Document:

ex10-1.htm

Exhibit 10.1

    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 hereof with 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.

    

     10.   
        Non-Waiver of
Default.  Neither this Amendment, Lender’s forbearance
hereunder nor Lender's continued making of loans or other extensions of credit
at any time extended to Borrower in accordance with the Agreement shall be
deemed a waiver of or consent to any Default.  Obligors agree that
such Defaults shall not be deemed to have been waived, released or cured by
virtue of advances, loans or other extensions of credit at any time extended to
Borrower, Lender's agreement to forbear pursuant to the terms of this Amendment
or the execution of this Amendment.

    

    11.            Severability.  Any
provision of this Amendment held by a court of competent jurisdiction to be
invalid or unenforceable shall not impair or invalidate the remainder of this
Amendment, and the effect thereof shall be confined to the provision so held to
be invalid or unenforceable.

    

    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 Clarkeex10-2.htm

    Exhibit
10.2

     

    PROMISSORY
NOTE

     

    US$___________                                                                                                                                                                                    
         [DATE]

     

    
      	
               
      

            	
              1.

            	
              Principal.

            

    

     

    For value
received, in installments as herein provided, AEROGROW INTERNATIONAL, INC.
(“Maker”),
promises to pay to the order of _____________, or assignee (“Holder”), the
principal sum of ___________ U.S. Dollars ($_________), together with accrued
interest from the date of disbursement hereunder on the unpaid principal balance
at the rate of ____________ (___%) per annum.  As used herein, the
term “Holder” shall mean Holder and any subsequent holder of this Note (this
“Note”),
whichever is applicable from time to time.

     

    
      	
               
      

            	
              2.

            	
              Payment of Interest
      and Principal.

            

    

     

    (a)           Interest

     

    Payment
of interest shall be made concurrently with the payment of principal, in an
amount equal to the accrued interest due on the portion of the principal balance
being paid.

     

    (b)           Principal
Payments

     

    Maker
shall pay the principal balance of this Note in full on
____________.

     

    
      	
               
      

            	
              3.

            	
              Warrants.

            

    

     

    Maker
shall issue to the Holder a warrant to purchase
[          ] common shares of
AeroGrow International, Inc. at a purchase price of
[     ] per common share.  The terms and
conditions of the warrant will be documented in a Common Stock Purchase Warrant
to be issued by the Maker in favor of the Holder, in a form and substance
mutually agreed between the parties.

     

    
      	
               
      

            	
              4.

            	
              Prepayment.

            

    

     

    This Note
may be prepaid in full or in part, at any time and from time to time, without
premium or penalty.  Maker shall have no right to reborrow any such
prepaid amounts.  All prepayments shall be applied by Holder first, to
the payment of accrued and unpaid interest; and last to the payment of
principal.

     

    
      	
               
      

            	
              5.

            	
              Interest Rate
      Calculation.

            

    

     

    Throughout
the term of this Note, interest shall be calculated on the basis of a 365-day
year, but shall be computed for the actual number of days in the period for
which interest is charged.  If any payment of interest or principal to
be made by Maker shall become due on a day other than a Business Day (as
hereinafter defined), such payment shall be made on the next succeeding Business
Day and, in the case of a principal payment, such extension of time shall be
included in computing any interest with respect to such payment.  As
used herein, the term “Business Day” shall mean a day other than Saturday or
Sunday on which banks are open for business in Boulder, Colorado.

     

    
      	
               
      

            	
              6.

            	
              Manner of
      Payment.

            

    

     

    Principal
and interest are payable in lawful money of the United States of
America.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              7.

            	
              Event of
      Default.

            

    

     

    The
occurrence of any of the following shall be deemed to be an event of default
(“Event of
Default”) hereunder:

     

    (a)           Maker’s
failure to pay any payment of principal or interest due pursuant to the terms
hereof within ten (10) Business Days after receipt of notice from Holder of a
breach of the obligation to make such payment;

     

    (b)           any
indebtedness for money borrowed by Maker in an aggregate principal amount in
excess of US$250,000 is not paid at final maturity or upon acceleration, if such
acceleration is not cured or rescinded;

     

