Exhibit 10.1


	               ROSENTHAL & ROSENTHAL, INC.

                          Financing Agreement

AGREEMENT dated October 9, 2002 between SURGE COMPONENTS, INC. ("Borrower"),
a corporation duly organized and presently existing in good standing under
the laws of the State of New York whose chief executive office is at 95 East
Jefryn Blvd., Deer Park, NY 11729, and ROSENTHAL & ROSENTHAL, INC.
("Lender"), a New York corporation with an address at 1370 Broadway, New
York, New York 10018.

	 Borrower desires to obtain loans and other financial accommodations
from Lender on a revolving basis upon the security of the "Collateral" as
herein defined. Now, therefore, Borrower and Lender agree as follows.

Section 1 DEFINITIONS

	 As used in this Agreement, these terms shall have the following
meanings which shall be applicable to both the singular and plural forms of
such terms.

	1.1  "Account Debtor" shall mean the account debtor with respect to
a Receivable and any other person who is obligated on such Receivable.

	1.2  "Advance Percentage" shall mean the percentage specified in
Section 2.1 hereof.

	1.3  "Affiliate" of a party shall mean any entity controlling,
controlled by, or under common control with, the party, and the term
"controlling" and such variations thereof shall mean ownership of a majority
of the voting power of a party.

	1.4  "Business Day" shall mean a day on which Lender and major banks
in New York City are open for the regular transaction of business.

	1.5  "Default" shall have the meaning provided in Section 8.1
hereof.

	1.6  "Effective Rate" shall have the meaning provided in Section 3.1
hereof.

	1.7  "Eligible Inventory" shall mean Inventory owned by Borrower in
the regular course of its business which is and at all times shall continue
to be acceptable to Lender in all respects. Standards of eligibility may be
fixed and revised from time to time solely by Lender in its exclusive
judgment. In determining eligibility, Lender may, but need not, rely on
certificates of inventory and reports furnished by Borrower, but reliance
thereon by Lender from time to time shall not be deemed to limit Lender's
right to revise standards of eligibility at any time. In general, Inventory
shall not be deemed eligible unless it complies in all respects with the
representations, covenants and warranties hereinafter set forth, made by
Borrower with respect thereto.

	1.8  "Eligible Receivables" shall mean Receivables created by
Borrower in the regular course of its business which are and at all times
shall continue to be acceptable to Lender in all respects. Standards of
eligibility may be fixed and revised from time to time solely by Lender in
its exclusive judgment. In determining eligibility Lender may, but need not,
rely on ageings, reports and schedules of Receivables furnished by Borrower,
but reliance thereon by Lender from time to time shall not be deemed to
limit Lender's right to revise standards of eligibility at any time. In
general, a Receivable shall not be deemed eligible unless the Account Debtor
on such Receivable is and at all times continues to be acceptable to Lender
and unless each Receivable complies in all respects with the
representations, covenants and warranties hereinafter set forth.

	1.9  "GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time as set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the elements and
pronouncements of the Financial Accounting Standards Board which are
applicable to the circumstances as of the date of determination consistently
applied.

	1.10  "Inventory" shall mean Inventory as defined in the Inventory
Security Agreement executed by Borrower in favor of Lender.

	1.11  "Loan Account" shall mean the Loan Account as described in
Section 2.1 hereof.

	1.12  "Margin" shall mean two (2%) percent per annum.

	1.13  "Maximum Credit Facility" shall mean $1,000,000.00.

	1.14  "Maximum Rate" shall have the meaning provided in Section 9.2
hereof.

	1.15  "Net Amount of Eligible Receivables" shall mean the gross
amount of Eligible Receivables less sales, excise or similar taxes, returns,
discounts, claims, credits and allowances of any nature at any time issued,
owing, granted, outstanding or claimed, and less (without duplication) all
amounts payable by any Account Debtor on Eligible Receivables if any
Eligible Receivable of such Account Debtor is unpaid more than ninety (90)
days following its invoice date.

	1.16  "Obligations" shall mean all obligations, liabilities and
indebtedness of Borrower to Lender or an Affiliate of Lender, however
evidenced, arising under this Agreement, under any other or supplemental
financing provided to Borrower by Lender or an Affiliate of Lender, or
independent hereof or thereof, whether now existing or incurred from time to
time hereafter and whether before or after termination hereof, absolute or
contingent, joint or several, matured or unmatured, direct or indirect,
primary or secondary, liquidated or unliquidated, and whether arising
directly or acquired from others (whether acquired outright, by assignment
unconditionally or as collateral security from another and including,
without limitation, participations or interest of Lender in obligations of
Borrower to others), and including (without limitation) all of Lender's
charges, commissions, fees, interest, expenses, costs and attorneys' fees
chargeable to Borrower in connection therewith.

