THIRD AMENDMENT TO

TERM LOAN AND SECURITY AGREEMENT AND WAIVER


          THIS
THIRD AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT AND WAIVER (this “Amendment”)
is made and entered into as of this 19th day of October 20, 2005, by and among
EASY GARDENER PRODUCTS, LTD., a Texas limited partnership (the “Borrower”),
EYAS INTERNATIONAL, INC., a Texas corporation, EG, L.L.C., a Nevada limited
liability company, E G PRODUCT MANAGEMENT, L.L.C., a Texas limited liability
company, WEATHERLY CONSUMER PRODUCTS GROUP, INC., a Delaware corporation,
WEATHERLY CONSUMER PRODUCTS, INC., a Delaware corporation, and NBU GROUP, LLC,
a Texas limited liability company (each a “Guarantor” and collectively
the “Guarantors”; and collectively with the Borrower, the “Credit
Parties”), the Lenders (as defined in the Loan Agreement defined below) and
CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (the “Agent”),
as agent for itself and on behalf of the Lenders.


W I T N E S S E T H:


          WHEREAS,
the Borrower, the Guarantors, the Lenders and the Agent are parties to that
certain Term Loan and Security Agreement, dated as of October 29, 2003 (as
amended by that certain First Amendment to Term Loan and Security Agreement
dated as of April 27, 2004, that certain Second Amendment to Term Loan and
Security Agreement and Waiver dated as of October 12, 2004 and as the same may
be further amended, amended and restated, modified and supplemented, the “Loan
Agreement”), pursuant to which the Lenders extended certain financial accommodations
to the Borrower under the terms and conditions stated therein; 


          WHEREAS,
the Credit Parties’ Senior Leverage Ratio as of June 30, 2005 was 4.08, which
exceeded the maximum allowable Senior Leverage Ratio of 3.00 for such period as
set forth in Annex I of the Loan Agreement;


          WHEREAS,
the Credit Parties’ EBITDA was $9,416,000 as of June 30, 2005, which was less
than the minimum allowable EBITDA of $11,500,000 for such period as set forth
in Annex I of the Loan Agreement;


          WHEREAS,
the Borrower has notified Agent that Events of Default have occurred and are
continuing as a result of: (a) Credit Parties’ failure to comply with the
Senior Leverage Ratio as described above and (b) Credit Parties’ failure to
comply with the minimum EBITDA requirement as described above (such Events of
Default are hereinafter collectively referred to as the “Specified Events of
Default”) and the Borrower has requested that the Agent and the Lenders
waive the Specified Events of Default; and


          WHEREAS,
the Agent and the Lenders have agreed to the Credit Parties’ requests upon and
subject to the terms and conditions hereinafter set forth;


          NOW,
THEREFORE, for and in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which is acknowledged, the parties hereto agree that all
capitalized terms used herein which are not 




1







otherwise
defined herein shall have the meanings ascribed thereto in the Loan Agreement,
and further agree as follows:


          SECTION
1. Acknowledgement of Obligations.


                    (a) Borrower
hereby acknowledges and agrees that based on the Specified Events of Default
(as defined below), it is unconditionally liable to the Agent and Lenders for
the full and immediate payment of all of the Obligations including, without
limitation, those Obligations set forth on Schedule A
attached hereto and incorporated herein by reference, plus all interest,
charges, fees, costs, and expenses that may arise under the Loan Agreement and
other Loan Documents plus all attorneys’ fees, disbursements and costs of
collection incurred in connection with such Obligations by Agent and Lenders
and that Borrower has no defenses, counterclaims or set-offs with respect to
the full and immediate payment and performance of any or all Obligations under
the Loan Agreement and the other Loan Documents.


                    (b) Borrower
acknowledges and agrees that (i) the Specified Events of Default constitute
material defaults under the Loan Agreement and the other Loan Documents, (ii)
any notices that might be given and any grace periods or cure periods which
must expire, prior to Agent or Lenders exercising any of their respective
rights and remedies in connection with the Loan Agreement or the other Loan
Documents, have been given, complied with and expired and, in any event, are
hereby waived and relinquished by Borrower, and (iii) as a consequence, Agent
and Lenders are now entitled to immediately exercise all of their respective
rights and remedies under the Loan Agreement and the other Loan Documents, at
law or in equity, including, without limitation, their rights to declare all
Obligations to be immediately due, payable, and performable, without notice, except
that Agent and Lenders have agreed to waive the Specified Events of Default as
provided in this Amendment.


                    (c) Borrower
further acknowledges and agrees that as a result of the Specified Events of
Default, Agent and Lenders have no commitments, obligations or agreements to
make loans or advances or other financial accommodations to Borrower, except
that Agent and Lenders have agreed to waive the Specified Events of Default as
provided in this Amendment and to continue to make loans, advances or other
financial accommodations as provided in this Amendment.


          SECTION
2. Amendments to Loan Agreement.


                    (a) Evidence
of Loans; Notes.  Sections 2.12
(Notes) of the Loan Agreements is hereby deleted in its entirety and the
following in substituted in lieu thereof:


          “2.12 Evidence of Loans.


	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Each Lender
  shall maintain, in accordance with its usual practice, electronic or written
  records evidencing the indebtedness and obligations to such Lender resulting
  from each Loan made by such Lender from time to time and the amounts of
  principal and interest payable and paid to such Lender from time to time
  under this Agreement.

  





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  (b)

  	
  Agent shall
  maintain electronic or written records (the “Register”) in which it
  will record (i) the amount of each Loan made hereunder, the class and type of
  each Loan made and any applicable interest rate periods, (ii) the amount of
  any principal and/or interest due and payable and/or to become due and
  payable from Borrower to each Lender hereunder and (iii) all amounts received
  by Agent hereunder from Borrower and each Lender’s share thereof.

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  The entries in
  the Register shall be prima facie evidence, absent manifest error, of the
  existence and amounts of the obligations and indebtedness therein recorded; provided,
  however, that the failure of Agent to maintain such records or any
  error therein shall not in any manner affect the obligations of Borrower to
  repay the Loans or Obligations in accordance with their terms.  

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Borrower
  agrees that upon written notice by Agent to Borrowers, which written notice
  may be issued to Borrower at any time in Agent’s sole discretion, and shall
  be accompanied by the return of one or more of the then existing Notes to
  Borrowers (“Notice Regarding Notes”); all references to “Term A Loan
  Notes”, “Term B Loan Notes”, or  “PIK
  Notes” in the Loan Documents shall be deemed to refer to any still
  outstanding Term A Loan Notes, Term B Loan Notes or PIK Notes, as applicable,
  and, in the case of Term A Loans, Term B Loans or PIK obligations that are no
  longer evidenced by Term A Loan Notes, Term B Loan Notes or PIK Notes, as applicable,
  such Loans shall thereupon be evidenced by the Register and such references
  to any such “Term A Loan Notes”, “Term B Loan Notes” or “PIK Notes” in the
  Loan Documents shall be deemed to refer to such Register or to the applicable
  facility, as appropriate.

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Upon Agent’s
  or any Lender’s request, and in any event within three (3) Business Days of
  any such request, the Borrower shall execute and deliver to Agent new Notes
  and/or divide any existing Notes in such smaller amounts or denominations as
  Agent or such Lender shall specify in their respective sole discretion,
  provided that the aggregate principal amount of such new Notes does not
  exceed the aggregate principal amount of the Loans outstanding when such
  request is made.”

  



                    (b)  Subsection
(v) of Section 2.7(c) (Other Mandatory Prepayments; Optional
Prepayments) is hereby deleted in its entirety and the following is substituted
in lieu thereof:


	
   

  	
   

  	
   

  
	
   

  	
  “(v)

  	
  If, upon
  receipt of the Borrower’s annual audited financial statements, the Agent
  determines in its sole discretion that payments from Excess Cash Flow made in
  the first three fiscal quarters of such fiscal year exceed the
  required payment amount from Excess Cash Flow for such fiscal year, then the
  difference shall be held by Agent and thereafter shall be applied to the then
  outstanding Loans in the order specified in Section 2.7(c)(i); and”

  





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                    (c) Termination
Fee.  A new sentence is hereby added
to Section 3.2 (Termination Fee) following the end of last sentence set
forth therein as follows:


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Notwithstanding
  the foregoing, if the Obligations are indefeasibly repaid in full in cash on
  or before the Maturity Date as a result of the consummation of a Repayment
  Event, then the Termination Fee shall be forgiven and shall not be payable
  by  Borrower.”

