Document:

ex10-1.htm

    EMPLOYMENT
AGREEMENT

    

    

    This
EMPLOYMENT AGREEMENT (this “Agreement”) is
entered into as of March 8, 2008 (the “Effective Date”), by
and between collectively, India Globalization Capital, Inc., (“IGC”) a corporation
organized under the laws of Maryland, India Globalization Capital Mauritius,
(“IGC-M” and
collectively with IGC, “Employer”), and Ram
Mukunda (“Executive”) on the
following terms and conditions:

    

    RECITALS:

    

    A. The
Employer desires to be assured of the continued services of Executive;
and

    

    B. Executive
desires to continue to be employed by the Employer as its Chief Executive
Officer upon the terms, covenants and conditions hereinafter set
forth.

    

    NOW, THEREFORE, in consideration of the mutual
terms, covenants and conditions hereinafter set forth, the parties hereto agree
as follows:

    

    1. Employment
Period.  Employer hereby agrees to continue to employ Executive
as its Chief Executive Officer, and Executive, agrees to accept such continued
employment for the period beginning on the Effective Date and ending on the
fifth anniversary of the Effective Date (the “Employment Period”).
Thereafter, Executive’s employment shall continue until terminated in accordance
with this Agreement.

    

    2. Performance of
Duties.

    

    
      	
              2.1.  

            	
              Executive
      agrees that during the Employment Period, and while Executive is employed
      by Employer, he shall devote his full normal and customary working time,
      energies and talents exclusively to serving in the capacity of Chief
      Executive Officer of Employer and to performing such other duties
      consistent with his position, as may be properly assigned to him by the
      Board of Directors of Employer (the “Board”). He
      will carry out such duties faithfully, efficiently and in a professional
      manner.

            

    

    

    
      	
              2.2.  

            	
              In
      addition to the limitations imposed upon Executive by the Restrictive
      Covenants contained in Section 4, Executive shall not during the
      Employment Period and while he is employed by the Employer, without prior
      written consent from the Board:

            

    

    

    
      	
              2.2.1.  

            	
              serve
      as, be a consultant to or employee, officer, manager, agent, or director
      of, any corporation, partnership or other entity other than Employer
      (other than civic, charitable, or other public service organizations) if,
      as determined at the reasonable discretion of the Board, such service,
      employment, or position would have a material adverse effect upon the
      ability of Executive to perform his duties hereunder and Executive is so
      advised in writing and given a period of not less than ninety (90) days to
      cease; or

            

    

    

    
      	
              2.2.2.  

            	
              have
      more than a ten percent (10%) ownership interest in any enterprise other
      than Employer if such ownership interest would have a material adverse
      effect upon the ability of Executive to perform his duties hereunder, and
      the Executive is so advised in writing and given a period of not less than
      ninety (90) days to divest the
interest.

            

    

    

    3. Compensation.  Subject
to the terms and conditions of this Agreement, during the FYE March 31, 2009,
Executive shall be compensated by Employer for his services as
follows:

    

    
      	
              3.1.  

            	
              Executive
      shall receive, for each consecutive twelve (12) month period beginning on
      the Effective Date and ending on each anniversary thereof, a rate of pay
      equal to Three Hundred Thousand Dollars ($300,000.00) per year (“Base
      Pay”).  Such compensation shall be payable in
      substantially equal monthly or more frequent installments and subject to
      customary tax withholding.

            

    

    

    
      	
              3.2.  

            	
              Executive
      shall receive, a “sign on bonus” of One Hundred and Fifty Thousand Dollars
      ($150,000.00), payable upon the filing of Employer’s 10-K for the year
      ending March 31, 2008 with the Securities and Exchange
      Commission.

            

    

    

    
      	
              3.3.  

            	
              Executive
      shall receive, an “annual bonus” as set out in Attachment
    1:

            

    

    

    
      	
              3.4.  

            	
              Executive
      shall receive, a “bonus for new contracts” as set out in Attachment
      1:

            

    

    

    
      	
              3.5.  

            	
              Executive
      shall be entitled to participate in all executive benefit plans maintained
      by Employer on substantially the same terms and conditions as other
      executives of Employer including, but not limited to, all health plans,
      insurance, retirement, deferred compensation and other plans and programs
      generally available to such executives of
  Employer.

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              3.6.  

            	
              Executive
      shall receive at least fifteen (20) days paid vacation per year, provided,
      however, that such vacation shall be scheduled and taken in accordance
      with Employer’s standard vacation policies applicable to Employer’s other
      executives.  Executive shall also be entitled to all other
      holiday and leave pay generally available to Employer’s other
      executives.  Any vacation days not used in a twelve (12) month
      period shall accrue and carry over to subsequent
  years.

            

    

    

    
      	
              3.7.  

            	
              Executive
      shall receive at least fifteen (15) days paid sick leave per
      year.  Any sick leave not used in a twelve (12) month period
      shall not accrue or carry over to subsequent
  years.

            

    

    

    
      	
              3.8.  

            	
              Employer
      will provide other benefits as set out in Attachment
  1.

            

    

    

    
      	
              3.9.  

            	
              Executive
      shall be reimbursed by Employer for all reasonable business, promotional,
      travel and entertainment expenses incurred or paid by Executive during the
      Employment Period in the performance of his services under this Employment
      Agreement.

            

    

    

    4. Restrictive
Covenants.  Executive acknowledges and agrees
that:

    

    
      	
              4.1.  

