**Exhibit10.23**

** **

**EIGHTHAMENDMENT AND MODIFICATION TO**

**LOAN AND SECURITY AGREEMENT**

 

**THIS EIGHTHAMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT** (the **“Amendment”**)is made this 8th day of April, 2004, by and among **SHERWOOD BRANDS OF VIRGINIA, LLC**(**“VA”**), **SHERWOOD BRANDS, LLC**(**“MD”**), **SHERWOOD BRANDS OF RI, INC.**(**“RI”**),**ASHER CANDY, INC. (formerly known as AsherCandy Acquisition Corporation)**(**“Asher”**),**SHERWOOD BRANDS, INC.** (**“Guarantor”**) and **WACHOVIA BANK, NATIONAL ASSOCIATION**, formerly known as First UnionNational Bank (the **“Lender”**).  VA, MD, RI and Asher are referred tocollectively as **“Borrowers”** oreach as a **“Borrower”**.

 

**BACKGROUND**

 

# A.            Borrowers,Guarantor and Lender entered into that certain Loan and Security Agreementdated June 12, 2001 (as amended by that certain First Amendment andModification to Loan and Security Agreement dated April 30, 2002, that certainSecond Amendment and Modification to Loan and Security Agreement datedSeptember 5, 2002, that certain Third Amendment and Modification to Loan andSecurity Agreement dated April 7, 2003, that certain Fourth Amendment andModification to Loan and Security Agreement dated May 30, 2003, that certainFifth Amendment and Modification to Loan and Security Agreement dated July 30,2003,  that certain Sixth Amendment andModification to Loan and Security Agreement dated November 24, 2003 andthat certain Seventh Amendment and Modification to Loan and Security Agreementdated February 13, 2004 and as the same may be further amended from time totime, the **“Loan Agreement”**).

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# B.            Borrowers,Guarantor and Lender desire to further amend the Loan Agreement in accordancewith the terms and conditions set forth herein.

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**NOW,THEREFORE**, intendingto be legally bound hereby, the parties hereto agree as follows:

 

## 1.             **Permitted Out-ofFormula Amount**.

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### (a)           During the period commencing on the date hereof throughand including June 12, 2004 only, in addition to the sums otherwise availableto Borrowers as Revolving Loans supported by the Borrowing Base, Borrowers mayborrow an additional amount equal to One Million Dollars ($1,000,000.00) (the **“Permitted Out-of-Formula Amount”**) asRevolving Loans.

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### (b)           Commencing on June 13, 2004 and at all times thereafter,no Permitted Out-of-Formula Amount shall be available to Borrowers.

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### (c)           Notwithstanding anything in this Amendment to thecontrary, in no event will the sum of the (i) Revolving Loans and Lettersof Credit supported by the Borrowing Base, plus (ii)Revolving Loans and Lettersof Credit supported by the Permitted Out-of-Formula Amount, exceed the MaximumRevolving Credit, less any Reserves.

 

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## 2.             **Certain Inventory**.  Notwithstanding anything in the LoanAgreement to the contrary, inventory of Borrowers consisting of Christmas Giftitems which otherwise satisfies all other requirements for Eligible Inventorymay be included in the calculation of the Borrowing Base prior to May 1, 2004(the date on which such inventory would otherwise be eligible for inclusion inaccordance with the Loan Agreement); provided, however, the maximum amount ofsuch inventory included in the calculation of the Borrowing Base (prior to theapplication of the applicable advance rate and prior to May 1, 2004) shall notexceed Two Hundred Eighty-Five Thousand Dollars ($285,000.00).

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## 3.             **Subordinated Debt**.

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### (a)           In addition to all of the other conditions set forth inthat certain Subordination Agreement among Borrowers, Lana, LLC and Lenderdated July 30, 2003 (as amended, the **“Subordination Agreement”**),at any time during which the Permitted Out-of-Formula Amount is available toBorrowers, Borrowers shall not make any payments of principal, interest or ofany other nature on indebtedness to Lana, LLC.

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### (b)           Contemporaneously with the execution of this Amendment,Borrowers shall cause Lana, LLC to execute and deliver to Lender an amendmentto the Subordination Agreement in form and content satisfactory to the Lender,pursuant to which Lana, LLC shall acknowledge and agree (i) that allindebtedness of Borrowers to Lana, LLC shall be fully subordinated to allObligations, regardless of whether or not such indebtedness to Lana, LLC isevidenced by a note or any other instrument, (ii) that the outstandingprincipal balance of the indebtedness of Borrowers to Lana, LLC is at leastThree Million Five Hundred Thousand Dollars ($3,500,000.00) and (iii) to theadditional condition on payment of the indebtedness to Lana, LLC set forthabove.

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## 4.             **Outside Accounts**.

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### (a)           Borrowers and Guarantor represent and warrant to Lenderthat attached hereto as **Schedule 3**is a complete listing of all accounts of Borrowers and Guarantor maintainedwith any bank or other financial institution other than Lender (collectively,the **“Outside Accounts”**).