  



                    (d) Section
3.4 (Default Rate of Interest) of the Loan Agreement is hereby deleted in
its entirety and the following is substituted in lieu thereof:


          “3.4 Default Rate of Interest.


	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Borrower
  acknowledges and agrees that based on the Specified Events of  Default (as such term is defined in the
  Third Amendment) and notwithstanding the waiver thereof pursuant to Section
  7 of the Third  Amendment, the
  Applicable Rate of interest in effect with respect to the  Obligations shall be increased by two
  percent (2.0%) per annum (the  “Default Rate”) from and after October
  1, 2005 and until such time as the
  Default Rate with respect to the Specified Events of Default (as such
  term is  defined in the Third
  Amendment) is waived by the Agent and Lenders, in  writing in their sole discretion, and shall be due and payable
  in cash on the  first day of each
  calendar month commencing on November 1, 2005 and  continuing until the later of the expiration of the Term and
  the full  performance and indefeasible
  payment in full in cash of all Obligations and  the termination of this Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  In the event
  that the Agent and Lenders waive the Default Rate in accordance  with subsection (a) above, then
  thereafter upon the occurrence and during the  continuation of a new Event of Default other than the Specified
  Events of  Default (as such term is
  defined in the Third Amendment), the Default Rate  shall be charged (such that the Applicable Rate of interest in
  effect at such  time with respect to
  the Obligations shall be increased by two percent (2.0%)  per annum) automatically and without
  notice from Agent, Lenders or any
  other Person.  In all such
  events, and notwithstanding the date on which  application of the Default Rate is communicated to Borrower,
  the Default  Rate shall accrue from
  the initial date of such Event of Default and shall be  due and payable in cash upon demand.  Neither Agent nor Lenders shall be
required to (A) accelerate the maturity of
  the Loans, (B) terminate any
  Commitment or (C) exercise any other rights or remedies under the Loan  Documents or applicable law in order to
  charge interest hereunder at the
  Default Rate.”

  



                    (e) 
Section 6.1(a) (Financial Statements, Reports and Other Information) of
the Loan Agreement is hereby deleted in its entirety and the following is
substituted in lieu thereof:




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          “6.1 Financial Statements, Reports and other
Information


                  (a)  Financial
Reports.  The Credit Parties shall
furnish to Agent (i) as soon as available and in any event within ninety (90)
calendar days after the end of each fiscal year of Borrower, audited annual
consolidated and consolidating financial statements of the Credit Parties and
EGUK, including the notes thereto, consisting of a consolidated and
consolidating balance sheet at the end of such completed fiscal year and the
related consolidated and consolidating statements of income, retained earnings,
cash flows and owners’ equity for such completed fiscal year, which financial
statements shall be prepared and certified without qualification by an
independent certified public accounting firm satisfactory to Agent in its
Permitted Discretion and accompanied by related management letters, if
available; provided that the consolidating statements may be unaudited; and
provided, further that internally prepared drafts of the annual consolidated
and consolidating financial statements of the Credit Parties and EGUK that are
described above shall be provided to Agent as soon as possible and in any event
within twenty (20) calendar days after the end of each fiscal year of Borrower,
(ii) as soon as available and in any event in draft form within twenty (20)
calendar days after the end of each fiscal quarter of the Borrower and in final
form within forty-five (45) calendar days after the end of each fiscal quarter
of the Borrower (other than the last fiscal quarter of each fiscal year),
unaudited consolidated and consolidating financial statements of the Credit
Parties consisting of a balance sheet and statements of income, retained
earnings and cash flows and owners’ equity as of the end of the immediately
preceding fiscal quarter, (iii) as soon as available and in any event within
twenty (20) calendar days after the end of each calendar month (other than the
last calendar month of a fiscal quarter), unaudited consolidated and
consolidating financial statements of the Credit Parties, consisting of a
balance sheet and statements of income, retained earnings, cash flows and
owners’ equity as of the end of the immediately preceding calendar month, and
(iv) within twenty (20) calendar days after the end of each calendar month, a
listing of all proposed non-recurring adjustments to EBITDA during such
calendar month.  All such financial
statements shall be prepared in accordance with GAAP consistently applied with
prior periods (subject, as to interim statements, to lack of footnotes and
year-end adjustments).  With each
quarterly and annual financial statement, the Borrower shall also deliver (x) a
Compliance Certificate of its chief financial officer in the form of Exhibit
A attached hereto (as the same has been amended and restated by the
Third Amendment) and otherwise satisfactory to Agent stating that (A) such
person has reviewed the relevant terms of the Loan Documents and the condition
of the Credit Parties, (B) no Default or Event of Default has occurred or is
continuing, or, if any of the foregoing has occurred or is continuing,
specifying the nature and status and period of existence thereof and the steps
taken or proposed to be taken with respect thereto, and (C) the Borrower is in
compliance with all financial covenants in this Agreement attached as Annex
I hereto and (y) a description, in form and substance satisfactory to the
Agent, of each new material agreement or arrangement entered into with any
Affiliate or holder of the Existing Warrant, including an estimate of cost
savings to the Borrower and or increase to the Borrower’s EBITDA resulting from
such agreement or arrangement, or of any modifications to existing material
agreements or arrangements with any Affiliate or holder of the Existing
Warrant, that occurred during the applicable fiscal quarter.  With each annual financial statement,
Borrower shall also deliver the calculation of the estimated level of
distributions by Borrower to its partners for the payment of all applicable
federal, and state income taxes in connection with Borrower’s income for such
fiscal year.  Such certificate shall be
accompanied by the calculations necessary to show compliance with the financial
covenants in a form satisfactory to the Agent in its Permitted Discretion.”




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                    (f) Subsection
(iv) of Section 6.1(c) (Notices) of the Loan Agreement is hereby
deleted in its entirety and the following is substituted in lieu thereof:


	
   

  	
   

  	
   

  
	
   

  	
  “(iv)

  	
  any notice received
  by any Credit Party from any payor of a claim, suit or other action that such
  payor has claims or has filed any claims against any Credit Party for an
  amount in excess of $250,000 individually or $500,000 in the aggregate.”

  



                   (g) Subsection
(f) of Section 6.1 (Shareholder Reports and Government Filings) of
the Loan Agreement is hereby deleted in its entirety and the following is
substituted in lieu thereof:


	
   

  	
   

  	
   

  
	
   

  	
  “(f)

  	
  Shareholder
  Reports and Government Filings.  Borrower shall furnish to Agent,
  concurrently with the sending or filing thereof, a copy of any proxy
  statements, financial statements or reports which the Credit Parties have
  made available to their shareholders or other equity owners in their capacity
  as such shareholders or equity owners, as a class or any class or series of
  shareholders or other equity owners as a class or series and a copy of any
  regular, periodic and special reports or registration statements which the
  Credit Parties file with the Securities and Exchange Commission, any stock
  exchange or any Governmental Authority, and Credit Parties shall timely file
  all reports required to be filed with the Securities and Exchange Commission,
  any stock exchange or any Governmental Authority.  In connection with the foregoing, the Agent and Lenders shall
  not declare an Event of Default based on Borrower’s failure to timely file
  its form 10-K for the fiscal year ended June 30, 2005 with the Securities and
  Exchange Commission and the American Stock Exchange, provided that the same
  is filed with such authorities on or before October 25, 2005.”

  



                   (h) Section
6.7 (Inspection; Periodic Audits) of the Loan Agreement is hereby deleted
in its entirety and the following is substituted in lieu thereof:





	
   

  	
   

  	
   

  
	
   

  	
  “6.7 Inspection; Periodic Audits.  Each
Credit Party shall permit the
representatives of Agent, at the expense of the Credit Parties, from time to
time as determined by Agent in its sole discretion and during normal business
hours without the requirement of prior notice, to (a) visit and inspect any of
such Credit Party’s offices or properties or any other place where Collateral
is located to inspect the Collateral and/or to examine and/or audit all of such
Credit Party’s books of account, records, reports and other papers, (b) make
copies and extracts therefrom, and (c) discuss such Credit Party’s business,
operations, prospects, properties, assets, liabilities, condition and/or
Accounts with its officers and independent public accountants (and by this provision
such officers and accountants are authorized to discuss the foregoing).”