	1.17  "Over-advance" shall mean any portion of all loans and
advances which on any day exceeds the product of the Advance Percentage
multiplied by the Net Amount of Eligible Receivables.

	1.18  "Person" shall mean any person, firm, corporation,
partnership, limited liability company, association, company, trust, estate,
custodian, nominee or other individual or entity.

	1.19  "Prime Rate" shall mean the prime rate from time to time
publicly announced in New York City by The Chase Manhattan Bank.

	1.20  "Receivables" shall mean all obligations to Borrower for the
payment of money arising out of the sale of goods or the rendering of
services by Borrower, now existing or hereafter arising, however evidenced,
including without limitation all accounts, contract rights, general
intangibles, documents, chattel paper and instruments (as each of such terms
is defined in the New York Uniform Commercial Code).


Section 2 LOANS

	2.1  Lender shall, in its discretion, make loans to Borrower from
time to time, at Borrower's request, which loans in the aggregate shall not
exceed the lesser of (i) eighty percent (80%) (the "Advance Percentage") of
the Net Amount of Eligible Receivables which have been validly assigned to
Lender and in which Lender holds a perfected security interest pursuant to
the terms hereof ranking prior to and free and clear of all interests,
claims, and rights of others; and (ii) the Maximum Credit Facility. The
making of any loan in excess of the Advance Percentage shall not be deemed
to modify the Advance Percentage or create any obligation to make any
further such loan. All loans (and all other amounts chargeable to Borrower
under this Agreement or any supplement hereto) shall be charged to a Loan
Account in Borrower's name on Lender's books. Lender shall render to
Borrower each month a statement of the Loan Account (and all credits and
charges thereto) which shall be considered correct and accepted by Borrower
and conclusively binding upon Borrower as an account stated except to the
extent that Lender receives a written notice by registered mail of
Borrower's exceptions within 30 days after such statement has been mailed by
ordinary mail to Borrower.

Section 3 LENDER'S CHARGES

	3.1  Borrower agrees to pay to Lender each month interest (computed
on the basis of the actual number of days elapsed over a year of 360 days)
on the average daily balances in the Loan Account during the preceding month
at a rate per annum (the "Effective Rate") equal to the Prime Rate plus the
Margin. The Effective Rate shall increase or decrease by one quarter of one
percent (1/4 of 1%) per annum for each increase or decrease, respectively,
of one-quarter of one per cent (1/4 of 1%) per annum in the Prime Rate;
provided, however, that no decrease shall reduce the Effective Rate to less
than the Prime Rate plus the Margin; and provided further, that no decrease
in the Prime Rate below 4.75% per annum shall be given any effect. Any
change in the Effective Rate due to a change in the Prime Rate shall take
effect on the date of such change in the Prime Rate.

	3.2  Borrower shall pay to Lender an annual facility fee in the
amount of 1% percent of the Maximum Credit Facility payable on the closing
date and on each anniversary of the closing date thereafter.

	3.3  A statement of all of Lender's charges shall accompany each
monthly statement of the Loan Account and such charges shall be payable by
Borrower within 5 days after receipt of such statement. In lieu of the
separate payment of charges, Lender at its option, shall have the right to
debit the amount of such charges to Borrower's Loan Account, which charges
shall be deemed to be first paid by amounts subsequently credited to the
Loan Account. As more fully provided in Section 9.2 hereof, in no event
shall the interest charges hereunder exceed the Maximum Rate.

	3.4  Borrower shall pay to Lender a monthly unused line fee in the
amount of one-quarter of one percent (1/4 of 1%) of the difference between
the Maximum Credit Facility and the average daily balance of the Loan
Account during each month, which amount shall be due and payable monthly in
arrears on the first day of each month.

