Exhibit
10.2
TEMPORARY AMENDMENT TO LOAN AND
SECURITY AGREEMENT
THIS TEMPORARY
AMENDMENT TO LOAN AND SECURITY AGREEMENT ("Amendment") is made and
effective this 27th day of October, 2008 by and among AEROGROW
INTERNATIONAL, INC. (“Borrower”), JACK J. WALKER
(“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:
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Definitions . Capitalized terms used in this
Amendment, unless otherwise defined herein, shall have the meaning
ascribed to such term in the Agreement.
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Temporary
Amendments. The amendments herein shall only be
applicable beginning October 24, 2008 and ending December 31, 2008
(“Temporary Amendment Period”). On January
1, 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 .
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Temporary
Increase to the Original Borrowing Base . This Amendment represents a
temporary increase in the Original Borrowing Base. As
such, on January 1, 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:
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(i) from
October 24, 2008 through Novmber 30, 2008 Item 1(a)(ii)(B)(2)
of the Schedule shall read:
(2) 70% 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) shall not exceed 70% of
the Obligations outstanding at any time and from October 20, 2008
through November 30, 2008.
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(ii) from
December 1, 2008 through December 15, 2008 Item
1(a)(ii)(B)(2) of the Schedule shall read:
(2) 65% 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) shall not exceed 40% of
the Obligations outstanding at any time and from December 1, 2008
through December 15, 2008.
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(iii) from
December 16, 2008 – through December 31, 2008 Item
1(a)(ii)(B)(2) of the Schedule shall read:
(2) 60% of the
dollar value (determined at the lower of cost or market value)of
Eligible Inventory.
provided,
however, that the
aggregate principal amount available to be borrowed against
Eligible Inventory under this clause (B) shall not exceed 40% of
the Obligations outstanding at any time and from December 16, 2008
through December 31, 2008.
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Conditions . The effectiveness of this Amendment
is subject to the following conditions precedent (unless
specifically waived in writing by Lender):
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Borrower shall
have executed and delivered such other documents and instruments as
Lender may require.
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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.
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No Default
shall be continuing.
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There shall
have occurred no material adverse change in the business,
operations, financial condition, profits or prospects of Borrower,
or in the Collateral.
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Borrower shall
pay a document fee to Lender in the amount of $1,000.00
(“Document Fee”). The Document Fee shall
shall be earned at closing of this Amendment and is
non-refundable.
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Borrower shall
pay a closing fee to Lender in the amount of $50,000.00
(“Closing Fee”). The Closing Fee shall be
earned at closing o
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