  






                   (i) Subsection
(a) of Article VIII (Events of Default) is hereby deleted in its
entirety and the following is substituted in lieu thereof:




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  “(a)

  	
  The Credit
  Parties shall fail to pay any amount on the Obligations or provided for in
  any Loan Document on the date when due (in all cases, whether on any payment
  date, at maturity, by reason of acceleration, by notice of intention to
  prepay, by required prepayment or otherwise);”

  



                   (j) Subsection
(c) of Article VIII (Events of Default) is hereby deleted in its
entirety and the following is substituted in lieu thereof:


	
   

  	
   

  	
   

  
	
   

  	
  “(c)

  	
  any Credit
  Party or other party thereto, other than Agent or any Lender, shall be in
  violation, breach or default of, or shall fail to perform, observe or comply
  with any covenant, obligation or agreement set forth in, or any event of
  default occurs under, any Loan Document and such violation, breach, default,
  event of default or failure shall not be cured within the applicable period
  set forth in the applicable Loan Document; provided that, with
  respect to the affirmative covenants set forth in Article VI (other than Sections
  6.3(b), (f), (g) and (h), 6.8(c), 6.9
  and 6.11 for which there shall be no cure period and Section 6.2
  for which there shall be a cure period to the extent indicated in subsection
  (a) above), there shall be a thirty (30) calendar day cure period (other
  than Sections 6.1 and 7.1 for which there shall not be
  any cure period) commencing from the earlier of (i) Receipt by such Person of
  written notice of such breach, default, violation or failure, and (ii) the
  time at which such Person or any authorized officer thereof knew or became
  aware, or should reasonably have known or been aware, of such failure,
  violation, breach or default.”

  



                   (k) Section
13.11 (Release of Collateral) of the Loan Agreement is hereby deleted in
its entirety and the following is substituted in lieu thereof:


	
   

  	
   

  
	
   

  	
  “13.11 Release of Collateral.  Subject to Section
12.3, promptly
  following full performance and satisfaction and indefeasible payment in full
  in cash of all Obligations and the termination of this Agreement and following
  the Credit Parties’ delivery of a written release of claims in favor of Agent
  and Lenders in form and substance satisfactory to Agent in its sole
  discretion, the Liens created hereby shall terminate and Agent and Lenders
  shall execute and deliver such documents, at the Credit Parties’ expense, as
  are necessary to release Lenders’ Liens in the Collateral and shall return
  the Collateral to the Credit Parties, and the Credit Parties agree that they
  shall have no right to file any UCC termination statement with respect to any
  of the UCC financing statements in favor of Agent and Lenders until all
  Obligations are satisfied and performed in full, as provided herein,
  including, without limitation, the delivery of the written release described
  above; provided, however, that the parties agree that,
  notwithstanding any such termination or release or the execution, delivery or
  filing of any such documents or the return of any Collateral, if and to the
  extent that any such payment made or received with respect to the Obligations
  is subsequently invalidated, determined to be fraudulent or preferential, set
  aside, defeased or required to be repaid to a trustee, debtor in possession,
  receiver, custodian or any other Person under any Debtor Relief Law, common
  law or equitable cause or any other law, then the Obligations intended to be
  satisfied by such payment shall be revived and shall continue as if such
  payment had not been received by Agent or any Lender and the Liens created
  hereby shall be revived automatically without any action on the part of any
  party hereto and shall continue as if such payment had 

  





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  not been
  received by Agent or any Lender.
  Agent and Lenders shall not be deemed to have made any representation
  or warranty with respect to any Collateral so delivered except that such
  Collateral is free and clear, on the date of such delivery, of any and all
  Liens arising from such Person’s own acts.”

  



                    (l) The
definitions of “Excess Cash Flow”, “Notes”, “Senior Leverage
Ratio” and “Term” set forth in Appendix A to the Loan
Agreement (Definitions) are hereby deleted in the entirety and the following
are substituted in lieu thereof:


	
   

  	
   

  
	
   

  	
  “Excess
  Cash Flow” shall mean, for any fiscal period, without duplication, an
  amount equal to the sum of (a) EBITDA (but excluding the items comprising
  subsections (g) and (h) of the definition of EBITDA) for such
  period plus the amount of any cash Makewell Investments made to meet the
  applicable ECF Threshold for such period, plus (b) an amount equal to
  the aggregate net cash proceeds of the sale, lease, transfer or other
  disposition of assets by the Borrower and its Subsidiaries during such period
  (such net cash proceeds to be determined only after deducting all transaction
  costs, expenses, debt repayments and taxes in connection with such sale,
  lease, transfer or other disposition) to the extent not required to be
  applied to mandatory prepayments or payments on the Loans or not otherwise
  reinvested pursuant to Section 2.7 hereof, plus (c) the amount of any cash
  tax refunds received by Borrower and its Subsidiaries during such period,
  less (d) an amount equal to the aggregate amount of all prepayments of the
  Loans in excess of required repayments, less (e) an amount equal to Capital
  Expenditures of Borrower and its Subsidiaries for such period, less
  (f) an amount equal to the sum of all regularly scheduled payments and
  optional and/or mandatory payments of principal on Indebtedness of Borrower
  and its Subsidiaries actually made during such period to the extent permitted
  hereunder, less (g) cash tax expenses actually paid during such
  period, less (h) cash Interest Expense actually paid during such
  period, less (i) any Tax Distributions made during such period.

  
	
   

  	
   

  
	
   

  	
  “Note”
  shall mean, if any, collectively and each individually, the Term A Loan
  Notes, the Term B Loan Notes and the PIK Notes, as the same may be amended,
  modified, divided, supplemented and/or restated from time to time.

  
	
   

  	
   

  
	
   

  	
  “Senior
  Leverage Ratio” shall mean, for the Credit Parties on a consolidated
  basis, at any date of determination, the ratio of (a) Senior Debt (but
  excluding for purposes of this definition all Permitted Transaction Costs
  that are actually paid by the Borrower and any installments of the
  Performance Fee that are accrued by the Borrower in accordance with the terms
  and provisions of Section 6 of the Third Amendment) outstanding on such date,
  to (b) EBITDA for the twelve (12) months then ending taken as one accounting
  period.

  
	
   

  	
   

  
	
   

  	
  “Term”
  shall mean the period commencing on the Closing Date and ending on September
  30, 2006.

  



                    (m) The
following new definitions “Fred Meyer Gain”, “Fred Meyer Loss”, “Performance
Fee” and “Third Amendment” are hereby added to Appendix A to the
Loan Agreement (Definitions) in the appropriate alphabetical order as follows:




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  “Fred
  Meyer Gain” shall mean, for any period, the amount of the gain incurred
  during such period in connection with the recognition of sales made to Fred
  Meyer that were previously treated as deferred income, provided that such
  gain shall not exceed $309,000.

  
	
   

  	
   

  
	
   

  	
“Fred
  Meyer Loss” shall mean, for any period, the amount of the loss incurred
  during such period in connection with the reversal of sales made to Fred
  Meyer and the treatment thereof as deferred income, provided that such loss
  shall not exceed $309,000.

  
	
   

  	
   

  
	
   

  	
“LaSalle
  Third Amendment” shall mean, the Waiver and Amendment No. 3 to Loan and
  Security Agreement dated as of October 19, 2005 by and among LaSalle and the
  Credit Parties without regard to any amendments thereto.

  
	
   

  	
   

  
	
   

  	
“Performance
  Fee” shall have the meaning ascribed to such term in Section 6 of the
  Third Amendment.

