Exhibit 10.30


 


FIFTEENTH AMENDMENT AND MODIFICATION TO

LOAN AND SECURITY AGREEMENT


 


THIS FIFTEENTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY
AGREEMENT (the “Amendment”) is
dated October 8, 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 (the “Fifth Amendment”),
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, that certain
Eighth Amendment and Modification to Loan and Security Agreement dated April 8,
2004, that certain Ninth Amendment and Modification to Loan and Security
Agreement dated June 11, 2004, that certain Tenth Amendment and
Modification to Loan and Security Agreement dated July 31, 2004, that
certain Eleventh Amendment and Modification to Loan and Security Agreement
dated August 20, 2004, that certain Twelfth Amendment and Modification to
Loan and Security Agreement dated August 31, 2004, that certain Thirteenth
Amendment and Modification to Loan and Security Agreement dated September 13,
2004, that certain Fourteenth Amendment and Modification to Loan and Security
Agreement dated September 30, 2004 and as the same may be further amended
from time to time, the “Loan Agreement”).


 


B.                                     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.                                       Permitted Subsidiary.


 





















 


(a)                                  Borrowers
and Guarantor have informed Lender that Guarantor has formed a wholly-owned
subsidiary known as Sherwood Brands Zip, LLC, a Maryland limited liability
company (“Sub-Transaction”).


 


(b)                                 Lender
consents to the Sub-Transaction and, solely for the purpose of avoiding the
occurrence of a default or an Event of Default, which could be caused by the
Sub-Transaction, waives Borrowers’ and Guarantor’s compliance with those
provisions of the Loan Agreement and the other Loan Documents which would
prohibit the Sub-Transaction, including, without limitation, the provisions of Section 6.15 of the Loan
Agreement.


 


(c)                                  The
foregoing consent and waiver is given solely in connection with the
Sub-Transaction and shall not be deemed to be an agreement, obligation or
commitment by Lender to consent to any other transaction which would be
prohibited by the terms and conditions of the Loan Agreement or any of the
other Loan Documents.


 


(d)                                 Borrowers
and Guarantor hereby acknowledge and agree that, except with the prior written
consent of Lender, which consent may be withheld by Lender in its sole
discretion, no Borrower or Guarantor will make any loans, advances, capital
contributions or other extensions of credit to Sherwood Brands Zip, LLC.


 


3.                                       Permitted Out-of Formula Amount.


 


(a)                                  During
the period commencing October 8, 2004 through and including November 21,
2004 only, in addition to the sums otherwise available to Borrowers as
Revolving Loans supported by the Borrowing Base, Borrowers may borrow for each
period listed in Column A below, an amount up to the amount listed in Column B
below for such period (the “Permitted Out-of-Formula
Amount”):


 


	
  Column A

  	
   

  	
  Column B

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Commencing October 8,
  2004 through and including October 31, 2004

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Commencing November 1,
  2004 through and including November 14, 2004

  	
   

  	
  $

  	
  500,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Commencing November 15,
  2004 through and including November 21, 2004

  	
   

  	
  $

  	
  250,000.00

  	
   

  



 


(b)                                 Commencing
on November 22, 2004 and at all times thereafter, no Permitted
Out-of-Formula Amount shall be available to Borrowers.


 


(c)                                  Notwithstanding
anything in this Amendment to the contrary, in no event will the sum of the
(i) Revolving Loans and Letters of Credit supported by the Borrowing Base,
plus (ii) Revolving Loans and Letters of Credit supported by the Permitted
Out-of-Formula Amount, exceed the Maximum Revolving Credit, less any Reserves.


 


4.                                       Unused Line Fee.  Commencing September 1, 2004, Section 3.3 of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:


 


2





















 


“3.3                           Unused Line Fee.  Borrowers shall pay Lenders, monthly, on the
first day of each month, in arrears, an Unused Line Fee for each month during
the Term equal to .375% per annum of the amount, if any, by which the Maximum
Revolving Credit exceeds the average outstanding daily principal balance during
the preceding month of all Revolving Loans and any Letters of Credit.”


 


5.                                       Reporting Requirements.


 


(a)                                  Section 6.10(b)(i) of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:


 


“(i)                               Intentionally Deleted.”


 


(b)                                 Section 6.10 of the Loan
Agreement is hereby amended by adding the following as subsection (h)
thereto:


 


“(h)                           Borrowers shall, at their
expense and within thirty (30) days following the end of each calendar month,
deliver to Lender a compliance certificate duly completed and certified by
Borrowers’ chief executive officer or chief financial officer, demonstrating
Borrowers’ compliance with the financial covenants set forth in Section 6.19 for the
immediately preceding calendar month and showing the calculations therefor in
reasonable detail.”


