Term Loan And Security Agreement

THIRD AMENDMENT TO
TERM LOAN AND SECURITY AGREEMENT AND WAIVER

THIS THIRD AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT AND WAIVER (this " Amendment" ) is made and entered into as of this 19th day of October 20, 2005, by and among EASY GARDENER PRODUCTS, LTD., a Texas limited partnership (the " Borrower" ), EYAS INTERNATIONAL, INC., a Texas corporation, EG, L.L.C., a Nevada limited liability company, E G PRODUCT MANAGEMENT, L.L.C., a Texas limited liability company, WEATHERLY CONSUMER PRODUCTS GROUP, INC., a Delaware corporation, WEATHERLY CONSUMER PRODUCTS, INC., a Delaware corporation, and NBU GROUP, LLC, a Texas limited liability company (each a " Guarantor" and collectively the " Guarantors" ; and collectively with the Borrower, the " Credit Parties" ), the Lenders (as defined in the Loan Agreement defined below) and CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (the " Agent" ), as agent for itself and on behalf of the Lenders.

W I T N E S S E T H :

WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent are parties to that certain Term Loan and Security Agreement, dated as of October 29, 2003 (as amended by that certain First Amendment to Term Loan and Security Agreement dated as of April 27, 2004, that certain Second Amendment to Term Loan and Security Agreement and Waiver dated as of October 12, 2004 and as the same may be further amended, amended and restated, modified and supplemented, the " Loan Agreement" ), pursuant to which the Lenders extended certain financial accommodations to the Borrower under the terms and conditions stated therein;

WHEREAS, the Credit Parties' Senior Leverage Ratio as of June 30, 2005 was 4.08, which exceeded the maximum allowable Senior Leverage Ratio of 3.00 for such period as set forth in Annex I of the Loan Agreement;

WHEREAS, the Credit Parties' EBITDA was $9,416,000 as of June 30, 2005, which was less than the minimum allowable EBITDA of $11,500,000 for such period as set forth in Annex I of the Loan Agreement;

WHEREAS, the Borrower has notified Agent that Events of Default have occurred and are continuing as a result of: (a) Credit Parties' failure to comply with the Senior Leverage Ratio as described above and (b) Credit Parties' failure to comply with the minimum EBITDA requirement as described above (such Events of Default are hereinafter collectively referred to as the " Specified Events of Default" ) and the Borrower has requested that the Agent and the Lenders waive the Specified Events of Default; and

WHEREAS, the Agent and the Lenders have agreed to the Credit Parties' requests upon and subject to the terms and conditions hereinafter set forth;

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, the parties hereto agree that all capitalized terms used herein which are not

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otherwise defined herein shall have the meanings ascribed thereto in the Loan Agreement, and further agree as follows:

SECTION 1. Acknowledgement of Obligations .

(a) Borrower hereby acknowledges and agrees that based on the Specified Events of Default (as defined below), it is unconditionally liable to the Agent and Lenders for the full and immediate payment of all of the Obligations including, without limitation, those Obligations set forth on Schedule A attached hereto and incorporated herein by reference, plus all interest, charges, fees, costs, and expenses that may arise under the Loan Agreement and other Loan Documents plus all attorneys' fees, disbursements and costs of collection incurred in connection with such Obligations by Agent and Lenders and that Borrower has no defenses, counterclaims or set-offs with respect to the full and immediate payment and performance of any or all Obligations under the Loan Agreement and the other Loan Documents.

(b) Borrower acknowledges and agrees that (i) the Specified Events of Default constitute material defaults under the Loan Agreement and the other Loan Documents, (ii) any notices that might be given and any grace periods or cure periods which must expire, prior to Agent or Lenders exercising any of their respective rights and remedies in connection with the Loan Agreement or the other Loan Documents, have been given, complied with and expired and, in any event, are hereby waived and relinquished by Borrower, and (iii) as a consequence, Agent and Lenders are now entitled to immediately exercise all of their respective rights and remedies under the Loan Agreement and the other Loan Documents, at law or in equity, including, without limitation, their rights to declare all Obligations to be immediately due, payable, and performable, without notice, except that Agent and Lenders have agreed to waive the Specified Events of Default as provided in this Amendment.

(c) Borrower further acknowledges and agrees that as a result of the Specified Events of Default, Agent and Lenders have no commitments, obligations or agreements to make loans or advances or other financial accommodations to Borrower, except that Agent and Lenders have agreed to waive the Specified Events of Default as provided in this Amendment and to continue to make loans, advances or other financial accommodations as provided in this Amendment.

SECTION 2. Amendments to Loan Agreement .

(a) Evidence of Loans; Notes . Sections 2.12 (Notes) of the Loan Agreements is hereby deleted in its entirety and the following in substituted in lieu thereof:

" 2.12 Evidence of Loans .