Section 4 SECURITY INTEREST IN COLLATERAL

	4.1  As security for the prompt performance, observance and payment
in full of all of the Obligations, Borrower grants to Lender a security
interest in, a continuing lien upon and a right of setoff against, and
Borrower hereby assigns, transfers, pledges and sets over to Lender
(collectively, including any other assets of Borrower in which Lender may be
granted a security interest, the "Collateral"): (i) all Receivables (whether
or not Eligible Receivables and whether or not specifically listed on any
schedules, assignments or reports furnished to Lender), (ii) all of
Borrower's property, and the proceeds thereof, now or hereafter held or
received by or in transit to Lender or held by others for Lender's account,
including any and all deposits, balances, sums and credits of Borrower with,
and any and all claims of Borrower against, Lender, at any time existing,
(iii) all credit insurance policies, and all other insurance and all
guarantees relating to the Receivables or other Collateral, (iv) all books,
records and other general intangibles evidencing or relating to Receivables
or other Collateral; all deposits, or other security for the obligation of
any person under or relating to Receivables, all of the Borrower's rights
and remedies of whatever kind or nature it may hold or acquire for the
purpose of securing or enforcing Receivables; all right, title and interest
of the Borrower in and to all goods relating to, or which by sale have
resulted in, Receivables, including goods returned by or reclaimed or
repossessed from Account Debtors and all goods described in copies of
invoices delivered by Borrower to Lender; all rights of stoppage in transit,
replevin, repossession and reclamation and all other rights and remedies of
an unpaid vendor or lienor, and all proceeds of any Letter of Credit naming
Borrower as beneficiary and which provides for, guarantees or assures the
payment of any Receivable; (v) all general intangibles whether or not
arising out of the sale of goods or rendition of services, and including
without limitation choses in action, causes of action, tax refunds (and
claims), and reversions from terminated pension plans; and (vi) all proceeds
of such Collateral, in any form, including, without limitation, cash,
non-cash items, checks, notes, drafts and other instruments for the payment
of money. Such security interest in favor of Lender shall continue during
the term of this Agreement and until payment in full of all Obligations,
whether or not this Agreement shall have sooner terminated.

	4.2  At Lender's request, Borrower will mark its ledger cards, books
of account and other records relating to Receivables with appropriate
notations satisfactory to Lender disclosing that the Receivables have been
assigned to Lender and will provide Lender with confirmatory assignment
schedules in form satisfactory to Lender, copies of customers' invoices,
evidence of shipment or delivery, and such further information as Lender may
require. Borrower will take any and all steps and observe such formalities
as Lender may request from time to time to create and maintain in Lender's
favor a valid and first lien upon, security interest in and pledge of all of
Borrower's Receivables and all other Collateral, including without
limitation by way of filing financing statements and other notices and
amendments and renewals thereof that may be requested by Lender to maintain
such security interest in and pledge of the Collateral.

Section 5 CUSTODY AND INSPECTION OF COLLATERAL AND RECORDS;
	COLLECTION AND HANDLING OF COLLATERAL

	5.1  Until Borrower's authority so to do is terminated at any time
by notice from Lender, Borrower will, at its own expense and on Lender's
behalf, collect as Lender's property and in trust for Lender all payments
and prepayments on Receivables, and shall not commingle such collections
with Borrower's own funds. As to all moneys so collected, including all
prepayments by customers, Borrower shall on the day received remit all such
collections to Lender in the form received. All amounts collected on
Receivables when received by Lender shall be credited to Borrower's Loan
Account, adding three Business Days for collection and clearance of
remittances. Such credits shall be conditional upon final payment to Lender.
Nothing contained in this Section 5.1, or otherwise in the Agreement, shall
be deemed to limit Lender's rights and powers pursuant to Section 7 of the
Agreement.

	5.2  All records, ledger sheets, correspondence, contracts and
documentation relating to or evidencing Receivables shall, until delivered
to Lender or removed by Lender from Borrower's premises, be kept on
Borrower's premises, without cost to Lender, in appropriate containers in
safe places, bearing suitable legends identifying them and all related
files, containers, receptacles and cabinets as being under Lender's dominion
and control. Lender shall at all reasonable times have full access to and
the right to examine and make copies of Borrower's books and records, to
confirm and verify all Receivables assigned to Lender and to do whatever
else Lender deems necessary to protect its interest. Lender may at any time
remove from Borrower's premises, or require Borrower to deliver any
contracts, documentation, files and records relating to Receivables, or
Lender may, without cost or expense to Lender, use such of Borrower's
personnel, supplies and space at Borrower's places of business as may be
reasonably necessary for collection of Receivables.