            	
              The
      agreements and covenants contained in this Section 4 are essential to
      protect the business interests of Employer and Employer will not enter
      into this Agreement but for such agreements and covenants. Accordingly,
      Executive covenants and agrees to the
following:

            

    

    

    
      	
              4.1.1.  

            	
              Confidential
      Information.  Except as may be required by the lawful order of a
      court, regulatory body or similar agency of competent jurisdiction, and at
      the sole cost and expense of the Employer, if any, unless disclosed with
      the Employer’s permission, Executive agrees to keep secret and
      confidential, during the Employment Period and while he is employed by
      Employer, all confidential non-public information of Employer, and its
      respective affiliates that was acquired by, or disclosed to, Executive
      during the course of his employment by Employer or any of its affiliates,
      including information relating to customers (including, without
      limitation, credit history, repayment history, financial information and
      financial statements), costs, operations, financial data and plans, and
      employee information, whether past, current or planned, and not to
      disclose the same, either directly or indirectly, to any other person,
      firm or business entity, or to use it in any way; provided, however, that
      the provisions of this Section 4.1.1 shall not apply to information
      that:  (A) was, is now, or becomes generally available to the
      public (but not as a result of a breach of any duty of confidentiality by
      which Executive is bound); (B) was disclosed to Executive by a third party
      not subject to any duty of confidentiality to Employer prior to its
      disclosure to Executive; (C) is disclosed by Executive in the ordinary
      course of Employer’s business as a proper part of his employment in
      connection with communications with customers, vendors and other proper
      parties, provided that it is for a proper business purpose solely for the
      benefit of Employer.  During the Employment Period and while he
      is employed by Employer, Executive further agrees that he shall not make
      any statement or disclosure that is intended by Executive to be
      detrimental to Employer or any of its
  affiliates.

            

    

    

    
      	
              4.1.2.  

            	
              Non-Competition.

            

    

    

    
      	
              4.1.2.1.  

            	
              Executive
      agrees that for the period commencing on the Effective Date and ending on
      the date on which Executive’s employment with Employer is terminated for
      any reason or no reason (the “Non-Competition
      Period”), Executive shall not directly or indirectly, alone or as a
      partner, officer, director, manager, employee, consultant, agent,
      independent contractor, member or stockholder of any person or entity
      (“Person”),
      engage in any business activity in India or the United States that is
      directly or indirectly in competition with the Business (as defined
      herein) of Employer or which is known by Executive to be detrimental to
      the Business or business plans of Employer or its affiliates; provided,
      however, that the record or beneficial ownership by Executive or his
      immediate family members of five percent (5%) or less of the outstanding
      publicly traded capital stock of any company for investment purposes shall
      not be deemed to be in violation of this Section 4.1.2.1 so long as
      Executive is not an officer, director, manager, employee or consultant of
      such Person.  The “Business” of Employer shall mean
      infrastructure building in India.  Executive further agrees that
      during the Non-Competition Period, he shall not in any capacity, either
      separately or in association with others:  (1) employ or solicit
      for employment or endeavor in any way to entice away from employment with
      Employer or its affiliates (a) any current employee of Employer or its
      affiliates or (b) any Person who was employed by Employer or its
      affiliates in any preceding 12-month period; (2) solicit, induce or
      influence any supplier, customer, agent, consultant or other Person that
      has a business relationship with Employer to discontinue, reduce or modify
      such relationship with Employer; nor (3) solicit or enter into
      negotiations with any of Employer’s identified potential acquisition
      candidates.

            

    

    

    
      	
              4.1.2.2.  

            	
              Executive
      understands that the foregoing restrictions may limit his ability to
      engage in a business similar to Employer’s Business for the duration of
      the Non-Competition Period, but acknowledges that he will receive
      sufficiently high remuneration and other benefits to justify such
      restriction as an employee of Employer pursuant to this
      Agreement.

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              4.1.2.3.  

            	
              Notwithstanding
      the generality of any other provision of this Agreement, during the
      Non-Competition Period, it shall not be a violation of Section 2.2 or this
      Section 4 for Executive to (i) be an owner, partner, officer, director,
      manager, employee, consultant, agent, independent contractor, member or
      stockholder of any person or entity that does not compete with the
      Business of Employer or (ii) make unlimited investments with other family
      members in any person or entity that does not compete with the Business of
      Employer.

            

    

    

    
      	
              4.1.3.  

            	
              Remedies.  If
      Executive breaches any of the provisions contained in Sections 4.1.1 or
      4.1.2 (the “Restrictive
      Covenants”), Employer shall have the following rights and remedies,
      each of which shall be enforceable, and each of which is in addition to,
      and not in lieu of, any other rights and remedies available to Employer at
      law or in equity.

            

    

    

    
      	
              4.1.3.1.  

            	
              Executive
      shall account for and pay over to Employer all compensation, profits, and
      other benefits which inure to Executive’s benefit which are derived or
      received by Executive or any person or business entity controlled by
      Executive, resulting from any action or transactions constituting a breach
      of any of the Restrictive
Covenants.

            

    

    

    
      	
              4.1.3.2.  

