4
                            ASSET PURCHASE AGREEMENT

                                 By and Between

                             Delicious Brands, Inc.,

                                       and

                                   BF USB Inc.


            THIS ASSET PURCHASE AGREEMENT (this "Agreement"),  dated as of April
5, 2000,  is by and between BF USB Inc., a Delaware  corporation  ("Purchaser"),
and  Delicious  Brands,  Inc.,  a Delaware  corporation  ("Seller").  Seller and
Purchaser  may   hereinafter  be  referred  to  collectively  as  "Parties"  and
individually as a "Party".

            WHEREAS,  the Parties  wish to provide for the terms and  conditions
upon which Purchaser will acquire substantially all of the assets of Seller.

            WHEREAS,   the  Parties  wish  to  make   certain   representations,
warranties,  covenants and  agreements  in  connection  with the purchase of the
assets and also to prescribe various terms and conditions to such transaction.

            NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration,  the receipt and
sufficiency  of which are  hereby  acknowledged,  the  Parties  hereby  agree as
follows:


                                    Section 1
                        Premises, Exhibits and Schedules

            The premises,  Exhibits and Schedules hereto  constitute an integral
and substantive part of this Agreement.

                                    Section 2
                                   Definitions

            2.1   Certain Defined Terms. As used in this Agreement, the term:
            (a)   "AAA" shall have the meaning set forth in Section 11(l).
            (b)   "Agreement" shall have the meaning set forth in the preamble.
            (c)   "Allocation  Certificate"  shall have the meaning set forth in
Section 3(e).
            (d)   "Antitrust  Division"  shall  have the  meaning  set  forth in
Section 6(f).
            (e)   "Appointing  Authority"  shall have the  meaning  set forth in
Section 11(l).
            (f)   "Assigned  Contracts"  shall  have the  meaning  set  forth in
Exhibit 3(a)(ii).
            (g)   "Assumed  Liabilities" shall have the meaning set forth in the
Liability Undertaking.
            (h)   "Auditor" shall have the meaning set forth in Section 3(c).
            (i)   "Audited  Closing  Balance  Sheet"  shall have the meaning set
forth in Section 3(c).
            (j)   "Authority"  and  "Authorities"  shall have the  meanings  set
forth in Section 4(e).

<PAGE>

            (k)   "Bank" shall have the meaning set forth in Section 6(o).
            (l)   "Bank  Extension"  shall have the meaning set forth in Section
6(o).
            (m)   "Basket  Amount"  shall have the  meaning set forth in Section
10(f).
            (n)   "Benefit  Arrangement"  shall  have the  meaning  set forth in
Section 4(r)(iv).
            (o)   "Benefit  Plans"  shall have the  meaning set forth in Section
4(r)(xii).
            (p)   "Break-up  Fee"  shall have the  meaning  set forth in Section
6(c)(ii).
            (q)   "Business  Day" shall mean a day,  other than a Saturday  or a
Sunday, on which commercial banks are not closed in New York City, U.S.A. and in
the City of Parma, Italy.
            (r)   "Closing" shall have the meaning set forth in Section 3(d).
            (s)   "Closing  Date"  shall have the  meaning  set forth in Section
3(d).
            (t)   "Closing  Working Capital Balance  Adjustment"  shall have the
meaning set forth in Section 3(c).
            (u)   "Closing  Working  Capital  Balance/(Deficit)"  shall have the
meaning set forth in Section 3(c).
            (v)   "COBRA" shall have the meaning set forth in Section 4(r)(xii).
            (w)   "Code" shall have the meaning set forth in Section 4(r)(i).
            (x)   "Consent" and  "Consents"  shall have the meaning set forth in
Section 4(f).
            (y)   "Disclose" shall have the meaning set forth in Section 6(e).
            (z)   "Disclosure  Schedule"  shall  have the  meaning  set forth in
Section 4(a).
            (aa)  "DOL" shall have the meaning set forth in Section 4(r)(i)(B).
            (bb)  "Dollars" and "$" shall mean lawful money of the United States
of America.
            (cc)  "ERISA" shall have the meaning set forth in Section 4(r)(i).
            (dd)  "Escrow Account" shall have the meaning set forth in Section 3
of the Escrow Agreement.
            (ee)  "Escrow Agent" shall have the meaning  ascribed thereto in the
preamble of the Escrow Agreement.
            (ff)  "Escrow   Agreement"   shall   mean   the   escrow   agreement
substantially  in the form of Exhibit  7(g)  hereto and to be  delivered  by the
parties at Closing pursuant to this Agreement.
            (gg)  "Escrow  Amount"  shall have the  meaning set forth in Section
3(b)(A)(ii).
            (hh)  "Estimated  Closing Working Capital  Balance/(Deficit)"  shall
have the meaning set forth in Section 3 (c).
            (ii)  "Excluded  Assets" shall have the meaning set forth in Section
3(a)(iv).
            (jj)  "FTC" shall have the meaning set forth in Section 6(f).
            (kk)  "GAAP" and "general accepted accounting principles" shall have
the meaning set forth in Section 2.2.
            (ll)  "Hazardous  Material"  shall  have the  meaning  set  forth in
Section 4(z)(i).

                                                                               2
<PAGE>

            (mm)  "HSR Act" shall have the meaning set forth in Section 3(d).
            (nn)  "Indemnified  Party"  shall  have  the  meaning  set  forth in
Section 10(g).
            (oo)  "Indemnifying  Party"  shall  have the  meaning  set  forth in
Section 10(g).
            (pp)  "Independent  Accountants" shall have the meaning set forth in
Section 3(c).
            (qq)  "Information"  shall  have the  meaning  set forth in  Section
6(e).
            (rr)  "IP  Assignments"  shall have the meaning set forth in Section
3(a)(iii).
            (ss)  "Intellectual  Property  Rights"  shall have the  meaning  set
forth in Section 4(n).
            (tt)  "Latest  Balance  Sheet"  shall have the  meaning set forth in
Section 4(g).
            (uu)  "Law" and "Laws"  shall have the  meaning set forth in Section
4(e).
            (vv)  "Liability  Undertaking"  shall have the  meaning set forth in
Section 3(b)(B).
            (ww)  "Lien" shall mean any restriction on personal or real property
of  any  kind,  including  without  limitation,   any  mortgage,  pledge,  lien,
hypothecation,  security  interest,  encumbrance,  claim of any kind,  easement,
right-of-way, tenancy, covenant, encroachment, restriction or charge of any kind
or nature (whether or not of record).

           (xx)   "Loss Contingency" shall have the meaning set forth in Section
4(h).
           (yy)   "New Name" shall have the meaning set forth in Section 7(j).
           (zz)   "Party" or  "Parties"  shall have the meaning set forth in the
preamble.
           (aaa)  "Payoff  Schedule" shall have the meaning set forth in Section
6(q).
           (bbb)  "PBGC" shall have the meaning set forth in Section 4(r)(i)(B).
           (ccc)  "Pension  Plan"  shall have the  meaning  set forth in Section
4(r)(i).
           (ddd)  "Permitted  Liens" shall have the meaning set forth in Section
3(a).
           (eee)  "Properties"  shall  have the  meaning  set  forth in  Section
4(z)(i).
           (fff)  "Purchase  Price"  shall have the meaning set forth in Section
3(b)(A).
           (ggg)  "Purchaser"  shall mean BF USB Inc. or any other  entity that:
(A) (x) owns or controls BF USB Inc.;  (y) BF USB Inc. owns or controls;  or (z)
is owned and  controlled  by the same parent  company or  companies  or the same
ultimate  beneficial owner as BF USB Inc., and (B) to which BF USB Inc. may have
assigned this Agreement as of the Closing.
           (hhh)  "Reserve Escrow Agreement" shall have the meaning set forth in
Section 6(n).
           (iii)  "Seller" shall mean Delicious Brands, Inc.
           (jjj)  "Seller's  Assets" shall have the meaning set forth in Section
3(a).
           (kkk)  "Seller  Capital  Stock"  shall have the  meaning set forth in
Section 4(c).
           (lll)  "Special  Reserve  Fund"  shall have the  meaning set forth in
Section 6(n).
           (mmm)  "Subsidiary"  and  "Subsidiaries"  shall have the  meaning set
forth in Section 4(b).
           (nnn)  "Tax  Returns"  shall  have the  meaning  set forth in Section
4(p).