	5.3  Borrower will immediately upon obtaining knowledge thereof
report to Lender all reclaimed, repossessed or returned merchandise, Account
Debtor claims and any other matter affecting the value, enforceability or
collectibility of Receivables. Any merchandise reclaimed or repossessed by
or returned to Borrower will, at the cost and expense of Borrower, be set
aside marked with the name of the Lender and will be held by Borrower for
the account of Lender and subject to Lender's security interest. All claims
and disputes relating to Receivables are to be promptly adjusted by Borrower
with the prior approval of Lender and within a reasonable time, at its own
cost and expense. Lender may, at its option, settle, adjust or compromise
claims and disputes relating to Receivables which are not adjusted by
Borrower within a reasonable time.

	5.4  Borrower shall reimburse Lender on demand for all costs of
collection incurred by Lender in efforts to enforce payment of Receivables,
recovery of or realization upon any other Collateral, including attorneys'
fees and the fees and commissions of collection agencies. All and any fees,
costs and expenses, of whatever kind and nature, including taxes of any
kind, which Lender may incur in filing public notices (including appraisal
fees and advertising costs), and the reasonable charges of any attorney whom
Lender may engage in preparing and filing documents, making title or lien
examinations and rendering opinion letters, as well as expenses incurred by
Lender (including all attorneys' fees and including Lender's out of pocket
expenses in conducting periodic field examinations of Borrower and the
collateral plus Lender's prevailing per diem charge for each of its
examiners in the field and office, now $750 per person per day), in
protecting, maintaining, preserving, enforcing or foreclosing the pledge,
lien and security interest granted to Lender hereunder, whether through
judicial proceedings or otherwise, or enforcing or collecting the
Receivables, or recovery of or realization upon any other Collateral, or in
defending or prosecuting any actions or proceedings arising out of or
related to its transactions with Borrower, including actions or proceedings
which may involve any person asserting a priority or claim with respect to
the Collateral, shall be borne and paid for by Borrower on demand, shall
constitute part of the Obligations and may at Lender's option be charged to
Borrower's Loan Account.

Section 6 REPRESENTATIONS, COVENANTS AND WARRANTIES

	As an inducement to Lender to enter into this Agreement, Borrower
represents, covenants and warrants (which shall survive the execution and
delivery of this Agreement) that:

	6.1  Borrower is a corporation duly organized and presently existing
in good standing under the laws of the State of New York and is duly
qualified and existing in good standing in every other state in which the
nature of Borrower's business requires it to be qualified.

	6.2  The execution, delivery and performance of this Agreement are
within the corporate powers of Borrower, have been duly authorized by
appropriate corporate action and are not in contravention of the terms of
Borrower's charter or by-laws or of any indenture, agreement or undertaking
to which Borrower is a party or by which it may be bound. Borrower warrants
that it is and covenants that it shall remain solvent at all times while
this Agreement is in effect.

	6.3  Borrower is and shall be, with respect to all Inventory, the
owner thereof free from any lien, security interest or encumbrance of any
kind, except in favor of Lender. Borrower (i) shall, at all times,  maintain
inventory which was acquired by Borrower not more than six months from the
date of purchase, which has a value (at lower of cost or market) aggregating
no less than $1,000,000, at Borrower's Deer Park location ; and (ii) may
maintain  in each of the locations set forth in Exhibit "A" hereto ("Exhibit
"A") inventory having values (at lower of cost or market) of not more than
the values specified in Exhibit "A" for each location. No Receivable or any
other Collateral has been or shall hereafter be assigned, pledged or
transferred to any person other than the Lender or in any way encumbered or
subject to a security interest except to Lender and Borrower shall defend
the same against the claims of all persons.

	6.4  Borrower's books and records relating to the Receivables are
maintained at the office referred to below. Except as otherwise stated
below, the principal executive office of Borrower is located at such address
and has been so located on a continuous basis for not less than six months.
Borrower shall not change such location without Lender's prior written
consent, and, upon making any such change, Borrower agrees to execute any
additional financing statements or other documents or notices which Lender
may require.

	6.5  All loans and advances requested by Borrower under this
Agreement shall be used for the general corporate and business purposes of
Borrower and shall in no event be requested or used by Borrower for the
specific purpose of paying wages of the employees of Borrower.

