AGREEMENT
Exhibit 10.4
This
Agreement (the “Agreement”) is made on June 24, 2008 among AeroGrow
International, Inc., which sometimes uses the name Aerogrow (“Client”),
Benefactor Funding Corp. (“Benefactor”), and FCC, LLC, d/b/a First Capital
(“First Capital”) (collectively, the “Parties”).
RECITALS
A. This
Agreement has been entered into and will be performed in the Controlling
State.
B. Benefactor
and Client executed that certain Factoring and Security Agreement dated February
7, 2007 (the “Factoring Agreement”).
C. Client
has requested termination of its factoring relationship with Benefactor pursuant
to the Factoring Agreement.
D. Benefactor
has agreed to terminate its factoring relationship with Client and release all
of its security interests in and liens on the assets of Client on the terms and
conditions set forth herein, conditioned only upon payment of the Payoff and the
provision of the LNT Letter of Credit and the LNT Canada Letter of Credit, as
such capitalized terms are defined below.
NOW THEREFORE, in
consideration of the premises, and intending to be legally bound hereby, the
Parties agree as follows:
1. Certain Definition and Index to
Definitions.
1.1 Definitions. The
following terms shall have the meanings set forth below. Any
capitalized terms not herein defined shall have the meaning proscribed in the
Uniform Commercial Code or the Factoring
Agreement.
1.1.1 “At-Risk Payment” - see
Section 3.4.1.
1.1.2 "Avoidance Claim" - any claim
that any At-Risk Payment is avoidable or may be avoidable under the Bankruptcy
Code, the Bankruptcy and Insolvency Act, common law, or any other debtor relief
statute in the United States or Canada.
1.1.3 “Claims” – see Section 3.1.2.
1.1.4 “Controlling
State” - Colorado.
1.1.5 “Indemnitor” –
See Section 3.1.4.
1.1.6 “Issuer” - First National Bank,
0000 Xxxxx Xxxxxx Xxxxx, XX 00000-0000.
1.1.7 “Letters of Credit” - the LNT
Letter of Credit and the LNT Canada Letter of Credit.
1.1.8 “LNT” - Linens 'n Things, Inc.,
Linens Holding Co., Linens N Things, and/or any U.S. affiliate
thereof.
1.1.9 “LNT Avoidance Claim” any claim
that any payment received by Benefactor from or for the account of LNT is
avoidable under the Bankruptcy Code, the Bankruptcy and Insolvency Act, common
law, or any other debtor relief statute in the United States.
1.1.10 “LNT Canada” - Linens ‘n Things
Canada Corp., and/or any affiliate thereof.
1.1.11 “LNT Canada Avoidance Claim” -
any claim that any payment received by Benefactor from or for the account of LNT
Canada is avoidable under the Bankruptcy Code, Bankruptcy and Insolvency Act,
common law or any other debtor relief statute in the United States or
Canada.
1.1.12 “LNT Canada Letter of Credit” –
a letter of credit issued by Issuer at the request of Client in favor of
Benefactor, in substantially the form attached hereto as Exhibit A.
1.1.13 “LNT Letter of Credit” – a
letter of credit issued by Issuer at the request of Client in favor of
Benefactor, in substantially the form attached hereto as Exhibit B.
1.1.14 “Minimum Volume Fee” -
$27,200.
1.1.15 “Non-Monetary Obligations” –
any obligations that are not presently an obligation to pay money, including,
but not limited to, Client’s indemnity obligation, and Client’s representations,
warranties, and covenants, as set forth in the Factoring Agreement.
1.1.16 “Obligations” – all monetary
obligations of Client to Benefactor pursuant to the Factoring Agreement, or
otherwise.
