**Exhibit10.22**

** **

**SEVENTHAMENDMENT AND MODIFICATION TO**

**LOAN AND SECURITY AGREEMENT**

 

**THISSEVENTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT** (the **“Amendment”**)is made this 13th day of February, 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 and that certain Sixth Amendment and Modification to Loan and SecurityAgreement dated November 24, 2003 and as the same may be further amendedfrom time to time, the **“Loan Agreement”**).

#  

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

#  

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

 

## 1.             **Kmart Receivables**.

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### (a)           Notwithstanding anything in the Loan Agreement to thecontrary, commencing on the date hereof, accounts receivable due Borrowers fromKmart (collectively, **“Kmart Receivables”**)arising from shipments to Kmart on or before March 31, 2004 may be EligibleAccounts (subject to all of the conditions and limitations with respect toEligible Accounts set forth in the Loan Agreement); provided, however, (i) themaximum amount of Kmart Receivables included in the Borrowing Base prior toapplication of the Eligible Accounts advance rate shall at no time exceed OneMillion Five Hundred Thousand Dollars ($1,500,000.00) and (ii) no KmartReceivable which remains unpaid more than thirty (30) days after the due datefor such account receivable shall be deemed an Eligible Account.

###  

### (b)           Kmart Receivables arising from shipments to Kmart after March31, 2004 shall in no event be deemed Eligible Accounts.

 

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## 2.             **Subordinated Debt**.

##  

### (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 any Kmart Receivables are included in the BorrowingBase, Borrowers shall not make any payments on indebtedness to Lana, LLC whichwould cause the principal balance of such indebtedness to be less than theamount of Kmart Receivables then included in the Borrowing Base (after givingeffect to the Eligible Accounts advance rate).

###  

### (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 to the additionalcondition on payment of the indebtedness to Lana, LLC set forth above.

###  

## 3.             **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;

###  

### (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;

###  

### (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

###  

### (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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## 4.             **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

 

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## information as Lender shall reasonably request to evidence or effectthe terms hereof, the Loan Agreement, as amended, or any of the other LoanDocuments, 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.

##  

## 5.             **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, suits or causes ofaction whatsoever, in law or equity, which any Borrower or Guarantor has or mayhave arising from any act, omission or otherwise, at any time up to andincluding the date of this Amendment.

##  

## 6.             **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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## 7.             **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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## 8.             **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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## 9.             **Construction.**  Any capitalized terms used in this Amendmentnot otherwise defined shall have the meaning as set forth in the LoanAgreement.

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

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## 12.           **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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## 13.           **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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## 14.           **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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## 15.           **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.

##  

**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 |
|                                           |                                   |                                        |  |  |  |  |  |  |  |  |

 

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

 

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