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Exhibit 10.25    
  

 
 

REVOLVING FUND LOAN AGREEMENT    
  

        THIS LOAN AGREEMENT, made and entered into this 13th day of August, 2002, by and between SHERWOOD BRANDS, INC., a North Carolina corporation,
(the "Borrower") and LAKE COUNTRY DEVELOPMENT CORPORATION, a Virginia non-stock corporation, (the "Lender"). 

        WHEREAS,
the Borrower desires to borrow from Lender, funds for the purchase of new equipment for the expansion of its facility located in Chase City, Mecklenburg County, Virginia (The
"Project"), the sum of THREE HUNDRED FIFTY THOUSAND and 00/100 Dollars ($350,000.00) to be secured as hereinafter provided; and 

        WHEREAS,
Borrower and Lender desire to set out certain terms and provisions which will govern said loan. 

        NOW,
THEREFORE, THIS AGREEMENT WITNESSETH: 

        That
for and in consideration of the loan of THREE HUNDRED FIFTY THOUSAND and 00/100 Dollars ($350,000.00) from Lender to Borrower and the benefits to be derived by Borrower thereby and
the mutual covenants and promises hereinafter contained. Borrower and Lender agree as follow: 

        1.    That
Lender agrees to loan and does hereby loan to Borrower the sum of THREE HUNDRED FIFTY THOUSAND and 00/100 Dollars ($350,000.00) "the Loan" out of Lender's Revolving
Loan Fund, the receipt of which is hereby acknowledged. 

        2.    Borrower
shall make and deliver to Lender its promissory note in writing requiring the repayment of the sum of THREE HUNDRED FIFTY THOUSAND and 00/100 Dollars
($350,000.00) to Lender in
monthly installments of Four Thousand Seven Hundred Eighty Four and 08/100 Dollars ($4,784.08) for eighty-four (84) months after this date with interest at the rate of four percent
(4.0%) per annum at the office of Lender, 200 South Mecklenburg Avenue, P. O. Box 150, South Hill, Virginia 23970, or at such other place as Lender may designate in writing. Payments under said
note shall be deemed late if not paid within fifteen (15) days of the due date, and Borrower shall pay Lender a late penalty of five percent (5%) of all past due payments in the event of such
late payment, calculated on the accumulated late payments and penalties, as more particularly provided in the Note. 

        3.    The
parties hereto covenant and agree that Borrower shall give to Lender a security interest in the project equipment listed in Exhibit A. Once the entire
indebtedness of the Lender is paid, including principal, interest and any fees thereon, the lien of Lender shall be released. 

        4.    Lender
agrees that prepayment of principal may be made at any time without penalty. 

        5.    Borrower
and Lender hereby covenant and agree to maintain, or cause to be maintained, fire and casualty insurance on the building and equipment, which is the collateral
for the Loan which is subject to this agreement in the amount of the principal balance of all loans made by Wachovia Bank, N.A. PLUS it least THREE HUNDRED FIFTY THOUSAND and 00/100 Dollars
($350,000.00), with a loss payable clause to Lake Country Development Corporation, or its assigns as their interests may appear. 

        6.    Borrower
hereby agrees to provide Lender a copy of its annual audited financial statements in conformity with generally accepted accounting principles within
90 days of the end of the fiscal year and prepared by a certified public accountant. Borrower will provide a statement from Wachovia Bank every 6 months reflecting the outstanding
balance of Borrower's revolving line of credit with Wachovia. This balance must always exceed the outstanding balance of this Loan. 

        7.    Borrower
hereby agrees to use all funds borrowed from Lake Country Development Corporation solely for the purchase of new equipment to expand Borrower's business
facilities located 

 

in Chase City, Mecklenburg County, Virginia, as stated in the application. In no event may the funds be used to generate interest or to arbitrage the loan funds. 

        8.    Borrower
hereby agrees that it must create sixty five (65) jobs within twenty four(24) months of the completion of the Project. If at least one job for every
$10,000.00 borrowed (35 jobs) has not been met
within two (2) years, the loan will be called. A good faith effort must be made to create 65 jobs. Borrower will provide a job report to Lender in such format prescribed by the Lender on a
semi-annual basis, due annually in February and July of each year. 

        9.    Borrower
hereby agrees that if its facility is intended for use by the public or for the employment of physically handicapped, it must be accessible to the physically
handicapped, pursuant to Public Law 90-480, as amended (42 U.S.C. 4151, et seq.), and the regulations issued thereunder. 

        10.  Borrower
agrees to comply with civil rights requirements which prohibit borrower from discriminating against employees or applicants for employment or providers of goods
and services. 