1.1.17 “Payoff” – the amount of the
Obligations, equal to $310,298.88, which amount includes, without limitation,
the Minimum Volume Fee and all attorneys’ fees and costs incurred by
Benefactor. The Payoff is equal to $310,298.88 as of June
24, 2008. In the event that the Payoff is not paid to Benefactor
pursuant to Section 2 of this Agreement by 5:00 p.m. Mountain time on June 24,
2008, then First Capital and Client will need to obtain an updated Payoff amount
in writing from Benefactor, which may be in the form of an e-mail from Xxxxxx
Xxxxxx, or from Xxxxxx X. Xxxxx or Xxxxxx X. Xxxxxx, counsel to
Benefactor.
2. PAYOFF AND TERMINATION OF
FACTORING AGREEMENT.
2.1 Upon
receipt by Benefactor of the Payoff via wire transfer in accordance with the
wire instructions set forth below, receipt by Benefactor of an executed version
of this Agreement from First Capital and Client, and upon receipt by Benefactor
of the Letters of Credit:
2.1.1 All
security interests in and liens on the assets of Client in favor of Benefactor
shall be terminated and released, and First Capital is authorized to terminate
all Uniform Commercial Code Financing Statements filed by Benefactor against the
Client;
2.1.2 Benefactor
will send notification, in form and substance satisfactory to First Capital, to
Client’s account debtors that future payments are to be made to First Capital
rather than to Benefactor; and
2.1.3 Within
ten (10) days after Benefactor’s receipt thereof, Benefactor will return to the
applicable Account Debtor, the proceeds of any of the Client’s Accounts and all
other funds of the Client received by Benefactor subsequent to the date hereof.
In the event that Benefactor returns such proceeds to an Account Debtor more
than ten (10) days after receipt by Benefactor, the only remedy of First Capital
or Client as a result thereof shall be the right to assert a claim for the
actual damage directly resulting therefrom.
2.1.4 Nothing
contained herein shall relieve Client of the Non-Monetary Obligations, which
shall survive termination of the factoring relationship between Client and
Benefactor, but Benefactor acknowledges and agrees that First Capital has no
obligation to Benefactor with respect to the Non-Monetary Obligations except as
expressly set forth herein.
2.2 The
Payoff should be sent to Benefactor in accordance with the following wire
transfer instructions:
Bank: Vectra
Bank
City and
State: Denver,
CO
ABA
Number: ABA
000000000
Benefactor
Funding Corp.
Account
Number: Account #4044909226
Reference: Payoff
2.3 In
the event that Benefactor has not received the Payoff and the Letters of Credit
on or before June 30, 2008, Benefactor shall be relieved of all of its duties
hereunder.
3. INDEMNIFICATION.
3.1 Indemnification for Avoidance Claims
by First Capital and Claims by Client.
3.1.1 Effective
from and after (1) Benefactor’s receipt of the Payoff, and (2) First Capital’s
receipt of notice of an Avoidance Claim from Benefactor, and in reliance on the
representations, warranties and agreements of Benefactor set forth herein, First
Capital hereby indemnifies Benefactor and holds Benefactor harmless against all
claims arising directly from the assertion of any Avoidance Claim, including
reasonable out-of-pocket attorney’s fees and expenses actually incurred by
Benefactor in defending any one or more of the Avoidance Claims.
3.1.2 Effective
from and after (1) Benefactor’s receipt of the Payoff, and (2) Client’s receipt
of notice of a Claim, as defined herein, from Benefactor, Client hereby
indemnifies Benefactor and holds Benefactor harmless against all claims relating
to or arising out of the Factoring Agreement, or arising out of the assertion of
any Avoidance Claim, LNT Canada Avoidance Claim or LNT Avoidance Claim
(collectively, the “Claims”), including reasonable out-of-pocket attorney’s fees
and expenses actually incurred by Benefactor in defending any one or more of the
Claims.
3.1.3 Benefactor
shall notify First Capital and Client within twenty days of Benefactor becoming
aware of the assertion of any LNT Avoidance Claim, LNT Canada Avoidance Claim,
Avoidance Claim or any other Claim. In the event that Benefactor fails to so
notify First Capital and Client, the only remedy of First Capital and Client as
a result thereof shall be the right to assert a claim for the actual damage
directly resulting therefrom.
