Exhibit 10.26


 


ELEVENTH
AMENDMENT AND MODIFICATION TO


LOAN AND SECURITY AGREEMENT


 


THIS ELEVENTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY
AGREEMENT (the “Amendment”) is made effective as of
August 20, 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; 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, 204, 2004; that certain Tenth Amendment and
Modification to Loan and Security Agreement dated July 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 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 of the Loan
Agreement is deleted in its entirety and replaced with the following:


 


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


 


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, 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.


 


4.                                       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


 


5.                                       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.


 


6.                                       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.


 


7.                                       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.


 


8.                                       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.


 


9.                                       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.


 


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


 


11.                                 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.


 





















 


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


 


13.                                 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.


 


14.                                 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.


 


15.                                 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.


 


16.                                 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/ Amri Frydman

  	
   

  
	
   

  	
  Amir
  Frydman

  
	
   

  	
  Executive
  Vice President

  
									



 


 


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  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  SHERWOOD
  BRANDS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Amir Frydman

  	
   

  
	
   

  	
  Amir
  Frydman

  
	
   

  	
  Executive
  Vice President