                                                                               3
<PAGE>

           (ooo)  "Third  Party"  shall  have the  meaning  set forth in Section
6(c)(i)(A).
           (ppp)  "Termination Date" shall have the meaning set forth in Section
3(d).
           (qqq)  "Treasury"  shall  have  the  meaning  set  forth  in  Section
4(r)(i)(B).
           (rrr)  "Transferred  Employees"  shall have the  meaning set forth in
Section 6(l)(i).
           (sss)  "Welfare  Plan"  shall have the  meaning  set forth in Section
4(r)(iii).
           (ttt)  "Worth Agreements" shall have the meaning set forth in Section
6(p)(ii).

            2.2  Accounting  Terms and  Determinations.  All  references in this
Agreement to "generally  accepted  accounting  principles"  or "GAAP" shall mean
generally  accepted  accounting  principles  in effect in the  United  States of
America at the time of application  thereof.  Unless otherwise specified herein,
all accounting terms used herein shall be interpreted,  all determinations  with
respect  to  accounting  matters  hereunder  shall  be made,  and all  financial
statements and certificates  and reports as to financial  matters required to be
furnished  hereunder shall be prepared,  in accordance  with generally  accepted
accounting principles, applied on a consistent basis.


                                    Section 3
                               Purchase of Assets

            (a)  Assets  to be  Purchased.  Upon the terms  and  subject  to the
conditions set forth in this Agreement (other than such conditions as shall have
been waived in accordance with the terms hereof),  Seller shall sell,  transfer,
convey,  assign and deliver to  Purchaser,  and  Purchaser  shall  purchase from
Seller, at the Closing hereunder,  all of the assets,  properties,  goodwill and
rights of Seller,  as a going concern,  of every nature,  kind and  description,
tangible  and  intangible,  wheresoever  located  and  whether or not carried or
reflected on the books and records of Seller (hereinafter sometimes collectively
referred to as "Seller's Assets"), including without limitation (i) the right to
use the names and all variations thereof listed on Exhibit 3(a)(i) hereto;  (ii)
the assets  referred  to in the  form(s)  of Bill (or  Bills) of Sale  listed on
Exhibit 3(a)(ii) hereto; (iii) the trademarks,  licenses, and other Intellectual
Property Rights set forth in the assignment and transfer  documents set forth in
Exhibit 3(a)(iii) (the "IP  Assignments");  and (iv) the assets reflected on the
Latest Balance Sheet,  with only such  dispositions of such assets as shall have
occurred in the ordinary course of Seller's  business  between December 31, 1999
and the Closing and which are permitted by the terms hereof;  and excluding only
(x) the minute books,  corporate  seal and stock records of Seller,  and (y) the
assets specifically set forth on Exhibit 3(a)(iv) hereto (the assets referred to
in  Sections  3(a)(iv)(x)  and (y),  hereinafter,  collectively,  the  "Excluded
Assets").  All real property assets and fixtures  included among Seller's Assets
shall be conveyed free and clear of any Lien,  except for those Liens  described
on Exhibit  3(a) hereto  (the  "Permitted  Liens").  All  machinery,  equipment,
vehicles and other personal property,  including without limitation inventories,
accounts and notes  receivable,  trade notes,  trade  accounts and  Intellectual
Property  Rights,  shall be conveyed  free and clear of any Liens except for the
Permitted Liens. Purchaser shall not assume any liabilities of Seller whether or
not associated  with Seller's  Assets or in any other way associated with Seller
or any of its  businesses  except as  specifically  set  forth in the  Liability
Undertaking set forth in Exhibit 3(b)(B).

            (b) Purchase Price. Upon the terms and subject to the conditions set
forth in this Agreement,  in consideration for Seller's Assets and the covenants
contained herein (including,  without limitation,  the restrictive covenants set
forth in the Noncompetition and Confidentiality  Agreement of the Seller and the
covenant to procure the other Noncompetition and Confidentiality


                                                                               4
<PAGE>

Agreements set forth on Exhibit 7(h)) and in full payment  thereof,  at Closing,
Purchaser shall:

                        (A) pay to Seller a total  purchase  price of Twenty Six
            Million Six  Hundred  Eighty  Thousand  Dollars  ($26,680,000)  (the
            "Purchase Price") as follows:


                        (i)         By  federal  wire  transfer  of  immediately
                                    available funds to the account(s) designated
                                    by Seller  (including  pursuant  to  Section
                                    6(q)(i)(z))   by   written   notice   to  be
                                    delivered  to  Purchaser  at least  five (5)
                                    Business  Days prior to Closing,  the sum of
                                    the Purchase Price,  less (1) (x) the amount
                                    of  One  Million  Seven   Hundred   Thousand
                                    Dollars ($1,700,000) representing the agreed
                                    upon  working  capital  adjustment,  plus or
                                    less (as the case may be), (y) the Estimated
                                    Closing  Working  Capital  Balance/(Deficit)
                                    pursuant to Section  3(c);  and less (2) the
                                    Escrow  Amount to be  deposited  pursuant to
                                    subparagraph (ii) below.

                        (ii)        By  federal  wire  transfer  of  immediately
                                    available funds to the Escrow  Account,  the
                                    sum of Five Million Three Hundred Thirty-Six
                                    Thousand Dollars  ($5,336,000)  (the "Escrow
                                    Amount");

                        and

                        (B)   execute   and   deliver  to  Seller  a   Liability
Undertaking in the form of Exhibit 3(b)(B) hereto ("Liability Undertaking").

            (c) Closing Working Capital Balance Adjustment. The "Closing Working
Capital  Balance  Adjustment"  shall  be the  amount  stated  in  Exhibit  3(c),
Paragraph C, Item VI(c),  equaling to the difference between: (x) the "Estimated
Closing Working Capital Balance/(Deficit)", as stated on Exhibit 3(c), Paragraph
C, Item V(a), and (y) the "Closing Working Capital Balance/(Deficit)", as stated
in Exhibit 3(c),  Paragraph C, Item V(b). The Estimate  Closing  Working Capital
Balance/(Deficit)   is  Seller's   estimate  of  the  Closing   Working  Capital
Balance/(Deficit) calculated pursuant to Exhibit 3(c) using the figures notified
by Seller to  Purchaser at least five (5)  Business  Days prior to Closing.  The
Closing Working Capital  Balance/(Deficit) shall be calculated using the figures
set forth in the Seller's  Audited Closing Balance Sheet and the Closing Working
Capital Balance Adjustment shall be due to (xx) Purchaser,  if positive, or (yy)
Seller,  if negative,  pursuant to Section 10(d).  Within  forty-five  (45) days
after the Closing  Date,  Seller  shall  deliver to  Purchaser a  (consolidated)
balance sheet for the Seller (and its  Subsidiaries) as of 11:59 p.m. of the day
immediately  prior to the Closing Date (the "Audited  Closing  Balance  Sheet"),
prepared by Seller in accordance with GAAP and  consistently  with the method of
preparation of the Latest Balance Sheet; provided,  however, that audit fees and
expenses with respect to the audit of the Audited  Closing  Balance  Sheet,  any
entries  or  adjustments  by  reason  of  any  Code  election,  any  entries  or
adjustments  by reason of a change in the business or operations of Seller after
the Closing  and any  finders or brokers or similar  fees and all legal fees and
expenses  payable by Seller in  connection  with the  transactions  contemplated
hereby shall not be included in such Audited  Closing  Date Balance  Sheet.  The
Audited  Closing  Date Balance  Sheet shall be audited by auditors  appointed by
Seller (the "Auditor"). All Parties shall have the right to review the Auditor's
audit work papers.  Auditor shall prepare a computation  of the Closing  Working
Capital  Balance  Adjustment  based on the Audited  Closing Balance Sheet and in
accordance with the terms of this Agreement and shall submit such computation to
Purchaser  and  Seller in writing  at the same time that  copies of the  Audited
Closing  Balance Sheet are delivered.  The Audited  Closing  Balance Sheet shall
become