(a)

Each Lender shall maintain, in accordance with its usual practice, electronic or written records evidencing the indebtedness and obligations to such Lender resulting from each Loan made by such Lender from time to time and the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

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(b)

Agent shall maintain electronic or written records (the " Register" ) in which it will record (i) the amount of each Loan made hereunder, the class and type of each Loan made and any applicable interest rate periods, (ii) the amount of any principal and/or interest due and payable and/or to become due and payable from Borrower to each Lender hereunder and (iii) all amounts received by Agent hereunder from Borrower and each Lender' s share thereof.


(c)

The entries in the Register shall be prima facie evidence, absent manifest error, of the existence and amounts of the obligations and indebtedness therein recorded; provided , however , that the failure of Agent to maintain such records or any error therein shall not in any manner affect the obligations of Borrower to repay the Loans or Obligations in accordance with their terms.


(d)

Borrower agrees that upon written notice by Agent to Borrowers, which written notice may be issued to Borrower at any time in Agent' s sole discretion, and shall be accompanied by the return of one or more of the then existing Notes to Borrowers (" Notice Regarding Notes" ); all references to " Term A Loan Notes" , " Term B Loan Notes" , or " PIK Notes" in the Loan Documents shall be deemed to refer to any still outstanding Term A Loan Notes, Term B Loan Notes or PIK Notes, as applicable, and, in the case of Term A Loans, Term B Loans or PIK obligations that are no longer evidenced by Term A Loan Notes, Term B Loan Notes or PIK Notes, as applicable, such Loans shall thereupon be evidenced by the Register and such references to any such " Term A Loan Notes" , " Term B Loan Notes" or " PIK Notes" in the Loan Documents shall be deemed to refer to such Register or to the applicable facility, as appropriate.


(e)

Upon Agent' s or any Lender' s request, and in any event within three (3) Business Days of any such request, the Borrower shall execute and deliver to Agent new Notes and/or divide any existing Notes in such smaller amounts or denominations as Agent or such Lender shall specify in their respective sole discretion, provided that the aggregate principal amount of such new Notes does not exceed the aggregate principal amount of the Loans outstanding when such request is made."

(b) Subsection (v) of Section 2.7(c) (Other Mandatory Prepayments; Optional Prepayments) is hereby deleted in its entirety and the following is substituted in lieu thereof:


" (v)

If, upon receipt of the Borrower' s annual audited financial statements, the Agent determines in its sole discretion that payments from Excess Cash Flow made in the first three fiscal quarters of such fiscal year exceed the required payment amount from Excess Cash Flow for such fiscal year, then the difference shall be held by Agent and thereafter shall be applied to the then outstanding Loans in the order specified in Section 2.7(c)(i) ; and"

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(c) Termination Fee . A new sentence is hereby added to Section 3.2 (Termination Fee) following the end of last sentence set forth therein as follows:


" Notwithstanding the foregoing, if the Obligations are indefeasibly repaid in full in cash on or before the Maturity Date as a result of the consummation of a Repayment Event, then the Termination Fee shall be forgiven and shall not be payable by Borrower."

(d) Section 3.4 (Default Rate of Interest) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof:

" 3.4 Default Rate of Interest.


(a)

Borrower acknowledges and agrees that based on the Specified Events of Default (as such term is defined in the Third Amendment) and notwithstanding the waiver thereof pursuant to Section 7 of the Third Amendment, the Applicable Rate of interest in effect with respect to the Obligations shall be increased by two percent (2.0%) per annum (the " Default Rate" ) from and after October 1, 2005 and until such time as the Default Rate with respect to the Specified Events of Default (as such term is defined in the Third Amendment) is waived by the Agent and Lenders, in writing in their sole discretion, and shall be due and payable in cash on the first day of each calendar month commencing on November 1, 2005 and continuing until the later of the expiration of the Term and the full performance and indefeasible payment in full in cash of all Obligations and the termination of this Agreement.


(b)

In the event that the Agent and Lenders waive the Default Rate in accordance with subsection (a) above, then thereafter upon the occurrence and during the continuation of a new Event of Default other than the Specified Events of Default (as such term is defined in the Third Amendment), the Default Rate shall be charged (such that the Applicable Rate of interest in effect at such time with respect to the Obligations shall be increased by two percent (2.0%) per annum) automatically and without notice from Agent, Lenders or any other Person. In all such events, and notwithstanding the date on which application of the Default Rate is communicated to Borrower, the Default Rate shall accrue from the initial date of such Event of Default and shall be due and payable in cash upon demand. Neither Agent nor Lenders shall be required to (A) accelerate the maturity of the Loans, (B) terminate any Commitment or (C) exercise any other rights or remedies under the Loan Documents or applicable law in order to charge interest hereunder at the Default Rate."