3.1.4 Upon
notification by Benefactor to First Capital and Client (the applicable
indemnifying party or parties will be referred to as the “Indemnitor”; provided,
however, that the use of such term shall not be deemed to imply that First
Capital has any obligation or duty to Benefactor for any Claim other than
Avoidance Claims) that an LNT Avoidance Claim, LNT Canada Avoidance Claim,
Avoidance Claim, or other Claim has been asserted against Benefactor, Indemnitor
shall promptly take all appropriate steps to defend Benefactor therefrom, at
Indemnitor’s expense. If Indemnitor finds it necessary to retain
counsel, it will be at Indemnitor’s expense, and Indemnitor’s choice of counsel
must be reasonably acceptable to Benefactor. Benefactor acknowledges and
agrees that Indemnitor, and not Benefactor, shall make all decisions in
consultation with Benefactor, and will take all steps reasonably requested by
Benefactor with respect to any Claim for which Indemnitor is defending
Benefactor (including any settlement of any such Claim), and Benefactor agrees
to take any action reasonably requested by Indemnitor in connection
therewith. Benefactor shall have the right to assume its own defense
of any Claim (which defense shall be at Benefactor’s expense) upon written
notice to First Capital and Client to such effect, which notice must include a
complete release of all obligations of First Capital and Client to Benefactor
with respect to such Claim.
3.1.5 Any
amounts due by Client or First Capital pursuant to this Section 3.1 shall be
paid to Benefactor within 5 business days of Benefactor’s written demand with
respect thereto.
3.1.6 Notwithstanding
anything to the contrary herein, the aggregate amount payable by First Capital
pursuant to its obligation to indemnify Benefactor against all claims arising
out of the assertion of any Avoidance Claim (including any reimbursement of
Benefactor’s expenses) shall not exceed $1,000,000.
3.2 Indemnification
for Returned Checks.
3.2.1 First
Capital agrees to pay to Benefactor, within 5 business days following
Benefactor’s written demand with respect thereto, the face amount of any check
which has been credited to Client’s account and for which Client was given
credit in calculating the Payoff which is returned to Benefactor unpaid;
provided, however, that First Capital shall have no obligation to Benefactor
with respect to any such returned check unless written demand for payment is
made to First Capital within 60 days of the date hereof.
3.3 Letters
of Credit.
3.3.1 As a condition to Benefactor’s performance under Section
2.1 and release
of its security interest in all collateral of Client securing the Obligations,
Client will cause the Issuer to issue the Letters of Credit in form and
substance satisfactory to Benefactor. Benefactor acknowledges and
agrees that Client and First Capital shall be entitled to rely on written
confirmation from Benefactor (which may be in the form of an e-mail from Xxxxxx
Xxxxxx, or from Xxxxxx Xxxxx or Xxxxxx Xxxxxx, counsel to Benefactor) that
Benefactor has received the Letters of Credit and that such Letters of Credit
are in form and substance satisfactory to Benefactor.
3.3.2 When all
applicable statutes of limitations governing the
LNT Avoidance Claims have run, Client may make demand on Benefactor to
consent to the immediate termination of the
LNT Letter of Credit relating to such
Claim and Benefactor will execute such documents
as are necessary to effect such termination.
3.3.3 In the
event that there is no filing under the Bankruptcy Code, the Bankruptcy and
Insolvency Act, common law, or other debtor relief statute in the United States
or Canada relating to LNT Canada within ninety (90) days of the date of this
Agreement, Client may make demand on Benefactor to consent to the immediate
termination of the LNT Canada Letter of Credit relating to such Claim and
Benefactor will execute such documents as are necessary to effect such
termination.