 


6.                                       Financial Covenants.


 


(a)                                  Lender
hereby waives any default or Event of Default that exists or may arise under
the Loan Agreement as a result of Borrowers’ failure to comply with (i) the
Tangible Net Worth requirement set forth in Section 6.19(a)
of the Loan Agreement and (ii) the Fixed Charge Coverage Ratio set forth in Section 6.19(b) of the Loan
Agreement for the periods ended April 30, 2004 and July 31, 2004.


 


(b)                                 The
foregoing waivers apply solely to Borrowers’ failure to comply with (i) such
Tangible Net Worth  requirement and (ii)
such Fixed Charge Coverage Ratio for the periods ended April 30, 2004 and July 31,
2004 only and do not apply to or constitute a waiver of any other default,
failure or Event of Default that exists or may exist under the Loan Agreement.


 


(c)                                  Section 6.19 of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:


 


“6.19                     Financial
Covenants.  Borrowers and
Guarantor, as applicable, shall at all times comply with the following:


 


“(a)                            Borrowers shall have EBITDA
as of the end of each period listed in Column A below of the amount listed in
Column B below for such period:


 


3





















 


	
  Column A

  	
   

  	
  Column B

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The three
  month period ending October 31, 2004

  	
   

  	
  at least
  $1,282,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The two
  month period ending November 30, 2004

  	
   

  	
  at least
  $2,838,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The four
  month period ending December 31, 2004

  	
   

  	
  at least
  $3,789,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The five
  month period ending January 31, 2005

  	
   

  	
  at least
  $4,012,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The six
  month period ending February 28, 2005

  	
   

  	
  at least
  $4,300,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The seven
  month period ending March 31, 2005

  	
   

  	
  at least
  $4,723,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The eight
  month period ending April 30, 2005

  	
   

  	
  at least
  $4,340,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The nine
  month period ending May 31, 2005

  	
   

  	
  at least
  $3,965,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The ten
  month period ending June 30, 2005

  	
   

  	
  at least
  $3,628,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The eleven
  month period ending July 31, 2005

  	
   

  	
  at least
  $3,303,000.00

  	
   

  



 


(b)                                 Borrower shall have
Net Excess Availability as of the date listed in Column A below of at least the
amount listed in Column B below for such date: 


 


	
  Column A

  	
   

  	
  Column B

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  October 30,
  2004

  	
   

  	
  $

  	
  not less
  than negative
 565,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  November 27,
  2004

  	
   

  	
  $

  	
  1,930,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 25,
  2004

  	
   

  	
  $

  	
  1,870,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  January 1,
  2005

  	
   

  	
  $

  	
  1,290,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  February 26,
  2005

  	
   

  	
  $

  	
  1,780,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 26,
  2005

  	
   

  	
  $

  	
  2,460,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  April 30,
  2005

  	
   

  	
  $

  	
  1,420,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  May 28, 2005

  	
   

  	
  $

  	
  1,200,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 25,
  2005

  	
   

  	
  $

  	
  1,090,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  July 30,
  2005

  	
   

  	
  $

  	
  590,000.00

  	
   

  



 


4





















 


(c)                                  Borrowers and
Guarantor shall not, directly or indirectly, expend or commit to expend, for
fixed or capital assets (including capital lease obligations) (collectively “Capital Expenditures”) an aggregate amount in excess of One
Hundred Thousand Dollars ($100,000.00) in the fiscal year ending July 31,
2005.


 


(d)                                 As used in this
Agreement, the following terms shall have the following meanings:


 


(i) “EBITDA” means, for the applicable period, the sum of net
income of Guarantor, Borrowers and their subsidiaries (exclusive of (A)
extraordinary items of income or loss and (B) other income or expenses not
resulting directly from the core business operations of Guarantor, Borrowers or
their subsidiaries), plus amounts which, in the determination of such
net income, have been deducted for interest expense, total federal, state,
local and foreign income, value added and similar taxes, and depreciation and
amortization; all as determined in accordance with GAAP and on a consolidated
basis.


 


(ii)  “Net Excess Availability”
means, at a particular date,  undrawn
availability under the Revolving Loans after deducting all sums due and owing
to Borrowers’ trade creditors which are more than thirty (30) days past due
(unless Borrowers shall have provided evidence satisfactory to Lender that the
party due such payables has agreed to other terms), less all Reserves
established by Lender.”


 


7.                                       Inventory Sublimit.  Section 10.1(c)(i)
of the Loan Agreement is hereby deleted in its entirety and replaced with the
following:


 


“(i)                               Total Eligible Inventory                                                                  $7,500,000.00”


 


8.                                       Letter of Credit Charge.  Commencing September 1, 2004, Section 10.2(a) of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:


 


	
  “(a)

  	
  Commercial
  Letters of Credit Charge

  	
  3.0% per
  annum on daily outstanding balance”

  



 


5





















 


9.                                       Term.  Section 10.4
of the Loan Agreement is deleted in its entirety and replaced with the
following:


 


“10.4  Term.                              Terminating
on August 1, 2005.”