            	
              Notwithstanding
      the provisions of Section 4.1.3.1 above, Executive acknowledges and agrees
      that in the event of a violation or Executive’s threatened violation of
      any of the Restrictive Covenants, Employer shall have no adequate remedy
      at law and shall therefore be entitled to enforce each such provision by
      temporary or permanent injunction or mandatory relief obtained in any
      court of competent jurisdiction without the necessity of proving damages,
      posting any bond or other security, and without prejudice to any other
      rights and remedies that may be available at law or in
    equity.

            

    

    

    
      	
              4.1.4.  

            	
              Severability.  If
      any of the Restrictive Covenants, or any part thereof, are held to be
      invalid or unenforceable, the same shall not affect the remainder of the
      covenant or covenants, which shall be given full effect, without regard to
      the invalid or unenforceable portions. Without limiting the generality of
      the foregoing, if any of the Restrictive Covenants, or any part thereof,
      are held to be unenforceable because of the duration of such provision or
      the area covered thereby, the parties hereto agree that the court making
      such determination shall have the power to reduce the duration and/or area
      of such provision and, in its reduced form, such provision shall then be
      enforceable.

            

    

    

    
      	
              4.1.5.  

            	
              Proprietary
      Rights.  Executive acknowledges and agrees that all know-how,
      documents, reports, plans, proposals, marketing and sales plans, client
      lists, employee files, client files, and any materials made by Executive
      or by Employer during the period of Executive’s employment are the
      property of Employer and shall not be used by Executive in any way adverse
      to Employer’s interests while he is so employed by
    Employer.

            

    

    

    5. Termination and Compensation
Due Upon Termination.  Executive’s right to compensation for
the period after the date Executive’s employment with Employer terminates shall
be determined in accordance with the following:

    

    
      	
              5.1.  

            	
              Termination
      Without Cause.  In the event Employer terminates Executive’s
      employment during the Employment Period without Cause, Employer shall pay
      Executive compensation, incentive compensation and benefits as specified
      in Section 3 through the earlier of eighteen (18) months or the balance of
      the Employment Period, during which time Executive shall be entitled
      to:

            

    

    

    
      	
              5.1.1.  

            	
              receive
      payment of his salary in accordance with the provisions of Section
      3.1;

            

    

    

    
      	
              5.1.2.  

            	
              continued
      participation in the benefit plans of Employer as specified in Section 3.2
      at Employer’s expense.

            

    

    

    
      	
              5.2.  

            	
              Voluntary
      Resignation.  Executive may terminate his employment with
      Employer for any reason (or no reason at all) at any time by giving
      Employer ninety (90) days prior written notice of voluntary resignation;
      provided, however, that Employer may decide that Executive’s voluntary
      resignation be effective immediately upon notice of such resignation.
      Employer shall have no obligation to make payments to Executive in
      accordance with the provisions of Section 3 for periods after the date on
      which Executive’s employment terminates due to Executive’s voluntary
      resignation, including in the event Employer accelerates the effectiveness
      of the resignation in accordance with this Section 5.2.  The
      non-competition clause as outlined in Section 4.1.2 shall apply for a
      period of 6 months following the effective date of the voluntary
      resignation.

            

    

    

    
      	
              5.3.  

            	
              However,
      for purposes of this Section 5, if Executive resigns within ninety (90)
      days following the occurrence of one of the following events, Executive
      shall be deemed to be Terminated without Cause in accordance with Section
      5.1:

            

    

    

    
      	
              5.3.1.  

            	
              Executive’s
      duties are materially reduced from those described in Section
      2;

            

    

    

    
      	
              5.3.2.  

            	
              the
      relocation of Executive’s office more than twenty five (25) miles from
      Bethesda, Maryland without Executive’s
consent;

            

    

    

    
      	
              5.3.3.  

            	
              a
      material breach of any of the provisions of this Agreement by the
      Employer.

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    
      	
              5.4.  

            	
              Termination
      for Cause.  Employer shall have no obligation to make payments
      to Executive in accordance with the provisions of Section 3 or otherwise
      for periods after Executive’s employment with Employer is terminated
      because of Executive’s termination for Cause. For purposes of this Section
      5.4, Executive shall be considered terminated for “Cause” if he is
      discharged by Employer on account of the occurrence of one or more of the
      following events:

            

    

    

    
      	
              5.4.1.  

            	
              Executive
      becomes habitually addicted to drugs or alcohol, as confirmed by the
      written opinion of a medical
doctor;

            

    

    

    
      	
              5.4.2.  

            	
              Executive
      intentionally discloses confidential information in violation of Section
      4.1.1 or engages in any action in violation of Section
    4.1.2.

            

    

    

    
      	
              5.4.3.  

            	
              Employer
      is directed by regulatory or governmental authorities to terminate the
      employment of Executive or Executive intentionally engages in activities
      that cause actions to be taken by regulatory or governmental authorities
      that have a material adverse effect on
Employer;

            

    

    

    
      	
              5.4.4.  

            	
              Executive
      is convicted of a felony crime (other than a felony resulting from a minor
      traffic violation);

            

    

    

    
      	
              5.4.5.  

            	
              Executive
      flagrantly disregards his duties under this Agreement after (A) written
      notice has been given to Executive by the Board that it views Executive to
      be flagrantly disregarding his duties under this Agreement and (B)
      Executive has been given a period of thirty (30) days after such notice to
      cease such misconduct.  However, no notice or cure period shall
      be required hereunder if Executive’s disregard of his duties has
      materially and adversely affected Employer or is
  illegal;

            

    

    

    
      	
              5.4.6.  