  
	
   

  	
   

  
	
   

  	
“Permitted
  Transaction Costs”  shall mean,
  the $50,000 amendment fee charged by LaSalle in connection with the execution
  and delivery of the LaSalle Third Amendment, legal fees and expenses incurred
  by the Borrower in connection with the negotiation and documentation of the
  Third Amendment, the LaSalle Third Amendment and the consummation of a
  Repayment Event and any other reasonable expenses payable by the Borrower
  related to consultants, investment bankers or appraisers engaged on behalf of
  the Borrower, the Agent or the Agent’s counsel, as the case may be; provided,
  however, that such consultants, investment bankers or appraisers have
  been requested by the Agent and Lenders; and provided, however,
  further that the fees and expenses covered by this definition of
  “Permitted Transaction Costs” shall not exceed $500,000 in the aggregate.

  
	
   

  	
   

  
	
   

  	
“Third
  Amendment” shall mean the Third Amendment to Term Loan and Security
  Agreement and Waiver dated as of October 19, 2005, by and among Borrower,
  Guarantors, Agent and Lenders.

  



                    (n)
Annex I (Financial Covenants) of the Loan Agreement is hereby amended by
deleting the Senior Leverage Ratio, Minimum EBTIDA and Fixed Charge Coverage
Ratio tables set forth in subsections A(1), (2) and (3)
thereof in their entirety and substituting the following in lieu thereof:


          “1.
Senior Leverage Ratio


          As
measured on each of the following test dates, the Senior Leverage Ratio shall
not exceed the following:


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Test Date:

  	
  Maximum Senior Leverage Ratio:

  
	
   

  	
  

  	
   


  	
   

  	
   

  	
  


  	
   

  
	
   

  	
  December 31, 2003

  	
  3.6:1.00

  
	
   

  	
  March 31, 2004

  	
  3.70:1.00

  
	
   

  	
  June 30, 2004; September 30,
2004 and
  December 31, 2004

  	
  3.25:1.00

  
	
   

  	
  March 31, 2005

  	
  3.40:1.00

  
	
   

  	
  June 30, 2005

  	
  3.00:1.00

  
	
   

  	
  September 30, 2005

  	
  3.89:1.00

  
	
   

  	
  December 31, 2005

  	
  3.39:1.00

  
	
   

  	
  March 31, 2006

  	
  3.86:1.00

  
	
   

  	
  June 30, 2006 and the last
day of each
  fiscal quarter thereafter

  	
  2.64:1.00

  




9







          2.
Minimum
EBITDA 


          As
measured on each of the following test dates for the twelve (12) months then
ending taken as one accounting period, EBITDA for the Credit Parties on a
consolidated basis shall not be less than the following:


	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Test Date:

  	
   

  	
  Minimum EBITDA:

  
	
   

  	
  


  	
   

  	
  


  
	
   

  	
  October 31,
  2003 and November 30, 2003

  	
   

  	
  $

  	
  9,000,000

  
	
   

  	
  December 31,
  2003

  	
   

  	
  $

  	
  8,000,000

  
	
   

  	
  January 31,
  2004 and February 29, 2004

  	
   

  	
  $

  	
  8,750,000

  
	
   

  	
  March 31,
  2004

  	
   

  	
  $

  	
  9,000,000

  
	
   

  	
  April 30,
  2004; May 31, 2004; June 30, 2004; July 31, 2004; August 31, 2004; September
  30, 2004; December 31, 2004 and March 31, 2005

  	
   

  	
  $

  	
  10,000,000

  
	
   

  	
  June 30,
  2005

  	
   

  	
  $

  	
  11,500,000

  
	
   

  	
  September
  30, 2005

  	
   

  	
  $

  	
  7,501,000

  
	
   

  	
  December 31,
  2005

  	
   

  	
  $

  	
  8,204,000

  
	
   

  	
  March 31,
  2006

  	
   

  	
  $

  	
  9,158,000

  
	
   

  	
June 30,
  2006 and at each fiscal quarter end thereafter

  	
   

  	
  $

  	
  11,700,000

  



          3.
Fixed Charge
Coverage Ratio 


          As
measured on the last day of each fiscal quarter during the Term, the Fixed
Charge Coverage Ratio shall not be less than the following:


	
   

  	
   

  	
   

  
	
   

  	
  Test Date:

  	
  Fixed Charge Coverage Ratio:

  
	
   

  	
  


  	
  


  
	
   

  	
  September
  30, 2005

  	
  0.84:1.00

  
	
   

  	
  December 31,
  2005

  	
  0.92:1.00

  
	
   

  	
  March 31,
  2006

  	
  0.96:1.00

  
	
   

  	
  June 30,
  2006 and at each fiscal quarter end thereafter

  	
  1.09:1.00”

  






10







                    (o)
Annex I (Financial Covenants) of the Loan Agreement is hereby amended
further to delete the definition of “EBITDA” set forth therein and to
substitute the following in lieu thereof:


                


	
   

  	
   

  
	
   

  	
“EBITDA”
  shall mean the sum, without duplication, of the following:  Net Income or Pretax Loss plus, (a)
  Interest Expense, (b) taxes on income, (c) depreciation expense, (d)
  amortization expense, (e) all other non-cash and/or non-recurring documented
  charges and expenses approved by Agent in its Permitted Discretion, excluding
  accruals for cash expenses made in the ordinary course of business, (f) loss
  from any sale of assets, other than sales in the ordinary course of business
  (g) any Permitted Transaction Costs that are accrued by the Borrower and (h)
  installments of the Performance Fee to the extent that they are accrued by
  the Borrower in accordance with the terms and provisions of Section 6 of the
  Third Amendment less (x) gain from any sale of assets, other than
  sales in the ordinary course of business and (y) all non-cash and/or
  non-recurring income, all of the foregoing determined in accordance with
  GAAP.  Notwithstanding the foregoing:
  (i) the Credit Parties’ “EBITDA” shall be set in the amount set forth on Annex
  III attached hereto for the corresponding periods set forth therein; (ii)
  solely for the Test Date ended June 30, 2005, the Credit Parties’ “EBITDA”
  shall be increased by the amount of the Fred Meyer Loss recognized during
  such period; and (iii) solely for the Test Dated ended September 30, 2005,
  the Credit Parties’ “EBITDA” shall be decreased by the amount of the Fred
  Meyer Gain recognized during such period.

  



                    (p)
Annex II (Reporting Requirements) to the Loan Agreement is hereby
amended to add the following subsection 8 in the appropriate order:


	
   

  	
   

  	
   

  
	
   

  	
  “8.

  	
  Concurrently
  with the delivery thereof to LaSalle, copies of any and all third party prepared
  documents, statements, appraisals, reports and other materials regarding any
  of the Collateral, including without limitation, the inventory appraisal that
  is required to be delivered to LaSalle on or before December 14, 2005
  pursuant to the terms of the LaSalle Third Amendment.”

  



                    (q)
Exhibit A (Compliance Certificate) to the Loan Agreement is hereby
deleted in its entirety and Exhibit A (Compliance Certificate) attached
hereto is substituted in place thereof.


                    
(r) The disclosure schedules to the Loan Agreement are hereby deleted in their
entirety and the amended and restated disclosure schedules attached hereto as Exhibit
2(r) (the “Amended and Restated Disclosure Schedules”) are
substituted in place thereof.


