Exhibit
10.22


 


SEVENTH
AMENDMENT AND MODIFICATION TO


LOAN AND SECURITY AGREEMENT


 


THIS
SEVENTH 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”), SHERWOOD
BRANDS, LLC (“MD”), SHERWOOD BRANDS OF RI, INC. (“RI”), ASHER
CANDY, INC. (formerly known as Asher Candy Acquisition 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 to collectively as “Borrowers”
or each as a “Borrower”.


 


BACKGROUND


 


A.            Borrowers,
Guarantor and Lender entered into that certain Loan and Security Agreement
dated June 12, 2001 (as amended by that certain First Amendment and
Modification to Loan and Security Agreement dated April 30, 2002, that certain
Second Amendment and Modification to Loan and Security Agreement dated
September 5, 2002, that certain Third Amendment and Modification to Loan and
Security Agreement dated April 7, 2003, that certain Fourth Amendment and
Modification to Loan and Security Agreement dated May 30, 2003, that certain
Fifth Amendment and Modification to Loan and Security Agreement dated July 30,
2003 and that certain Sixth Amendment and Modification to Loan and Security
Agreement dated November 24, 2003 and as the same may be further amended
from time to time, the “Loan Agreement”).


 


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


 


NOW,
THEREFORE, intending
to be legally bound hereby, the parties hereto agree as follows:


 


1.             Kmart Receivables.


 


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


 


(b)           Kmart Receivables arising from shipments to Kmart after March
31, 2004 shall in no event be deemed Eligible Accounts.


 





















 


2.             Subordinated Debt.


 


(a)           In addition to all of the other conditions set forth in
that certain Subordination Agreement among Borrowers, Lana, LLC and Lender
dated July 30, 2003 (as amended, the “Subordination Agreement”),
at any time during which any Kmart Receivables are included in the Borrowing
Base, Borrowers shall not make any payments on indebtedness to Lana, LLC which
would cause the principal balance of such indebtedness to be less than the
amount of Kmart Receivables then included in the Borrowing Base (after giving
effect 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 amendment
to the Subordination Agreement in form and content satisfactory to the Lender,
pursuant to which Lana, LLC shall acknowledge and agree to the additional
condition on payment of the indebtedness to Lana, LLC set forth above.


 


3.             Further Agreements
and 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 full
force and effect;


 


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


 


(c)           acknowledge and agree that as of the date hereof, neither
any Borrower nor Guarantor has any defense, set-off, counterclaim or challenge
against 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 other
Loan Documents, as amended;


 


(d)           acknowledge and agree that except as heretofore disclosed
to Lender by Borrowers in writing, all representations and warranties of
Borrowers and Guarantor contained 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 and as of the date hereof;


 


(e)           represent and warrant that 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 will exist and all information described in the
foregoing Background is true and accurate; and


 


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


 


4.             Additional
Documents; Further Assurances. 
Borrowers and Guarantor covenant and agrees to execute and deliver to
Lender, or to cause to be executed and delivered to Lender contemporaneously
herewith, at the sole cost and expense of Borrowers, all documents, agreements,
statements, resolutions, certificates, consents and information as Lender may
require in connection with the matters or actions described herein.  Borrowers and Guarantor further covenant and
agree to execute and deliver to Lender or to cause 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 or effect
the terms hereof, the Loan Agreement, as amended, or any of the other Loan
Documents, or to enforce or to protect Lender’s interest in the
Collateral.  All such documents,
agreements, statements, etc., shall be in form and content acceptable to Lender
in its reasonable sole discretion.


 


5.             Release.  Borrowers and Guarantor acknowledge and agree
that they have no claims, suits or causes of action against Lender and hereby
remise, release and forever discharge Lender and its officers, directors, shareholders,
employees, agents, successors and assigns from any claims, suits or causes of
action whatsoever, in law or equity, which any Borrower or Guarantor has or may
have arising from any act, omission or otherwise, at any time up to and
including the date of this Amendment.


 


6.             Certain Fees,
Costs, Expenses And Expenditures.  Borrowers will pay all of the Lender’s
expenses in connection with the review, preparation, negotiation, documentation
and closing of this Amendment and the consummation of the transactions
contemplated hereunder, including without limitation, fees, disbursements,
expenses, appraisal costs and fees and expenses of counsel retained by Lender
and all fees related to filings, recording of documents and searches, whether
or not the transactions contemplated hereunder are consummated.  Nothing contained herein shall limit in any
manner whatsoever Lender’s right to reimbursement under any of the Loan
Documents.


 


7.             No Further
Amendment; No Course of Dealing. 
Nothing contained herein constitutes an agreement or obligation by
Lender to grant any further amendments with respect to any of the Loan
Documents.  Any waiver or implied waiver
by Lender of any obligations or covenants of Borrowers, Guarantor or any of
them, under the Loan Documents is expressly terminated and rescinded and
Borrowers shall strictly perform and comply with all obligations and covenants
under the Loan Documents.


 


8.             Inconsistencies.
To the extent of any inconsistencies between the terms and conditions of this
Amendment and the terms and conditions of the Loan Agreement, the terms and
conditions of this Amendment shall prevail. All terms and conditions of the
Loan Agreement not inconsistent herewith shall remain in full force and effect
and are hereby ratified and confirmed by Borrowers.


 


9.             Construction.  Any capitalized terms used in this Amendment
not otherwise defined shall have the meaning as set forth in the Loan
Agreement.


 


10.           Binding Effect.  This Amendment, upon due execution hereof,
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.


 


11.           Governing Law.  This Amendment shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania.


 


12.           Severability.  The provisions of this Amendment and all
other Loan Documents are deemed to be severable, and the invalidity or
unenforceability of any provision shall not affect or impair the remaining
provisions which shall continue in full force and effect.


 


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


 





















 


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


 


15.           Counterparts.  This Amendment may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Amendment by signing
any such counterpart.


 


IN WITNESS
WHEREOF, the parties
hereto, intending to be legally bound hereby, have caused this Amendment to be
executed 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