3.3.4 All
amounts payable by First Capital and Client to Benefactor pursuant to this
Section 3 shall
be due within 5 business days following First Capital’s and Client’s receipt of
Benefactor’s written demand therefor, and shall accrue late charges of 2% per
month on any sums not paid when due.
3.4 Representations,
Warranties, and Agreements by Benefactor Regarding Potential Avoidance
Claims.
3.4.1 To
the best of its knowledge, Benefactor hereby represents and warrants to First
Capital and Client that set forth on Schedule 1 attached hereto is a true,
correct and complete list of all payments received by Benefactor in the 90-day
period immediately preceding the date hereof from or for the account of any
Account Debtor of Client, including the amount of each such payment, the name of
the Account Debtor and the date such payment was received by
Benefactor. Each such payment set forth on Schedule 1 attached
hereto, other than payments received from LNT or LNT Canada, is referred to
herein as an “At-Risk Payment”.
3.4.2 Benefactor
hereby represents and warrants to First Capital and Client that Benefactor has
not actually received any written notice of, and that no officer of Benefactor
has actual knowledge acquired in the course of employment that, any Account
Debtor listed on Schedule 1 hereto, other than LNT and LNT Canada, is the
subject of any bankruptcy or similar insolvency proceeding as of the date
hereof.
3.4.3 The sole
remedy of First Capital and/or Client for the breach of any representation and
warranty contained herein by Benefactor shall be the recovery of the actual
damages directly resulting therefrom.
4. RELEASE. Effective upon
the payment of the Payoff and the execution and delivery by Client of this
Agreement, and in order to induce Benefactor to execute and deliver this
Agreement, Client hereby forever releases, discharges and acquits Benefactor,
its parent, directors, officers, shareholders, agents and employees, of and from
any and all claims of every type, kind, nature, description or character, and
irrespective of how, why, or by reason of what facts, whether heretofore
existing, now existing or hereafter arising, or which could, might, or may be
claimed to exist, of whatever kind or name, whether known or unknown, suspected
or unsuspected, liquidated or unliquidated, each as though fully set forth
herein at length. Client agrees that the matters released herein are
not limited to matters which are known or disclosed. Client
acknowledges that factual matters now unknown to it may have given or may
hereafter give rise to claims which are presently unknown, unanticipated and
unsuspected, and it acknowledges that this release has been negotiated and
agreed upon in light of that realization and that it nevertheless hereby intends
to release, discharge and acquit Benefactor from any such unknown
claims. Acceptance of this release shall not be deemed or construed
as an admission of liability by any party released. Client
acknowledges that either (a) it has had advice of counsel of its own choosing in
negotiations for and the preparation of this release, or (b) it has knowingly
determined that such advise is not needed.
5. REPRESENTATIONS
AND WARRANTIES BY FIRST CAPITAL. First Capital
acknowledges that its decision to enter into its financing transaction with
Client was based on its independent credit and business investigation, and that
in no way did First Capital rely on any statement or inference which it may have
received from Benefactor.
6. DAMAGE TO
REPUTATION.
Benefactor, Client, and First Capital
hereby agree not to make any statements, whether written, oral or on-line, that
disparages another party or such party’s reputation.
7. AMENDMENT. Neither
this Agreement nor any provisions hereof may be changed, waived, discharged or
terminated, nor may any consent to the departure from the terms hereof be given,
orally (even if supported by new consideration), but only by an instrument in
writing signed by all parties to this Agreement. Any waiver or
consent so given shall be effective only in the specific instance and for the
specific purpose for which given.
