**Exhibit 10.30**

 

**FIFTEENTH AMENDMENT AND MODIFICATION TOLOAN AND SECURITY AGREEMENT**

 

**THIS FIFTEENTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITYAGREEMENT** (the **“Amendment”**) isdated October 8, 2004 by and among **SHERWOOD BRANDS OFVIRGINIA, LLC**(**“VA”**), **SHERWOOD BRANDS, LLC** (**“MD”**), **SHERWOOD BRANDS OF RI, INC.**(**“RI”**),**ASHER CANDY, INC. (formerly known as Asher CandyAcquisition Corporation)**(**“Asher”**), **SHERWOOD BRANDS, INC.** (**“Guarantor”**)and **WACHOVIA BANK, NATIONAL ASSOCIATION**,formerly known as First Union National Bank (the **“Lender”**).  VA, MD, RI and Asher are referred tocollectively as **“Borrowers”** or each as a **“Borrower”**.

 

**BACKGROUND**

 

# A.                                   Borrowers, Guarantor and Lender entered into thatcertain Loan and Security Agreement dated June 12, 2001 (as amended bythat certain First Amendment and Modification to Loan and Security Agreementdated April 30, 2002, that certain Second Amendment and Modification toLoan and Security Agreement dated September 5, 2002, that certain ThirdAmendment and Modification to Loan and Security Agreement dated April 7,2003, that certain Fourth Amendment and Modification to Loan and SecurityAgreement dated May 30, 2003, that certain Fifth Amendment and Modification toLoan and Security Agreement dated July 30, 2003 (the **“Fifth Amendment”**),that certain Sixth Amendment and Modification to Loan and Security Agreementdated November 24, 2003, that certain Seventh Amendment and Modificationto Loan and Security Agreement dated February 13, 2004, that certainEighth Amendment and Modification to Loan and Security Agreement dated April 8,2004, that certain Ninth Amendment and Modification to Loan and SecurityAgreement dated June 11, 2004, that certain Tenth Amendment andModification to Loan and Security Agreement dated July 31, 2004, thatcertain Eleventh Amendment and Modification to Loan and Security Agreementdated August 20, 2004, that certain Twelfth Amendment and Modification toLoan and Security Agreement dated August 31, 2004, that certain ThirteenthAmendment and Modification to Loan and Security Agreement dated September 13,2004, that certain Fourteenth Amendment and Modification to Loan and SecurityAgreement dated September 30, 2004 and as the same may be further amendedfrom time to time, the **“Loan Agreement”**).

#  

# B.                                     Borrowers and Guarantors have requested thatLender extend the Term and further amend the Loan Agreement in accordance withthe terms and conditions set forth herein.

#  

**NOW, THEREFORE**, intending to be legally boundhereby, the parties hereto agree as follows:

 

## 1.                                       **Confirmation of Background**.  Borrowers and Guarantor ratify, confirm andacknowledge that the statements contained in the foregoing Background are true,accurate and complete in all respects.

##  

## 2.                                       **Permitted Subsidiary**.

 

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### (a)                                  Borrowersand Guarantor have informed Lender that Guarantor has formed a wholly-ownedsubsidiary known as Sherwood Brands Zip, LLC, a Maryland limited liabilitycompany (**“Sub-Transaction”**).

###  

### (b)                                 Lenderconsents to the Sub-Transaction and, solely for the purpose of avoiding theoccurrence of a default or an Event of Default, which could be caused by theSub-Transaction, waives Borrowers’ and Guarantor’s compliance with thoseprovisions of the Loan Agreement and the other Loan Documents which wouldprohibit the Sub-Transaction, including, without limitation, the provisions of **Section 6.15** of the LoanAgreement.

###  

### (c)                                  Theforegoing consent and waiver is given solely in connection with theSub-Transaction and shall not be deemed to be an agreement, obligation orcommitment by Lender to consent to any other transaction which would beprohibited by the terms and conditions of the Loan Agreement or any of theother Loan Documents.

###  

### (d)                                 Borrowersand Guarantor hereby acknowledge and agree that, except with the prior writtenconsent of Lender, which consent may be withheld by Lender in its solediscretion, no Borrower or Guarantor will make any loans, advances, capitalcontributions or other extensions of credit to Sherwood Brands Zip, LLC.