    (c)           a
decree or order by a court having jurisdiction in the premises shall have been
entered adjudging Maker bankrupt or insolvent, or approving as properly filed a
petition seeking liquidation or reorganization of Maker under any applicable
bankruptcy, insolvency, reorganization or other similar law, and such decree or
order shall have continued unvacated and unstayed for a period of 90 days; an
involuntary case shall be commenced under any applicable bankruptcy, insolvency,
reorganization or other similar law in respect of Maker and shall continue
undismissed for a period of 90 days or an order for relief in such case shall
have been entered and such order shall have remained in force unvacated and
unstayed for a period of 90 days; or a decree or order of a court having
jurisdiction in the premises shall have been entered for the appointment on the
ground of insolvency or bankruptcy of a receiver, custodian, liquidator, trustee
or assignee in bankruptcy or insolvency of Maker or of its property, or for the
winding up or liquidation of its affairs, and such decree or order shall have
remained in force unvacated and unstayed for a period of 90 days;
or

     

    (d)           Maker
shall institute proceedings to be adjudicated a voluntary bankrupt, shall
consent to the filing of a bankruptcy proceeding against it, shall file a
petition or answer or consent seeking liquidation or reorganization under any
applicable bankruptcy, insolvency, reorganization or other similar law, shall
consent to the filing of any such petition or shall consent to the appointment
on the ground of insolvency or bankruptcy of a receiver or custodian or
liquidator or trustee or assignee in bankruptcy or insolvency of it or of its
property, or shall make a general assignment for the benefit of
creditors.

     

    
      	
               
      

            	
              8.

            	
              Remedies.

            

    

     

    Upon the
occurrence of an Event of Default and without demand or notice, Holder shall
have the option to declare the entire principal balance of this Note together
with all accrued and unpaid interest thereon immediately due and payable; provided, however, that upon
the occurrence of an Event of Default under clauses (c) or (d) of
Paragraph 7 above, the entire principal balance of this Note together with
all accrued and unpaid interest thereon shall immediately become due and payable
without any action on the part of Holder.  No delay or omission on the
part of Holder in exercising any right under this Note shall operate as a waiver
of such right.

     

    
      	
               
      

            	
              9.

            	
              Waiver.

            

    

     

    Maker
hereby waives diligence, presentment, protest and demand, notice of protest,
dishonor and nonpayment of this Note, and expressly agrees that, without in any
way affecting the liability of Maker hereunder, Holder may extend any maturity
date or the time for payment of any installment due hereunder, accept additional
security, release any party liable hereunder and release any security now or
hereafter securing this Note.  Maker further waives, to the fullest
extent permitted by law, the right to plead any and all statutes of limitations
as a defense to any demand on this Note, or on any deed of trust, security
agreement, lease assignment, guaranty or other agreement now or hereafter
securing this Note.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              10.

            	
              Severability.

            

    

     

    Every
provision of this Note is intended to be severable.  In the event any
term or provision hereof is declared by a court of competent jurisdiction to be
illegal or invalid for any reason whatsoever, such illegality or invalidity
shall not affect the balance of the terms and provisions hereof, which terms and
provisions shall remain binding and enforceable.

     

    
      	
               
      

            	
              11.

            	
              Interest Rate
      Limitation.

            

    

     

    In no
event shall the rate of interest payable on the indebtedness evidenced hereby
exceed the maximum rate permissible under applicable law.  If the rate
of interest payable hereunder is ever reduced as a result of this
Paragraph 11 and at any time thereafter the maximum rate permitted by
applicable law shall exceed the rate of interest  provided for in this
Note, then the rate provided for in this Note shall be increased to the maximum
rate provided by applicable law for such period as is required so that the total
amount of interest received by Holder is that which would have been received by
Holder but for the operation of the first sentence of this
Paragraph 11.

     

    
      	
               
      

            	
              12.

            	
              Number and
      Gender.

            

    

     

    In this
Note the singular shall include the plural and masculine shall include the
feminine and neuter gender, and vice versa, if the context so
requires.

     

    
      	
               
      

            	
              13.

            	
              Headings.

            

    

     

    Headings
at the beginning of each numbered Paragraph of this Note are intended solely for
convenience and are not to be deemed or construed to be a part of this
Note.

     

    
      	
               
      

            	
              14.

            	
              Choice of
      Law.

            

    

     

    This Note
shall be governed by and construed in accordance with the laws of the State of
Colorado.

     

    

    “Maker”

    

    AEROGROW
INTERNATIONAL, INC.

    

    

    By:                                                                         

    Name:

    Title

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