TEMPORARY AMENDMENT TO LOAN AND SECURITY AGREEMENT
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”), XXXX X. XXXXXX
(“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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1.
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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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2.
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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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3.
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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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4.
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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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(a)
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Borrower
shall have executed and delivered such other documents and instruments as
Lender may require.
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(b)
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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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(c)
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No
Default shall be continuing.
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(d)
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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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(e)
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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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(e)
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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 of this
Amendment and is non-refundable.
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(f)
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Guarantor
shall execute and deliver to Lender a Limited Guaranty of Individual in
form and substance substantially similar to the agreement attached to this
Amendment as Exhibit “A.”
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5. Representations and
Warranties of Obligors. Each Obligor 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; (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 Obligors, enforceable against Obligors 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)
each Obligor is entering into this Amendment freely and voluntarily with
the advice of legal counsel of his or its own choosing; (g) each has freely
and voluntarily agreed to the releases, waivers and undertakings set forth in
this Amendment; (h) each 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 January 1, 2009; and (i) each
understands that any amounts outstanding, due and owing to Lender in excess of
the Original Borrowing Base on January 1, 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. Each
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 all the Obligations have been paid in full.
Borrower and each Guarantor acknowledges and agrees 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 each Guarantor that is a party thereto
in accordance with their respective terms as of the date hereof. Although
each Guarantor has been informed of the matters set forth herein and has
acknowledged and agreed to same, each Guarantor understands that Lender has no
obligation to inform any Guarantor of such matters in the future or to seek any
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:__________________________
Xxx
X.
Xxxxxx
Senior
Vice
President
Aerogrow
Interational, Inc.
By:__________________________
X.
XxxXxxxxx Xxxxxx, Chief Financial
Officer
The
undersigned hereby acknowledge, consent and agree to the foregoing Amendment and
agree his respective Validity Agreement or Limited Guaranty of Individual (as
applicable and as may be amended from time to time) executed by the undersigned
in connection with the Agreement remains in full force and effect
notwithstanding the modification of the Agreement pursuant to the foregoing
Amendment, subject to no right of offset, claim or counterclaim.
_____________________________
Xxxx X.
Xxxxxx
_____________________________
Xxxxxx
Xxxxxxx
_____________________________
X.
XxxXxxxxx Xxxxxx