 


10.                                 Inventory.  Notwithstanding anything in the Loan
Agreement to the contrary, Out-of-Season Inventory which otherwise satisfies
all other requirements for Eligible Inventory may be included in the
calculation of the Borrowing Base; provided, however, the maximum amount of
such Out-of-Season Inventory included in the calculation of the Borrowing Base
shall not exceed Five Hundred Thousand Dollars ($500,000.00).  As used herein, “Out-of-Season
Inventory” shall mean inventory purchased or manufactured by
Borrowers for a particular holiday season, during the applicable period shown
on Exhibit “A” attached hereto.  By way of example only, inventory purchased
or manufactured by Borrowers and consisting of Christmas Canes would be
Out-of-Season Inventory for the period from December 26 through and
including March 1.


 


11.                                 Cash Collateral.


 


(a)                                  Pursuant
to the terms of that certain Amended and Restated Reimbursement Agreement,
dated as of May 1, 1997 among VA, MD, Guarantor and Lender (as amended by that
certain First Amendment to Amended and Restated Reimbursement Agreement dated February 26,
1998, that certain Second Amendment to Amended and Restated Reimbursement
Agreement dated April 11, 2000, that certain Third Amendment to Amended
and Restated Reimbursement Agreement dated July 30, 2003, that certain
Fourth Amendment to Amended and Restated Reimbursement Agreement dated of even
date herewith (the “Fourth Amendment”)
and as the same may be further amended, restated or supplemented from time to
time, the “Reimbursement Agreement”), VA agreed
to establish the LC Collateral Account (as defined in the Reimbursement
Agreement) and to maintain certain account balances in such account.  VA hereby grants to Lender a security
interest in the LC Collateral Account. 
Such funds will be held by Lender as cash collateral to secure the
payment and performance of all of the Borrowers’ Obligations.  Lender will have sole dominion and control
over all funds in the LC Collateral Account and such funds may be withdrawn
only by Lender.  Lender will have the
right to apply all or any part of such funds towards payment of any of the
Obligations.


 


(b)                                 Borrowers
hereby authorize and direct Lender, from time to time, to disburse Revolving
Loans into the LC Collateral Account to satisfy Borrower’s obligations under Section 4 of the Fourth
Amendment without further authorization from Borrowers.  Such authorization shall in no way relieve VA
of its obligation comply with Section 4
of the Fourth Amendment.


 


12.                                 Repayment of Term Loan B.  Notwithstanding any of the terms and
conditions set forth in the Loan Agreement or any of the other Loan Documents,
Borrowers shall pay to Lender the unpaid principal balance of Term Loan B, plus
all accrued and unpaid interest thereon and all fees, costs and expenses due in
connection therewith on or before March 31, 2005.


 


13.                                 Use of Non-Ordinary Income.  In addition to all other obligations of
Borrowers with respect to proceeds of Collateral, any and all cash received by
any Borrower, including, without limitation, insurance proceeds, dividends, tax
refunds, the proceeds of any asset sale (provided Lender has consented to such
sale in writing), and the proceeds of the settlement of any lawsuit shall be
delivered to Lender.  Lender may apply
any funds received under this section to payment of any of the
Obligations, whether or not due, in any order or manner as Lender determines.


 


6





















 


14.                                 Subordinated Debt.


 


(a)                                  Existing
Indebtedness.  Borrowers
and Guarantors acknowledge and agree that, as of the date hereof, the
outstanding principal balance of the indebtedness of Borrowers and/or Guarantor
(i) to Lana, LLC is Three Million Five Hundred One Thousand Nine Hundred
Eighty-Six and 78/100 Dollars ($3,501,986.78) and (ii) to Ilana Frydman is Four
Hundred Sixty-Seven Thousand Eight Hundred Dollars ($467,800.00).


 


(b)                                 Obligations
to Lana, LLC


 


(i)                                     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”), no
Borrowers will make, and Lana, LLC will not demand or accept, either directly
or indirectly, payment (of any kind or character) of all or any part of the
Subordinated Debt (as defined in the Subordination Agreement) until all of the
Obligations have been paid in full and Lender shall no longer have any
obligation, agreement or commitment to advance any sums to any Borrower.


 


(ii)                                  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 that Lana, LLC shall not receive payment (of any kind or
character) of all or any part of the Subordinated Debt (as defined in the
Subordination Agreement) until all of the Obligations have been paid in full
and Lender shall no longer have any obligation, agreement or commitment to
advance any sums to any Borrower.


 


(c)                                  Obligations
to Ilana Frydman.