	6.6    Borrower shall maintain its shipping forms, invoices and
other related documents in a form satisfactory to Lender and shall maintain
its books, records and accounts in accordance with sound accounting
practice. Borrower shall furnish to Lender (a) accounts receivable agings
(i) weekly, not later than Wednesday of each week covering the previous
week; and (ii) monthly, not later than the 10th of each month, covering the
previous month; and (b) inventory designations (i) weekly, not later than
Wednesday of each week, covering the period through Friday of the previous
week; and (ii) monthly, not later than the 10th of each month, covering the
previous month.  Borrower shall furnish to Lender such other information
regarding the business affairs and financial condition of Borrower as Lender
may, from time to time, reasonably request, including, without limitation
(a) audited financial statements prepared on at the end of and for each
fiscal year of Borrower, as soon as practical and in any event within 90
days after the end of each such fiscal year, in such detail and scope as
Lender may require including without limitation, a balance sheet, a
statement of income, a statement of cash flows and notes, prepared by
independent Certified Public Accountants acceptable to Lender; and
concurrently with such financial statements, a written statement signed by
such independent public accountants to the effect that, (i) in making the
examination necessary for their opinion of such financial statements, they
have not obtained any knowledge of the existence of any Event of Default, or
(ii) if such independent public accountants shall have obtained from such
examination any such knowledge, they shall disclose in such written
statement the Event of Default and the nature thereof, (b) financial
statements prepared internally as at the end of and for each fiscal
quarterly period of Borrower, as soon as practical and in any event within
45 days after the end of each such fiscal quarter of Borrower, in such
detail and scope as Lender may require including without limitation, a
balance sheet, a statement of income, a statement of cash flows and notes,
certified by the Chief Financial Officer of Borrower ("CFO"); and
concurrently with such financial statements, a written statement signed by
the CFO to the effect that, (i) such CFO has not obtained any knowledge of
the existence of any Event of Default, or (ii) if such CFO has obtained from
such examination any such knowledge, such CFO shall disclose in such written
statement the Event of Default and the nature thereof.  All such  statements
and information shall fairly present the financial condition of Borrower,
and the results of its operations as of the dates and for the periods, for
which the same are furnished.

	6.7  Borrower shall duly pay and discharge all taxes, assessments,
contributions and governmental charges upon or against it or its properties
or assets prior to the date on which penalties attach thereto. Borrower
shall be liable for any tax (excluding a tax imposed on the overall net
income of Lender) imposed upon any transaction under this Agreement or
giving rise to the Receivables or which Lender may be required to withhold
or pay for any reason and Borrower agrees to indemnify and hold Lender
harmless with respect thereto, and to repay Lender on demand the amount
thereof, and until paid by Borrower shall be added to the Obligations
secured hereunder, and may at Lender's option be charged to Borrower's Loan
Account.

	6.8  With respect to each Receivable, Borrower hereby represents and
warrants that: each Receivable represents a valid and legally enforceable
indebtedness based upon an actual and bona fide sale and delivery of
property or rendition of services in the ordinary course of Borrower's
business which has been finally accepted by the Account Debtor and for which
the Account Debtor is unconditionally liable to make payment of the amount
stated in each invoice, document or instrument evidencing the Receivable in
accordance with the terms thereof, without offset, defense or counterclaim;
each Receivable will be paid in full at maturity; all statements made and
all unpaid balances appearing in any invoices, documents, instruments and
statements of account describing or evidencing the Receivables are true and
correct and are in all respects what they purport to be and all signatures
and endorsements that appear thereon are genuine and all signatories and
endorsers have full capacity to contract; the Account Debtor owing the
Receivable and each guarantor, endorser or surety of such Receivable is
solvent and financially able to pay in full the Receivable when it matures;
and all recording, filing and other requirements of giving public notice
under any applicable law have been duly complied with.

	6.9  Borrower shall until payment in full of all Obligations to
Lender and termination of this Agreement (a) cause to be maintained at the
end of each fiscal quarter (ie, February, May, August, November), Tangible
Net Worth in an amount not less than $4,250,000 and (b) cause to be
maintained at the end of each such fiscal quarter, Working Capital of not
less than $2,000,000.

	For the purpose hereof the following terms shall have the following
definitions:

	"Current Assets" at a particular date shall mean cash, accounts,
marketable securities and inventory of Borrower providing however, that such
amounts shall not include any amounts for any indebtedness owing by any
affiliate to Borrower.

