for Future
Changes.  Borrower acknowledges that (a) except as expressly
set forth herein, Lender has not agreed to (and has no obligation whatsoever to
discuss, negotiate or agree to) any restructuring, modification, amendment,
waiver or forbearance with respect to the Obligations or any of the terms of the
Loan Documents, (b) no understanding with respect to any other restructuring,
modification, amendment, waiver or forbearance with respect to the Obligations
or any of the terms of the Loan Documents shall constitute a legally binding
agreement or contract, or have any force or effect whatsoever, unless and until
reduced to writing and signed by authorized representatives of Borrower and
Lender, and (c) the execution and delivery of this Waiver has not established
any course of dealing among the parties hereto or created any obligation or
agreement of Lender with respect to any future restructuring, modification,
amendment, waiver or forbearance with respect to the Obligations or any of the
terms of the Loan Documents.





10.         Counterparts.  This
Waiver may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which, when so executed and delivered,
shall be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same instrument.





11.         Successors and
Assigns.  This Waiver shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties
hereto.





12.  Choice of
Law.  This Waiver shall be governed by, and construed in
accordance with, the laws of the State of Oklahoma, other than its laws
respecting choice of law.





IN
WITNESS WHEREOF, Borrower and Lender have caused this Waiver to be duly executed
as of the date first above written.





AEROGROW INTERNATIONAL,
INC.








By:/s/ Jervis B.
Perkins


Jervis
B. Perkins, President and


Chief
Executive Officer








FCC, LLC, d/b/a First
Capital







By:
              /s/ Lee E.
      ElmoreLee E. Elmore,Senior Vice
      President

























ACKNOWLEDGMENT
AND AGREEMENT OF LIMITED GUARANTOR





The
undersigned acknowledges the foregoing Waiver and agrees that the Limited
Guaranty of Individual by the undersigned in favor of Lender dated January 1,
2009, as amended, remains in full force and effect, subject to no right of
offset, claim or counterclaim.





/s/ Jack J. Walker


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 Waiver; (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.





VALIDITY
GUARANTORS








By:/s/ Jervis B.
Perkins


Jervis
B. Perkins








By:/s/ H. MacGregor
Clarke


H.
MacGregor Clarke