        11.  Borrower
agrees to comply with all applicable environmental protection laws and statutes and represents the following: 

	a.
	The
Borrower (including for purposes of this Section any former or current Affiliate of the Borrower) is in, material compliance with all applicable laws, rules, regulations and orders
of all governmental authorities, agencies and officials relating to environmental matters and the release, handling and disposal of hazardous, toxic and polluting substances.

	b.
	The
Borrower has obtained and is in material compliance with all required Governmental permits, certificates, licenses, approvals and other authorizations, and has filed all
notifications relating to air emissions, effluent discharges and solid and hazardous waste storage, treatment and disposal required in connection with its ownership or use of real estate or the
operation of its business.

	c.
	There
are no outstanding notices of violation, orders, claims, citations, complaints, penalty assessments, suits or other proceedings, administrative, criminal or civil, at law or in
equity, pending against the Borrower or its properties that would have a material adverse effect on the Borrower's business, financial position, results of operations or prospects or on any facility
or the operation of any facility. No investigation or review is pending or to the knowledge of the Borrower threatened against the Borrower by any governmental body, agency or official with respect to
any alleged violation of any Environmental Law, regulation, ordinance, standard, pen-nit or order in connection with its ownership or use of any real estate or the conduct of its business.

	d.
	No
toxic or hazardous substances have been generated by the Borrower. No notification of release of a hazardous substance pursuant to any Environmental Law has been filed as to any
property now or formerly occupied or owned by the Borrower.

	e.
	No
hazardous, toxic or polluting substances have been released, discharged or disposed of on property now or formerly owned or occupied by the Borrower which could result in an action
under any Environmental Law which could have a material adverse effect on the Borrower's business, financial position, results of operations or prospects or any facility or operation of such facility.

	f.
	The
Borrower has not received from any environmental regulatory entity any requests for information, notices of claim, demand letters or other notification that in connection with the
ownership or use of any real estate or the conduct of the Borrower's business is or may be potentially responsible with respect to any investigation or clean-up of hazardous substances or
toxic waste or pollutants at any sites.

	g.
	To
the best knowledge of the Borrower, no waste generated by the Borrower has ever been sent, nor is waste: generated by the Borrower being sent, directly or indirectly, to any site 

2

 

listed
or formerly, proposed for listing on the National Priority, List promulgated pursuant to CERCLA or to any site listed on any state list of hazardous substances sites requiring investigation or
clean up. 

	h.
	"Environmental
Law" means and includes any present and future local, state, federal or intentional law or treaty (whether under common law, statute, rule, regulation or otherwise)
relating to public health, safety or the environment, including, by way of example, but not limitation, the following: the Recourse Conservation and Recovery Act 42 U.S.C. 6901,  et seq., as amended by
the Hazardous and Solid Waste Act Amendments of 1984; the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. 9601, et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act, 49 U.S.C.
1802, et seq.; the Rivers and Harbors Act of 1899, 33 U..S.C. 401, et seq.; the Clean Water Act, 33
U.S.C. 1251, et seq.; the Clean Water Act, 42 U.S.C. 7401, et seq.; the Toxic Substances Control Act, 15
U.S.C. 26015 et seq.; the Safe Drinking Water Act, 42 LI.S.C. 7901.300f, et seq.; the Uranium Mill
Tailings Radiation Control Act, 42 U.S.C. 7901, et seq.; the Federal Occupational Safety and Health Act, 29 U.S.C. 651, et
seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. 136, et seq., the National Environmental Policy Act, 42
U.S.C. 4321, et seq.; the Noise Control Act, 42 U.S.C. 4901, et seq., the Emergency Planning and
Community Right to Know Act of 1986, 42 U.S.C. 11001, et seq.; the Lead Based Paint Poisoning Prevention Act, 42 U.S.C. 4821, et
seq., The Chesapeake Bay, Prevention Act, VA Code Section 10.1-2100 et seq., and any Regulations now or
hereafter promulgated pursuant thereto and, as to all of the foregoing, the amendments, regulations, orders, decrees, permits or licenses now or hereafter promulgated thereunder as any of the
foregoing now exist or may be changed or amended or come into effect in the future. 

        12.  Borrower
hereby agrees that it shall be responsible for all closing costs of this Loan, and shall pay upon closing this Loan to Lake Country Development Corporation for
a fee of TWO THOUSAND FIVE HUNDRED and 00/100 Dollars ($2,500.00), for its administrative/service fee. 

        13.  The
parties hereto acknowledge, agree and understand that the Lender cannot be a sole lender and that, accordingly, an additional loan was made to Borrower by Wachovia
Bank, Primary Lender, for the
improvement of Borrower's facilities in the Town of Chase City, Mecklenburg County, Virginia, Accordingly, the parties hereto, acknowledge and covenant that the loan to Borrower by Wachovia Bank has
been completed and the loan funds were disbursed to Borrower prior to the disbursement of these funds. 

