**Exhibit10.28**

 

**THIRTEENTHAMENDMENT AND MODIFICATION TO**

**LOAN AND SECURITY AGREEMENT**

 

**THISTWELFTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT** (the **“Amendment”**)is made effective as of August 31, 2004, by and among **SHERWOOD BRANDS OF VIRGINIA, LLC**(**“VA”**), **SHERWOODBRANDS, LLC** (**“MD”**), **SHERWOOD BRANDS OF RI, INC.**(**“RI”**), **ASHERCANDY, INC. (formerly known as Asher Candy Acquisition Corporation)**(**“Asher”**), **SHERWOODBRANDS, INC.** (**“Guarantor”**)and **WACHOVIA BANK, NATIONAL ASSOCIATION**,formerly known as First Union National Bank (the **“Lender”**).  VA, MD, RIand Asher are referred to collectively as **“Borrowers”**or each 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 (the **“Fifth Amendment”**),  that certain Sixth Amendment and Modificationto Loan and Security Agreement dated November 24, 2003; that certainSeventh Amendment and Modification to Loan and Security Agreement datedFebruary 13, 2004; that certain Eighth Amendment and Modification to Loan andSecurity Agreement dated April 8, 2004; that certain Ninth Amendment andModification to Loan and Security Agreement dated June 11, 2004; that certainTenth Amendment and Modification to Loan and Security Agreement dated July 31,2004; that certain Eleventh Amendment and Modification to Loan and SecurityAgreement dated August 20, 2004; that certain Twelfth Amendment andModification to Loan and Security Agreement dated August 31, 2004 and as thesame may be further amended from time to time, the **“Loan Agreement”**).

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# B.            Borrowersare in default under the Loan Agreement for failure as of April 30, 2004 andJuly 31, 2004 to comply with the Tangible Net Worth requirement set forth in **Section 6.19(a)** of the LoanAgreement and the Fixed Charge Coverage Ratio set forth in **Section6.19(b)** of the Loan Agreement (the **“ExistingDefaults”**).

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# C.            Borrowersand Guarantors have requested that Lender extend the Term and further amend theLoan Agreement in accordance with the terms and conditions set forth herein.

#  

**NOW,THEREFORE**, intendingto be legally bound hereby, 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.

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

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“10.4  **Term**.          Terminating on September 30, 2004.”

 

## 3.             **Maximum Credit Amount**.  **Section 10.1(a)**of the Loan Agreement is deleted in its entirety and replaced with thefollowing:

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“(a)         Maximum Revolving Credit:                               $15,000,000.00”

 

Borrowers’ obligations inrespect of sums due under Revolving Loans and Letters of Credit shall continueto be evidenced by that certain Amended and Restated Revolving Note fromBorrowers to Lender dated April 30, 2002 in the face amount of Twenty-FiveMillion Dollars ($25,000,000.00). However, the Maximum Revolving Credit shall be Fifteen Million Dollars($15,000,000.00), notwithstanding the face amount of such Amended and RestatedRevolving Note.

 

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

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### (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, except for the ExistingDefaults, no Event of Default or event which with the delivery of notice,passage of time or both would constitute an Event of Default exists or willexist; 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 other Loan Documentsshall constitute an Event of Default under the Loan Agreement.

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## 5.             **General Acknowledgments**.

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### (a)           Borrowers and Guarantor fully and finally waive any noticeor demand from Lender to Borrowers or Guarantor in connection with the ExistingDefaults.

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### (b)           By reason of the Existing Defaults Lender has the rightto, at its option, declare all Obligations immediately due and payable.

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### (c)           As a result of the Existing Defaults, Lender has nofurther obligation to make any further advances or extensions of credit to anyBorrower.

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### (d)           Neither this Agreement nor any other agreement executed inconnection herewith or pursuant to the terms hereof, nor any actions takenpursuant to this Agreement or such other agreement shall be deemed to cure theExisting Defaults or any other Events of Default which may exist under the LoanAgreement or the other Loan Documents or to be a waiver by Lender of theExisting Defaults or any other defaults or Events of Default under the LoanAgreement or the other Loan Documents, or of any rights or remedies inconnection therewith or with respect thereto, it being the intention of theparties hereto that the obligations of Borrowers and Guarantor with respect tothe Loan Agreement and the other Loan Documents are and shall remain in fullforce and effect

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## 6.             **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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## 7.             **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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## 8.             **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.

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## 9.             **No FurtherAmendment; 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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## 10.           **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 and

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## conditions of this Amendment shall prevail. All terms and conditions ofthe Loan Agreement not inconsistent herewith shall remain in full force andeffect and are hereby ratified and confirmed by Borrowers.

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

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

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## 14.           **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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## 15.           **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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## 16.           **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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## 17.           **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              |
|                                           |                                        |  |  |  |  |  |  |  |

 

 

**(SIGNATURES CONTINUED 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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