            	
              Executive
      commits an act of fraud against Employer, violates a duty of loyalty to
      Employer, or violates an obligation owed to Employer pursuant to Sections
      2 or 4 hereof.

            

    

    

    
      	
              5.5.  

            	
              In
      the event Employer attempts to terminate Executive’s employment pursuant
      to Section 5.3 and it is ultimately determined that the Employer lacked
      Cause, the provisions of Section 5.1 shall apply and, in addition to any
      other remedies that Executive may have, Executive shall be entitled to
      receive the payments called for by Section 5.1 with interest on any past
      due payments at the rate of ten percent (10%) per year from the date on
      which the applicable payment would have been made, plus Executive’s costs
      and expenses (including but not limited to reasonable attorneys’ fees)
      incurred in connection with such dispute and interest thereon at the rate
      of ten percent (10%) per year from the date incurred by the
      Executive.

            

    

    

    
      	
              5.6.  

            	
              Employer
      shall have no obligation to make payments to Executive in accordance with
      the provisions of Section 3 for periods after the date of Executive’s
      employment with Employer terminates on account of disability, except
      payments due and owing through the effective date of termination. For
      purposes of this Section 5.6, determination of whether Executive is
      disabled shall be determined in accordance with Employer’s long term
      disability plan (if any) and applicable
law.

            

    

    

    
      	
              5.7.  

            	
              Employer
      shall have no obligation to make payments to Executive in accordance with
      the provisions of Section 3 for periods after the date of Executive’s
      death, except payments due and owing as of such
  date.

            

    

    

    6. Indemnification.  Executive
shall be defended, held harmless by and indemnified by Employer to the fullest
extent permitted by applicable law (including, but not limited to payment of all
legal fees and costs and by counsel reasonably satisfactory to him) against
claims asserted against him by third parties, arising out of, or related to, the
business of the Employer or Executive’s services for Employer or its affiliates,
where such services were within the scope of authority of Employee, or
specifically authorized in advance by Employer.  However, Employer
shall have no obligation to defend, indemnify or hold Executive harmless from
any claims relying in whole or in part upon any intentionally tortious, grossly
negligent or fraudulent conduct by Executive.  This duty of
indemnification shall survive the termination of this Agreement for a period of
two years and is intended to be in addition to and not in lieu of any
indemnification right of Executive that may be contained in the Bylaws or
Articles of Incorporation of Employer.

    

    7. Assignment and
Successors.  This Agreement is personal in its nature and
neither of the parties shall, without the written consent of the other, which
may be given or withheld in the absolute discretion of each, assign, delegate or
otherwise transfer this Agreement or any rights or obligations hereunder;
provided, however, that in the event of a merger, consolidation, transfer or
sale of all or substantially all of the assets or other reorganization of the
Employer with or to any other individual(s) or entity, this Agreement shall,
subject to the provisions hereof, be binding upon and inure to the benefit of
such successor and such successor shall discharge and perform all the promises,
covenants, duties and obligations of the Employer hereunder; provided, however,
Employer shall continue to remain obligated hereunder.

    

    8. Governing
Law.  THIS AGREEMENT WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS OR ANY OTHER PRINCIPLE
THAT COULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION. ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT MUST BE
INSTITUTED IN THE STATE OR FEDERAL COURTS LOCATED IN THE STATE OF MARYLAND, TO
THE JURISDICTION OF WHICH EACH OF THE PARTIES HEREBY EXPRESSLY AND IRREVOCABLY
AGREES TO SUBMIT. THE PARTIES AGREE TO ENTER INTO MEDIATION PRIOR TO TRIAL IN
ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    9. Entire
Agreement.  This Agreement embodies the entire agreement of the
parties respecting the matters within its scope. This Agreement supersedes all
prior agreements of the parties on this subject matter . Any prior negotiations,
correspondence, agreements, proposals or understandings relating to the subject
matter shall be deemed to be merged into this Agreement and to the extent
inconsistent herewith, such negotiations, correspondence, agreements, proposals
or understandings shall be deemed to be of no force or effect. There are no
representations, warranties or agreements, whether express or implied, or oral
or written, with respect to the subject matter , except as set forth
herein.

    

    10. Modifications.  This
Agreement shall not be modified by any oral agreement, either express or
implied, and all modifications shall be in writing and signed by the parties
..

    

    11. Waiver.  Failure
to insist upon strict compliance with any of the terms, covenants or conditions
shall not be deemed a waiver of such terms, covenant or condition, nor shall any
waiver or relinquishment of, or failure to insist upon strict compliance with,
any right or power at any one or more times be deemed a waiver or relinquishment
of such right or power at any other time or times. All waivers shall be in
writing and signed by Executive and Employer.

    

    12. Number and
Gender.  Where the context requires, the singular shall include
the plural, the plural shall include the singular, and any gender shall include
all other genders.

    

    13. Headings.  The
section and Section headings in this Agreement are for the purpose of
convenience only and shall not limit or otherwise affect any of its terms
..

    

    14. Waiver of Jury
Trial.  The parties acknowledge that they are hereby waiving
any right to trial by jury in any action, proceeding or counterclaim brought by
either of the parties against the other in connection with any matter whatsoever
arising out of or in any way connected with this Agreement or Executive’s
Employment.