        14.  If
all or any part of the property securing the loan or an interest therein is sold or transferred by Borrower without Lender's prior written consent, excluding the
creation of a lien or encumbrance subordinate to this lien, Lender, by operation of law, may at Lender's option declare all sums secured by this agreement to be immediately due and payable. Lender
shall have waived such option to accelerate if, prior to the sale or transfer, Lender and the entity to whom the property is to be sold or transferred reach an agreement in writing that the credit of
such entity is satisfactory to Lender and that the interest payable on the sums secured by this agreement shall be at such rate as Lender shall request. If Lender has waived the option to accelerate
provided herein, and if Borrower's successor in interest has executed a written assumption agreement accepted in writing by Lender, Lender shall release Borrower from all obligations under this
agreement. 

        15.  If
any clause, provision or section of this Revolving Loan Fund Agreement be held illegal or invalid by any court, the illegality or invalidity of such clause, provision
or section shall not affect any of the remaining clauses, provisions or sections hereof, and this Revolving Fund Loan Agreement shall be construed and enforced as if such illegal or invalid clause,
provisions or sections had not been contained herein. 

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        16.  Feminine
or neuter pronouns are to be substituted for those of the masculine form and the plural is to be substituted for the singular number in any place or places
herein in which the context may require such substitution. 

        17.  THE
BORROWER ACKNOWLEDGES THAT THE FAILURE TO COMPLY WITH ANY PROVISION OF THIS AGREEMENT MAY RESULT IN THE LENDER, AT ITS OPTION, ACCELERATING THE DUE DATE OF THIS LOAN
AND DECLARING THAT THE ENTIRE BALANCE, PRINCIPAL AND INTEREST, SHALL BECOME DUE AND PAYABLE AT T HE OPTION OF T HE HOLDER OF THE PROMISSORY NOTE. 

        18.  This
Agreement shall be construed and interpreted according to the laws of the Commonwealth of Virginia. 

4

 

        IN
WITNESS WHEREOF, Sherwood Brands, Inc., (Borrower), and Lake Country Development Corporation (Lender), have caused this agreement to be duly executed by their respective proper
corporate officers who have been duly and properly empowered to do so by proper resolution of any board of directors, and they have hereunto set their hands and seals, all on the day and year first
above written. 

	 	 	SHERWOOD BRANDS, INC.

A North Carolina Corporation
	

 	
 	

By:	

/s/  UZIEL FRYDMAN      
 Uziel Frydman

Chairman, President and CEO
	

ATTEST:	
 	

 	

 
	

/s/  CHRISTOPHER J. WILLI      
 Christopher J. Willi, Secretary	
 	

 	

 
	

 	
 	

LAKE COUNTRY DEVELOPMENT CORPORATION

A Virginia Non-Stock Corporation
	

 	
 	

By	

/s/  F. RANDOLPH JONES      
 F. Randolph Jones, President
	

ATTEST:	
 	

 	

 
	

/s/  GERALD VINCENT      
 Gerald Vincent, Secretary	
 	

 	

 

ANY
PROVISION OF THIS AGREEMENT MAY RESULT IN THE LENDER, AT ITS OPTION, ACCELERATING THE DUE DATE OF THIS LOAN AND DECLARING THAT THE ENTIRE BALANCE, PRINCIPAL AND INTEREST, SHALL BECOME DUE AND
PAYABLE AT THE OPTION OF THE HOLDER OF THE PROMISSORY NOTE. 

5

 
 
 

PROMISSORY NOTE    
  

$350,000.00 

August 13,
2002

South Hill, Virginia 

        FOR
VALUE RECEIVED, SHERWOOD BRANDS, INC., a North Carolina Corporation, Borrower, promises to pay to the order of Lake County Development Corporation, a Virginia
Non-Stock Corporation, Lender, the sum of THREE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($350,000.00), with interest thereon from date until paid, at Four Percent (4.0%) per annum,
negotiable and payable at the office of the payee, 200 South Mecklenburg Avenue, P. 0. Box 150, South Hill, Virginia 23970, or at such other place as the holder of the note may designate in writing
from time to time, without offset. It is further agreed by the makers and endorsers hereof that time is of the essence. And the makers and endorsers hereof waive the benefit of the homestead
exemptions as to this debt; and waive notice of maturity, presentment, demand, protest, and notice of nonpayment and dishonor of this note; and agree to pay all costs of collection, including
reasonable attorney's fees, if it becomes necessary to place this note in the hands of an attorney for collection. The makers and endorsers hereof agree that 15 days after the giving of
10 days notice to the undersigned of default (a) of a payment of any installment hereof, or (b) in the observance of any uncured violation of any covenant contained in the
Revolving Fund Loan Agreement, or any other document executed in connection with this loan, the entire balance, principal and interest, shall become due and payable at the option of the holder or
holders hereof. Failure to exercise said option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default. 

