Exhibit
10.23


 


EIGHTH
AMENDMENT AND MODIFICATION TO


LOAN AND SECURITY AGREEMENT


 


THIS EIGHTH
AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the “Amendment”)
is made this 8th day of April, 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 and
that certain Seventh Amendment and Modification to Loan and Security Agreement
dated February 13, 2004 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.             Permitted Out-of
Formula Amount.


 


(a)           During the period commencing on the date hereof through
and including June 12, 2004 only, in addition to the sums otherwise available
to Borrowers as Revolving Loans supported by the Borrowing Base, Borrowers may
borrow an additional amount equal to One Million Dollars ($1,000,000.00) (the “Permitted Out-of-Formula Amount”) as
Revolving Loans.


 


(b)           Commencing on June 13, 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.


 





















 


2.             Certain Inventory.  Notwithstanding anything in the Loan
Agreement to the contrary, inventory of Borrowers consisting of Christmas Gift
items which otherwise satisfies all other requirements for Eligible Inventory
may be included in the calculation of the Borrowing Base prior to May 1, 2004
(the date on which such inventory would otherwise be eligible for inclusion in
accordance with the Loan Agreement); provided, however, the maximum amount of
such inventory included in the calculation of the Borrowing Base (prior to the
application of the applicable advance rate and prior to May 1, 2004) shall not
exceed Two Hundred Eighty-Five Thousand Dollars ($285,000.00).


 


3.             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 the Permitted Out-of-Formula Amount is available to
Borrowers, Borrowers shall not make any payments of principal, interest or of
any other nature on indebtedness to Lana, LLC.


 


(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 (i) that all
indebtedness of Borrowers to Lana, LLC shall be fully subordinated to all
Obligations, regardless of whether or not such indebtedness to Lana, LLC is
evidenced by a note or any other instrument, (ii) that the outstanding
principal balance of the indebtedness of Borrowers to Lana, LLC is at least
Three Million Five Hundred Thousand Dollars ($3,500,000.00) and (iii) to the
additional condition on payment of the indebtedness to Lana, LLC set forth
above.


 


4.             Outside Accounts.


 


(a)           Borrowers and Guarantor represent and warrant to Lender
that attached hereto as Schedule 3
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 May 30, 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.             Appraisals.  Lender intends to obtain a current appraisal
of all equipment of Borrowers and a desk-top review of previously performed
appraisals of Borrowers’ real estate. 
Borrowers shall be fully liable for all costs and expenses incurred by
Lender in connection with such appraisal and review, which sums may be deducted
by Lender from any deposit account of Borrowers maintained with Lender or
charged as a Revolving Loan.  Borrowers
shall fully cooperate with respect to such equipment appraisal such that the
equipment appraisal is completed on or before May 30, 2004.


 


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6.             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.


 


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


 


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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 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

  
												



 


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(SIGNATURES
CONTINUED ON FOLLOWING PAGE)


 


(SIGNATURES CONTINUED FROM PREVIOUS PAGE)


 


	
   

  	
   

  	
  GUARANTOR:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SHERWOOD BRANDS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Amir Frydman

  	
   

  
	
   

  	
   

  	
   

  	
  Amir Frydman

  
	
   

  	
   

  	
   

  	
  Executive Vice President

  
						



 


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SCHEDULE 3


 


OUTSIDE ACCOUNTS


 


 


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