    

    15. Attorneys’
Fees.  Executive and the Employer agree that in any dispute
resolution proceedings arising out of this Agreement, the prevailing party shall
be entitled to its or his reasonable attorneys’ fees and costs incurred by it or
him in connection with resolution of the dispute, in addition to any other
relief granted.

    

    16. Severability.  In
the event that it is determined that any portion of this Agreement is in
violation of any statute or public policy, then only the portions of this
Agreement which violate such statute or public policy shall be stricken, and all
portions of this Agreement which do not violate any statute or public policy
shall continue in full force and effect. Furthermore, any determination striking
any portion of this Agreement shall be done as narrowly as possible so as to
give as much effect as possible to the intentions of the parties under this
Agreement.

    

    17. Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
document .

    

    18. Notices.  All
notices and other communications provided for in the Agreement shall be in
writing and will be deemed duly given (a) when delivered by hand or electronic
mail, (b) two (2) days after being given to an express courier with a reliable
system for tracking delivery, (c) when sent by confirmed facsimile with a copy
sent by another means specified in this provision or (d) five (5) days after the
day of mailing, when mailed by registered or certified mail, return receipt
requested, postage prepaid, and addressed as set forth below. A party may from
time to time change its address or designee for notification purposes by giving
the other written notice of the new address or designee and the date upon which
it will become effective.. The addresses for such notices shall be:

    

    
      18.1.   
 if to
Executive:     7301 Broxburn
Court

      Bethesda,
Md.  20817

    

    Attention:  Ram
Makunda

     

    with a
copy to:

     

    

    
      18.2.   
 If to
Employer:     P. O. BOX 60642

      Potomac, Md.
20859

      Attention:  Treasurer

    

     

    with a
copy to:      Seyfarth Shaw LLP

    815
Connecticut Avenue, N.W., Suite 500

    Washington,
DC  20006-4004

    Attention:  Stanley
S. Jutkowitz

    

    19. Time of the
Essence.  Time is expressly made of the essence with respect to
each and every provision of the Agreement.

    

    20. Inurement.  Except
as otherwise specified herein, no Person, other than the parties (and
Executive’s estate upon his death, including his personal representative,
administrator or heirs), shall have any rights under or interest in this
Agreement or its subject matter.

    

    

    [SIGNATURE
PAGE FOLLOWS]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN WITNESS WHEREOF, the undersigned have
executed this Employment Agreement as of the Effective Date.

    

    

    INDIA
GLOBALIZATION CAPITAL, INC.

    

    

    

    By: /s/ John
Selvaraj                                                              /s/ Ram
Mukunda                     

    Name:John
Selvaraj                                                                Ram
Mukunda

    Title: 
Treasurer

    

    INDIA
GLOBALIZATION CAPITAL MAURITIUS

    

     

    By:/s/ John
Selvaraj                                  

    Name:John
Selvaraj                                                                

    Title:
Director

     

     

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    ATTACHMENT
1:

    

    

    The terms
set out in Sections 3.3, 3.4, and 3.8 are subject to annual review and update by
the Board of IGC:

    

    Section
3.3:    For the Financial Year Ending March 31, 2009 (FYE
2009), based on net income as reported on IGC’s audited GAAP
financials  (before one time charges including charges for employee
options, warrants and other items), Executive shall receive, an “annual bonus”
of seventy five percent (75%) of Executive’s Base Pay per year if Employer
achieves net income of Six Million Dollars ($6,000,000) for FYE 2009, one
hundred percent (100%) of Executive’s Base Pay per year if Employer achieves net
income revenue of Eight Million Dollars ($8,000,000) for the FYE March 31, 2009
and one hundred fifty percent (150%) of Executive’s Base Pay per year if
Employer achieves net income of Twelve Million Dollars ($12,000,000) for FYE
2009.

     

    
      	
              ·  

            	
              The
      annual bonus shall be pro rated to (a) between 75%-100% of Executive’s
      Base Pay if for FYE 2009 the net income is between $6,000,000 and
      $8,000,000 and (b) between 100%-150% if the net income for FYE 2009 is
      between $8,000,000-$12,000,000.

            
	 	 

    

    
      	
              ·  

            	
              No
      annual bonus shall be paid to Executive if for FYE 2009 the net income is
      less than Six Million Dollars ($6,000,000).  If net income for
      FYE 2009 is in excess of $12,000,000, the Board, in its sole discretion,
      may award Executive an annual bonus in excess of 150% of Executive’s Base
      Pay for FYE 2009.

            

    

    

    Section
3.4:    Executive shall receive, a “bonus for new contracts”
of One Hundred and Fifty Thousand Dollars ($150,000.00) if Employer or any of
its subsidiaries obtains a combined total of new Qualified Contracts or
Qualified Mining Contracts totaling One Hundred Twenty Million Dollars
($120,000,000.00), and an additional One Hundred and Fifty Thousand Dollars
($150,000.00) for obtaining new Qualified Contracts or Qualified Mining
Contracts totaling Two Hundred Forty Million Dollars
($240,000,000.00).

     

    
      	
              ·  

            	
              Bonuses
      payable pursuant to this section shall not be pro rated for total
      Qualified Contracts and Qualified Mining Contracts of less than
      $120,000,000 or $240,000,000, respectively.  “Qualified
      Contracts” means the total value of contracts measured by revenue due to
      Employer or any of its subsidiaries over the entire period of the
      contracts.  “Qualified Mining Contracts” means the estimated
      value of material sold by Employer or any of its subsidiaries under mining
      contracts or mineral licenses in a single year or a maximum of five years
      if contracts are for five or more years.   The Board shall
      make all determinations of the value of new Qualified Contracts and
      Qualified Mining Contracts. For purposes of this Section 3.4
      “subsidiaries” shall include any entity in which Employer directly or
      indirectly owns 50% or more of the voting
  securities.