	"Current Liabilities" at a particular date shall mean all amounts
which would, in conformity with GAAP, be included under current liabilities
or on a balance sheet of Borrower, as at such date, but in any event
including, without limitation or duplications, the amounts of (a) all
indebtedness payable on demand, or at the option of the person or entity to
whom such indebtedness is owed, not more than twelve (12) months after such
date, (b) any payments in respect of any indebtedness (whether installment,
serial maturity, sinking fund payment or otherwise) required to be made not
more than twelve (12) months after such date, (c) all reserves in respect of
liabilities or indebtedness payable on demand or, at the option of the
person or entity to whom such indebtedness is owed, not more than twelve
(12) months after such date, the validity which is not contested to such
date, (d) all accruals for federal or other taxes measured by income payable
within twelve (12) months of such date and (e) all outstanding indebtedness
to Lender.

	"Tangible Net Worth" shall mean,  at a particular date (a) the
aggregate amount of all assets of Borrower as may be properly classified as
such in accordance with GAAP consistently applied excluding such other
assets as are properly classified as intangible assets under GAAP, less (b)
the aggregate amount of all liabilities of Borrower (excluding subordinated
liabilities to Lender) determined in accordance with GAAP.

	"Working Capital" shall mean the excess, if any, of Current Assets
less Current Liabilities.


Section 7 SPECIFIC POWERS OF LENDER

	7.1  Borrower hereby constitutes Lender or its agent, or any other
person whom Lender may designate, as Borrower's attorney, at Borrower's own
cost and expense to exercise at any time all or any of the following powers
which, being coupled with an interest, shall be irrevocable until all
Obligations have been paid in full: (a) to receive, take, endorse, assign,
deliver, accept and deposit, in Lender's or Borrower's name, any and all
checks, notes, drafts, remittances and other instruments and documents
relating to Receivables and proceeds thereof; (b) to receive, open and
dispose of all mail addressed to Borrower and to notify postal authorities
to change the address for delivery thereof to such address as Lender may
designate; (c) to transmit to Account Debtors indebted on Receivables notice
of Lender's interest therein and to request from such Account Debtors at any
time, in Borrower's name or in Lender's or that of Lender's designee,
information concerning the Receivables and the amounts owing thereon; (d) to
notify Account Debtors to make payment directly to Lender; (e) to take or
bring, in Borrower's name or Lender's, all steps, actions, suits or
proceedings deemed by Lender necessary or desirable to effect collection of
the Receivables; and (f) to sign on behalf of the Borrower one or more
financing statements (or amendments to financing statements) under the
Uniform Commercial Code. In addition, to the extent permitted by law, Lender
may file one or more financing statements signed only by Lender, naming
Borrower as debtor and Lender as secured party and indicating therein the
types or describing the items of collateral covered by this Agreement.
Without limitation of any of the powers enumerated above, Lender is hereby
authorized to accept and to deposit all collections in any form, relating to
Receivables, received from or for the account of Account Debtors (whether
such collections are remitted directly to Lender by Account Debtors or are
forwarded to Lender by Borrower), including remittances  which may reflect
deductions taken by Account Debtors, regardless of amount, the Loan Account
of Borrower to be credited only with amounts actually collected on
Receivables in accordance with Section 5.1. Borrower hereby releases (i) any
bank, trust company or other firm receiving or accepting such collections in
any form, and (ii) Lender and its officers, employees and designees, from
any liability arising from any act or acts hereunder or in furtherance
hereof, whether of omission or commission, and whether based upon any error
of judgment or mistake of law or fact.