                                                                               5
<PAGE>

final and binding upon the parties  unless,  within  thirty (30) days  following
submission of the Audited  Closing Balance Sheet and the Closing Working Capital
Balance Adjustment  calculation,  a Party notifies the other Party in writing of
its objection thereto (the "First Notification"). The Parties shall negotiate in
good faith to resolve  their  differences.  If the Parties are unable to resolve
their differences  within twenty (20) days of receipt of the First  Notification
by  the  non-objecting  Party,  the  Parties  shall  submit  the  dispute  to an
independent  accounting firm mutually  selected by the Parties (the "Independent
Accountants")  for resolution.  The Independent  Accountants shall be limited to
determining whether the Audited Closing Balance Sheet was prepared in accordance
with GAAP and consistently  with the method of preparation of the Latest Balance
Sheet, and the calculation of the Closing Working Capital Balance Adjustment was
calculated  appropriately  from the figures  contained  in the  Audited  Closing
Balance Sheet and pursuant to the method set forth in Exhibit 3(c).  The Parties
shall instruct the Independent  Accountants to use their  reasonable  efforts to
make  their   determination   within  thirty  (30)  days  of   submission.   The
determination of the Independent  Accountants shall be final and non-appealable,
and shall be binding upon the Parties.  The fees and expenses of the Independent
Accountants shall be divided and paid equally by Seller and Purchaser.

            (d) Closing.  Unless this Agreement  shall have been  terminated and
the  transactions  contemplated  herein  shall have been  abandoned  pursuant to
Section 9 hereof,  a closing (the "Closing") will be held as soon as practicable
but in no event later than May 31, 2000 (the "Closing Date"), provided, however,
that if any of the  conditions  provided  for in Section 7 and  Section 8 hereof
shall not have been  satisfied  or waived by such  date,  then the Party to this
Agreement that is unable to satisfy such  condition or  conditions,  despite the
best efforts of such Party,  shall be entitled to postpone the Closing by notice
to the  other  Parties  until  such  condition  or  conditions  shall  have been
satisfied  (which  such  notifying  Party  will  seek to cause to  happen at the
earliest  practicable  date) or waived,  but in no event shall the Closing occur
later than the "Termination  Date" which shall be the later to occur of: (i) ten
(10) days after the  expiration of the waiting  period  (including any extension
thereof by reason of a request for  further  information)  under the  Hart-Scott
Rodino  Antitrust  Improvements  Act of 1976,  as  amended,  and the  rules  and
regulations  promulgated  thereunder (the "HSR Act"), and (ii) five (5) Business
Days after any necessary authority and approval of Seller's shareholders of this
Agreement and the transactions  contemplated  herein, but in no event later than
June 15, 2000,  unless the Parties  shall agree in writing to extend the date of
such  Closing.  The Closing shall be held at the offices of BBLP-Pavia e Ansaldo
at the  address  set forth in  Section  11(e) or at such other  location  as the
Parties  may agree in writing,  at 10:00 a.m.,  local time or such other time as
the Parties may agree,  at which time and place the  documents  and  instruments
necessary or appropriate to effect the transactions  contemplated herein will be
exchanged by the Parties.

            (e) Allocation.  Seller and Purchaser  agree that the  consideration
paid to Seller  pursuant to this  Section 3 shall be  allocated  for purposes of
this Agreement and for federal, state and local tax purposes as set forth on the
Allocation   Certificate  attached  hereto  as  Exhibit  3(e)  (the  "Allocation
Certificate").  The Allocation  Certificate  shall be completed on or before the
Closing Date.  Purchaser and Seller shall file all federal,  state and local tax
returns  in  accordance   with  the  allocation  set  forth  on  the  Allocation
Certificate.


                                    Section 4
                    Representations and Warranties of Seller

            Seller  hereby  represents  and warrants to Purchaser as of the date
hereof as follows:


                                                                               6
<PAGE>

            (a) Disclosure Schedule. The disclosure schedule marked as Exhibit 4
hereto (the  "Disclosure  Schedule") is divided into "parts" which correspond to
the  subsections  of this  Section  4.  The  Disclosure  Schedule  includes  all
information  concerning Seller and each of its subsidiaries  which is responsive
to each section hereof to make such Disclosure Schedule accurate and complete in
all material respects for each such part.

            (b) Corporate Organization.  The Disclosure Schedule sets forth each
Subsidiary (as defined below) of Seller. Seller is a corporation duly organized,
validly  existing  and in good  standing  under  the  laws of the  state  of its
incorporation,  has full corporate  power and authority to carry on its business
as it is now being  conducted and to own,  lease and operate its  properties and
assets, is duly qualified or licensed to do business as a foreign corporation in
good standing in every other  jurisdiction in which the character or location of
the properties and assets owned,  leased or operated by it or the conduct of its
business requires such qualification or licensing,  except in such jurisdictions
in which the failure to be so qualified or licensed and in good  standing  would
not,  individually  or in the aggregate,  have a material  adverse effect on its
condition (financial or otherwise),  results of operations,  assets,  properties
and going concern value; and has heretofore  delivered to Purchaser complete and
correct copies of its articles or certificate of  incorporation  and bylaws,  as
presently  in  effect.  The  Disclosure  Schedule  contains  for  Seller and its
subsidiaries a list of all  jurisdictions in which each is qualified or licensed
to do business.  The Disclosure Schedule sets forth the name and jurisdiction of
incorporation  of each  corporation as to which more than fifty percent (50%) of
the outstanding  equity securities having ordinary voting rights or power at the
time of  determination  is  being  made is  owned  or  controlled,  directly  or
indirectly,  by Seller  (individually,  a  "Subsidiary"  and  collectively,  the
"Subsidiaries").  Except as set forth in the Disclosure Schedule, in the case of
each Subsidiary:  (i) all outstanding  capital stock and other equity securities
are owned or  controlled  directly or  indirectly  by Seller;  (ii) there are no
contractual or consensual  limitations  on Seller's  ability to vote or alienate
such  securities;  (iii)  there are no  outstanding  options,  warrants or other
rights to purchase or acquire securities of such corporation or securities owned
or held by Seller;  (iv) there are no other contractual or consensual charges or
impediments  which would materially limit or impair the ownership of such equity
interests or the ability effectively to exercise the full rights of ownership or
control  of such  equity  interests,  including  without  limitation  any voting
trusts,  voting agreements,  or rights of first refusal or first option; and (v)
there  are  no   contracts,   commitments,   understandings,   arrangements   or
restrictions by which any such corporation is bound to issue, sell,  transfer or
to  purchase  or  acquire  any  shares  of its  capital  stock or  other  equity
securities or options, warrants or rights. Except as set forth on the Disclosure
Schedule,  all  shares  of  capital  stock and other  equity  interests  of each
Subsidiary  are owned or  controlled  directly or  indirectly by Seller free and
clear of all Liens. Except as set forth in the Disclosure  Schedule,  all of the
outstanding  capital  stock of Seller and each  Subsidiary  is duly  authorized,
validly  issued,  fully paid,  nonassessable  and was not issued in violation of
preemptive rights.

