FORBEARANCE AGREEMENT

THIS FORBEARANCE AGREEMENT (this “Forbearance Agreement”) effective as of January 31, 2009 among AEROGROW INTERNATIONAL, INC., a Nevada corporation (“Borrower”), Jack J. Walker, a Colorado resident (“Guarantor”; Borrower and Guarantor are sometimes referred to herein individually as an “Obligor” and collectively as “Obligors”), and FCC, LLC, d/b/a First Capital, a Florida limited liability company (“Lender”).

WHEREAS, Borrower and Lender are parties to that certain Loan and Security Agreement dated as of June 23, 2008 (as amended, restated or otherwise modified from time to time, the “Loan Agreement”), pursuant to which Lender agreed to extend certain financial accommodations to Borrower; and

WHEREAS, pursuant to the Loan Agreement, Borrower agreed, among other things, to comply with certain financial covenants; and

WHEREAS, Borrower has failed to provide certain information and has violated such financial covenants; and

WHEREAS, Borrower’s agreement to comply with such financial covenants was a material inducement to Lender’s agreement to enter into the Loan Agreement, and Lender would not have agreed to make loans available to Borrower without the assurance that Borrower would provide such information and comply with such covenants; and

WHEREAS, as a result of such material defaults by Borrower, Lender has the right, as set forth in the Loan Agreement and the other Loan Documents, to immediately exercise all of its rights and remedies with respect to the Collateral, Borrower and Guarantors, all without notice to Borrower, Guarantors or any other Person; and

WHEREAS, Obligors have asked Lender to temporarily forbear from exercising its rights and remedies with respect to the defaults described above, as more particularly described herein; and

WHEREAS, Lender is willing to grant such temporary forbearance, subject to the terms and conditions set forth herein; and

WHEREAS, Borrower and Lender desire to amend the Loan Agreement as set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.           All capitalized terms used herein and not otherwise expressly defined herein shall have the respective meanings given to such terms in the Loan Agreement.

2.           Borrower acknowledges and agrees that (i) Borrower has failed to comply with each of the financial covenants set forth in Item 21 of the Schedule as required in Section 6 of the Loan Agreement and (ii) the foregoing failures to comply with the Loan Agreement constitute Defaults under the Loan Agreement and are referred to herein as the “Existing Defaults.”

3.           In order to induce Lender to enter into this Forbearance Agreement and to grant the forbearance contemplated hereby, Borrower and Guarantors hereby acknowledge and agree with Lender as follows:

4.           In consideration of Borrower’s timely and strict compliance with Borrower’s agreements set forth in the Loan Agreement and in this Forbearance Agreement, and in reliance upon the representations, warranties, agreements and covenants of Obligors, other than by Guarantor, set forth herein, Lender agrees to forbear until the Forbearance Termination Date (as defined below) from exercising its rights and remedies under the Loan Agreement and the other Loan Documents as a result of the Existing Defaults.  Lender reserves its rights and remedies at all times with respect to any Default under the Loan Agreement, the Guarantees, this Forbearance Agreement or any other Loan Document other than the Existing Defaults, whether presently existing or occurring hereafter.  At any time on or after the Forbearance Termination Date, Lender may exercise any and all of its rights and remedies under or with respect to the Loan Agreement, the Guarantees, this Forbearance Agreement and the other Loan Documents, whether relating to the Existing Defaults or otherwise.  As used herein, “Forbearance Termination Date” means the earlier of (x) June 30, 2009, (y) the date of the occurrence of a Default other than an Existing Default (whether any such Default first occurred or arose on, prior or after the date hereof), and (z) the default or breach by any Obligor of any of the covenants, agreements, representations and warranties set forth in this Agreement.

5.           In conjunction with the forbearance contemplated in this Forbearance Agreement, from the date of this Forbearance Agreement through and including the Forbearance Termination Date, the Loan Agreement is amended by deleting Item 1(a)(ii) of the Schedule to the Agreement and replacing it with the following:

(ii)           the sum of :

provided, however , that the aggregate principal amount available to be borrowed against Eligible Inventory under this clause (B) shall not exceed 80% of the Obligations outstanding at any time;

On July 1, 2009, the amendment to Item 1(a)(ii) of the Schedule set forth above shall cease to be effective, and the terms of Item 1(a)(ii) of the Schedule shall revert back to those terms otherwise in effect under the Loan Agreement.

           6.           In consideration of the accommodations made by Lender hereunder, Borrower agrees as follows: