Exhibit 10.24


 


NINTH
AMENDMENT AND MODIFICATION TO


LOAN AND SECURITY AGREEMENT


 


THIS NINTH
AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the “Amendment”)
is made this 11th day of June, 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,  that certain Sixth Amendment and
Modification to Loan and Security Agreement dated November 24, 2003; that
certain Seventh Amendment and Modification to Loan and Security Agreement dated
February 13, 2004; and that certain Eighth Amendment and Modification to Loan and
Security Agreement dated April 8, 2004 and as the same may be further amended
from time to time, the “Loan Agreement”).


 


B.            Borrowers
are in default under the Loan Agreement for failure as of April 30, 2004 to
comply with the Tangible Net Worth requirement set forth in Section 6.19(a) of
the Loan Agreement and the Fixed Charge Coverage Ratio set forth in Section
6.19(b) of the Loan Agreement (the “Existing Defaults”).


 


C.            Notwithstanding
the existence of the Existing Defaults Borrowers and Guarantors have requested
that Lender extend the Term and 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.             Confirmation of Background.  Borrowers and Guarantor ratify, confirm and
acknowledge that the statements contained in the foregoing Background are true,
accurate and complete in all respects.


 


2.             Term.  Section 10.4 is deleted in its entirety and
replaced with the following:


 


“10.4  Term.  Terminating on July 31, 2004.”


 





















 


3.             Additional Financial
Information.  In addition
to any other financial information required to be delivered pursuant to the
terms of the Loan Agreement Borrowers shall submit to Lender on or before June
30, 2004 a revised budget for the fiscal year ending July 31, 2005 which budget
shall be in form and content satisfactory to Lender and shall include monthly
income statements and balance sheets together with weekly cash flow and
borrowing availability projections from the date of the budget through and
including July 31, 2005.


 


4.             Outside Accounts.


 


(a)           Borrowers and Guarantor represent and warrant to Lender
that attached hereto as Schedule 1
is a complete listing of all accounts of Borrowers and Guarantor maintained
with any bank or other financial institution other than Lender (collectively,
the “Outside Accounts”).


 


(b)           On or before July 19, 2004, Borrowers and Guarantor
shall cause to be delivered to Lender control agreements with respect to
Lender’s security interest in each of the Outside Accounts, which control
agreements must be in form and content satisfactory to Lender.


 


5.             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, except for the Existing
Defaults, 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


 


(f)            covenant and agree that Borrowers’ or Guarantor’s failure
to comply with the terms of this Amendment or any of the other Loan Documents
shall constitute an Event of Default under the Loan Agreement.


 


6.             General
Acknowledgments.


 


(a)           Borrowers and Guarantor fully and
finally waive any notice or demand from Lender to Borrowers or Guarantor in
connection with the Existing Defaults.


 


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


 


(c)           As a result of the Existing Defaults,
Lender has no further obligation to make any further advances or extensions of
credit to any Borrower.


 


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


 


7.             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.


 


8.             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.


 


9.             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.


 


10.           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


 


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terminated and rescinded and Borrowers shall strictly perform and
comply with all obligations and covenants under the Loan Documents.


 


11.           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.


 


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


 


13.           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.


 


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


 


15.           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.


 


16.           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.


 


17.           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.


 


18.           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.


 


 


(SIGNATURES ON FOLLOWING PAGE)


 


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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.,

  
	
  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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SCHEDULE 1


 


OUTSIDE ACCOUNTS


 


 


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