(e) Section 6.1(a) (Financial Statements, Reports and Other Information) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof:

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" 6.1 Financial Statements, Reports and other Information

(a) Financial Reports . The Credit Parties shall furnish to Agent (i) as soon as available and in any event within ninety (90) calendar days after the end of each fiscal year of Borrower, audited annual consolidated and consolidating financial statements of the Credit Parties and EGUK, including the notes thereto, consisting of a consolidated and consolidating balance sheet at the end of such completed fiscal year and the related consolidated and consolidating statements of income, retained earnings, cash flows and owners' equity for such completed fiscal year, which financial statements shall be prepared and certified without qualification by an independent certified public accounting firm satisfactory to Agent in its Permitted Discretion and accompanied by related management letters, if available; provided that the consolidating statements may be unaudited; and provided, further that internally prepared drafts of the annual consolidated and consolidating financial statements of the Credit Parties and EGUK that are described above shall be provided to Agent as soon as possible and in any event within twenty (20) calendar days after the end of each fiscal year of Borrower, (ii) as soon as available and in any event in draft form within twenty (20) calendar days after the end of each fiscal quarter of the Borrower and in final form within forty-five (45) calendar days after the end of each fiscal quarter of the Borrower (other than the last fiscal quarter of each fiscal year), unaudited consolidated and consolidating financial statements of the Credit Parties consisting of a balance sheet and statements of income, retained earnings and cash flows and owners' equity as of the end of the immediately preceding fiscal quarter, (iii) as soon as available and in any event within twenty (20) calendar days after the end of each calendar month (other than the last calendar month of a fiscal quarter), unaudited consolidated and consolidating financial statements of the Credit Parties, consisting of a balance sheet and statements of income, retained earnings, cash flows and owners' equity as of the end of the immediately preceding calendar month, and (iv) within twenty (20) calendar days after the end of each calendar month, a listing of all proposed non-recurring adjustments to EBITDA during such calendar month. All such financial statements shall be prepared in accordance with GAAP consistently applied with prior periods (subject, as to interim statements, to lack of footnotes and year-end adjustments). With each quarterly and annual financial statement, the Borrower shall also deliver (x) a Compliance Certificate of its chief financial officer in the form of Exhibit A attached hereto (as the same has been amended and restated by the Third Amendment) and otherwise satisfactory to Agent stating that (A) such person has reviewed the relevant terms of the Loan Documents and the condition of the Credit Parties, (B) no Default or Event of Default has occurred or is continuing, or, if any of the foregoing has occurred or is continuing, specifying the nature and status and period of existence thereof and the steps taken or proposed to be taken with respect thereto, and (C) the Borrower is in compliance with all financial covenants in this Agreement attached as Annex I hereto and (y) a description, in form and substance satisfactory to the Agent, of each new material agreement or arrangement entered into with any Affiliate or holder of the Existing Warrant, including an estimate of cost savings to the Borrower and or increase to the Borrower' s EBITDA resulting from such agreement or arrangement, or of any modifications to existing material agreements or arrangements with any Affiliate or holder of the Existing Warrant, that occurred during the applicable fiscal quarter. With each annual financial statement, Borrower shall also deliver the calculation of the estimated level of distributions by Borrower to its partners for the payment of all applicable federal, and state income taxes in connection with Borrower' s income for such fiscal year. Such certificate shall be accompanied by the calculations necessary to show compliance with the financial covenants in a form satisfactory to the Agent in its Permitted Discretion."

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(f) Subsection (iv) of Section 6.1(c) (Notices) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof:


" (iv)

any notice received by any Credit Party from any payor of a claim, suit or other action that such payor has claims or has filed any claims against any Credit Party for an amount in excess of $250,000 individually or $500,000 in the aggregate."

(g) Subsection (f) of Section 6.1 (Shareholder Reports and Government Filings) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof:


" (f)

Shareholder Reports and Government Filings . Borrower shall furnish to Agent, concurrently with the sending or filing thereof, a copy of any proxy statements, financial statements or reports which the Credit Parties have made available to their shareholders or other equity owners in their capacity as such shareholders or equity owners, as a class or any class or series of shareholders or other equity owners as a class or series and a copy of any regular, periodic and special reports or registration statements which the Credit Parties file with the Securities and Exchange Commission, any stock exchange or any Governmental Authority, and Credit Parties shall timely file all reports required to be filed with the Securities and Exchange Commission, any stock exchange or any Governmental Authority. In connection with the foregoing, the Agent and Lenders shall not declare an Event of Default based on Borrower' s failure to timely file its form 10-K for the fiscal year ended June 30, 2005 with the Securities and Exchange Commission and the American Stock Exchange, provided that the same is filed with such authorities on or before October 25, 2005."