###  

## 3.                                       **Permitted Out-of Formula Amount**.

 

### (a)                                  Duringthe period commencing October 8, 2004 through and including November 21,2004 only, in addition to the sums otherwise available to Borrowers asRevolving Loans supported by the Borrowing Base, Borrowers may borrow for eachperiod listed in Column A below, an amount up to the amount listed in Column Bbelow for such period (the **“Permitted Out-of-FormulaAmount”**):

 
| **Column A**                                                                    | ** ** | **Column B** | ** **   |
|---------------------------------------------------------------------------------|------------|--------------|--------------|
|                                                                            |       |         |         |
| Commencing October 8,  2004 through and including October 31, 2004    |       | $            | 1,000,000.00 |   |
|                                                                            |       |         |         |
| Commencing November 1,  2004 through and including November 14, 2004  |       | $            | 500,000.00   |   |
|                                                                            |       |         |         |
| Commencing November 15,  2004 through and including November 21, 2004 |       | $            | 250,000.00   |   |

 

### (b)                                 Commencingon November 22, 2004 and at all times thereafter, no PermittedOut-of-Formula Amount shall be available to Borrowers.

###  

### (c)                                  Notwithstandinganything in this Amendment to the contrary, in no event will the sum of the(i) Revolving Loans and Letters of Credit supported by the Borrowing Base,plus (ii) Revolving Loans and Letters of Credit supported by the PermittedOut-of-Formula Amount, exceed the Maximum Revolving Credit, less any Reserves.

###  

## 4.                                       **Unused Line Fee**.  Commencing September 1, 2004, **Section 3.3** of the LoanAgreement is hereby deleted in its entirety and replaced with the following:

 

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“3.3                           Unused Line Fee.  Borrowers shall pay Lenders, monthly, on thefirst day of each month, in arrears, an Unused Line Fee for each month duringthe Term equal to .375% per annum of the amount, if any, by which the MaximumRevolving Credit exceeds the average outstanding daily principal balance duringthe preceding month of all Revolving Loans and any Letters of Credit.”

 

## 5.                                       **Reporting Requirements**.

##  

### (a)                                  **Section 6.10(b)(i)** of the LoanAgreement is hereby deleted in its entirety and replaced with the following:

###  

“(i)                               Intentionally Deleted.”

 

### (b)                                 **Section 6.10** of the LoanAgreement is hereby amended by adding the following as **subsection (h)**thereto:

###  

“(h)                           Borrowers shall, at theirexpense and within thirty (30) days following the end of each calendar month,deliver to Lender a compliance certificate duly completed and certified byBorrowers’ chief executive officer or chief financial officer, demonstratingBorrowers’ compliance with the financial covenants set forth in **Section 6.19** for theimmediately preceding calendar month and showing the calculations therefor inreasonable detail.”

 

## 6.                                       **Financial Covenants**.

##  

### (a)                                  Lenderhereby waives any default or Event of Default that exists or may arise underthe Loan Agreement as a result of Borrowers’ failure to comply with (i) theTangible Net Worth requirement set forth in **Section 6.19(a)**of the Loan Agreement and (ii) the Fixed Charge Coverage Ratio set forth in **Section 6.19(b)** of the LoanAgreement for the periods ended April 30, 2004 and July 31, 2004.

###  

### (b)                                 Theforegoing waivers apply solely to Borrowers’ failure to comply with (i) suchTangible Net Worth  requirement and (ii)such Fixed Charge Coverage Ratio for the periods ended April 30, 2004 and July 31,2004 only and do not apply to or constitute a waiver of any other default,failure or Event of Default that exists or may exist under the Loan Agreement.

###  

### (c)                                  **Section 6.19** of the LoanAgreement is hereby deleted in its entirety and replaced with the following:

###  

“6.19                     **FinancialCovenants**.  Borrowers andGuarantor, as applicable, shall at all times comply with the following:

 

“(a)                            Borrowers shall have EBITDAas of the end of each period listed in Column A below of the amount listed inColumn B below for such period:

 

