**Exhibit10.21**

** **

**SIXTHAMENDMENT AND MODIFICATION TO**

**LOAN AND SECURITY AGREEMENT**

 

**THIS SIXTHAMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT** (the **“Amendment”**)is made this 24 day of November, 2003, 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 (the **“Fifth Amendment”**) and as the same maybe further amended from time to time, the **“LoanAgreement”**).

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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.             **Temporary Line Increase**.  Commencing the date hereof through andincluding January 31, 2004 only, **Section 10.1(a)**of the Loan Agreement, “Maximum Credit Amount”, is amended by replacing thereference to “$18,000,000.00” with “20,000,000.00”.  Commencing February 1, 2004 and at all timesthereafter, **Section 10.1(a)** of the LoanAgreement, “Maximum Credit Amount”, shall be “$18,000,000.00”.  Borrowers’ obligations in respect of sums dueunder Revolving Loans and Letters of Credit shall continue to be evidenced bythat certain Amended and Restated Revolving Note from Borrowers to Lender datedApril 30, 2002 in the face amount of Twenty-Five Million Dollars($25,000,000.00).

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## 2.             **Conditions ofAmendment**.  The continuedeffectiveness of the conditions of this Amendment is subject to the performanceby Borrowers of all of their agreements to be performed under the LoanAgreement, the other Loan Documents, hereunder and to the following furtherconditions:

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### (a)           No Revolving Loan or other extension of credit based onthe Permitted Out-of-Formula Amount shall be outstanding as of the date hereofand no Permitted Out-of-Formula Amount shall be available to Borrowershereafter.

 

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### (b)           On or before the date hereof, Borrowers shall deliver toLender a schedule, which shall be in form satisfactory to Lender, detailing the(i) fixed assets of Borrower sold or moved to a location outside of the UnitedStates since July 30, 2003 or scheduled to be sold or moved to a locationoutside of the United States, (ii) estimated sale price or appraised value ofsuch fixed assets and (iii) date or estimated timing of such sale or move.  Any such sale or movement of fixed assetsshall be further subject to the terms and conditions of **Section 8**of the Fifth Amendment.

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### (c)           On or before December 22, 2003, Borrowers shall deliver toLender a reforecast of Borrowers’ budget and business plan for Borrowers’fiscal year ending July 31, 2004 which shall include, *inter alia*, (i) actual results of Borrowers’operations through November 30, 2003, (ii) for the balance of such fiscal year,projected consolidated****balancesheets, statements of income and statements of cash flows of Borrowers on amonthly basis for such fiscal year and (iii) for the balance of such fiscalyear, projected sources and usage of cash, projected Borrowing Base andprojected Net Excess Availability on a weekly basis for such fiscal year.  All of the foregoing shall be in such form,and shall be accompanied by, such information with respect to the business ofBorrowers and/or their subsidiaries as Lender may request from time to time.

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## 3.             **Subordinated Debt**.

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### **(a)          **Notwithstandinganything to the contrary contained in that certain Subordination Agreementeffective as of July 30, 2003 by and among Lana, LLC (**“Creditor”**),Borrowers, Guarantor and Lender (the **“Subordination Agreement”**),Borrowers and Guarantor hereby agree that Creditor shall not be paid anything(of any kind or character) on account of the principal of or interest on anySubordinated Debt (as defined in the Subordination Agreement) or any other sumspayable in connection therewith and no Borrower or Guarantor will make, eitherdirectly or indirectly, payment (of any kind or character) of all or any partof the Subordinated Debt (as defined in the Subordination Agreement) or anyother sums payable in connection therewith until (i) Lender has given Creditorwritten notice that the “Maximum Credit Amount” set forth in **Section 10.1(a)** of the Loan Agreementhas been reduced to $18,000,000.00 and (ii) Borrowers, Guarantor and Creditorhave complied with all of the terms and conditions set forth in theSubordination Agreement.

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### (b)           Borrowers and Guarantor acknowledge and agree that (i) theonly indebtedness of any Borrower and/or Guarantor to Creditor is theindebtedness evidence by the Subordinated Note (as defined in the SubordinationAgreement) and (ii) any additional loans from Creditor to any Borrower and/orGuarantor are included within the term Subordinated Debt and are subject to theterms and conditions hereof and of the Subordination Agreement.  Borrowers and Guarantor further acknowledgeand agree that, as of the date hereof, the outstanding principal balance of theSubordinated Note is Two Million Dollars ($2,000,000.00).

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### (c)           In addition to all of the other terms and conditions setforth herein, this Amendment is contingent upon delivery to Lender, on of thefollowing: (i) the original of the Subordinated Note (as defined in theSubordination Agreement) and (ii) an executed copy of any other documentsevidencing the Subordinated Debt and/or the Subordinated Debt Collateral (eachas defined in the Subordination Agreement).

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## 4.             **Amendment Fee.**  Contemporaneouslywith the execution of this Amendment, and in addition to all other sums dueunder the Loan Agreement and under the other Loan Documents, Borrowers shallpay to Lender an amendment fee in the amount of Five Thousand Dollars

 

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## ($5,000.00) (the **“Amendment Fee”**),which has been fully earned by Lender as of the date hereof.  The Amendment Fee may be deducted from anyaccount of any Borrower maintained with Lender or charged as a Revolving Loan.

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## 5.             **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, after giving effect to thisAmendment, 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 all information described in the foregoing Background is true andaccurate; 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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## 6.             **Additional Documents;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 andagree that they have no claims, suits or causes of action against Lender andhereby remise, release and forever discharge Lender and its officers,directors, shareholders, employees, agents, successors and assigns from anyclaims, suits or causes of action whatsoever, in law or equity, which anyBorrower or Guarantor has or may have

 

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## arising from any act, omission or otherwise, at any time up to andincluding 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 andconditions of this Amendment shall prevail. All terms and conditions of theLoan Agreement not inconsistent herewith shall remain in full force and effectand 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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**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.**, |
| George C. Kyvernitis, Vice President      |                              | 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 |
|                                      |                              |                                   |   |
|                                      |                              |                                   |   |
|                                      |                              | **GUARANTOR:**                         |
|                                      |                              |                                   |   |
|                                      |                              | **SHERWOOD BRANDS, INC.**              |
|                                      |                              |                                   |   |
|                                      |                              | By:                                    | /s/ Amir Frydman |   |
|                                      |                              |                                   | Amir Frydman |
|                                      |                              |                                   | Executive Vice President |
|                                           |                                   |                                        |  |  |  |  |  |  |  |  |

 

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