(h) Section 6.7 (Inspection; Periodic Audits) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof:


" 6.7 Inspection; Periodic Audits . Each Credit Party shall permit the representatives of Agent, at the expense of the Credit Parties, from time to time as determined by Agent in its sole discretion and during normal business hours without the requirement of prior notice, to (a) visit and inspect any of such Credit Party' s offices or properties or any other place where Collateral is located to inspect the Collateral and/or to examine and/or audit all of such Credit Party' s books of account, records, reports and other papers, (b) make copies and extracts therefrom, and (c) discuss such Credit Party' s business, operations, prospects, properties, assets, liabilities, condition and/or Accounts with its officers and independent public accountants (and by this provision such officers and accountants are authorized to discuss the foregoing)."

(i) Subsection (a) of Article VIII (Events of Default) is hereby deleted in its entirety and the following is substituted in lieu thereof:

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" (a)

The Credit Parties shall fail to pay any amount on the Obligations or provided for in any Loan Document on the date when due (in all cases, whether on any payment date, at maturity, by reason of acceleration, by notice of intention to prepay, by required prepayment or otherwise);"

(j) Subsection (c) of Article VIII (Events of Default) is hereby deleted in its entirety and the following is substituted in lieu thereof:


" (c)

any Credit Party or other party thereto, other than Agent or any Lender, shall be in violation, breach or default of, or shall fail to perform, observe or comply with any covenant, obligation or agreement set forth in, or any event of default occurs under, any Loan Document and such violation, breach, default, event of default or failure shall not be cured within the applicable period set forth in the applicable Loan Document; provided that , with respect to the affirmative covenants set forth in Article VI (other than Sections 6.3(b) , (f) , (g) and (h) , 6.8(c) , 6.9 and 6.11 for which there shall be no cure period and Section 6.2 for which there shall be a cure period to the extent indicated in subsection (a) above), there shall be a thirty (30) calendar day cure period (other than Sections 6.1 and 7.1 for which there shall not be any cure period) commencing from the earlier of (i) Receipt by such Person of written notice of such breach, default, violation or failure, and (ii) the time at which such Person or any authorized officer thereof knew or became aware, or should reasonably have known or been aware, of such failure, violation, breach or default."

(k) Section 13.11 (Release of Collateral) of the Loan Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof:


" 13.11 Release of Collateral . Subject to Section 12.3 , promptly following full performance and satisfaction and indefeasible payment in full in cash of all Obligations and the termination of this Agreement and following the Credit Parties' delivery of a written release of claims in favor of Agent and Lenders in form and substance satisfactory to Agent in its sole discretion, the Liens created hereby shall terminate and Agent and Lenders shall execute and deliver such documents, at the Credit Parties' expense, as are necessary to release Lenders' Liens in the Collateral and shall return the Collateral to the Credit Parties, and the Credit Parties agree that they shall have no right to file any UCC termination statement with respect to any of the UCC financing statements in favor of Agent and Lenders until all Obligations are satisfied and performed in full, as provided herein, including, without limitation, the delivery of the written release described above; provided , however , that the parties agree that, notwithstanding any such termination or release or the execution, delivery or filing of any such documents or the return of any Collateral, if and to the extent that any such payment made or received with respect to the Obligations is subsequently invalidated, determined to be fraudulent or preferential, set aside, defeased or required to be repaid to a trustee, debtor in possession, receiver, custodian or any other Person under any Debtor Relief Law, common law or equitable cause or any other law, then the Obligations intended to be satisfied by such payment shall be revived and shall continue as if such payment had not been received by Agent or any Lender and the Liens created hereby shall be revived automatically without any action on the part of any party hereto and shall continue as if such payment had

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not been received by Agent or any Lender. Agent and Lenders shall not be deemed to have made any representation or warranty with respect to any Collateral so delivered except that such Collateral is free and clear, on the date of such delivery, of any and all Liens arising from such Person' s own acts."

(l) The definitions of " Excess Cash Flow" , " Notes" , " Senior Leverage Ratio" and " Term" set forth in Appendix A to the Loan Agreement (Definitions) are hereby deleted in the entirety and the following are substituted in lieu thereof:


" Excess Cash Flow" shall mean, for any fiscal period, without duplication, an amount equal to the sum of (a) EBITDA (but excluding the items comprising subsections (g) and (h) of the definition of EBITDA) for such period plus the amount of any cash Makewell Investments made to meet the applicable ECF Threshold for such period, plus (b) an amount equal to the aggregate net cash proceeds of the sale, lease, transfer or other disposition of assets by the Borrower and its Subsidiaries during such period (such net cash proceeds to be determined only after deducting all transaction costs, expenses, debt repayments and taxes in connection with such sale, lease, transfer or o ...