            (c)  Capitalization.  All authorized  capital stock of Seller of all
classes  ("Seller Capital Stock") is set forth on the Disclosure  Schedule.  The
number of shares of capital stock of Seller outstanding and the number of shares
of capital stock of Seller held in treasury as of the date of this Agreement are
set forth on the  Disclosure  Schedule.  All  issued and  outstanding  shares of
capital  stock of  Seller  are duly  authorized,  validly  issued,  fully  paid,
nonassessable  and are without,  and were not issued in violation of, preemptive
rights. Except as set forth on the Disclosure Schedule:  (x) there are no shares
of  capital  stock or other  equity  securities  of  Seller  outstanding  or any
securities  convertible  into or  exchangeable  for such shares,  securities  or
rights; (y) there are no outstanding options, warrants, conversion privileges or
other rights to purchase or acquire any capital stock or other equity securities
of Seller granted by Seller, or any securities  convertible into or exchangeable
for  such  shares,  securities  or  rights;  and  (z)  there  are no  contracts,
commitments,  understandings,  arrangements  or  restrictions by which Seller is
bound to issue or acquire any  additional  shares of its capital  stock or other
equity  securities  or any options,  warrants,  conversion  privileges  or other
rights to


                                                                               7
<PAGE>

purchase or acquire any capital  stock or other equity  securities  of Seller or
any securities  convertible into or exchangeable for such shares,  securities or
rights.

            (d) Authorization.  Seller has full corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated herein.
The Board of  Directors  of Seller has taken all  action  required  by law,  its
articles or certificate of  incorporation  and bylaws and otherwise to authorize
the execution,  delivery and performance of this Agreement and the  consummation
of the  transactions  contemplated  herein.  This  Agreement  has been  duly and
validly  executed  and  delivered  by Seller  and no other  corporate  action is
necessary other than approval of the  Shareholders of Seller.  This Agreement is
the valid and binding legal obligation of Seller,  enforceable against Seller in
accordance with its terms, except that such enforceability may be subject to (i)
applicable   bankruptcy,   insolvency,   reorganization,   fraudulent  transfer,
conveyance  or  moratorium  or other  similar laws  affecting or relating to the
enforcement of creditor's  rights generally,  (ii) general  principles of equity
relating to enforceability  (regardless of whether considered in a proceeding at
law or equity)  and (iii) as rights to  indemnity  may be limited by federal and
state securities laws and public policy.

            (e)  Non-Contravention.  Except  as  set  forth  in  the  Disclosure
Schedule, neither the execution,  delivery and performance of this Agreement nor
the consummation of the transactions contemplated herein will: (i) violate or be
in conflict with any provision of the articles or certificate  of  incorporation
or bylaws of Seller or the certificates of the designations, powers, preferences
and  rights of any  outstanding  series of stock or other  securities  of Seller
(including,  without limitation, the Series A, B, C, and D Convertible Preferred
Stock);  or (ii) be in conflict with, or constitute a default,  however  defined
(or an event  which,  with the giving of due  notice or lapse of time,  or both,
would constitute such a default),  under, or cause or permit the acceleration of
the  maturity  of,  or give  rise to any  right  of  termination,  cancellation,
imposition of fees or penalties under, any debt,  note, bond,  lease,  mortgage,
indenture,  license,  obligation,   contract,  commitment,   franchise,  permit,
instrument or other agreement or obligation  (including  without  limitation any
agreement  with  stockholders)  to  which  Seller  is a party  or by  which  its
properties or assets are or may be bound (unless with respect to which  defaults
or other rights,  requisite  waivers or consents  shall have been obtained at or
prior to the Closing) or result in the creation or imposition of any third party
claim or cause of action  against  Seller or Purchaser  (which in the  aggregate
would result in a loss in excess of Ten Thousand  Dollars  ($10,000)),  or Liens
(which  in the  aggregate  would  encumber  assets  of  Seller  in excess of Ten
Thousand  Dollars  ($10,000)),  upon any  property or asset of Seller  under any
debt, obligation,  contract,  agreement or commitment to which Seller is a party
or by which  Seller or any of its assets or  properties  is or may be bound;  or
(iii) to the best of Seller's  knowledge,  violate  any  statute,  treaty,  law,
judgment, writ, injunction,  decision,  decree, order, regulation,  ordinance or
other similar authoritative matters (sometimes  hereinafter  separately referred
to as a "Law" and  sometimes  collectively  as "Laws") of any foreign,  federal,
state or local governmental or quasi-governmental, administrative, regulatory or
judicial court, department,  commission,  agency, board, bureau, instrumentality
or  other  authority   (hereinafter  sometimes  separately  referred  to  as  an
"Authority" and sometimes collectively as "Authorities").

            (f) Consents and  Approvals.  Except as set forth in the  Disclosure
Schedule, with


                                                                               8
<PAGE>

respect to Seller, no consent,  approval,  order or authorization of or from, or
registration,  notification,  declaration or filing with (hereinafter  sometimes
separately referred to as a "Consent" and sometimes  collectively as "Consents")
any  individual  or entity,  including  without  limitation  any  Authority,  is
required in  connection  with the  execution,  delivery or  performance  of this
Agreement  by  Seller  or  the   consummation  by  Seller  of  the  transactions
contemplated  herein,  other than shareholder  approval or consents which if not
made or obtained,  will not,  individually or in the aggregate,  have a material
adverse effect on the business of Seller and its Subsidiaries taken as a whole.

            (g)  Financial  Statements.  Seller has  furnished to Purchaser  the
(consolidated)  balance sheets and statements of operations (or income or loss),
changes in shareholders' equity and changes in cash flow (or financial position)
and the reports of independent  public  accountants  described on the Disclosure
Schedule.  The most recent  audited  (consolidated)  balance  sheet  provided by
Seller to  Purchaser  shall be for the period  ending  December  31, 1999 and is
referred to herein as the "Latest Balance Sheet". Prior to Closing,  Seller will
furnish the (consolidated)  financial  statements and the reports of independent
public accountants described on the Disclosure Schedule to the Purchaser. Except
as disclosed therein,  the aforesaid financial statements (i) are or will be, as
the case may be, in  accordance  with the books and  records  of Seller and have
been,  or will  be,  as the  case  may be,  prepared  in  conformity  with  GAAP
consistently  applied for all periods,  and (ii) fairly  present and will fairly
present, as the case may be, the (consolidated)  financial position of Seller as
of the respective dates thereof,  and the  (consolidated)  results of operations
(or income or loss),  changes in  shareholders'  equity and changes in cash flow
(or  financial  position)  for the periods then ended,  all in  accordance  with
generally accepted accounting principles consistently applied for all periods.

            (h) Loss  Contingencies;  Other  Non-Accrued  Liabilities;  Employee
Accruals.  Except for those items listed in  subparagraphs  (i),  (ii) and (iii)
below which do not exceed  individually or in the aggregate Ten Thousand Dollars
($10,000),  and except as described in the Disclosure Schedule,  Seller does not
have (i) any loss  contingencies  which are not  required by GAAP to be accrued;
(ii) any loss  contingencies  involving an unasserted claim or assessment (known
to Seller) which are not required by GAAP to be disclosed  because the potential
claimants  have not  manifested  to Seller an awareness  of a possible  claim or
assessment;  or (iii) any categories of liabilities or obligations which are not
required  by  GAAP  to  be  accrued.  For  purposes  of  this  Agreement,  "Loss
Contingency"  shall have the meaning  accorded to it by GAAP.  All  accruals for
unpaid vacation pay; premiums for employment insurance; health premiums; accrued
wages,  salaries and  commissions;  and employee benefit plan payments have been
reflected in the books and records of Seller.