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### (b)           On or before May 30, 2004, Borrowers and Guarantor shallcause to be delivered to Lender control agreements with respect to Lender’ssecurity interest in each of the Outside Accounts, which control agreementsmust be in form and content satisfactory to Lender.

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## 5.             **Appraisals**.  Lender intends to obtain a current appraisalof all equipment of Borrowers and a desk-top review of previously performedappraisals of Borrowers’ real estate. Borrowers shall be fully liable for all costs and expenses incurred byLender in connection with such appraisal and review, which sums may be deductedby Lender from any deposit account of Borrowers maintained with Lender orcharged as a Revolving Loan.  Borrowersshall fully cooperate with respect to such equipment appraisal such that theequipment appraisal is completed on or before May 30, 2004.

 

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## 6.             **Further Agreementsand Representations.** Each Borrower and Guarantor does hereby:

 

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

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

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### (c)           acknowledge and agree that as of the date hereof, neitherany Borrower nor Guarantor has any defense, set-off, counterclaim or challengeagainst the payment of any sums owing under any of the Obligations, as amended,or the enforcement of any of the terms of the Loan Agreement or of the otherLoan Documents, as amended;

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### (d)           acknowledge and agree that except as heretofore disclosedto Lender by Borrowers in writing, all representations and warranties ofBorrowers and Guarantor contained in the Loan Agreement and/or the other LoanDocuments, as amended, are true, accurate and correct on and as of the datehereof as if made on and as of the date hereof;

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### (e)           represent and warrant that no Event of Default or eventwhich with the delivery of notice, passage of time or both would constitute anEvent of Default exists or will exist and all information described in theforegoing Background is true and accurate; and

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### (f)            covenant and agree that Borrowers’ or Guarantor’s failureto comply with the terms of this Amendment or any of the documents executed ordelivered to Lender pursuant to the terms hereof shall constitute an Event ofDefault under the Loan Agreement.

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## 7.             **AdditionalDocuments; Further Assurances.** Borrowers and Guarantor covenant and agrees to execute and deliver toLender, or to cause to be executed and delivered to Lender contemporaneouslyherewith, at the sole cost and expense of Borrowers, all documents, agreements,statements, resolutions, certificates, consents and information as Lender mayrequire in connection with the matters or actions described herein.  Borrowers and Guarantor further covenant andagree to execute and deliver to Lender or to cause to be executed and deliveredat the sole cost and expense of Borrowers, from time to time, any and all otherdocuments, agreements, statements, certificates and information as Lender shallreasonably request to evidence or effect the terms hereof, the Loan Agreement,as amended, or any of the other Loan Documents, or to enforce or to protectLender’s interest in the Collateral.  Allsuch documents, agreements, statements, etc., shall be in form and contentacceptable to Lender in its reasonable sole discretion.

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## 8.             **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.

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## 9.             **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

 

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## shall limit in any manner whatsoever Lender’s right to reimbursement underany of the Loan Documents.

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## 10.           **No Further Amendment;No Course of Dealing**. Nothing contained herein constitutes an agreement or obligation byLender to grant any further amendments with respect to any of the LoanDocuments.  Any waiver or implied waiverby Lender of any obligations or covenants of Borrowers, Guarantor or any ofthem, under the Loan Documents is expressly terminated and rescinded andBorrowers shall strictly perform and comply with all obligations and covenantsunder the Loan Documents.

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## 11.           **Inconsistencies.**To the extent of any inconsistencies between the terms and conditions of thisAmendment and the terms and conditions of the Loan Agreement, the terms andconditions of this Amendment shall prevail. All terms and conditions of the LoanAgreement not inconsistent herewith shall remain in full force and effect andare hereby ratified and confirmed by Borrowers.

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

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## 13.           **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.

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## 14.           **Governing Law.**  This Amendment shall be governed and construedin accordance with the laws of the Commonwealth of Pennsylvania.

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## 15.           **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.

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## 16.           **No Third PartyBeneficiaries**.  The rightsand benefits of this Amendment and the Loan Documents shall not inure to thebenefit of any third party.

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## 17.           **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.

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## 18.           **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.

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**(SIGNATURES ON FOLLOWING PAGE)**

 

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**IN WITNESSWHEREOF**, the partieshereto, intending to be legally bound hereby, have caused this Amendment to beexecuted the 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 |
|                                           |                                 |                                        |  |  |  |  |  |  |  |  |  |

 

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**(SIGNATURESCONTINUED ON FOLLOWING PAGE)**

 

**(SIGNATURES CONTINUED FROM PREVIOUS PAGE)**

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

 

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**SCHEDULE 3**

 

**OUTSIDE ACCOUNTS**

 

 

Bankof America - Account Number 0000 0070 6660 maintained by Sherwood Brands, Inc.

 

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