8. NOTICE. All
notices shall be effective upon: (a) deposit thereof in a receptacle
under the control of the United States Postal Service; properly addressed and
postage paid, certified return-receipt requested, (b) facsimile transmittal to a
receiver under the control of the party to whom notice is being given, with
telephone call confirming receipt; (c) delivery to a delivery service of a
properly addressed notice, postage or delivery prepaid, with instructions to
make delivery on the next business day, or (d) actual receipt by the party to
whom notice is being given, or an employee or agent of thereof. For
purposes hereof, the addresses of the parties are as set forth below or as may
otherwise be specified from time to time in a writing sent by one party to the
other in accordance with the provisions hereof:
First
Capital
Address:
FCC, LLC, d/b/a First
Capital
0000 Xxxxxxxxx 00xx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention:
Xxxx X. Xxxxxx,
Executive Vice President
Fax
Number:
(000) 000-0000
Benefactor
Address:
000
Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention:
Xxxxxx X.
Xxxxxx
Fax
Number:
(000) 000-0000
Client
Address:
0000 Xxxxxxx Xx., Xxxxx
000
Xxxxxxx, XX 00000
Attention:
Xxxx Xxxxxx, Chief Financial Officer
Fax
Number:
(000)-000-0000
9. ENFORCEMENT.
In the event that either party finds it necessary to retain counsel in
connection with any litigation arising in connection with the interpretation,
defense or enforcement of this agreement, the prevailing party in such
litigation shall recover its reasonable attorney’s fees and expenses from the
unsuccessful party. It shall be presumed (subject to rebuttal only by
the introduction of competent evidence to the contrary) that the amount
recoverable is the amount billed to the prevailing party by its counsel and that
such amount will be reasonable if based on the billing rates charged to the
prevailing party by its counsel in similar matters.
10. CHOICE OF
LAW. This Agreement and all transactions contemplated
hereunder and/or evidenced hereby shall be governed by, construed under, and
enforced in accordance with the internal laws of the Controlling
State.
11. INTERPRETATION. This
Agreement and all agreements relating to the subject matter hereof are the
product of negotiation and preparation by and among each party and its
respective attorneys, and shall be construed accordingly.
12. CONFLICTS
WITH OTHER AGREEMENTS. Unless otherwise expressly stated in
any other agreement between the Parties, if a conflict exists between the
provisions of this Agreement and the provisions of such other agreement, the
provisions of this Agreement shall control.
13. COUNTERPARTS. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if all signatures were upon the same
instrument. Delivery of an executed counterpart of the signature page
to this Agreement by facsimile or by electronic means shall be effective as
delivery of a manually executed counterpart of this Agreement, and any party
delivering such an executed counterpart of the signature page to this Agreement
by facsimile or electronic means to any other party shall thereafter also
promptly deliver a manually executed counterpart of this Agreement to such other
party, provided that the failure to deliver such manually executed counterpart
shall not affect the validity, enforceability, or binding effect of this
Agreement.
14. ENTIRE
AGREEMENT. This Agreement supersedes all other agreements and
understandings between the parties hereto, verbal or written, express or
implied, relating to the subject matter hereof. No promises of any
kind have been made by the parties hereto, or any third party to induce the
execution of this Agreement. No course of dealing, course of
performance or trade usage, and no parole evidence of any nature, shall be used
to supplement or modify any terms of this Agreement.
15. VENUE. Any
suit, action or proceeding arising out of the subject matter hereof, or the
interpretation, performance or breach of this Agreement, shall, if Benefactor so
elects, be instituted in or transferred to any court sitting in the Controlling State (the “Acceptable
Forums”). The Acceptable Forums are convenient to all parties, and
each party irrevocably submits to the jurisdiction of the Acceptable Forums,
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement, and waives any and all objections to jurisdiction or venue
that it may have under the laws of the Controlling State or otherwise in those courts in
any such suit, action or proceeding. Should such proceeding be
initiated in any other forum, First Capital and Client waive any right to oppose
any motion or application made by Benefactor as a consequence of such proceeding
having been commenced in a forum other than an Acceptable Forum to transfer the
action or proceeding to an Acceptable Forum.