          SECTION 3.
Investment Banker.  The Credit Parties hereby acknowledge and
agree to engage and thereafter employ and maintain in place, at all times and
at its sole expense, a nationally-recognized investment banker acceptable to
the Agent and Lenders in their sole discretion on terms satisfactory to the
Agent and Lenders in their sole discretion (“Investment Banker”).  The Credit Parties agree that the Investment
Banker shall develop and explore strategic initiatives, including, without
limitation, assisting the Credit Parties with respect to one or more sales of
the Credit Parties’ assets, stock or other ownership interests and business
operations or a refinancing which will generate liquidity in an amount
sufficient to enable the Credit Parties to satisfy all of its Obligations 





11







to the Agent
and the Lenders (collectively, the “Repayment Event”).  The Credit Parties further agree to
consummate the Repayment Event that constitutes the highest and best offer
received by the Credit Parties in an amount sufficient to repay the LaSalle
Loans and the Obligations owed to Agent and Lenders in full in cash.  The Credit Parties hereby consent to the
Agent contacting the Investment Banker directly with respect to the status of
the prospects and the Credit Parties’ marketing and sales efforts with respect
to a Repayment Event, and hereby agrees that such communications shall not be
restricted or denied in any way provided that the Agent shall not have the
right to direct the actions of the Investment Banker or to otherwise exercise
any control over the Investment Banker.
In connection with the foregoing, the Investment Banker and/or Borrower
shall copy Agent and Lenders on all drafts of Investment Banker’s work product
simultaneously with Investment Banker’s delivery thereof to Borrower or
Borrower’s receipt thereof, as applicable, and Investment Banker and/or
Borrower shall deliver to the Agent and Lenders copies of all final work
product prepared by the Investment Banker simultaneously with Investment
Banker’s delivery thereof to Borrower or Borrower’s receipt thereof, as
applicable, and Investment Banker shall provide Agent and Lenders with any
other work product of the Investment Banker that the Agent and Lenders may
reasonably request, and also to deliver to the Agent and Lenders all of the
following items on or before the following dates, each in form and substance
satisfactory to the Agent and Lenders in their sole discretion:


                    (a)
On or before November 15, 2005, a fully executed engagement letter between the
Borrower and the Investment Banker;


                    (b)
On or before January 15, 2006, a final, fully distributed offering memorandum
for soliciting bids and a detailed written plan as to the
Borrower’s efforts to consummate a Repayment Event that will generate liquidity
in an amount sufficient to enable the Credit Parties to timely satisfy all of
their Obligations owed to the Agent and the Lenders;


                    (c)
Borrower shall use best efforts to deliver,
on or before February 28, 2006, at least one binding, fully executed,
letter-of-intent, subject solely to customary contingencies, with respect to a
Repayment Event; provided that if Borrower’s best efforts do not result in
timely compliance with this subsection (c), then the Agent and Lenders shall
not declare an Event of Default; 


                    (d)
Borrower shall use best efforts to deliver
to the Agent and Lenders duly executed, non-contingent Definitive Documentation
with respect to a Repayment Event on or before March 30, 2006, provided that if
Borrower’s best efforts do not result in timely compliance with this subsection
(d), then the Agent and Lenders shall not declare an Event of Default.  For purposes of this Section 3(d),
the term “Definitive Documentation” shall mean all of the following: (1)
written documents containing terms and conditions satisfactory to Agent and
Lender in their sole discretion and providing for the consummation of a
Repayment Event on or before April 30, 2006; (2) any and all written consents
to the consummation of a Repayment Event from LaSalle and all other Persons
deemed necessary by Agent and Lenders in their sole discretion, together with
all assurances requested by Agent and Lenders regarding the Credit Parties’
ability to consummate a Repayment Event on or before April 30, 2006; and (3)
any and all other agreements, instruments and documents in connection with a
Repayment Event requested by Agent and Lenders from any and all Persons deemed
necessary by Agent and Lenders in their sole discretion; and





12







                    (e)
Borrower shall use best efforts to
consummate a Repayment Event on or before April 30, 2006, provided that if
Borrower’s best efforts do not result in timely compliance with this subsection
(e), then the Agent and Lenders shall not declare an Event of Default.


          SECTION
4.               Business
Consultant.  The Credit
Parties shall employ and maintain in place, at all times and at its sole
expense, Silverman Consulting or another business consultant satisfactory to
the Agent and Lenders in their sole discretion (“Business Consultant”).  The Credit Parties agree that the Business
Consultant shall provide advice and assistance to Credit Parties’ management
with respect to all aspects of the business and operations of the Credit
Parties, including, without limitation, assisting with developing strategic
initiatives, identifying operational inefficiencies, developing and assisting
to implement strategies to eliminate such operational inefficiencies, reviewing
the Credit Parties’ 2006 Operating Budget on or before November 15, 2005 and
providing suggested changes, if any, and on a weekly basis reviewing the
Rolling Thirteen Week Cash Flow Report (defined below) and assisting the Credit
Parties with respect to marketing and selling the Credit Parties’ assets and
consummating a Repayment Event.  The
Business Consultant shall have complete and full access at all times to
management of the Credit Parties and to the books and records of the Credit
Parties in order to provide information and advice to the Credit Parties
regarding all aspects of the business, financial condition, operations, and
prospects of the Credit Parties and with respect to marketing and selling the
Credit Parties’ assets and consummating a Repayment Event.  The Credit Parties hereby consent to the
Agent contacting the Business Consultant directly with respect to the status of
the Credit Parties’ business operations, the Credit Parties’ prospects and
financial condition and the Credit Parties’ marketing and sales efforts (with
respect to the sale of the Credit Parties’ assets and the consummation of a
Repayment Event), and hereby agrees that such communications shall not be
restricted or denied in any way provided that the Agent and Lenders shall not
have the right to direct the actions of the Business Consultant or to otherwise
exercise any control over the Business Consultant.  The Credit Parties further agree that the Business Consultant
and/or Borrower shall deliver to the Agent copies of any written reports, work
product, information, document or item received by any Credit Party from the
Business Consultant, simultaneously with the delivery or receipt of the same,
and any other written reports and work product of the Business Consultant that
the Agent and Lenders may reasonably request in their Permitted
Discretion.  


          SECTION
5.               Agent’s
Financial Consultant.
The Credit Parties hereby acknowledge and agree that the Agent, or its
counsel, may retain and thereafter continue to employ and retain, at the Credit
Parties’ expense, a financial consultant satisfactory to the Agent in its sole
discretion (the “Agent’s Financial Consultant”) to assess the status of
the business operations of the Credit Parties and to analyze the Credit
Parties’ current and future plans with respect to the continued business
operations, projected results and supply chain management of the Credit Parties
and the Credit Parties’ fulfillment of their Obligations under the Loan
Documents, including, without limitation, reviewing and testing the work
product of the Business Consultant and the Investment Banker.  The Credit Parties shall reimburse the
Agent, or its counsel, as the case may be, on demand, for all reasonable fees
and expenses of the Agent’s Financial Consultant.  The Credit Parties agree to cooperate fully and reasonably with
the Agent’s Financial Consultant in conducting its review, to include, without
limitation, access to the Credit Parties’ facilities and books and records, and
the opportunity to interview officers and key agents and employees of the
Credit Parties, including, without limitation, the Credit Parties’ Business
Consultant and outside auditors and the Investment 




13







Banker.  The Agent’s Financial Consultant may conduct
any such activity without any prior notice to the Credit Parties.


          SECTION
6.               Performance
Fee.  The Credit Parties
acknowledge and agree that, as partial consideration for the Agent’s and
Lenders’ agreements and commitments hereunder, the Credit Parties shall pay to
the Agent, for distribution to the Lenders, a performance fee in the amount of
Two Million Dollars ($2,000,000), which fee shall be fully earned in its
entirety on the date of this Amendment and shall be payable in kind by the
Credit Parties such that it shall accrue and be added to the principal
outstanding balance of the Term Loan owed to the Agent and Lenders on the dates
set forth below in the amounts set forth below (the “Performance Fee”)
for payment in cash promptly following the repayment in full in cash of the LaSalle
Loans and the other Obligations owed to the Agent and Lenders (such Performance
Fee to be paid pro rata with the “Termination Fee” payable to LaSalle under and
pursuant to the LaSalle Third Amendment as in effect on such date without
regard to any subsequent amendment(s) thereto):


	
   

  	
   

  	
   

  	
   

  	
   

  
	
  
 

  	
  
Scheduled Accrual Date:

  	
   

  	
  Fee:

  
	
  
 

  	


  	
   

  	


  
	
   

  	
  May 1, 2006

  	
   

  	
  $

  	
  1,000,000

  
	
   

  	
  June 1, 2006

  	
   

  	
  $

  	
  500,000

  
	
   

  	
  July 1, 2006

  	
   

  	
  $

  	
  500,000

  




The
Performance Fee shall be added to the Term Loan, shall constitute part of the
Obligations and shall be secured by all of the Collateral.  Notwithstanding the foregoing, the Credit
Parties’ obligation to pay the $2,000,000 Performance Fee shall be forgiven or
partially forgiven to the extent that any installment of such fee is not yet
due pursuant to the scheduled accrual dates set forth in this Section 6
if a Repayment Event shall have been consummated or the Obligations shall have
been otherwise indefeasibly repaid in full in cash on or before the respective
scheduled accrual dates set forth in this Section 6.


