Exhibit 10.26

SECOND AMENDMENT AND MODIFICATION TO  LOAN AND SECURITY AGREEMENT

THIS SECOND AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT (the "Amendment") is made this 4th day of September, 2002, by and among
SHERWOOD BRANDS OF VIRGINIA, LLC ("VA"), SHERWOOD BRANDS, LLC ("MD"), SHERWOOD BRANDS OF RI, INC. ("RI"), 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
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 and as the same may be further amended from time to time, the "Loan Agreement").

B.    Borrowers
and Lender desire to further amend the Loan Agreement in accordance with the terms and conditions set forth below.

NOW,
THEREFORE, intending to be legally bound hereby, the parties hereto agree as follows:

C.Permitted Out-of Formula Amount.



Period

Permitted Out-of-Formula Amount(i) Date hereof through and including October 13, 2002

$
850,000(ii) October 14, 2002 through and including October 31, 2002

$
650,000




D.Mortgages.Contemporaneously with the execution of this Amendment, Sherwood Brands of Virginia, LLC shall
execute and deliver to Lender a Credit Line Deed of Trust and Security Agreement encumbering the property located at 807 S. Main Street, Chase City, Virginia, as more fully described in Exhibit "A"hereto and a Credit Line Deed of Trust and Security Agreement encumbering the property located at 350 Sherwood Drive, Keysville,
Virginia, as more fully described inExhibit "B"hereto, each in form and content satisfactory to Lender (collectively, the "Mortgages"). The
Mortgages shall be executed on the date hereof; however, Lender hereby agrees that Lender shall not record the Mortgages prior to the earlier of (i) Borrowers' failure to comply with the
conditions set forth inSections 3, 4, 6 and 8of this Amendment or (ii) the time when the Mortgages would become void or
un-recordable by Lender. Lender further agrees that Lender shall mark the Mortgages as "cancelled" and return the Mortgages to Sherwood Brands of Virginia, LLC within one Business Day
after the date Lender determines, in its sole discretion, that Borrowers have performed or caused to be performed or otherwise complied withSections 3, 4, 6, and
8of this Amendment. If, in accordance with the terms of

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this Amendment, Lender shall record the Mortgages, Borrowers shall, on demand, pay the Lender all fees, taxes, and other expenses associated with recording the Mortgages.

E.Shareholder Debt.Contemporaneously with the execution of this Amendment, Borrowers, Guarantor and Ilana
Frydman shall execute and deliver to Lender a letter agreement regarding the subordination of certain debt of Borrowers to Ilana Frydman (the "Letter").

F.Appraisal.On or before September 30, 2002, Borrowers shall cause to be delivered to Lender an
appraisal of Borrowers' equipment in form, content and prepared by an appraiser satisfactory to Lender, which appraisal shall show a value for Borrowers' equipment on an orderly liquidation basis
equal to at least Three Million Dollars ($3,000,000.00).

G.Financial Covenants.

(a)  Lender
waives Borrowers' compliance with the Tangible Net Worth requirement set forth inSection 6.19(a)of the
Loan Agreement for the fiscal quarter of Borrowers ending July 31, 2002 only. Further, Lender waives Borrowers' compliance with the Fixed Charge Coverage Ratio set forth in Section 6.19(b)of
the Loan Agreement for the fiscal quarters of Borrowers ending April 30, 2002 and July 31, 2002 only. Borrowers
shall be in compliance withSections 6.19(a)and6.19(b)of the Loan Agreement for all periods after
July 31, 2002.

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



H.New Financing.

(a)Section 6.14(c)of the Loan Agreement is deleted in its entirety.

(b)  On
or before October 31, 2002, Borrowers shall close under and receive the proceeds of a financing (the "New Financing") from a source other than Lender, which
New Financing shall provide net cash to Borrowers in an amount equal to at least the lesser of (i) the sum of the 1) outstanding principal balance of and all accrued and unpaid interest
under Term Loan A (collectively, the "Term Loan A Balance"), plus 2) outstanding principal balance of and all accrued and unpaid interest under Term Loan B (collectively, the "Term Loan B
Balance"), plus 3) amount of Borrowers' Unfunded Capital Expenditures for Borrowers' fiscal year ended July 31, 2002 or (ii) Two Million Five Hundred Thousand Dollars
($2,500,000.00). Proceeds of the New Financing shall be used by Borrowers on the date received to pay in full the Term Loan A Balance and the Term Loan B Balance, with the remainder being used by
Borrowers for working capital purposes

(c)  The
New Financing shall not be secured by any assets of any Borrower other than the equipment of Borrowers described on Schedule B-2to the Loan Agreement (collectively, the "Specific Assets") and the
party extending the New Financing must enter into an
Intercreditor Agreement with Lender, on terms and conditions as shall be satisfactory to Lender (the "New Financing Intercreditor Agreement"). In connection with the New Financing and upon receipt by
Lender of the sums described inSection 6(b)above and the New Financing Intercreditor Agreement, Lender will release its lien only against the
Specific Assets. In addition to the foregoing, the New Financing must otherwise be on terms and conditions satisfactory to Lender.

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I.Lake County Development Authority Financing.Upon receipt by Lender of an Intercreditor Agreement executed by
the Lake County Development Authority, on terms and conditions as shall be satisfactory to Lender, Lender will release its lien only against the equipment of Borrowers described on Exhibit "C"hereto.

J.Keyman Life Policy.On or before September 30, 2002, Borrowers shall cause to be delivered to Lender
an assignment in form and content satisfactory to Lender, executed by all necessary parties and acknowledged by the underwriter, of all life insurance policies on the life of Uziel Frydman in respect
of which any Borrower is a beneficiary or otherwise the party to whom death benefit proceeds are to be paid (collectively, the "Policies"), which Policy or Policies shall be in an aggregate amount not
less than One Million Dollars ($1,000,000.00) (the "Minimum Amount"). The assignment shall be limited to the first million dollars of proceeds.

K.Amendment Fee.Contemporaneously with the execution of this Amendment, Borrowers shall pay to Lender a fee in
the amount of Ten Thousand Dollars ($10,000.00). The foregoing fee may be debited from any account of Borrowers maintained with Lender, or charged as a Revolving Loan.

L.Further Agreements and Representations.Each Borrower does hereby:



M.Additional Documents; Further Assurances.Borrowers 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, the Mortgages, the Letter and any and all other documents, agreements,
statements, resolutions, certificates, consents and information as Lender may require in connection with the matters or actions described herein. Borrowers 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

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interest in the Collateral. All such documents, agreements, statements, etc., shall be in form and content acceptable to Lender in its reasonable sole discretion.

N.Release.Borrowers 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 has or may have arising from any act, omission or otherwise, at any time up to and including the date of this Amendment.

O.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.

P.No Waiver.Nothing contained herein constitutes an agreement or obligation by Lender to grant any further
amendments or waivers with respect to any of the Loan Documents. Except as expressly set forth inSection 5(a)above, nothing contained in this
Amendment constitutes a waiver or release by Lender of any Event of Default or of any rights or remedies available to Lender under the Loan Documents or at law or in equity.

Q.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.

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

S.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.

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

U.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.

V.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.

W.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.

X.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.

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

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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:                                                           
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|WACHOVIA BANK, NATIONAL ASSOCIATION |                                                             | SHERWOOD BRANDS OF VIRGINIA, LLC
a Virginia limited liability company
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|By:                                 | /s/GEORGE C. KYVERNITISGeorge C. Kyvernitis, Vice President |                                                                      
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