Section 8 LENDER'S REMEDIES UPON BORROWER'S DEFAULT

	8.1  Borrower agrees that all of the loans and advances made by
Lender under the terms of this Agreement, together with all Obligations of
Borrower as defined herein (unless otherwise provided in any instrument
evidencing the same or agreement relating thereto), shall be payable by
Borrower at Lender's demand at the office of Lender in New York, New York.
In addition, all Obligations shall be, at Lender's option, due and payable
without notice or demand upon termination of this Agreement or upon the
occurrence of any one or more of the following events of default
("Default"): (a) if Borrower shall fail to pay to Lender when due any
amounts owing to Lender under any Obligation, or shall breach any of the
terms, covenants, conditions or provisions of this Agreement or any other
agreement between the parties; (b) if any guarantor, endorser or other
person liable on the Obligations shall die, terminate its guaranty or shall
breach any of the terms, covenants, conditions or provisions of any
guarantee, endorsement or other agreement of such person with, or in favor
of, Lender; (c) if any representation, warranty, or statement of fact made
to Lender at any time by or on behalf of Borrower is false or misleading in
any material respect; (d) if Borrower shall become insolvent, is generally
unable to pay its debts as they mature, files or has filed against it a
petition in bankruptcy, liquidation or reorganization, or if a judgment
against Borrower remains unpaid, unstayed or undismissed for a period of
more than five days, or if Borrower discontinues doing business for any
reason, or if a custodian, receiver or trustee of any kind is appointed for
it or any of its property; (e) if there is a change (by voluntary transfer,
death or otherwise) in Borrower's controlling stockholders or owners; or (f)
if at any time Lender shall, in its sole discretion, reasonably exercised,
consider the Obligations insecure or any part of the Receivables unsafe,
insecure or insufficient and Borrower shall not on demand furnish other
collateral or make payment on account, satisfactory to Lender. Upon the
occurrence of any Default, (i) Borrower shall pay to Lender, as liquidated
damages and as part of the Obligations, a charge at the rate of two percent
per month upon the unpaid balance of the Obligations from the date of
Default until the date of full payment of the Obligations, which charge
shall be in lieu of compensation payable under Section 3.1 from such date;
provided, that in no event shall such rate exceed the Maximum Rate, (ii)
Borrower shall pay to Lender all costs, disbursements, charges and expenses
for the collection and enforcement of the Obligations, and for the
protection and enforcement of Lender's security interest, including
attorneys' fees, all of which shall be added to and deemed part of the
Obligations, and (iii) Lender shall have the right (in addition to any other
rights Lender may have under this Agreement or otherwise) without further
notice to Borrower, to enforce payment of any Receivables, to settle,
compromise, or release in whole or in part, any amounts owing on
Receivables, to prosecute any action, suit or proceeding with respect to
Receivables, to extend the time of payment of any and all Receivables, to
make allowances and adjustments with respect thereto, to issue credits in
Lender's name or Borrower's, to sell, assign and deliver the Receivables (or
any part thereof) and any returned, reclaimed or repossessed merchandise or
other property held by Lender or by Borrower for Lender's account, at public
or private sale, at broker's board, for cash, upon credit or otherwise, at
Lender's sole option and discretion, and Lender may bid or become purchaser
at any such sale if public, free from any right of redemption which is
hereby expressly waived. Borrower agrees that the giving of five days'
notice by Lender, sent by ordinary mail, postage prepaid, to the mailing
address of Borrower set forth in this Agreement, designating the place and
time of any public sale or the time after which any private sale or other
intended disposition of the Receivables or any other security held by Lender
is to be made, shall be deemed to be reasonable notice thereof and Borrower
waives any other notice with respect thereto. The net cash proceeds
resulting from the exercise of any of the foregoing rights or remedies shall
be applied by Lender to the payment of the Obligations in such order as
Lender may elect, and Borrower shall remain liable to Lender for any
deficiency.

	8.2  The enumeration of the foregoing rights and remedies is not
intended to be exhaustive, and such rights and remedies are in addition to
and not by way of limitation of any other rights or remedies Lender may have
under the New York Uniform Commercial Code or other applicable law. Lender
shall have the right, in its sole discretion, to determine which rights and
remedies, and in which order any of the same, are to be exercised, and to
determine which Receivables are to be proceeded against and in which order,
and the exercise of any right or remedy shall not preclude the exercise of
any others, all of which shall be cumulative. No act, failure or delay by
Lender shall constitute a waiver of any of its rights and remedies. No
single or partial waiver by Lender of any provision of this Agreement, or
breach or default thereunder, or of any right or remedy which Lender may
have shall operate as a waiver of any other provision, breach, default,
right or remedy or of the same provision, breach, default, right or remedy
on a future occasion. Borrower waives presentment, notice of dishonor,
protest and notice of protest of all instruments included in or evidencing
any of the Obligations or the Receivables and any and all notices or demands
whatsoever (except as expressly provided herein). Lender may, at all times,
proceed directly against Borrower to enforce payment of the Obligations and
shall not be required to first enforce its rights in the Receivables or any
other security granted to it. Lender shall not be required to take any
action of any kind to preserve, collect or protect its or Borrower's rights
in the Receivables or any other security granted to it.

