Exhibit
10.1
FIRST AMENDMENT TO LOAN AND
SECURITY AGREEMENT
THIS FIRST
AMENDMENT TO LOAN AND SECURITY AGREEMENT (this
“Amendment”) is made and entered into as of the
31 st
day of July, 2008 (the
“Amendment Date”), between AEROGROW INTERNATIONAL,
INC. , a Nevada corporation (“Borrower”) and
FCC, LLC d/b/a First Capital , a Florida limited liability
company (“Lender”).
W
I T N
E S S E T H
:
WHEREAS, Borrower and Lender are parties to that
certain Loan and Security Agreement dated as of June 23, 2008 (as
amended, restated, modified or supplemented from time to time, the
“Loan Agreement”); and
WHEREAS, the parties desire to amend the
Agreement on the terms and conditions 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:
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All capitalized
terms used herein and not otherwise expressly defined herein shall
have the respective meanings given to such terms in the
Agreement.
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The Agreement
is amended by deleting Item 1(a)(ii)(B) of the
Schedule and substituting the following in lieu
thereof:
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(1)
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$5,000,000,
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50% of the
dollar value (determined at the lower of cost or market value) of
Eligible Inventory.
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provided,
however, that the
aggregate principal amount available to be borrowed against
Eligible Inventory under this clause (B) (i) shall not exceed 85%
of the Obligations from July 1, 2008 through and including
September 15, 2008; (ii) shall not exceed 60% of the Obligations
from September 16, 2008 through and including September 30, 2008;
and (iii) shall not exceed 40% of the Obligations beginning October
1, 2008 and at all times thereafter, except that during the months
of July, August and September of each calendar year (beginning with
2009 calendar year) the aggregate principal amount available to be
borrowed against Eligible Inventory under this clause (B) (i) shall
not exceed 60% of the Obligations;
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The Agreement
is amended by deleting Item 8 of the Schedule and
substituting the following in lieu thereof:
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Interest
Margin : (i) So long as
Borrower maintains a ratio of Indebtedness to Tangible Net Worth
less than or equal to the following table, the Interest Margin
shall be 2.0%.
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Month
Ending
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Ratio
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09/30/08
(measured quarterly)
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5.75x
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12/31/08
(measured quarterly)
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3.00x
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03/31/09 and
thereafter
(measured quarterly on 3/31/09 and
monthly thereafter)
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2.25x
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In addition, so
long as Borrower maintains a ratio of Indebtedness to Tangible Net
Worth less than or equal to the above table, AND Borrower is
otherwise in compliance with all terms and conditions of the
Agreement as of 12/31/08, then the Interest Margin will reduce to
1.50%. The 12/31/08 adjustment, in Lender’s sole
discretion, shall be based on preliminary year-end financial
statements provided by Borrower. Should the results of
Borrower’s year-end audited financial statements show that
Borrower is not in compliance with all terms and conditions of the
Agreement (but Borrower is otherwise in compliance with the above
table), the Interest Margin shall immediately and automatically
revert to 2.0% as of 1/1/09, and Borrower will repay to Lender, on
demand, all amounts due thereon.
(ii) If Borrower fails, at any time,
to maintain a ratio of Indebtedness to Tangible Net Worth less than
or equal to the table set forth in subsection (i) above, the
Interest Margin shall be 3.5%.
(iii) Nothing in this Item 8 of
the Schedule shall be construed to limit or waive
Lender’s option to increase the rate of interest on the
unpaid
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