 


(i)                                     Borrowers
have received, or in the future will receive, cash proceeds of a loan or loans
from Ilana Frydman in an aggregate amount not to exceed Five Hundred Thousand
Dollars ($500,000.00) (the “Frydman Subordinated Debt”).


 


(ii)                                  Contemporaneously
with the execution of this Amendment, Borrowers shall cause Ilana Frydman to
execute and deliver to Lender a subordination agreement in form and content
satisfactory to the Lender, pursuant to which Ilana Frydman shall acknowledge
and agree that they shall not receive payment (of any kind or character) of all
or any part of the Frydman Subordinated Debt except as provided for in such
subordination agreement.


 


(d)                                 Borrowers
and Guarantor hereby acknowledge and agree that, pursuant to Section 6.25 of the Loan
Agreement, no Borrower or Guarantor shall, nor shall any of them permit their
subsidiaries to, incur or create any liability or indebtedness, including
capitalized leases, other than as provided for in Section 6.25
of the Loan Agreement.  Any previous
waivers and/or consents by Lender in connection with any indebtedness incurred
by any Borrower or Guarantor have been given solely as an accommodation to
Borrowers and Guarantor, on Borrowers’ and Guarantor’s request, and shall not
be deemed to be an agreement, obligation or commitment by Lender to waiver
and/or consent to any other indebtedness to be incurred by any Borrower or
Guarantor which would be prohibited by the terms and conditions of the Loan
Agreement or any of the other Loan Documents.


 


7





















 


15.                                 Additional Reporting Requirements.  In addition to all other information required
to be delivered under the Loan Agreement:


 


(a)                                  On
or before October 31, 2004, Borrowers shall deliver to Lender a schedule,
which shall be in form satisfactory to Lender, detailing the (i) fixed assets
of Borrowers sold or moved to a location outside of the United States since July 31,
2003, (ii) fixed assets of Borrowers scheduled to be sold or moved to a
location outside of the United States, (iii) estimated sale price or appraised
value of such fixed assets and (iv) date or estimated timing of such sale or
move.  Any such sale or movement of fixed
assets shall be further subject to the terms and conditions of Section 8 of the Fifth
Amendment.


 


(b)                                 One
time every fourteen (14) days, Borrowers shall deliver to Lender a report
including (i) projections, including without limitation projected Net Excess
Availability, and cash flows on a week-by-week basis for the next succeeding
thirteen (13) week period and (ii) a cash flow statement for the immediately
preceding two (2) week period, in each case prepared by the chief financial
officer of Borrowers.  Such report shall
include an explanation of any variances between the projections previously
delivered to Lender and the actual results of operations.


 


16.                                 Amendment Fee.


 


(a)                                  Borrowers
shall pay to Lender an amendment fee in the amount of $95,000.00 (the “Amendment Fee”), which has been fully earned by Lender as
of the date hereof.


 


(b)                                 The
Amendment Fee shall be paid as follows:


 


(i)                                     $5,000.00
on the date of execution of this Amendment; and


 


(ii)                                  $90,000.00
on the earlier of (A) January 3, 2005, (B) the occurrence of an Event of
Default and demand by Lender for payment in full of the Obligations or (C)
termination of the Loan Agreement for any reason.


 


17.                                 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;


 


8





















 


(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


 


(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.


 


18.                                 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.


 


19.                                 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.


 


20.                                 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.


 


21.                                 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.


 


22.                                 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





















 


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


 


24.                                 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.


 


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


 


26.                                 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.


 


27.                                 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.


 


28.                                 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.


 


29.                                 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]


 


10





















 


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

  
															



 


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  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  SHERWOOD BRANDS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Amir Frydman

  	
   

  
	
   

  	
   

  	
  Amir Frydman

  
	
   

  	
   

  	
  Executive
  Vice President

  



 


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EXHIBIT “A”


 


Out-of-Season
Inventory


 


	
  Type of Inventory

  	
   

  	
  Period included in
  Out-of-Season Inventory

  
	
   

  	
   

  	
   

  
	
  Christmas Canes

  	
   

  	
  December 26 through and including March 1

  
	
   

  	
   

  	
   

  
	
  Christmas Gift items

  	
   

  	
  December 26 through and including April 30

  
	
   

  	
   

  	
   

  
	
  All other Christmas Categories

  	
   

  	
  December 26 through and including June 30

  
	
   

  	
   

  	
   

  
	
  Valentines items

  	
   

  	
  February 15 through and including May
  31

  
	
   

  	
   

  	
   

  
	
  Easter items consisting of finished goods

  	
   

  	
  Day after Easter through and including September 30

  
	
   

  	
   

  	
   

  
	
  Halloween items

  	
   

  	
  October 31 through and including March 31

  



 


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