          SECTION 7.
Waiver and Consent.
Subject to the terms and conditions of this Amendment, including without
limitation the conditions specified in Section 11 and 12 below,
the Agent and Lenders hereby waive the Specified Events of Default. The
aforesaid waiver and consent relates solely to the Specified Events of Default
and nothing in this Agreement is intended or shall be construed to be a waiver
by the Agent or Lenders of any other Default or Event of Default which may
currently exist or hereafter arise.
Agent’s and/or Lenders’ exercise or failure to exercise any rights under
any of the foregoing in a particular instance shall not operate as a waiver of
their rights to exercise the same or different rights in subsequent instances.


          SECTION 8.
Additional Reporting.  In addition to and not in lieu of any other
reports required by the Loan Agreement, the Credit Parties shall furnish or
cause to be furnished to the Agent or shall participate in, as the case may be,
all of the following:


                    (a)
Rolling Thirteen Week Cash Flow Report.
A weekly report (the “Rolling Thirteen Week Cash Flow Report”),
in form and substance satisfactory to Agent in its sole discretion,






14









with the first
such report to be provided on October 24, 2005 and thereafter to be provided no
later than Monday of each week, or if Monday is not a Business Day, then on the
next succeeding Business Day, which sets forth (i) an updated thirteen-week cash
flow projection whereby the first week shall be deleted and updated with the
week immediately succeeding the last week included in the previous report; (ii)
a detailed reconciliation analysis of actual results compared to projected
results for the prior week and the actual results compared to the projected
results for the period to date; and (iii) a written explanation of all
variances; 


                    (b)
Conference Call.  Upon the
Agent’s request, the Credit Parties (including key management and any other
requested personnel) shall participate in a weekly telephonic meeting, at which
time the Credit Parties will: (i) review the status of their business
operations and cash flows; (ii) present and discuss progress towards a
Repayment Event; and (iii) provide detail relating to the prior month’s and
week’s financial performance (including a detailed reconciliation analysis of
actual results compared to projected results) and the Credit Parties’ expected
current month’s financial and operational performance; and 


                    (c)
Extension Period Notices.  On or
about August 15, 2004 Borrower commenced an Extension Period (as such term is
defined in the Subordinated Debentures) under the Subordinated Debentures such
that  payments of interest thereon shall
be deferred for a period of up to sixty (60) consecutive months in accordance
with the terms and conditions of the Subordinated Debentures, and Borrower has
confirmed the continuance of such Extension Period pursuant to monthly written
notices (the most recent of which is attached hereto as Exhibit 8(c)).  At all times prior to the indefeasible
payment in full in cash of the Obligations owed to Agent and Lenders, the
Borrower shall continue to issue monthly written notices to all holders of the
Subordinated Debentures confirming the occurrence and continuance of an
Extension Period, and the Borrower shall furnish Agent with a copy of all such
notices simultaneously with the issuance thereof.   


                    (d)
Cooperation; Other Information.  Each
Credit Party shall cooperate fully and reasonably shall provide such other
financial and other information concerning the financial, business and legal
affairs of any Credit Party as the Agent and Lenders may from time to time
reasonably request.


          SECTION
9. Additional Events of Default.
Notwithstanding any cure periods granted under the Loan Agreement and
other Loan Documents, the Credit Parties hereby acknowledge that the failure to
timely and fully meet any of the agreements, obligations, provisions or
covenants set forth in this Amendment or in Sections of the Loan Agreement that
are amended by this Amendment, in each case, on or before such applicable date
shall constitute an automatic Event of Default under the Loan Agreement and the
other Loan Documents (without notice, demand or grace of any kind) and shall
entitle the Agent and the Lenders to exercise all of the rights and remedies
granted thereunder.  


          SECTION
10. Guarantor Acknowledgment. 


                    (a)
Each Guarantor hereby acknowledges that it has reviewed the terms and
provisions of the Loan Agreement and this Amendment.  Each Guarantor hereby confirms that it will continue to guarantee
to the fullest extent possible in accordance with the Loan Agreement, as 




15







amended
hereby, the payment and performance of all “Obligations” under the Loan
Agreement, as amended hereby, including without limitation the payment and
performance of all such “Obligations” under the Loan Agreement, as amended
hereby, in respect of the Obligations of the Borrower now or hereafter existing
under or in respect of the Loan Agreement and the Notes defined therein, as
amended hereby.


                    (b)
Each Guarantor acknowledges and agrees that
the Loan Agreement and other Loan Documents, as amended hereby, shall continue
in full force and effect and that all of its obligations thereunder shall be
valid and enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Each Guarantor represents and warrants that
all representations and warranties contained in the Loan Agreement and this
Amendment are true, correct and complete in all respects on and as of the date
hereof to the same extent as though made on and as of the date hereof.


                    (c)
Each Guarantor acknowledges and agrees that: (i) notwithstanding the conditions
to effectiveness set forth in this Amendment, such Guarantor is not required by
the terms of the Loan Agreement or any other Loan Document to consent to the
amendments of the Loan Agreement effected pursuant to this Amendment; and (ii)
nothing in the Loan Agreement, this Amendment or any other Loan Document shall
be deemed to require the consent of such Guarantor to any future amendments to
the Loan Agreement.


          SECTION
11. Conditions Precedent. This Amendment shall be effective upon the
satisfaction of all of the following conditions:  


                    
(a) Deliverables.  The Credit
Parties shall have delivered to the Agent: (i) an executed original of this
Amendment and Agent shall have accepted the Credit Parties’ signatures thereto;
(ii) the Amended and Restated Disclosure Schedules, in form and substance
satisfactory to Agent in its sole discretion; (iii) an executed copy of an
Amendment No. 1 to that certain Pledge Agreement dated October 29, 2003 made by
Borrower in favor of Agent, which Amendment No. 1 shall be in the form of Exhibit
11(a)(iii) attached hereto, shall be in form and substance satisfactory to
Agent in its Permitted Discretion and shall confirm the pledge to Agent of the
Borrower’s ownership interests in, among other entities, NBU Group, LLC; (iv)
original stock certificates, limited liability company membership certificates
and/or other ownership certificates, as applicable, together with stock powers,
proxies and other similar instruments executed in blank, as applicable, with
respect to any and all ownership interests that are pledged by the Credit
Parties to the Agent as security for the Obligations; (v) any and all consents,
licenses, permits, approvals or authorizations of, or registrations, filings or
declarations with any Governmental Authority or other Person (including,
without limitation, any and all holders of the Subordinated Debentures and the
Subordinated Debt) if required in connection with the execution, delivery,
performance, validity or enforceability of this Amendment by or against the
Credit Parties; and (vi) an executed copy of the LaSalle Third Amendment, in
form and substance satisfactory to the Agent in its Permitted Discretion.


                    
(b) Accuracy of Representations and Warranties.  All representations and warranties made by
the Credit Parties under this Amendment are true and correct as of the date
hereof.




16








                    (c)
No Defaults or Events of Default.
Except for the Specified Events of Default, the Borrower is not in
default under any Loan Document and no Event of Default exists and is
continuing or would result from the execution, delivery or performance of this
Amendment.


          SECTION
12. Conditions Subsequent. In addition to the foregoing, the Credit
Parties hereby agree to satisfy all of the following conditions contained in
this Section 12 in a manner satisfactory to Agent in its sole
discretion. A failure to satisfy any of
the conditions contained in this Section 12 in a manner satisfactory to
Agent in its sole discretion on or before the dates set forth below constitute
an automatic Event of Default under the Loan Agreement and other Loan Documents
(without notice, demand or grace of any kind): 



                    (a)
2005 Annual Statements.
Notwithstanding anything set forth in Section 6.1(a) of the Loan
Agreement to the contrary, solely for the Credit Parties’ fiscal year ended
June 30, 2005, the Credit Parties shall be permitted to deliver to Agent the
annual financial statements that are required to be delivered in connection
with Section 6.1(a) of the Loan Agreement on or before October 25, 2005.


                    (b)
Engagement Letter.  On or before
October 28, 2005, the Credit Parties shall deliver to Agent a fully executed
engagement letter between the Credit Parties and the Business Consultant, in
form and substance satisfactory to Agent in its sole discretion, together with
written evidence, in form and substance satisfactory to Agent in its sole
discretion, that the Business Consultant has commenced the tasks described in Section
4 hereof on or before such date.