            (i)  Absence  of  Certain  Changes.  Except  as  set  forth  in  the
Disclosure  Schedule,  since the date of the Latest  Balance  Sheet,  Seller has
owned and operated its assets,  properties and businesses in the ordinary course
of business and consistent with past practice;  without  limiting the generality
of the foregoing, Seller has not, subject to the aforesaid exceptions:

                 (i) suffered,  as of the date hereof, any adverse change in its
condition  (financial or  otherwise),  assets or properties or  experienced  any
event or failed to take any action which  reasonably could be expected to result
in such a change  that  results  in a cost in  excess of Five  Thousand  Dollars
($5,000) individually,  or Ten Thousand Dollars ($10,000) in the aggregate other
than in the ordinary course of business;

                 (ii) other than in the ordinary  course of  business,  suffered
any loss,  damage,  destruction  or other  casualty  (whether  or not covered by
insurance)  or  any  loss  of


                                                                               9
<PAGE>

officers, employees, dealers, distributors,  independent contractors, customers,
or suppliers  which,  individually  or in the  aggregate,  could have a material
adverse effect on its business or operations,;

                 (iii) declared,  set aside,  made or paid any dividend or other
distribution  in respect of its capital  stock;  or  purchased  or redeemed  any
shares of its capital stock;

                 (iv)  issued or sold any shares of its  capital  stock,  or any
options, warrants,  conversion,  exchange or other rights to purchase or acquire
any such shares or any  securities  convertible  into or  exchangeable  for such
shares;

                 (v) incurred any indebtedness for borrowed money;

                 (vi)  mortgaged,  pledged,  or subjected to any Lien, or lease,
any of its properties or assets, tangible or intangible;

                 (vii)  acquired or disposed of any assets or properties  valued
in excess of Fifteen  Thousand  Dollars  ($15,000)  other  than in the  ordinary
course of business;

                 (viii) forgiven or canceled any debts or claims,  or waived any
rights;

                 (ix)  entered  into any  transaction  in excess of  Twenty-Five
Thousand Dollars ($25,000) other than in the ordinary course of business;

                 (x) granted to any  officer or  salaried  employee or any other
employee  any  increase in  compensation  in any form or paid any  severance  or
termination pay other than in the ordinary course of business;

                 (xi) entered into any commitment for capital  expenditures  for
additions  to plant,  property or equipment  in excess of  twenty-five  thousand
dollars ($25,000); or

                 (xii)  agreed,  whether in writing  or  otherwise,  to take any
action described in this subsection.

            (j) Real Properties. Except as set forth in the Disclosure Schedule,
Seller has good and marketable fee simple record title in and to, or a leasehold
interest  in and to, all of their real  property  and real  property  assets and
fixtures  reflected in the Latest  Balance  Sheet and all of their real property
assets and fixtures purchased or otherwise acquired since the date of the Latest
Balance Sheet (except for real property assets and fixtures sold in the ordinary
course of business  since the date of the Latest Balance  Sheet).  Except as set
forth in the Disclosure Schedule, such leasehold interests are valid and in full
force  and  effect  and,  to the  best of  Seller's  knowledge,  enforceable  in
accordance  with their terms and there does not exist any  violation,  breach or
default thereof or thereunder.  Except as set forth in the Disclosure  Schedule,
none of the real property  assets or fixtures  owned by Seller is subject to any
Lien except for Permitted Liens. Except as set forth in the Disclosure Schedule,
to the best of Seller's  knowledge,  all real properties  owned by and leased to
Seller used in the conduct of its business are free from structural  defects, in
good operating condition and repair, with no maintenance,  repair or replacement
having an estimated cost exceeding Twenty Five Thousand Dollars ($25,000) in the
aggregate  having been deferred or neglected,  suitable for the intended use and
free  from  other  material  defects.  Except  as set  forth  in the  Disclosure
Schedule,  to the best of Seller's  knowledge,  each such real  property and its
present  use  conform in all  respects  to all  occupational,  safety or health,
zoning, planning, subdivision, platting and similar Laws. Except as set forth in
the  Disclosure  Schedule,  all  public  utilities  necessary  for  the  use and
operation of any facilities on the aforesaid real properties are, to the best of
Seller's knowledge,  available for


                                                                              10
<PAGE>

use or access at such properties and there is no legal or physical impairment to
free ingress or egress from any of such facilities or real properties. Seller is
not a foreign  person and is not  controlled  by a foreign  person,  as the term
"foreign person" is defined in Section 1445(f)(3) of the Code.

            (k) Machinery,  Equipment, Vehicles and Personal Property. Except as
set forth in the Disclosure  Schedule,  Seller has good and merchantable  right,
title  and  interest  in and to,  or a  leasehold  interest  in and to,  all its
machinery,  equipment,  vehicles and other  personal  property  reflected in the
Latest  Balance Sheet and purchased or otherwise  acquired since the date of the
Latest  Balance  Sheet  (except  for such items  sold or leased in the  ordinary
course of business  since the date of the Latest Balance  Sheet).  Except as set
forth in the Disclosure  Schedule,  all of such leasehold  interests relating to
machinery, equipment, vehicles and other personal property are valid and in full
force and effect and  enforceable in accordance  with their terms and there does
not exist any violation, breach or default thereof or thereunder.  Except as set
forth in the Disclosure Schedule, none of such machinery, equipment, vehicles or
other  personal  property  owned by Seller is  subject  to any Lien  except  for
Permitted Liens. Except as set forth in the Disclosure Schedule,  the machinery,
equipment, vehicles and other personal property of Seller which are necessary to
the  conduct of its  business  are in good  operating  condition  and repair and
readily usable for the intended  purposes thereof and no necessary  maintenance,
replacement or repair has been deferred or neglected.

            (l) Inventories. Except as set forth in the Disclosure Schedule:

                (i) all  inventory  of Seller,  whether  reflected in the Latest
Balance  Sheet or  otherwise,  consists  of a quality  and  quantity  usable and
salable on normal trading terms in the industry;  and the present  quantities of
all  Seller's  inventory  are  reasonable  in the present  circumstances  of the
business as currently conducted or as proposed to be conducted.

                (ii) none of Seller's  inventory  is being held or is  otherwise
regularly held by any third party whatsoever on a consignment basis.

                (iii) Seller owns free of all Liens, all packaging inventory and
related  materials  maintained  by  suppliers  and other third party  packers or
co-packers held for Seller as shown on the Latest Balance Sheet.

            (m) Receivables and Payables.  Except as set forth on the Disclosure
Schedule:  (A)  Seller  has good  right,  title and  interest  in and to all its
accounts and notes  receivable and trade notes and trade  accounts  reflected in
the Latest Balance Sheet and those acquired and generated  since the date of the
Latest Balance Sheet (except for those paid since the date of the Latest Balance
Sheet); (B) none of such accounts and notes receivable and trade notes and trade
accounts is subject to any Lien other than  Permitted  Liens;  (C) except to the
extent of applicable  reserves  shown in the Latest  Balance  Sheet,  all of the
accounts and notes  receivable,  trade notes and trade  accounts owing to Seller
constitute valid and enforceable  claims arising from bona fide  transactions in
the ordinary course of business,  and, to the best of Seller's knowledge,  there
are no claims,  refusals to pay or other rights of set-off  against any thereof;
(D) no account or note debtor whose account or note balance exceeds  Twenty-Five
Thousand  Dollars  ($25,000)  has been  delinquent in payment by more than sixty
(60) days;  (E) the aging  schedules of (x) the accounts,  trade notes and trade
accounts of Seller  previously  furnished  to Purchaser on March 6, 2000 for the
period  ended  March 3, 2000  annexed to the  Disclosure  Schedule,  and (y) the
accounts  receivable  of Seller  furnished to Purchaser on March 6, 2000 for the
period ended February 29, 2000 annexed to the Disclosure Schedule,  are complete
and  accurate  in all  material  respects;  and  (F)  the  reserves  established
therefore and reflected in the Latest Balance Sheet are reasonable.