            

    

    

    

    Section
3.8:   The Employer shall provide the Executive with an
automobile, plus gas and maintenance expenses, to be used by Executive in
connection with the performance of his duties for Employer.  Monthly
lease payments, for the Employer, for such automobile shall not exceed $890 per
month.  The Employee shall reimburse the Employer $125 per month for
personal use of the automobile.  The Employer shall provide the
Executive with life insurance, D&O insurance, and health
insurance.ex10-1.htm

    Exhibit
10.1

     

     

    
      
        	
                FIRST

                CAPITAL

              	
                3520
      N.W. 58th
      Street

                Oklahoma
      City, OK 73112

                Office:
      405-917-9600

                Fax:
      405-917-9660

                www.firstcapital.com

              
	
                PromptŸProfessionalŸReliable

              	 
      

      

      
 

    

    May 20,
2008

    AeroGrow
International, Inc.

    6075
Longbow Drive

    Boulder,
CO 80301

    Attn:
Mitchell B. Rubin, Chief Financial Officer

    

        RE:
Commitment for Credit Facility

    

    Dear Mr.
Rubin:

    

    FCC, LLC,
d/b/a First Capital (“FCC”), is
pleased to offer its commitment for a $12,000,000 revolving credit facility (the
“Revolving Credit Facility”) to
AeroGrow International, Inc. (“Borrower”), upon and subject to the terms and
conditions of this letter and the Summary of Terms and Conditions attached
hereto as Exhibit A (the “Term
Sheet”).

    

    The
commitment of FCC hereunder and the agreement of FCC to provide the services
described herein are subject to the satisfaction of each of the following
conditions precedent in a manner acceptable to FCC in its sole and absolute
discretion: (a) each of the terms and conditions set forth herein and in the
Term Sheet; (b) the completion of all due diligence with respect to Borrower in
scope and determination satisfactory to FCC in its sole discretion; (c) the
absence of a material breach of any representation, warranty or agreement of
Borrower set forth herein; (d) FCC’s satisfaction that until the closing of the
Revolving Credit Facility there shall be no competing offering, placement or
arrangement of any debt securities or bank financing by or on behalf of
Borrower; (e) the negotiation, execution and delivery of definitive
documentation for the Revolving Credit Facility consistent with the Term Sheet
and otherwise satisfactory to FCC including payoff arrangements with current
lender; (f) no change, occurrence or development that could, in FCC’s opinion,
have a material adverse effect on the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise) or prospects of
Borrower shall have occurred or become know to FCC; and (g) FCC becoming aware
after the date hereof of any information or other matter which in FCC’s judgment
is inconsistent in a material and adverse manner with any information or other
matter disclosed to FCC prior to the date hereof with respect to Borrower, its
business or financial condition, or the transactions contemplated in connection
with the Revolving Credit Facility (in which case FCC may, in its sole
discretion, suggest alternative financing amounts or structures that ensure
adequate protection for FCC or terminate this letter and any commitment or
undertaking hereunder).

    

    Borrower
hereby represents, warrants and covenants that (a) all information, other than
Projections (defined below), which has been or is hereafter made available to
FCC by Borrower or any of Borrower’s representatives in connection with the
transaction contemplated hereby (the “Information”) is and will be complete
and correct in all material respects and does not and will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements contained therein not misleading, and (b) all financial
projections concerning Borrower that have been or are hereafter made available
to FCC by Borrower or any of

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    AeroGrow
International, Inc.

    May 21,
2008

    Page
2

     

    

    Borrower’s
representatives (the “Projections”) have been or will be
prepared in good faith based upon assumptions which Borrower believes to be
reasonable.  Borrower agrees to furnish FCC with such Information and
Projections as FCC may reasonably request and to supplement the Information and
the Projections from time to time until the closing date for the Revolving
Credit Facility so that the representations, warranties, and covenants in the
preceding sentence are correct on such closing date.

    

    By
acceptance of this offer, Borrower agrees to pay all costs and expenses of FCC
described in the Term Sheet (the “Reimbursable Expenses”).

    

    In
consideration of FCC’s issuance of its commitment hereunder, Borrower shall pay
to FCC a fee of $10,000 upon Borrower’s acceptance hereof.  In the
event that the Revolving Credit Facility is not consummated, the $10,000 fee
will be non-refundable.

    

    Borrower
agrees to indemnify and hold harmless FCC and each of its respective affiliates
and its directors, officers, employees, advisors, attorneys and agents (each, an
“Indemnified Party”) from and
against (and will reimburse each Indemnified Party as the same are incurred) any
and all losses, claims, damages, liabilities, and expenses (including, without
limitation, the reasonable fees and expenses of counsel) that may be incurred by
or asserted or awarded against any Indemnified Party, in each case arising out
of or in connection with or by reason of (including, without limitation, in
connection with any investigation, litigation or proceeding or preparation of a
defense in connection therewith) any matters contemplated by this letter, any
related transaction, the Revolving Credit Facility, or any use made or proposed
to be made with the proceeds thereof, unless and only to the extent that, as to
any Indemnified Party, it shall be determined in a final, nonappealable judgment
by a court of competent jurisdiction that such losses, claims, damages,
liabilities or expense resulted primarily from the gross negligence or willful
misconduct of such Indemnified Party.  Borrower agrees that no
Indemnified Party shall have any liability for any indirect or consequential
damages in connection with the Revolving Credit Facility.