                    (c)
Landlord Waivers.  On or before
October 31, 2005, the Credit Parties shall deliver to Agent a fully executed
landlord waiver, in form and substance satisfactory to Agent in its sole
discretion, with respect to each of the Credit Parties leasehold locations for
which the Agent does not presently have a landlord waiver.


                    (d)
Warehouseman Waivers.  On or before
October 31, 2005, the Credit Parties shall deliver to Agent a fully executed
warehouseman’s waiver, in form and substance satisfactory to Agent in its sole
discretion, with respect to each of the Credit Parties’ warehouse locations for
which the Agent does not presently have a warehouseman’s waiver.


                    (e)
Opinion.  On or before November 3,
2005, the Credit Parties shall deliver a written opinion of counsel for the
Borrower in form and content satisfactory to the Agent in its Permitted
Discretion, addressed to the Agent and its counsel, and covering such matters
related to the transactions contemplated hereby as the Agent may request
(including, without limitation, as to authority, existence, incumbency and
enforceability of this Amendment).


                    (f)
Updated Insurance Certificates.  On
or before November 3, 2005, the Credit Parties shall deliver updated insurance
certificates naming Agent as loss payee and additional insured, with respect to
each of the Credit Parties insurance policies on which Agent is not presently
named in such capacities, and Credit Parties shall also deliver to Agent
evidence of D&O and business interruption insurance, in form and substance
satisfactory to Agent in its Permitted Discretion.




17







                    (g)
Termination.  On or before November
21, 2005, the Credit Parties shall cause to be duly filed a termination
statement with respect to the following PPSA Registration: Location:
Missassauga, Canada, Debtor: Weatherly Consumer Products, Inc., Secured Party:
Nations Financial Capital Corporation, assignee of US West Financial Services,
Inc., as Agent, File #: 060929289 Registration #: 19930728 11445 0043 4214.


                    (h)
Intellectual Property.  Within three
(3) Business Days after Agent’s delivery of proposed filings, each Credit Party
shall execute or at Credit Parties’ expense, permit the Agent to execute
updated United States Patent & Trademark Office and/or United State
Copyright Office filings against Intellectual Property owned by the Credit
Parties, in favor of the Agent and Lenders, in form and substance satisfactory
to the Agent in its sole discretion.


          SECTION
13. Loan Agreement and Other Loan Documents in Full Force and Effect as
Amended.  E\xcept as specifically amended hereby, the
Loan Agreement and other Loan Documents shall remain in full force and effect
and hereby are ratified and confirmed as so amended. This Amendment shall not
constitute a novation, satisfaction and accord, cure, release or satisfaction
of the Loan Agreement or other Loan Documents, but shall constitute an
amendment thereof. The parties hereto agree to be bound by the terns and
conditions of the Loan Agreement and other Loan Documents as amended by this
Amendment, as though such terms and conditions were set forth herein in full.
Each reference in the Loan Agreement and the other Loan Documents to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of similar import shall
mean and be a reference to the Loan Agreement or applicable Loan Document, as
amended by this Amendment, and each reference herein or in any other Loan
Document to the “Agreement”, the “Loan Agreement” or the “CapitalSource Loan
Agreement” shall mean and be a reference to the Loan Agreement as amended and
modified by this Amendment.


          SECTION 14.
Representations.  The Credit Parties hereby represent and
warrant to the Agent and Lenders as follows: (i) each of the Credit Parties is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (ii) the execution, delivery and performance by
each of the Credit Parties of this Amendment are within its powers, have been
duly authorized, and do not contravene: (A) its articles of incorporation,
certificate of formation, shareholders agreement, operating agreement, limited
liability company agreement, voting rights agreement or other organizational
documents (collectively, the “Organizational Documents”); or (B) any
applicable law, (iii) except as delivered to Agent pursuant to Section 11
above, no consent, license, permit, approval or authorization of, or registration,
filing or declaration with any Governmental Authority or other Person is
required in connection with the execution, delivery, performance, validity or
enforceability of this Amendment by or against the Credit Parties, (iv) this
Amendment has been duly executed and delivered by each of the Credit Parties,
and the execution, delivery and performance of this Amendment have been duly
authorized by all requisite corporate or partnership action on the part of each
of the Credit Parties, (v) this Amendment constitutes the Credit Parties’,
legal, valid and binding obligations enforceable against it in accordance with
its terns, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally or by general principles of equity,
(vi) after giving effect to this Amendment, no Credit Party is in default under
any Loan Document or any document, instrument or agreement evidencing or
relating to any other indebtedness of such Credit Party and no such default or
any other Default or Event of Default exists, 




18







has occurred
and is continuing or would result from the execution, delivery or performance
of this Amendment, (vii) (A) no default or event of default or other event,
fact, circumstance or condition that, with the giving of applicable notice
passage of time or both, would constitute or be or result in any default or
event of default under any Subordinated Debt or the Subordinated Debentures has
occurred and is continuing, and (B) notwithstanding anything to the contrary
set forth in the Loan Agreement, Loan Documents or any document governing the
Subordinated Debt or Subordinated Debentures, the Credit Parties shall not make
any payments (in cash, in kind by set off or otherwise) on or with respect to
the Subordinated Debt or the Subordinated Debentures at any time prior to the
indefeasible repayment in full in cash of the Obligations that are owed to the
Agent and Lenders, (viii) (A) an Extension Period (as such term is defined in
the Subordinated Debentures) has occurred and is continuing under the
Subordinated Debentures, and (B) Borrower shall not revoke such Extension
Period at any time prior to the indefeasible payment in full in cash of the
Obligations owed to the Agent and Lenders,
(ix) there are no Organization Documents governing EYAS except as listed
on Exhibit 14, and as of the date hereof there are not, and at all times
prior to the indefeasible payment in full of the Obligations owed to the Agent
and Lenders there shall not be, any outstanding capital stock, equity
securities or other ownership interests of EYAS except for any of the foregoing
that constitute Permitted Securities, (x) (A) nothing contained or provided in
any Organizational Documents of any Credit Party to the contrary: (1) shall
restrict or limit or require any consent, vote or action of any of the
shareholders, members or owners to any of the Pledge Agreements or the transactions
contemplated thereby or to any action taken by Agent and/or Lenders under the
Pledge Agreements including, without limitation, any enforcement action or any
foreclosure, sale or transfer of all or a portion of the Pledged Collateral (as
such term is defined in the Pledge Agreements); or (2) shall otherwise affect
or restrict in any manner the exercise by Agent of any rights and remedies
under the Pledge Agreements, the Loan Agreement or the other Loan Documents and
(xi) all representations and warranties made by the Credit Parties under the
Loan Documents are true and correct as of the date hereof and are made as to
this Amendment.  All representations and
warranties made in this Amendment shall survive the execution and delivery of
this Amendment and no investigation by the Agent and Lenders shall affect such
representations or warranties or the right of the Agent and Lenders to rely
upon them.


          SECTION 15.
Release. In
consideration of Agent and Lenders entering into this Amendment, each of the
Credit Parties hereby releases and forever discharges Agent and Lenders, and
their successors, assigns, agents, shareholders, members, directors, officers,
employees, agents, attorneys, parent corporations, subsidiary corporations,
affiliated corporations, affiliates, and each of them, from any and all claims,
debts, Obligations, demands, obligations, costs, expenses, actions and causes
of action, of every nature and description, known and unknown, whether or not
related to the subject matter of this Amendment, which such Credit Party or any
Credit Party now has or at any time may hold, by reason of any matter, cause or
thing occurred, done, omitted or suffered to be done prior to the date of this
Amendment. Each of the Credit Parties waives the benefits of any law, which may
provide in substance: “A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.” Each of the Credit Parties understands that the
facts which it believes to be true at the time of making the release provided
for herein may later turn out to be different than it now believes, and that
information which is not know known or suspected may later be discovered.  Each of the Credit Parties accepts this
possibility, and each of the Credit Parties assumes the risk of the facts
turning out to be different and new information being 




19







discovered;
and each of the Credit Parties further agrees that the release provided for
herein shall in all respects continue to be effective and not subject to
termination or rescission because of any difference in such facts or any new
information. This release is fully effective on the date hereof. Agent and
Lenders are not releasing any Credit Parties from any claims, debts,
Obligations, demands, obligations, costs, expenses, actions or causes of
action.




