Exhibit
10.28


 


THIRTEENTH
AMENDMENT AND MODIFICATION TO


LOAN AND SECURITY AGREEMENT


 


THIS
TWELFTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the “Amendment”)
is made effective as of August 31, 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 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 and
July 31, 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.            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
of the Loan Agreement is deleted in its entirety and replaced with the
following:


 


“10.4  Term.          Terminating on September 30, 2004.”


 


3.             Maximum Credit Amount.  Section 10.1(a)
of the Loan Agreement is deleted in its entirety and replaced with the
following:


 


“(a)         Maximum Revolving Credit:                               $15,000,000.00”


 


Borrowers’ obligations in
respect of sums due under Revolving Loans and Letters of Credit shall continue
to be evidenced by that certain Amended and Restated Revolving Note from
Borrowers to Lender dated April 30, 2002 in the face amount of Twenty-Five
Million Dollars ($25,000,000.00). 
However, the Maximum Revolving Credit shall be Fifteen Million Dollars
($15,000,000.00), notwithstanding the face amount of such Amended and Restated
Revolving Note.


 


4.             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.


 


5.             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.


 


(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


 


6.             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.


 


7.             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.


 


8.             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.


 


9.             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.


 


10.           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.


 


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


 


12.           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.


 


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


 


14.           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.


 


15.           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.


 


16.           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.


 


17.           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.


 


 


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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

  
									



 


 


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  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  SHERWOOD
  BRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Amir Frydman

  	
   

  
	
   

  	
  Amir
  Frydman

  
	
   

  	
  Executive
  Vice President