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| **Column A**                                         | ** ** | **Column B**            | ** ** |
|------------------------------------------------------|------------|-------------------------|------------|
| ** **                                           | ** ** | ** **              | ** ** |
| The three  month period ending October 31, 2004 |       | at least  $1,282,000.00 |       |
|                                                 |       |                    |       |
| The two  month period ending November 30, 2004  |       | at least  $2,838,000.00 |       |
|                                                 |       |                    |       |
| The four  month period ending December 31, 2004 |       | at least  $3,789,000.00 |       |
|                                                 |       |                    |       |
| The five  month period ending January 31, 2005  |       | at least  $4,012,000.00 |       |
|                                                 |       |                    |       |
| The six  month period ending February 28, 2005  |       | at least  $4,300,000.00 |       |
|                                                 |       |                    |       |
| The seven  month period ending March 31, 2005   |       | at least  $4,723,000.00 |       |
|                                                 |       |                    |       |
| The eight  month period ending April 30, 2005   |       | at least  $4,340,000.00 |       |
|                                                 |       |                    |       |
| The nine  month period ending May 31, 2005           |       | at least  $3,965,000.00 |       |
|                                                 |       |                    |       |
| The ten  month period ending June 30, 2005      |       | at least  $3,628,000.00 |       |
|                                                 |       |                    |       |
| The eleven  month period ending July 31, 2005   |       | at least  $3,303,000.00 |       |

 

(b)                                 Borrower shall haveNet Excess Availability as of the date listed in Column A below of at least theamount listed in Column B below for such date: 

 
| **Column A**            | ** ** | **Column B** | ** **                              |
|-------------------------|------------|--------------|-----------------------------------------|
| ** **              | ** ** | ** **   | ** **                              |
| October 30,  2004  |       | $            | not less  than negative 565,000.00 |   |
|                    |       |         |                                    |
| November 27,  2004 |       | $            | 1,930,000.00                            |   |
|                    |       |         |                                    |
| December 25,  2004 |       | $            | 1,870,000.00                            |   |
|                    |       |         |                                    |
| January 1,  2005   |       | $            | 1,290,000.00                            |   |
|                    |       |         |                                    |
| February 26,  2005 |       | $            | 1,780,000.00                            |   |
|                    |       |         |                                    |
| March 26,  2005    |       | $            | 2,460,000.00                            |   |
|                    |       |         |                                    |
| April 30,  2005    |       | $            | 1,420,000.00                            |   |
|                    |       |         |                                    |
| May 28, 2005            |       | $            | 1,200,000.00                            |   |
|                    |       |         |                                    |
| June 25,  2005     |       | $            | 1,090,000.00                            |   |
|                    |       |         |                                    |
| July 30,  2005     |       | $            | 590,000.00                              |   |

 

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(c)                                  Borrowers andGuarantor shall not, directly or indirectly, expend or commit to expend, forfixed or capital assets (including capital lease obligations) (collectively **“Capital Expenditures”**) an aggregate amount in excess of OneHundred Thousand Dollars ($100,000.00) in the fiscal year ending July 31,2005.

 

(d)                                 As used in thisAgreement, the following terms shall have the following meanings:

 

(i) **“EBITDA”** means, for the applicable period, the sum of netincome of Guarantor, Borrowers and their subsidiaries (exclusive of (A)extraordinary items of income or loss and (B) other income or expenses notresulting directly from the core business operations of Guarantor, Borrowers ortheir subsidiaries), plus amounts which, in the determination of suchnet income, have been deducted for interest expense, total federal, state,local and foreign income, value added and similar taxes, and depreciation andamortization; all as determined in accordance with GAAP and on a consolidatedbasis.

 

(ii)  **“Net Excess Availability”**means, at a particular date,  undrawnavailability under the Revolving Loans after deducting all sums due and owingto Borrowers’ trade creditors which are more than thirty (30) days past due(unless Borrowers shall have provided evidence satisfactory to Lender that theparty due such payables has agreed to other terms), less all Reservesestablished by Lender.”

 

## 7.                                       **Inventory Sublimit**.  **Section 10.1(c)(i)**of the Loan Agreement is hereby deleted in its entirety and replaced with thefollowing:

##  

“(i)                               Total Eligible Inventory                                                                  $7,500,000.00”

 

## 8.                                       **Letter of Credit Charge**.  Commencing September 1, 2004, **Section 10.2(a)** of the LoanAgreement is hereby deleted in its entirety and replaced with the following:

##  

| “(a) | Commercial  Letters of Credit Charge | 3.0% per  annum on daily outstanding balance” |
|-----------|--------------------------------------|----------------------------------------------------|

 

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## 9.                                       **Term**.  **Section 10.4**of the Loan Agreement is deleted in its entirety and replaced with thefollowing:

##  

“10.4  **Term**.                              Terminatingon August 1, 2005.”