20







          SECTION
16. Miscellaneous.


                    (a)
The execution, delivery and effectiveness of this Amendment shall not, except
as expressly provided herein, be deemed to be an amendment or modification of,
or operate as a waiver of, any provision of any Loan Document or any right,
power or remedy of the Agent and Lenders, nor constitute a waiver of any
provision of any Loan Document, or any other document, instrument and/or
agreement executed or delivered in connection therewith or of any Default or
Event of Default under any of the foregoing, in each case whether arising
before or after the date hereof or as a result of performance thereunder. This
Amendment shall not preclude the future exercise of any right, remedy, power or
privilege available to the Agent and Lenders whether under the Loan Documents,
at law or otherwise.


                    (b)
This Amendment may be executed in any number of counterparts (including by
facsimile), and by the different parties hereto or thereto on the same or
separate counterparts, each of which shall be deemed to be an original
instrument but all of which, as applicable, together shall constitute one and
the same agreement. The descriptive headings of the various sections of this
Amendment are inserted for convenience of reference only and shall not be
deemed to affect the meaning or construction of any of the provisions thereof.
Whenever the context and construction so require, all words in this Amendment
in the singular number herein shall be deemed to have been used in the plural,
and vice versa, and the masculine gender shall include the feminine and neuter
and the neuter shall include the masculine and feminine.


                    (c)
This Amendment may not be changed, amended, restated, waived, supplemented,
discharged, canceled, terminated or otherwise modified orally or by any course
of dealing or in any manner other than as provided in the Loan Agreement. This
Amendment shall be considered part of the Loan Agreement and shall be a Loan
Document for all purposes.


                    (d)
The Loan Agreement as amended by this Amendment constitutes the final, entire
agreement and understanding between the parties with respect to the subject
matter thereof and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements between the parties, and shall be
binding upon and inure to the benefit of the successors and assigns of the
parties thereto and supersede all other prior agreements and understandings, if
any, relating to the subject matter thereof. There are no unwritten oral
agreements between the parties with respect to the subject matter thereof.


                    (e) THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN, AND SHALL BE SUBJECT TO THE
WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF, THE LOAN AGREEMENT.


                    (f)
The Borrower may not assign, delegate or transfer this Amendment or any of its
rights or obligations hereunder without the prior consent of the Agent and
Lenders and any delegation, transfer or assignment in violation hereof shall be
null and void. No rights are intended to be created hereunder for the benefit
of any third party donee, creditor or incidental beneficiary of the 




21







Borrower or
any other Person other than the Agent and Lenders. Nothing contained in this
Amendment shall be construed as a delegation to the Agent and Lenders of the
Borrower’s duty of performance, including, without limitation, any duties under
any account or contract in which the Agent and Lenders have a security interest
or Lien. This Amendment shall be binding upon the Borrower and its respective
successors and permitted assigns. The Agent and Lender’s ability to assign,
sell or transfer all or any part of this Amendment shall be governed by the
Loan Agreement.


                    (g)
Except as specifically amended hereby, (i) this Amendment shall not limit or
diminish the obligations of the parties under the Loan Agreement, and (ii) each
Credit Party reaffirms its obligations under the Loan Documents to which it is
a party and agrees that the Loan Documents remain in full force and effect and
are hereby ratified and confirmed.


                    (h)
The Credit Parties  shall execute and
deliver such other documents, certificates and/or instruments and take such
other actions or cause such other actions to be taken as the Agent and Lenders
may request in order more effectively to consummate the transactions
contemplated hereby.


                    (i)
Each Credit Party hereby acknowledges and agrees that it has no defense,
counterclaim, offset, cross-complaint, claim or demand of any kind or nature
whatsoever that can be asserted to reduce or eliminate all or any part of such
Credit Party’s liability to repay the Obligations or to seek affirmative relief
or damages of any kind or nature from Agent and/or the Lenders.


[Remainder of page intentionally left blank]




22







          IN
WITNESS WHEREOF, the parties hereto have executed this Amendment under seal as
of the day and year first above written.


	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BORROWER:

  	
  EASY
  GARDENER PRODUCTS, LTD., a Texas limited partnership

  
	
   

  	
   

  
	
   

  	
  By: E G
  Product Management, L.L.C., its General Partner

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Richard
  M. Kurz   

  
	
   

  	
   

  	
  


  
	
   

  	
  Name: 

  	
  Richard M.
  Kurz

  
	
   

  	
   

  	
  


  
	
   

  	
  Title: 

  	
  CFO

  
	
   

  	
   

  	
  


  
	
   

  	
   

  
	
  GUARANTORS:

  	
  EYAS
  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Richard
  M. Kurz   

  
	
   

  	
   

  	
  


  
	
   

  	
  Name: 

  	
  Richard M.
  Kurz

  
	
   

  	
   

  	
  


  
	
   

  	
  Title: 

  	
  CFO

  
	
   

  	
   

  	
  


  
	
   

  	
   

  
	
   

  	
  EG, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Richard
  M. Kurz   

  
	
   

  	
   

  	
  


  
	
   

  	
  Name: 

  	
  Richard M.
  Kurz

  
	
   

  	
   

  	
  


  
	
   

  	
  Title: 

  	
  CFO

  
	
   

  	
   

  	
  


  
	
   

  	
   

  
	
   

  	
  E G PRODUCT
  MANAGEMENT, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Richard
  M. Kurz   

  
	
   

  	
   

  	
  


  
	
   

  	
  Name: 

  	
  Richard M.
  Kurz

  
	
   

  	
   

  	
  


  
	
   

  	
  Title: 

  	
  CFO

  
	
   

  	
   

  	
  


  
	
   

  	
   

  
	
   

  	
  WEATHERLY
  CONSUMER PRODUCTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Richard
  M. Kurz   

  
	
   

  	
   

  	
  


  
	
   

  	
  Name: 

  	
  Richard M.
  Kurz

  
	
   

  	
   

  	
  


  
	
   

  	
  Title: 

  	
  CFO

  
	
   

  	
   

  	
  


  
	
   

  	
   

  	
   

  
	
   

  	
  WEATHERLY
  CONSUMER PRODUCTS GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Richard
  M. Kurz   

  
	
   

  	
   

  	
  


  
	
   

  	
  Name: 

  	
  Richard M.
  Kurz

  
	
   

  	
   

  	
  


  
	
   

  	
  Title: 

  	
  CFO

  
	
   

  	
   

  	
  


  



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23







	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NBU GROUP,
  LLC

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Richard
  M. Kurz   

  
	
   

  	
   

  	
  


  
	
   

  	
  Name: 

  	
  Richard M.
  Kurz

  
	
   

  	
   

  	
  


  
	
   

  	
  Title: 

  	
  CFO

  
	
   

  	
   

  	
  


  



[Remainder of page intentionally left blank]


24







	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AGENT AND
  LENDER:

  	
  CAPITALSOURCE
  FINANCE LLC

  
	
   

  	
   

  
	
   

  	
  By:  

  	
  /s/ Joseph
  Turitz 

  
	
   

  	
   

  	
  


  
	
   

  	
  Name:  

  	
  Joseph
  Turitz 

  
	
   

  	
   

  	
  


  
	
   

  	
  Title:  

  	
  General
  Counsel, Corporate Finance

  
	
   

  	
   

  	
  


  





25







Schedule A


(Schedule of Obligations)
(Unpaid principal as of September 30, 2005)*




 


	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Term A Loan:

  	
   

  	
  $

  	
  8,840,774.49

  	
   

  
	
  Term B Loan:

  	
   

  	
  $

  	
  9,500,000.00

  	
   

  
	
  PIK:

  	
   

  	
  $

  	
  1,324,024.58

  	
   

  



*plus accrued and accruing
interest, costs, fees, attorneys’ fees and disbursements and other charges as
well as adjustments, credits, and charges as provided as provided under the Loan
Documents.




26