	8.3  BORROWER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN THE
EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER CONNECTED WITH THIS
AGREEMENT, THE OBLIGATIONS, THE RECEIVABLES, OR ANY OTHER TRANSACTION
BETWEEN THE PARTIES AND BORROWER HEREBY IRREVOCABLY CONSENTS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE OBLIGATIONS. IN ANY SUCH
LITIGATION BORROWER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL DIRECTED TO BORROWER AT ITS PLACE OF BUSINESS SET FORTH
ABOVE. WITHIN 30 DAYS AFTER SUCH MAILING, BORROWER SHALL APPEAR IN ANSWER TO
SUCH SUMMONS, COMPLAINT OR OTHER PROCESS, FAILING WHICH BORROWER SHALL BE
DEEMED IN DEFAULT AND JUDGMENT MAY BE ENTERED BY LENDER AGAINST BORROWER FOR
THE AMOUNT OF THE CLAIM AND OTHER RELIEF REQUESTED THEREIN.

Section 9 EFFECTIVE DATE, CONTROLLING LAW AND TERMINATION

	9.1  This Agreement shall become effective upon acceptance by Lender
at its office in the State of New York, and shall continue in full force and
effect until May 31, 2004 (the "Renewal Date") and from year to year
thereafter, unless sooner terminated as herein provided. Borrower may
terminate this Agreement on the Renewal Date or on the anniversary of the
Renewal Date in any year by giving Lender at least sixty (60) days' prior
written notice by registered or certified mail, return receipt requested,
and in addition to its other rights hereunder, Lender shall have the right
to terminate this Agreement at any time by giving Borrower thirty (30) days'
prior written notice. Should a Default occur hereunder, this Agreement will
be terminable by Lender at any time and Borrower shall, upon any such
termination by Lender, pay to Lender, as additional liquidated damages and
as part of the Obligations, an amount equal to 75% of Lender's average
monthly charges for the previous six months, or from the date of this
Agreement, whichever is less, multiplied by the number of months remaining
under this Agreement.  In the event that Lender shall permit termination of
this Agreement by Borrower other than as provided herein, as a condition to
such termination, Borrower shall pay to Lender such additional liquidated
damages in addition to performance of any other conditions to such
termination.  No termination of this Agreement, however, shall relieve or
discharge Borrower of its duties, obligations and covenants hereunder until
such time as all Obligations have been paid in full, and the continuing
security interest in Receivables and other Collateral granted to Lender
hereunder or under any other agreement shall remain in effect until such
Obligations have been fully discharged. No provision hereof shall be
modified or amended orally or by course of conduct but only by a written
instrument expressly referring hereto signed by both parties.

	9.2  ALL LOANS SHALL BE DISBURSED BY LENDER FROM ITS OFFICE IN THE
STATE OF NEW YORK, SHALL BE PAYABLE BY BORROWER AT SUCH OFFICE, AND THIS
AGREEMENT AND ALL TRANSACTIONS THEREUNDER SHALL BE DEEMED TO BE CONSUMMATED
IN SUCH STATE AND SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THAT STATE.  If any part or provision of this Agreement is
invalid or in contravention of the applicable laws or regulations of any
controlling jurisdiction, such part or provision shall be severable without
affecting the validity of any other part or provision of this Agreement.
Notwithstanding any provision herein or in any related document, Lender
shall never be entitled to receive, collect, or apply, as interest on the
Loan Account, any amount in excess of the maximum rate of interest ("Maximum
Rate") permitted to be charged from time to time by applicable law (if such
law imposes any maximum rate), and in the event Lender ever receives,
collects, or applies as interest, any amount in excess of the Maximum Rate,
such amount shall be deemed and treated as a partial prepayment of the
principal of the Loan Account; and, if the principal of the Loan Account and
all other of Lender's charges other than interest are paid in full, any
remaining excess shall be paid to Borrower.






 	 IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement
to be executed by their respective corporate officers thereto duly
authorized as of the day and year first above written.


                               SURGE COMPONENTS,INC.

                                 By:/s/Ira Levy
                                    ---------------------
                                    Title: President
Attest:

/s/Steven Lubman
-------------------
 Secretary

                               Accepted:

                               ROSENTHAL & ROSENTHAL, INC.


                               By:/s/Sheldon Kaye
                                  -------------------------
                                  Sheldon Kaye