                                                                              11
<PAGE>

            (n) Intellectual  Property  Rights.  Seller owns or has the right to
use (as specified in the Disclosure  Schedule) the  industrial and  intellectual
property rights,  including without limitation the patents, patent applications,
patent rights, trademarks,  trademark applications,  trade names, service marks,
service mark  applications,  copyrights,  computer  programs and other  computer
software,   inventions,   know-how,  trade  secrets,   technology,   proprietary
processes, methods, systems, recipes, and formulae (collectively,  "Intellectual
Property Rights") described on the Disclosure  Schedule.  Except as set forth on
the Disclosure Schedule,  the use of all Intellectual  Property Rights necessary
or required for the conduct of the  businesses of Seller as presently  conducted
and as proposed  to be  conducted  does not and will not  infringe or violate or
allegedly infringe or violate the intellectual  property rights of any person or
entity.  Except as described on the Disclosure Schedule,  neither Seller nor any
Subsidiary owns or uses any Intellectual Property Rights pursuant to any license
agreement  or has granted  any person or entity any rights,  pursuant to license
agreement or otherwise, to use the Intellectual Property Rights. Such agreements
as set forth on the Disclosure Schedule include written and oral agreements.

            (o)  Litigation.  Except  as set forth in the  Disclosure  Schedule,
there is no legal, administrative, arbitration, or other proceeding, suit, claim
or action of any nature or, to the best of  Seller's  knowledge,  investigation,
review or audit of any kind, judgment,  decree,  decision,  injunction,  writ or
order  pending,  noticed,  scheduled or, to the best of the Seller's  knowledge,
threatened  by or  against  or  involving  Seller,  its  assets,  properties  or
businesses or its directors, officers, agents or employees, whether at law or in
equity,  before or by any person or entity or Authority,  or which  questions or
challenges  the validity of this Agreement or any action taken or to be taken by
the Parties  pursuant to this Agreement or in connection  with the  transactions
contemplated herein.

            (p) Tax  Returns.  Seller  has duly  and  timely  filed  all tax and
information  reports,  returns  and  related  documents  required to be filed by
Seller with respect to the income-type,  sales/use-type  and  employment-related
taxes of the United  States,  the states,  municipalities,  and other foreign or
domestic  jurisdictions set forth in the Disclosure  Schedule (and the political
subdivisions  thereof).  Except as set forth in the Disclosure Schedule,  Seller
has duly and timely filed all tax and information  reports,  returns and related
documents  required  to be  filed by it with any  Authority,  including  without
limitation all returns and reports of income, franchise,  gross receipts, sales,
use, occupation,  employment,  withholding,  excise, transfer, real and personal
property and other taxes, charges,  assessments,  and levies (collectively,  the
"Tax Returns") and,  except as set forth in the Disclosure  Schedule,  have duly
paid,  or made  adequate  provision  for the due and timely  payment of all such
taxes and other  charges,  including  without  limitation  interest,  penalties,
assessments  and  deficiencies,  due or  claimed to be due from them by any such
Authorities,  except where  failure to pay would not result in a loss,  cost, or
damages exceeding Ten Thousand Dollars ($10,000) in the aggregate;  the reserves
for all of such taxes and other  charges  reflected in the Latest  Balance Sheet
are  adequate;  and, to the best of Seller's  knowledge,  there are no Liens for
such taxes or other  charges upon any property or assets of Seller.  There is no
omission,   deficiency,   error,  misstatement  or  misrepresentation,   whether
innocent,  intentional or fraudulent,  in any Tax Return filed by Seller for any
period which could  result in an actual tax  liability in excess of Ten Thousand
Dollars ($10,000). The federal income tax returns (consolidated,  if applicable)
of Seller have been examined by the Internal  Revenue Service for all periods to
and including those expressly set forth in the Disclosure Schedule,  and, except
to the extent  shown  therein,  all  deficiencies  asserted  as a result of such


                                                                              12
<PAGE>

examinations  have been paid or finally  settled and no issue has been raised by
the Internal  Revenue Service in any such  examination  which, by application of
similar  principles,  reasonably  could be  expected  to  result  in a  proposed
deficiency  for any other  period  not so  examined.  Except as set forth in the
Disclosure Schedule, all deficiencies and assessments levied or assessed to date
resulting from  examination of the Tax Returns of Seller have been paid.  Except
as set forth in the Disclosure Schedule,  there are no outstanding agreements or
waivers  extending  the  statutory  period of  limitation  applicable to any Tax
Return for any period.

            (q)  Insurance.  The  Disclosure  Schedule  contains an accurate and
complete  list of all policies of fire and other  casualty,  general  liability,
theft, life, workers'  compensation,  health,  directors and officers,  business
interruption  and other all other  forms of  insurance  owned or held by Seller,
specifying  the insurer,  the policy  number and the term of the  coverage.  All
present  policies  are in full force and effect and all  premiums  with  respect
thereto have been paid.  Seller has not been denied any form of insurance and no
policy of  insurance  has been  revoked or  rescinded  during the past three (3)
years, except as described on the Disclosure Schedule.

            (r) Benefit Plans. Except as set forth in the Disclosure Schedule:

                (i) Seller does not sponsor, administer,  maintain or contribute
to,  nor has  Seller  at any  time  ever  sponsored,  administered,  maintained,
contributed to,  directly or indirectly,  nor had an obligation to contribute or
been required to contribute to any  "employee  pension  benefit plan"  ("Pension
Plan",  not  including  any  union-sponsored  plan) as such term is  defined  in
Section 3(2) of the Employee  Retirement Income Security Act of 1974, as amended
("ERISA"),  or under which  Seller may incur any  liability,  including  without
limitation, solely for purposes of this subsection a plan excluded from coverage
by Section 4(b)(5) of ERISA and,  including without  limitation any such Pension
Plan which is a "Multiemployer Plan" within the meaning of Section 4001(a)(3) of
ERISA, without regard to whether or not any of the foregoing is funded,  whether
formal or informal,  whether or not subject to ERISA and whether legally binding
or not. Each such Pension Plan is in compliance  with the applicable  provisions
of ERISA,  the  applicable  provisions of the Internal  Revenue Code of 1986, as
amended, and the regulations  promulgated thereunder (the "Code"), and all other
applicable  Law.  No Pension  Plan is subject to Title IV of ERISA or to Section
412 of the Code.  Seller has satisfied all payment and contribution  obligations
for all union sponsored plans. Set forth on the Disclosure Schedule is a list of
all  Union-sponsored  pension  plans to which  Seller  contributes  or  Seller's
employees are entitled to benefits, and

                        (A) Each  Pension  Plan  which is  intended  to meet the
            requirements of Section 401(a) and where applicable,  Section 401(k)
            of the  Code,  now  meets  and  since  its  inception  has met,  the
            requirements  for  qualification  under  Section  401(a) and,  where
            applicable,  Section  401(k) of the Code,  and its related  trust is
            now, and since its  inception has been,  exempt from taxation  under
            Section  501(a) of the Code and  nothing  has  occurred  which would
            adversely affect the qualified status of such Pension Plan.

