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”), H. MacGregor Clarke, an individual resident 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.





5.           Representations and
Warranties of Borrower.  Borrower 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 hereofwith the exception of
Section 4(a)(vi) 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; (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 Borrower, enforceable against Borrower 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) it is
entering into this Amendment freely and voluntarily with the advice of
legal counsel of its own choosing; and (g) it has freely and voluntarily
agreed to the releases, waivers and undertakings set forth in this Amendment;
(h) Borrower 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) Borrower 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.  The
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 the earlier to occur of all the Obligations
being paid in full, or the Guaranty being terminated or released in accordance
with its terms. Borrower and the Guarantor acknowledge and agree 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 Guarantor that are parties thereto in
accordance with their respective terms as of the date hereof. Although Guarantor
has been informed of the matters set forth herein and has acknowledged and
agreed to same, Guarantor understands that Lender has no obligation to inform
Guarantor of such matters in the future or to seek 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.





Non-Waiver of
Default.










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:__________________________


Lee
E.
Elmore


Senior
Vice
President








Aerogrow
International, Inc.







By:__________________________


Jervis
B. Perkins, President and


Chief
Executive
Officer








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





(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.








Jervis B.
Perkins







H.
MacGregor Clarke