 

## 10.                                 **Inventory**.  Notwithstanding anything in the LoanAgreement to the contrary, Out-of-Season Inventory which otherwise satisfiesall other requirements for Eligible Inventory may be included in thecalculation of the Borrowing Base; provided, however, the maximum amount ofsuch Out-of-Season Inventory included in the calculation of the Borrowing Baseshall not exceed Five Hundred Thousand Dollars ($500,000.00).  As used herein, **“Out-of-SeasonInventory”** shall mean inventory purchased or manufactured byBorrowers for a particular holiday season, during the applicable period shownon **Exhibit “A”** attached hereto.  By way of example only, inventory purchasedor manufactured by Borrowers and consisting of Christmas Canes would beOut-of-Season Inventory for the period from December 26 through andincluding March 1.

##  

## 11.                                 **Cash Collateral**.

##  

### (a)                                  Pursuantto the terms of that certain Amended and Restated Reimbursement Agreement,dated as of May 1, 1997 among VA, MD, Guarantor and Lender (as amended by thatcertain First Amendment to Amended and Restated Reimbursement Agreement dated February 26,1998, that certain Second Amendment to Amended and Restated ReimbursementAgreement dated April 11, 2000, that certain Third Amendment to Amendedand Restated Reimbursement Agreement dated July 30, 2003, that certainFourth Amendment to Amended and Restated Reimbursement Agreement dated of evendate herewith (the **“Fourth Amendment”**)and as the same may be further amended, restated or supplemented from time totime, the **“Reimbursement Agreement”**), VA agreedto establish the LC Collateral Account (as defined in the ReimbursementAgreement) and to maintain certain account balances in such account.  VA hereby grants to Lender a securityinterest in the LC Collateral Account. Such funds will be held by Lender as cash collateral to secure thepayment and performance of all of the Borrowers’ Obligations.  Lender will have sole dominion and controlover all funds in the LC Collateral Account and such funds may be withdrawnonly by Lender.  Lender will have theright to apply all or any part of such funds towards payment of any of theObligations.

###  

### (b)                                 Borrowershereby authorize and direct Lender, from time to time, to disburse RevolvingLoans into the LC Collateral Account to satisfy Borrower’s obligations under **Section 4** of the FourthAmendment without further authorization from Borrowers.  Such authorization shall in no way relieve VAof its obligation comply with **Section 4**of the Fourth Amendment.

###  

## 12.                                 **Repayment of Term Loan B**.  Notwithstanding any of the terms andconditions set forth in the Loan Agreement or any of the other Loan Documents,Borrowers shall pay to Lender the unpaid principal balance of Term Loan B, plusall accrued and unpaid interest thereon and all fees, costs and expenses due inconnection therewith on or before March 31, 2005.

##  

## 13.                                 **Use of Non-Ordinary Income**.  In addition to all other obligations ofBorrowers with respect to proceeds of Collateral, any and all cash received byany Borrower, including, without limitation, insurance proceeds, dividends, taxrefunds, the proceeds of any asset sale (provided Lender has consented to suchsale in writing), and the proceeds of the settlement of any lawsuit shall bedelivered to Lender.  Lender may applyany funds received under this section to payment of any of theObligations, whether or not due, in any order or manner as Lender determines.

 

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## 14.                                 **Subordinated Debt**.

##  

### (a)                                  ExistingIndebtedness**. **Borrowersand Guarantors acknowledge and agree that, as of the date hereof, theoutstanding principal balance of the indebtedness of Borrowers and/or Guarantor(i) to Lana, LLC is Three Million Five Hundred One Thousand Nine HundredEighty-Six and 78/100 Dollars ($3,501,986.78) and (ii) to Ilana Frydman is FourHundred Sixty-Seven Thousand Eight Hundred Dollars ($467,800.00).

###  

### (b)                                 Obligationsto Lana, LLC

###  

#### (i)                                     Inaddition to all of the other conditions set forth in that certain SubordinationAgreement among Borrowers, Lana, LLC and Lender dated July 30, 2003 (asamended, the **“Subordination Agreement”**), noBorrowers will make, and Lana, LLC will not demand or accept, either directlyor indirectly, payment (of any kind or character) of all or any part of theSubordinated Debt (as defined in the Subordination Agreement) until all of theObligations have been paid in full and Lender shall no longer have anyobligation, agreement or commitment to advance any sums to any Borrower.