                        (B) Seller has performed all obligations  required to be
            performed by it under,  and is not in default  under or in violation
            of, any and all of the Pension  Plans,  and is in  compliance in all
            material  respects with, and each Pension Plan has been operated and
            administered  in  all  material  respects  in  accordance  with  its
            provisions and in compliance in all material  respects with the laws
            governing  each such Pension  Plan,  including  without  limitation,
            rules and regulations  promulgated by the Department of the Treasury
            ("Treasury"),  the Internal  Revenue  Service,  Department  of Labor



                                                                              13
<PAGE>

            ("DOL"),  and the  Pension  Benefit  Guaranty  Corporation  ("PBGC")
            pursuant to the provisions of ERISA and the Code.

                        (C) No event has  occurred and there has been no failure
            to act on the part of the Seller,  as fiduciary of any Pension Plan,
            or a plan  official  that  violates  Section  404 of  ERISA or could
            subject Seller, a Pension Plan, or a plan official to the imposition
            of any tax, penalty, or other liability, further by way of indemnity
            or otherwise.

                        (D)  Seller   does  not  owe  any   accrued  but  unpaid
            contributions to any of the Pension Plans.

                        (E) No reportable  event (as defined in Section  4043(e)
            of ERISA),  or  requirement  to provide  security to a Pension  Plan
            (pursuant to Sections  401(a) 29 or Section 412(f) of the Code),  or
            plan  termination (as defined in Title IV of ERISA or Section 411(d)
            of the Code), has occurred with respect to any of the Pension Plans.

                        (F) The present value of accrued  benefits (as agreed to
            by Seller's  actuary in writing) under any of the Pension Plans that
            are  covered  by Title IV of ERISA  does not exceed the value of the
            assets  of such  Pension  Plan.  As of the last day of the last plan
            year of each Pension Plan and as of the Closing Date,  the amount of
            "unfunded benefit  liabilities" as defined in Section 4001(a)(18) of
            ERISA (but  excluding  from the  definition  of  "current  value" of
            "assets" of such Pension Plan, accrued but unpaid contributions) did
            not and will not exceed zero. No  "accumulated  funding  deficiency"
            for which there is an excise tax due (or would be due in the absence
            of a waiver), as defined in Section 412 of the Code or as defined in
            Section  302(a)(2) of ERISA,  whichever may apply, has been incurred
            with  respect  to any  Pension  Plan with  respect to any plan year,
            whether  or  not  waived.   Seller  has  no  liability   for  unpaid
            contributions  with respect to any Pension Plan  pursuant to Section
            412(m) of the Code.

                        (G) Seller has paid all premiums (and  interest  charges
            and penalties for late payment,  if applicable) due to the PBGC with
            respect to each  Pension  Plan for each plan year  thereof for which
            such  premiums  are  required.  Seller has not  engaged in, nor is a
            successor to an entity that has engaged in, a transaction  described
            in  Section  4069 of ERISA.  There has been no  reportable  event as
            defined in Section 4043(b) of ERISA and the PBGC  regulations  under
            such  section)  with respect to any Pension Plan. No filing has been
            made by Seller with PBGC,  and no proceeding  has been  commenced by
            the PBGC, to terminate any Pension Plan. No condition  exists and no
            event has occurred that could constitute  grounds for termination of
            any Pension Plan by the PBGC.

                        (ii) Seller has not ceased operations at any facility or
withdrawn from any Pension Plan or otherwise acted or omitted to act in a manner
which could subject it to liability  under Section 4062,  Section 4063,  Section
4064,  Section  4068,  or  Section  4069 of  ERISA  and  there  are no  facts of
circumstances which might give rise to any liability of Seller to the PBGC under
Title IV of ERISA or which  could  reasonably  be  anticipated  to result in any
claims  being  made  against  Purchaser,  or Seller to the PBGC.  Seller has not
incurred any withdrawal  liability  (including without limitation any contingent
or  secondary  withdrawal  liability)  within the  meaning  of Section  4201 and
Section 4204 of ERISA to any Multiemployer Plan. Seller has not, with respect to
any Pension Plan which is a Multiemployer  Plan,  suffered or otherwise caused a
"complete  withdrawal"  or a "partial  withdrawal,"  as such  terms are  defined
respectively  in  Sections  4201,  4203,  4204 and 4205 of ERISA.  Seller has no
liability to any such  Multiemployer  Plan in the event of a complete or partial
withdrawal  therefrom as of the close


                                                                              14
<PAGE>

of the most recent fiscal year of any such Multiemployer Plan ended prior to the
date hereof.

                        (iii)  Seller does not  sponsor,  administer,  maintain,
contribute to, or has not at any time ever sponsored, administered,  maintained,
contributed to, or been required to contribute to any "employee  welfare benefit
plan"  ("Welfare  Plan"),  as such  term is  defined  in  Section  3(1) of ERISA
(including  without  limitation a plan excluded from coverage by Section 4(b)(5)
of ERISA),  or under which Seller may incur any  liability,  whether  insured or
otherwise,  without  regard to  whether or not any of the  foregoing  is funded,
whether formal or informal,  whether or not subject to ERISA and whether legally
binding or not, and any such Welfare Plan  maintained by Seller is in compliance
with the  provisions  of ERISA and all other  applicable  Laws.  Seller  has not
established or contributed to any "voluntary employees' beneficiary association"
within the meaning of Section  501(c)(9)  of the Code.  Seller does not maintain
any Welfare Plan which is a "Group  Health Plan" (as such the term is defined in
Section  607(1) of ERISA and Section  4980B(g)(2) of the Code) that has not been
administered  and operated in all  respects in  compliance  with the  applicable
requirements of Section 601 of ERISA and Section 4980B of the Code and Seller is
not  subject  to  any  liability,  including  but  not  limited  to,  additional
contributions, fines or penalties, or loss of tax deductions as a result of such
administration and operation.

                        (iv)  Seller  does not  maintain  or  contribute  to any
employment,  consulting,  severance,  or  other  similar  contract  arrangement,
procedures,  or policy and each plan,  arrangement  (written or oral),  program,
agreement  or  commitment   providing  for  insurance  coverage  (including  any
self-insured   arrangements),   workers'   compensation,   disability  benefits,
supplemental  unemployment  benefits,  vacation benefits,  retirement  benefits,
life, health,  disability, or accident benefits (including,  without limitation,
any  "voluntary  employees'  beneficiary  association"  as  defined  in  Section
501(c)(9) of the Code providing for the same or other benefits),  dependent care
spending  accounts or assistance,  split dollar  arrangements,  cafeteria plans,
supplemental  retirement,  termination  pay,  dental,  salary,  continuation  or
deferred compensation, profit-sharing bonuses, stock options, stock appreciation
rights,   stock   purchases  or  other  forms  of  incentive   compensation   or
post-retirement  insurance,  compensation or benefits which (A) is not a Welfare
Plan,  Pension Plan, or  Multiemployer  Plan,  (B) is entered into,  maintained,
contributed to, or required to be contributed to, as the case may be, by Seller,
or under which Seller may incur any liability,  without regard to whether or not
any of the  foregoing  is funded,  whether  formal or  informal,  whether or not
subject  to ERISA,  and  whether  legally  binding  or not,  and (C)  covers any
individual who is currently,  or was previously,  retained or employed by Seller
("Benefit Arrangement").