    

    In
connection with the Revolving Credit Facility, Borrower agrees to provide to
FCC, in a reasonably prompt manner and in any event at or before such time as
FCC may deem necessary for a complete and satisfactory review by FCC, as
applicable, all such documents, reports, agreements, financial and other
information, environmental reports and other items as FCC or their respective
counsel may reasonably request with respect to Borrower and its
business.

    

    The terms
of this letter and the Term Sheet are confidential and, except for disclosure on
a confidential basis to accountants, attorneys and other professional advisors
retained by Borrower in connection with the Revolving Credit Facility or as may
required by law, may not be disclosed in whole or in part to any other person or
entity without FCC’s prior written consent; provided that Borrower may disclose
this commitment letter and the Term Sheet on a confidential basis to its
accountants, attorneys and other professional advisors.

    

    All of
Borrower’s reimbursement, indemnification and confidentiality obligations set
forth in this letter shall remain in full force and effect regardless of whether
any definitive documentation for

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    AeroGrow
International, Inc.

    May 21,
2008

    Page
3

    

    

    the
Revolving Credit Facility shall be executed and notwithstanding the termination
of this letter or any commitment or undertaking hereunder.

    

    In the
event Borrower breaches any of its obligations or agreements set forth in this
letter, at FCC’s option this letter and FCC’s commitment hereunder shall
terminate and Borrower shall forfeit any unused portion of the Deposit and any
fees paid to FCC prior to such termination.

    

    This
letter and the Term Sheet shall be governed by laws of the State of
Oklahoma.  Borrower and FCC hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort, or otherwise) arising out of or relating to this letter, the
Term Sheet, the transactions contemplated hereby and thereby or the actions of
FCC and Borrower in the negotiation, performance or enforcement
hereof.

    

    This
letter and the Term Sheet set forth the entire understanding of Borrower and FCC
with respect to the Revolving Credit Facility.  This letter may be
modified or amended only by the written agreement of Borrower and
FCC.  This letter is not assignable by Borrower without FCC’s prior
written consent and is intended to be solely for the benefit of Borrower, FCC
and the Indemnified Parties.

    

    This
offer will expire at 5:00 p.m. Oklahoma City, Oklahoma time on May 21, 2008
unless Borrower (a) executes this letter and returns it to FCC prior to that
time (which may be by facsimile transmission), and (b) pays to FCC the $10,000
fee whereupon this letter (which may be signed in one or more counterparts)
shall become a binding agreement.  Thereafter, this undertaking and
commitment will expire on June 20, 2008.

    

    Very
truly yours,

    

    FCC,
LLC, d/b/a First Capital

    

    By: /s/ Lee E.
Elmore           

    Lee E.
Elmore, Senior Vice President

    

    

    Accepted
and Agreed to as of

    May ___,
2008

    

    AEROGROW
INTERNATIONAL INC.

    

    
      

      
        	
                By:

              	                                                           
      
	
                Name:

              	                                                           
      
	
                Title:

              	                                                           
      

      

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    EXHIBIT
A

    

    SUMMARY
OF TERMS AND CONDITIONS

    

    FCC CREDIT
FACILITY:

    

      
        	
                Borrower:

              	
                AeroGrow
      International, Inc.

              
	 
      	 
      
	
                Lender:

              	
                FCC,
      LLC d/b/a First Capital

              
	 
      	 
      
	
                Amounts:

              	
                Revolver:
      $12,000,000

              
	 
      	 
      
	
                Maturity:

              	
                Two
      years with automatic renewals in one-year increments thereafter unless
      either party gives the other notice of non-renewal.

              
	 
      	 
      
	
                Revolving
      Loan:

              	
                Accounts:
      Advances of up to 80% of eligible receivable determined by FCC in its
      discretion. Availability under the revolver will be reduced by such
      reserves as FCC may establish from time to time in its
      discretion.

              
	 
      	 
      
	 
      	
                Inventory:
      Advances of up to 50% of eligible inventory determined by FCC in its
      discretion.  Inventory advances will be capped at the lesser of
      $5,000,000 or 40% of total loan for months October – June and 60% of the
      total loan for months July – September.

              
	 
      	 
      
	
                Interest
      & Fees:

              	
                Interest
      Rate: Prime plus 2% (if AeroGrow is in compliance with all terms and
      conditions of the loan agreement and revolving credit facility as of
      12/31/08, interest rate will reduce to Prime plus 1.5% effective
      1/1/09)

              
	 
      	 
      
	 
      	
                Closing
      Fee: $120,000

              
	 
      	 
      
	 
      	
                Facility
      Fee: 0.75% of total credit facility

              
	 
      	 
      
	 
      	
                Exam
      Fee: $750 per day per examiner plus expenses.

              
	 
      	 
      
	 
      	
                Collateral
      Management Fee -0.20% of monthly average loan balance

              
	 
      	 
      
	 
      	
                Collection
      Days: Three (3) business days.