####  

#### (ii)                                  Contemporaneouslywith the execution of this Amendment, Borrowers shall cause Lana, LLC toexecute and deliver to Lender an amendment to the Subordination Agreement inform and content satisfactory to the Lender, pursuant to which Lana, LLC shallacknowledge and agree that Lana, LLC shall not receive payment (of any kind orcharacter) of all or any part of the Subordinated Debt (as defined in theSubordination Agreement) until all of the Obligations have been paid in fulland Lender shall no longer have any obligation, agreement or commitment toadvance any sums to any Borrower.

####  

### (c)                                  Obligationsto Ilana Frydman.

###  

#### (i)                                     Borrowershave received, or in the future will receive, cash proceeds of a loan or loansfrom Ilana Frydman in an aggregate amount not to exceed Five Hundred ThousandDollars ($500,000.00) (the **“Frydman Subordinated Debt”**).

####  

#### (ii)                                  Contemporaneouslywith the execution of this Amendment, Borrowers shall cause Ilana Frydman toexecute and deliver to Lender a subordination agreement in form and contentsatisfactory to the Lender, pursuant to which Ilana Frydman shall acknowledgeand agree that they shall not receive payment (of any kind or character) of allor any part of the Frydman Subordinated Debt except as provided for in suchsubordination agreement.

####  

### (d)                                 Borrowersand Guarantor hereby acknowledge and agree that, pursuant to **Section 6.25** of the LoanAgreement, no Borrower or Guarantor shall, nor shall any of them permit theirsubsidiaries to, incur or create any liability or indebtedness, includingcapitalized leases, other than as provided for in **Section 6.25**of the Loan Agreement.  Any previouswaivers and/or consents by Lender in connection with any indebtedness incurredby any Borrower or Guarantor have been given solely as an accommodation toBorrowers and Guarantor, on Borrowers’ and Guarantor’s request, and shall notbe deemed to be an agreement, obligation or commitment by Lender to waiverand/or consent to any other indebtedness to be incurred by any Borrower orGuarantor which would be prohibited by the terms and conditions of the LoanAgreement or any of the other Loan Documents.

 

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## 15.                                 **Additional Reporting Requirements**.  In addition to all other information requiredto be delivered under the Loan Agreement:

##  

### (a)                                  Onor before October 31, 2004, Borrowers shall deliver to Lender a schedule,which shall be in form satisfactory to Lender, detailing the (i) fixed assetsof Borrowers sold or moved to a location outside of the United States since July 31,2003, (ii) fixed assets of Borrowers scheduled to be sold or moved to alocation outside of the United States, (iii) estimated sale price or appraisedvalue of such fixed assets and (iv) date or estimated timing of such sale ormove.  Any such sale or movement of fixedassets shall be further subject to the terms and conditions of **Section 8** of the FifthAmendment.

###  

### (b)                                 Onetime every fourteen (14) days, Borrowers shall deliver to Lender a reportincluding (i) projections, including without limitation projected Net ExcessAvailability, and cash flows on a week-by-week basis for the next succeedingthirteen (13) week period and (ii) a cash flow statement for the immediatelypreceding two (2) week period, in each case prepared by the chief financialofficer of Borrowers.  Such report shallinclude an explanation of any variances between the projections previouslydelivered to Lender and the actual results of operations.

###  

## 16.                                 **Amendment Fee.**

##  

### (a)                                  Borrowersshall pay to Lender an amendment fee in the amount of $95,000.00 (the **“Amendment Fee”**), which has been fully earned by Lender asof the date hereof.

###  

### (b)                                 TheAmendment Fee shall be paid as follows:

###  

#### (i)                                     $5,000.00on the date of execution of this Amendment; and

####  

#### (ii)                                  $90,000.00on the earlier of (A) January 3, 2005, (B) the occurrence of an Event ofDefault and demand by Lender for payment in full of the Obligations or (C)termination of the Loan Agreement for any reason.