16. JURY
TRIAL WAIVER. TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY AND
EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY
PARTY’S ACTIONS IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT HEREOF OR
THEREOF. EACH PARTY HERETO ACKNOWLEDGES THAT SUCH WAIVER IS MADE WITH
FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED
HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS
CHOOSING.
IN
WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
By: _________________________________________________
Xxxxxx X.
Xxxxxxx, President/Chief Executive Officer
Benefactor
Funding Corp.
By: __________________________________________________
Name:________________________________________________
Title:_________________________________________________
FCC, LLC,
d/b/a First Capital
By:___________________________________________________
Xxx
X. Xxxxxx, Senior Vice President
EXHIBIT
A
Form
of LNT Canada Letter of Credit
IRREVOCABLE
STANDBY LETTER OF CREDIT
LETTER OF
CREDIT NUMBER:
DATE:
JUNE ___, 2008
BENEFICIARY: BENEFACTOR FUNDING CORP., 000 XXXXXXX
XXXXXX, XXXXX 000, XXXXXX, XXXXXXXX, 00000
WE HEREBY
ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. __________ IN YOUR FAVOR
BY ORDER OF AEROGROW
INTERNATIONAL, INC., 0000 XXXXXXX XXXXX, XXXXX 000, XXXXXXX, XXXXXXXX, 00000
(“AEROGROW”), FOR ANY SUM OR SUMS NOT EXCEEDING USD$38,193.66 (US DOLLARS
THIRTY-EIGHT THOUSAND ONE HUNDRED NINETY-THREE AND 66/100), SUBJECT TO THE BELOW
SCHEDULE, AVAILABLE UPON PRESENTATION OF YOUR DRAFTS AT SIGHT ON
(BANK).
AUTOMATIC
INCREASE/DECREASE SCHEDULE:
SCHEDULE
DATE ACTION AMOUNT
7/30/2008 DECREASE
BY $36,725.91
DRAFTS
MUST BE ACCOMPANIED BY:
YOUR
SIGNED STATEMENT CERTIFYING AS FOLLOWS:
WE HEREBY
CERTIFY THAT THE AMOUNT OF THIS DRAWING REPRESENTS AN AMOUNT WHICH BENEFACTOR
FUNDING CORP. (“BFC”) IS OBLIGATED TO PAY (THE “DETERMINED AMOUNT”) ON ACCOUNT
OF A CLAIM ASSERTED AGAINST BFC RELATING TO A PAYMENT RECEIVED BY BFC FROM
LINENS ‘N THINGS CANADA CORP OR ANY AFFILIATE THEREOF WHICH IS SUBJECT TO A
STATE OR FEDERAL OR CANADIAN INSOLVENCY STATUTE, OR SIMILAR COMMON LAW
PROCEEDING. TEN DAYS HAVE PASSED SINCE BFC HAS MADE DEMAND ON
AEROGROW FOR PAYMENT TO BFC OF THE DETERMINED AMOUNT AND AEROGROW HAS FAILED TO
HONOR SUCH DEMAND.
DRAFTS
DRAWN UNDER THIS CREDIT ARE TO BE ENDORSED HEREON AND BEAR THE CLAUSE, ''DRAWN
UNDER (BANK), LETTER OF
CREDIT REFERENCE NUMBER ________ DATED __________.''
PARTIAL
DRAWS ARE PERMITTED.