        This
note is payable in eighty four (84) equal monthly installments of FOUR THOUSAND SEVEN HUNDRED EIGHTY FOUR and 08/100 DOLLARS ($4,784.08) commencing on the lst day of October,
2002 and on the lst day of each and every month thereafter until paid, except if not sooner paid, the entire indebtedness shall be due and payable on September 1, 2009. 

        Optional
prepayment is permitted at any time in whole or in part without Penalty. Any such partial payment shall be applied to installments of principal in inverse chronological order,
but such prepayments shall not reduce the amount of the monthly payments set forth above. Payments not received by the 15th day of the month in which they are due shall be subject to a late charge of
five percent (.5%), provided said late charge shall apply on the accumulated late monthly installments and penalty as set forth herein or as determined in accordance herewith, and shall not operate or
be construed to apply to the outstanding principal balance of this Note in the event the same becomes due and payable prior to maturity. 

        This
note is secured by Personal properly listed on Exhibit A located in Chase City, Mecklenburg County, Virginia. 

        IN
WITNESS WHEREOF, SHERWOOD BRANDS, INC., a North Carolina Corporation, have caused this note to be duly executed by its proper corporate officers who have been duly and properly
empowered to do so this 13th day of August, 2002. 

	 	 	SHERWOOD BRANDS, INC.
	

 	
 	

By	

/s/  UZIEL FRYDMAN      
 Uziel Frydman

Chairman, President and CEO
	

ATTEST:	
 	

 	

 
	

/s/  CHRISTOPHER J. WILLI      
 Christopher J. Willi, Secretary	
 	

 	

 

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Exhibit 10.25

REVOLVING FUND LOAN AGREEMENT

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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. 

        (a)  In
addition to the sums otherwise available to Borrowers as Revolving Loans supported by the Borrowing Base, Borrowers may borrow an additional amount as Revolving Loans
(the "Permitted Out-of-Formula Amount") not to exceed the following amounts during the following periods only: 

	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

        (b)  Commencing
on November 1, 2002 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 supported by the applicable Permitted Out-of-Formula Amount, exceed the Maximum Revolving Credit, less any Reserves. 

        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 in Exhibit "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 in Sections 3, 4, 6 and 8 of 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 with Sections 3, 4, 6, and
8 of this Amendment. If, in accordance with the terms of 

 

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 in Section 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 with Sections 6.19(a) and 6.19(b) of the Loan Agreement for all periods after
July 31, 2002. 

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

"(a)
Borrowers shall maintain Tangible Net Worth of not less than (i) $10,500,000.00 as of the date hereof and at all times hereafter through October 30, 2001; (ii) $11,500,000.00
as of October 31, 2001 and at all times thereafter through January 30, 2002; (iii) $12,500,000.00 as of January 31, 2002 and at all times thereafter through
April 30, 2002; (iv) $11,500,000.00 as of May 1, 2002 and at all times thereafter through October 30, 2002; (v) $13,000,000.00 as of October 31, 2002; and
(vi) $15,000,0000 as of January 31, 2003 and at all times thereafter." 

        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-2 to 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 in Section 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. 

2

 

        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: 

        (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 obligations under the Loan Agreement and the other Loan Documents, as amended; 

        (c)  acknowledge
and agree that as of the date hereof, such Borrower has no 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 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, upon execution by Lender of this Amendment, 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' failure to comply with the terms of this Amendment or any of the documents executed or delivered to Lender pursuant to the terms
hereof (including, without limitation, Borrowers' failure to obtain the New Financing and repay the Term Loan A Balance and the Term Loan B Balance when and as described above) shall constitute an
Event of Default under the Loan Agreement. 

        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 

3

 

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 in Section 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] 

4

 

        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:	

SHERWOOD BRANDS, INC.,

Sole Member
	

By:	

/s/  GEORGE C. KYVERNITIS       
 George C. Kyvernitis, Vice President	
 	

By:	

/s/  AMIR FRYDMAN      
 Amir Frydman

Executive Vice President
	

 	

 	
 	

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 ACQUISITION CORPORATION
	

 	

 	
 	

By:	

/s/  AMIR FRYDMAN      
 Amir Frydman

Executive Vice President
	

 	

 	
 	

GUARANTOR:
	

 	

 	
 	

SHERWOOD BRANDS, INC.
	

 	

 	
 	

By:	

/s/  AMIR FRYDMAN      
 Amir Frydman

Executive Vice President

5

QuickLinks

Exhibit 10.26

SECOND AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}]]