####  

## 17.                                 **Further Agreements and Representations.**Each Borrower and Guarantor does hereby:

##  

### (a)                                  ratify,confirm and acknowledge that, as amended hereby, the Loan Agreement and theother Loan Documents are valid, binding and in full force and effect;

###  

### (b)                                 covenantand agree to perform all of such Borrower’s and Guarantor’s obligations underthe Loan Agreement and the other Loan Documents, as amended;

###  

### (c)                                  acknowledgeand agree that as of the date hereof, neither any Borrower nor Guarantor hasany defense, set-off, counterclaim or challenge against the payment of any sumsowing under any of the Obligations, as amended, or the enforcement of any ofthe terms of the Loan Agreement or of the other Loan Documents, as amended;

###  

### (d)                                 acknowledgeand agree that except as heretofore disclosed to Lender by Borrowers inwriting, all representations and warranties of Borrowers and Guarantorcontained in the Loan Agreement and/or the other Loan Documents, as amended,are true, accurate and correct on and as of the date hereof as if made on andas of the date hereof;

 

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### (e)                                  representand warrant that, no Event of Default or event which with the delivery ofnotice, passage of time or both would constitute an Event of Default exists orwill exist; and

###  

### (f)                                    covenantand agree that Borrowers’ or Guarantor’s failure to comply with the terms ofthis Amendment or any of the other Loan Documents shall constitute an Event ofDefault under the Loan Agreement.

###  

## 18.                                 **Additional Documents; Further Assurances.**  Borrowers and Guarantor covenant and agreesto execute and deliver to Lender, or to cause to be executed and delivered toLender contemporaneously herewith, at the sole cost and expense of Borrowers,all documents, agreements, statements, resolutions, certificates, consents andinformation as Lender may require in connection with the matters or actionsdescribed herein.  Borrowers andGuarantor further covenant and agree to execute and deliver to Lender or tocause to be executed and delivered at the sole cost and expense of Borrowers,from time to time, any and all other documents, agreements, statements,certificates and information as Lender shall reasonably request to evidence oreffect the terms hereof, the Loan Agreement, as amended, or any of the otherLoan Documents, or to enforce or to protect Lender’s interest in theCollateral.  All such documents,agreements, statements, etc., shall be in form and content acceptable to Lenderin its reasonable sole discretion.

##  

## 19.                                 **Release.**  Borrowers and Guarantor acknowledge and agreethat they have no claims, suits or causes of action against Lender and herebyremise, release and forever discharge Lender and its officers, directors,shareholders, employees, agents, successors and assigns from any claims, suitsor causes of action whatsoever, in law or equity, which any Borrower orGuarantor has or may have arising from any act, omission or otherwise, at anytime up to and including the date of this Amendment.

##  

## 20.                                 **Certain Fees, Costs, Expenses And Expenditures**.  Borrowers will pay all of the Lender’sexpenses in connection with the review, preparation, negotiation, documentationand closing of this Amendment and the consummation of the transactionscontemplated hereunder, including without limitation, fees, disbursements,expenses, appraisal costs and fees and expenses of counsel retained by Lenderand all fees related to filings, recording of documents and searches, whetheror not the transactions contemplated hereunder are consummated.  Nothing contained herein shall limit in anymanner whatsoever Lender’s right to reimbursement under any of the LoanDocuments.

##  

## 21.                                 **No Further Amendment; No Course of Dealing**.  Nothing contained herein constitutes anagreement or obligation by Lender to grant any further amendments with respectto any of the Loan Documents.  Any waiveror implied waiver by Lender of any obligations or covenants of Borrowers,Guarantor or any of them, under the Loan Documents is expressly terminated andrescinded and Borrowers shall strictly perform and comply with all obligationsand covenants under the Loan Documents.

##  

## 22.                                 **Inconsistencies.** To the extent ofany inconsistencies between the terms and conditions of this Amendment and theterms and conditions of the Loan Agreement, the terms and conditions of thisAmendment shall prevail. All terms and conditions of the Loan Agreement notinconsistent herewith shall remain in full force and effect and are herebyratified and confirmed by Borrowers.

 

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## 23.                                 **Construction.**  Any capitalized terms used in this Amendmentnot otherwise defined shall have the meaning as set forth in the LoanAgreement.

##  

## 24.                                 **Binding Effect.**  This Amendment, upon due execution hereof,shall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns.

##  

## 25.                                 **Governing Law.**  This Amendment shall be governed andconstrued in accordance with the laws of the Commonwealth of Pennsylvania.