IT IS A
CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL HAVE AUTOMATICALLY RENEWING ONE
(1) YEAR TERMS UNLESS WE GIVE BENEFICIARY AT LEAST THIRTY (30) DAYS BUT NOT MORE
THAN SIXTY (60) DAYS PRIOR WRITTEN NOTICE THAT WE ELECT NOT TO RENEW THE LETTER
OF CREDIT FOR ANY SUCH ADDITIONAL PERIOD. SUCH NOTICE SHALL BE SENT
VIA FEDERAL EXPRESS OR OTHER GENERALLY RECOGNIZED NATIONAL OVERNIGHT CARRIER,
ACTUALLY RECEIVED BY BENEFICIARY. IN THE EVENT WE GIVE BENEFICIARY
NOTICE THAT WE ELECT NOT TO RENEW FOR SUCH ADDITIONAL PERIODS, BENEFICIARY MAY
IMMEDIATELY DRAW UPON THIS LETTER OF CREDIT UP TO THE FULL FACE AMOUNT. SUCH
DRAWING SHALL BE ACCOMPANIED BY (i) YOUR DRAFTS AT SIGHT ON (BANK), AND (ii)
YOUR SIGNED STATEMENT CERTIFYING AS FOLLOWS:
THIS
DRAWING IS BEING MADE AS A RESULT OF (BANK)’S REFUSAL TO RENEW LETTER OF CREDIT
NUMBER (NUMBER OF CREDIT).
WE HEREBY
ENGAGE WITH YOU THAT ANY DRAFT DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF
THIS LETTER OF CREDIT WILL BE DULY HONORED ON THE PRESENTATION AT OUR OFFICE AT
___________________, VIA COURIER SERVICE OR REGISTERED MAIL, ON OR BEFORE THE
EXPIRATION DATE AS SPECIFIED ABOVE.
THIS
LETTER OF CREDIT SETS FORTH IN FULL TERMS OF OUR UNDERTAKING, AND SUCH
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE
TO ANY NOTE, DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN OR IN WHICH
THIS LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES
AND ANY SUCH REFERENCE SHALL NOT BE DEEMED TO BE INCORPORATED HEREIN BY
REFERENCE TO ANY NOTE, DOCUMENT OR AGREEMENT.
EXCEPT SO
FAR AS OTHERWISE STATED, THIS LETTER OF CREDIT IS SUBJECT TO THE RULES OF THE
INTERNATIONAL STANDBY PRACTICES AS ADOPTED BY THE INTERNATIONAL CHAMBER OF
COMMERCE, WHICH ARE IN EFFECT AT THE TIME OF ISSUANCE OF THIS LETTER OF
CREDIT.
(BANK)
______________________________________
(AUTHORIZED
SIGNATURE)
EXHIBIT
B
Form
of LNT Letter of Credit
IRREVOCABLE
STANDBY LETTER OF CREDIT
LETTER OF
CREDIT NUMBER:
DATE:
JUNE ___, 2008
BENEFICIARY: BENEFACTOR FUNDING CORP., 000 XXXXXXX
XXXXXX, XXXXX 000, XXXXXX, XXXXXXXX, 00000
WE HEREBY
ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. __________ IN YOUR FAVOR
BY ORDER OF AEROGROW
INTERNATIONAL, INC., 0000 XXXXXXX XXXXX, XXXXX 000, XXXXXXX, XXXXXXXX, 00000
(“AEROGROW”), FOR ANY SUM OR SUMS NOT EXCEEDING USD$343,092.34 (US
DOLLARS THREE HUNDRED FORTY-THREE THOUSAND NINETY-TWO AND 34/100) AVAILABLE UPON
PRESENTATION OF YOUR DRAFTS AT SIGHT ON (BANK).
DRAFTS
MUST BE ACCOMPANIED BY:
YOUR
SIGNED STATEMENT CERTIFYING AS FOLLOWS:
WE HEREBY
CERTIFY THAT THE AMOUNT OF THIS DRAWING REPRESENTS AN AMOUNT WHICH BENEFACTOR
FUNDING CORP. (“BFC”) IS OBLIGATED TO PAY (THE “DETERMINED AMOUNT”) ON ACCOUNT
OF A CLAIM ASSERTED AGAINST BFC RELATING TO A PAYMENT RECEIVED BY BFC FROM
LINENS HOLDING CO., LINENS N’ THINGS, INC. OR ANY U.S. AFFILIATE THEREOF WHICH
IS SUBJECT TO A STATE OR FEDERAL INSOLVENCY STATUTE, OR SIMILAR COMMON LAW
PROCEEDING. TEN DAYS HAVE PASSED SINCE BFC HAS MADE DEMAND ON
AEROGROW FOR PAYMENT TO BFC OF THE DETERMINED AMOUNT AND AEROGROW HAS FAILED TO
HONOR SUCH DEMAND.