              
	 
      	 
      
	 
      	
                Minimum
      Interest Charge: Each month, Borrower will pay the difference, if any,
      between actual interest on the FCC Credit Facilities and interest that
      would have been earned on an outstanding principal amount of
      $3,000,000.

              
	 
      	 
      
	 
      	
                Expenses:
      Borrower shall pay all of FCC’s costs and expenses, including due
      diligence costs, legal documentation and filing costs (including recording
      taxes), title insurance premiums and similar items.

              
	 
      	 
      
	
                Purpose
      of Facility:

              	
                To
      payoff current factor (Benefactor) and provide additional working
      capital.

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	 
      	 
      
	
                Financial
      Covenants:

              	
                Borrower
      will be bound by certain covenants to be mutually agreed upon between
      Borrower and FCC prior to closing, such as, without limitation, a minimum
      tangible net worth, a maximum debt/tangible net worth ratio and a minimum
      EBITDA coverage of debt service ratio.

              
	 
      	 
      
	
                Validity
      Agreements:

              	
                Jerry
      Perkins and Mitch Rubin.

              
	 
      	 
      
	
                Subordinated
      Debt:

              	
                All
      shareholder and/or related party debt to be fully subordinated to FCC as
      well as debt owed to First National Bank and Jack
  Walker.

              
	 
      	 
      
	
                Collateral:

              	
                First
      and exclusive security interest in all of Borrower’s existing and future
      acquired personal property and fixtures, including accounts receivable,
      inventory, equipment, deposit accounts, investment property, chattel
      paper, documents, instruments, general intangibles, and all proceeds of
      the foregoing.

              
	 
      	 
      
	
                Other
      Terms and Conditions:

              	
                The
      financing agreements will contain representations and warranties,
      covenants, events of default, and other provisions acceptable to FCC
      including the following:

              
	 
      	 
      
	 
      	
                1.
      Borrower’s agreement to provide FCC with periodic financial and collateral
      reporting, including annual audited financial statements, annual financial
      projections, and periodic borrowing base certificates, receivables agings
      and inventory reports.

              
	 
      	 
      
	 
      	
                2.
      Borrower’s agreement to maintain insurance with insurance carriers
      (acceptable to FCC) against such risks and in such amounts as is customary
      for similar businesses, naming FCC as additional insured/loss
      payee.

              
	 
      	 
      
	 
      	
                3.
      Restrictions on, among other things, distributions and dividends,
      acquisitions and investments, indebtedness, liens, affiliate transactions,
      and capital expenditures.

              
	 
      	 
      
	 
      	
                4.
      Borrower’s agreement to cause all proceeds of accounts receivable and
      other collateral to be forwarded to a lockbox.

              
	 
      	 
      
	
                Conditions
      Precedent:

              	
                The
      extension of the aforementioned financing arrangement is subject to the
      fulfillment of a number of conditions to FCC’s satisfaction, including,
      but not limited to, the following:

              
	 
      	 
      
	 
      	
                1.
      The execution and delivery, in form and substance acceptable to FCC and
      its counsel, of FCC’s customary agreements, documents, instruments,
      financing statements, consents, landlord waivers, documents indicating
      compliance with all applicable federal and state environmental laws and
      regulations, evidences of corporate authority, opinions of counsel and
      such other writings to confirm and effectuate the FCC Credit Facility as
      may be required by FCC and its
counsel.

              

      

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        	 
      	 
      
	 
      	
                2.
      No material adverse change, in the opinion of FCC, in the assets,
      liabilities, business, financial condition, business prospects, or results
      of operations of Borrower.

              
	 
      	 
      
	 
      	
                3.
      There shall exist no action, suit, investigation, litigation, or
      proceeding pending or threatened in any court or before nay arbitrator or
      governmental instrumentality that in FCC’s judgment (a) could reasonably
      be expected to have a material adverse effect on Borrower’s assets,
      liabilities, business, financial condition, business prospects, or results
      of operations or which could impair Borrower’s ability to perform
      satisfactorily under the Revolving Credit Facility, or (b) could
      reasonably be expected to materially and adversely affect the Revolving
      Credit Facility or the transactions contemplated
  thereby.

              
	 
      	 
      
	 
      	
                4.
      FCC shall have received each in form and substance satisfactory to FCC
      updated financial statements and projections.

              
	 
      	 
      
	 
      	
                5.
      FCC shall have received certificates of insurance with respect to
      Borrower’s property and liability insurance, together with a loss payable
      endorsement naming FCC as loss payee and additional insured in form and
      substance satisfactory to FCC.

              
	 
      	 
      
	 
      	
                6.
      Borrower shall have obtained all governmental and third party consents and
      approvals as may be necessary or appropriate in connection with the
      Revolving Credit Facility and the transactions contemplated
      thereby.

              
	 
      	 
      
	 
      	
                7.
      FCC’s receipt of true, correct and complete copies of all loan
      documentation between Borrower and other third parties providing financing
      to Borrower, FCC’s satisfaction with the terms and conditions of such
      financing and the collateral therefor and, if requested by FCC, the
      execution and delivery of intercreditor agreements satisfactory to
      FCC.

              
	 
      	 
      
	
                Other:

              	
                This
      term sheet is intended as an outline only and does not purport to
      summarize all of the conditions, covenants, representations, warranties
      and other provisions which will be contained in definitive legal
      documentation for the Revolving Credit Facility contemplated
      hereby.

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