##  

## 26.                                 **Severability**.  The provisions of this Amendment and allother Loan Documents are deemed to be severable, and the invalidity orunenforceability of any provision shall not affect or impair the remainingprovisions which shall continue in full force and effect.

##  

## 27.                                 **No Third Party Beneficiaries**.  The rights and benefits of this Amendment andthe Loan Documents shall not inure to the benefit of any third party.

##  

## 28.                                 **Headings**.  The headings of the Articles, Sections,paragraphs and clauses of this Amendment are inserted for convenience only andshall not be deemed to constitute a part of this Amendment.

##  

## 29.                                 **Counterparts**.  This Amendment may be executed in any numberof counterparts, all of which taken together shall constitute one and the sameinstrument, and any of the parties hereto may execute this Amendment by signingany such counterpart.

##  

## **[SIGNATURES ON FOLLOWING PAGE]**

##  

## 10

## 

 

**IN WITNESS WHEREOF**, the parties hereto,intending to be legally bound hereby, have caused this Amendment to be executedthe day and year first above written.

 
| **LENDER:**                              | **BORROWERS:**                        |
|------------------------------------------|---------------------------------------|
|                                     |                                  |   |
| **WACHOVIA BANK,  NATIONAL ASSOCIATION** | **SHERWOOD BRANDS OF VIRGINIA,  LLC** |
|                                     | a Virginia limited liability company  |
|                                     |                                  |   |
| By:                                      | /s/  George C. Kyvernitis   |   | By: | **SHERWOOD BRANDS, INC.,** |
|                                     | Georgios C. Kyvernitis, Director      |   | Sole Member |
|                                     |                                  |   |
|                                     |                                  |   |
|                                     |                                  | By: | /s/  Amir Frydman |   |
|                                     |                                  |   | Amir Frydman |
|                                     |                                  |   |
| ** **                               | **SHERWOOD BRANDS, LLC,**             |
|                                     | a Maryland limited liability company  |
|                                     |                                  |
|                                     | By:                                   | **SHERWOOD BRANDS, INC.,** |
|                                     |                                  | Sole Member |
|                                     |                                  |   |
|                                     |                                  |   |
|                                     |                                  | By: | /s/ Amir Frydman |   |
|                                     |                                  |   | Amir Frydman |
|                                     |                                  |   | Executive Vice President |
|                                     |                                  |   |
|                                     |                                  |   |
| ** **                               | **SHERWOOD BRANDS OF RI, INC.**       |
|                                     |                                  |   |
|                                     |                                  |   |
|                                     | By:                                   | /s/ Amir Frydman |   |
|                                     |                                  | Amir Frydman |
|                                     |                                  | Executive Vice President |
|                                     |                                  |   |
|                                     |                                  |   |
|                                     | **ASHER CANDY, INC.**                 |
|                                     |                                  |   |
|                                     |                                  |   |
|                                     | By:                                   | /s/ Amir Frydman |   |
|                                     |                                  | Amir Frydman |
|                                     |                                  | Executive Vice President |
|                                          |                                       |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**(SIGNATURESCONTINUED ON FOLLOWING PAGE)**

 

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**(SIGNATURES CONTINUED FROM PREVIOUS PAGE)**

 
| ** ** | **GUARANTOR:**            |
|------------|---------------------------|
|       |                      |
| ** ** | **SHERWOOD BRANDS, INC.** |
|       |                      |   |
|       |                      |   |
|       | By:                       | /s/ Amir Frydman |   |
|       |                      | Amir Frydman |
|       |                      | Executive  Vice President |

 

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**EXHIBIT “A”**

 

**Out-of-SeasonInventory**

 
| **Type of Inventory**                     | ** ** | **Period included in  Out-of-Season Inventory**          |
|-------------------------------------------|------------|----------------------------------------------------------|
|                                      |       |                                                     |
| Christmas Canes                           |       | December 26 through and including March 1      |
|                                      |       |                                                     |
| Christmas Gift items                      |       | December 26 through and including April 30     |
|                                      |       |                                                     |
| All other Christmas Categories            |       | December 26 through and including June 30      |
|                                      |       |                                                     |
| Valentines items                          |       | February 15 through and including May  31           |
|                                      |       |                                                     |
| Easter items consisting of finished goods |       | Day after Easter through and including September 30 |
|                                      |       |                                                     |
| Halloween items                           |       | October 31 through and including March 31      |

 

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