DRAFTS
DRAWN UNDER THIS CREDIT ARE TO BE ENDORSED HEREON AND BEAR THE CLAUSE, ''DRAWN
UNDER (BANK), LETTER OF
CREDIT REFERENCE NUMBER ________ DATED __________.''
PARTIAL
DRAWS ARE PERMITTED.
IT IS A
CONDITION OF THIS LETTER OF CREDIT THAT IT SHALL HAVE AUTOMATICALLY RENEWING ONE
(1) YEAR TERMS UNLESS WE GIVE BENEFICIARY AT LEAST THIRTY (30) DAYS BUT NOT MORE
THAN SIXTY (60) DAYS PRIOR WRITTEN NOTICE THAT WE ELECT NOT TO RENEW THE LETTER
OF CREDIT FOR ANY SUCH ADDITIONAL PERIOD. SUCH NOTICE SHALL BE SENT
VIA FEDERAL EXPRESS OR OTHER GENERALLY RECOGNIZED NATIONAL OVERNIGHT CARRIER,
ACTUALLY RECEIVED BY BENEFICIARY. IN THE EVENT WE GIVE BENEFICIARY
NOTICE THAT WE ELECT NOT TO RENEW FOR SUCH ADDITIONAL PERIODS, BENEFICIARY MAY
IMMEDIATELY DRAW UPON THIS LETTER OF CREDIT UP TO THE FULL FACE AMOUNT. SUCH
DRAWING SHALL BE ACCOMPANIED BY (i) YOUR DRAFTS AT SIGHT ON (BANK), AND (ii)
YOUR SIGNED STATEMENT CERTIFYING AS FOLLOWS:
THIS
DRAWING IS BEING MADE AS A RESULT OF (BANK)’S REFUSAL TO RENEW LETTER OF CREDIT
NUMBER (NUMBER OF CREDIT).
WE HEREBY
ENGAGE WITH YOU THAT ANY DRAFT DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF
THIS LETTER OF CREDIT WILL BE DULY HONORED ON THE PRESENTATION AT OUR OFFICE AT
___________________, VIA COURIER SERVICE OR REGISTERED MAIL, ON OR BEFORE THE
EXPIRATION DATE AS SPECIFIED ABOVE.
THIS
LETTER OF CREDIT SETS FORTH IN FULL TERMS OF OUR UNDERTAKING, AND SUCH
UNDERTAKING SHALL NOT IN ANY WAY BE MODIFIED, AMENDED OR AMPLIFIED BY REFERENCE
TO ANY NOTE, DOCUMENT, INSTRUMENT OR AGREEMENT REFERRED TO HEREIN OR IN WHICH
THIS LETTER OF CREDIT IS REFERRED TO OR TO WHICH THIS LETTER OF CREDIT RELATES
AND ANY SUCH REFERENCE SHALL NOT BE DEEMED TO BE INCORPORATED HEREIN BY
REFERENCE TO ANY NOTE, DOCUMENT OR AGREEMENT.
EXCEPT SO
FAR AS OTHERWISE STATED, THIS LETTER OF CREDIT IS SUBJECT TO THE RULES OF THE
INTERNATIONAL STANDBY PRACTICES AS ADOPTED BY THE INTERNATIONAL CHAMBER OF
COMMERCE, WHICH ARE IN EFFECT AT THE TIME OF ISSUANCE OF THIS LETTER OF
CREDIT.
(BANK)
______________________________________
(AUTHORIZED
SIGNATURE)
SCHEDULE
1
At-Risk
Payments