                        (v) As of or  subsequent  to the Closing  Date,  neither
Seller,  nor any Welfare Plan or Benefit  Arrangement  maintained by Seller, has
any present or future  obligation  to maintain,  sponsor,  provide,  or make any
payment to any present or former employee of Seller pursuant to any Welfare Plan
or Benefit  Arrangement.  Seller does not  maintain  any Welfare Plan or Benefit
Arrangement,  which is funded by a trust  described in Section  501(c)(9) of the
Code or subject to the provisions of Section 505 of the Code. No Welfare Plan or
Benefit Arrangement of Seller provides or is required to provide health, dental,
medical,  life, death, or survivor benefits to any former or retired employee or
beneficiary  thereof except to the extent required under any state insurance law
providing for a conversion  option under a group insurance  policy under Section
601 of ERISA or Section 4980B of the Code.

                        (vi)  Neither any of Pension  Plans or Welfare  Plans or
Benefit  Arrangements,  nor any  trust  created  or  insurance  contract  issued
thereunder nor any trustee or


                                                                              15
<PAGE>

administrator thereof nor any officer, director or employee of Seller, custodian
or any other  "disqualified  person" within the meaning of Section 4975(e)(2) of
the Code,  or "party in interest"  within the meaning of Section 3(14) of ERISA,
with respect to any such Pension Plans or Welfare Plans or Benefit  Arrangements
or  any  such  trust  or  insurance  contract  or  any  trustee,   custodian  or
administrator  thereof, or any disqualified  person, party in interest or person
or entity  dealing with such Pension Plans or Benefit  Arrangements  or any such
trust,  insurance  contract  or any  trustee  is  subject to a tax or penalty on
prohibited  transactions  imposed  by  Section  4975  of the  Code or to a civil
penalty  imposed by Section  502 of ERISA.  There are no facts or  circumstances
which could subject Seller to any excise tax under Section 4972 or Sections 4976
through 4980, both inclusive, of the Code.

                        (vii) Full  payment has been made of all  amounts  which
Seller is required,  under  applicable  Law, with respect to any Pension Plan or
Welfare Plan or Benefit  Arrangement,  or any agreement  relating to any Pension
Plan or Welfare  Plan or  Benefit  Arrangement,  to have paid as a  contribution
thereto.  No accumulated  funding deficiency (as defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived,  exists with respect to any
Pension  Plan.  Seller  does not  maintain  or  contribute  to,  nor has it ever
sponsored,  maintained or  contributed to or been required to contribute to, any
Pension  Plan  subject  to Part 3 of Title I of ERISA or  Section  412(n) of the
Code.  Seller has made adequate  provisions  for reserves to meet  contributions
which  have not been  made  because  they are not yet due under the terms of any
Pension Plan or Welfare Plan or Benefit Arrangement or related  agreements.  All
Pension  Plans  which  Seller  operates  as plans that are  qualified  under the
provisions  of Section  401(a) of the Code satisfy the  requirements  of Section
401(a)  and all  other  sections  of the Code  incorporated  therein,  including
without  limitation  Sections  401(k),  401(l) and  401(m) of the Code;  and the
Internal Revenue Service has issued favorable determination letters with respect
to the  current  statement  of all Pension  Plans and,  to  Seller's  knowledge,
nothing has occurred since the issuance of any such letters that could adversely
affect  such  favorable  determination.  There  will be no  change  on or before
Closing  in  the  operation  of  any  Pension  Plan,  Welfare  Plan  or  Benefit
Arrangement  or any  documents  with  respect  thereto  which will  result in an
increase in the benefit  liabilities under such plans, except as may be required
by Law.

                        (viii)  Seller  has  complied  with  all  reporting  and
disclosure  obligations  with respect to the Pension  Plans,  Welfare  Plans and
Benefit Arrangements imposed by Title I of ERISA or other applicable Law.

                        (ix) There are no  pending  or, to  Seller's  knowledge,
threatened claims,  suits or other proceedings against Seller, the Pension Plan,
Welfare Plan, Benefit Arrangement, or any other party, including but not limited
to any fiduciary with respect to such plans or arrangements by present or former
employees of Seller,  plan participants,  beneficiaries or spouses of any of the
above,  including  without  limitation  claims  against the assets of any trust,
involving any Pension Plan, Welfare Plan, or Benefit Arrangement,  or any rights
or benefits thereunder, other than the ordinary and usual claims for benefits by
participants or beneficiaries.

                        (x) The transactions  contemplated  herein do not result
in the acceleration or accrual,  vesting, funding or payment of any contribution
or benefit under any Pension Plan, Welfare Plan or Benefit Arrangement.

                        (xi) No action or  omission  of Seller or any  director,
officer,  employee, or agent thereof or any condition,  circumstance,  or verbal
requirement exists which in any way restricts, impairs or prohibits Purchaser or
Seller or any successor from amending, merging, or



                                                                              16
<PAGE>

terminating any Pension Plan, Welfare Plan or Benefit  Arrangement in accordance
with the express terms of any such plan and applicable Law.

                        (xii)  (A) Each  Pension  Plan,  Welfare  Plan,  Benefit
Arrangement,  related  trust  agreement,  annuity  contract,  or  other  funding
instrument  complies  and has been  maintained,  in all  material  respects,  in
compliance  with its terms and, both as to its form,  operation,  and procedures
with all applicable requirements,  including all record keeping,  reporting, and
disclosure requirements,  prescribed by any and all statutes, orders, rules, and
regulations  including,  but not limited to,  ERISA,  the  Consolidated  Omnibus
Budget  Reconciliation  Act, as amended ("COBRA"),  and the Code; (B) Seller has
performed,  in all material respects,  all obligations  required to be performed
under,  and is not in  default  under  or in  violation  of,  any and all of the
Pension Plans,  Welfare Plans, and Benefit Arrangements  (collectively  "Benefit
Plans") is, in all material respects,  in compliance with, and each Benefit Plan
has been operated and  administered  in accordance  with its  provisions  and in
compliance  with,  the  laws  governing  each  such  plan,   including   without
limitation,  rules  and  regulations  promulgated  by the  DOL,  PBGC,  and  the
Treasury, pursuant to the provisions of ERISA, COBRA, and the Code; (C) no event
has  occurred  and there has been no  failure  to act on the part of  Seller,  a
fiduciary of any Benefit Plan,  or a "plan  official" (as defined in Section 412
of ERISA) that violates Section 404 of ERISA or could subject the Purchaser, any
Benefit  Plan,  a  fiduciary,  or plan  official to the  imposition  of any tax,
penalty, or other liability,  whether by way of indemnity or otherwise;  and (D)
no filing, application, or other matter with respect to any of the Benefit Plans
or the Seller is pending with the IRS, PBGC, DOL, or other governmental body.

                        (xiii)  The  Disclosure  Schedule  contains  a true  and
complete  list  of all of the  Benefit  Plans  which  the  Seller  is now or was
previously  obligated,  directly  or  indirectly,  to  contribute  or  maintain,
regardless of whether formal or informal and without regard to whether or not it
was funded.  Seller has delivered to the Purchaser (A) true and complete  copies
of all documents  embodying or relating to the Benefit Plans,  including without
limitation,  with respect to each Benefit  Plan,  all  amendments to the Benefit
Plans, and any trust or other funding arrangement, including certified financial
statements  which  fairly  present  the  assets and  liabilities  of each of the
Benefit Plans as of the date thereof and there have been no material  changes in
the assets and liabilities since the date of such financial statements;  (B) the
most recent annual and periodic actuarial evaluations,  if any, prepared for any
Benefit  Plan;  (C) the most recent  annual  reports  (series  Form 5500 and all
schedules thereto),  if any, required under ERISA,  including those prepared for
the most recent three (3) years for each Benefit  Plan;  (D) if the Benefit Plan
is funded, the most recent annual and periodic  accounting of the Benefit Plan's
assets,  including  the most  recent  three (3) years of the plan;  (E) the most
recent  determination  letter  received  from the IRS, if any, and a copy of the
most recent  summary plan  description  together with the most recent summary of
modifications  required  under ERISA with  respect to each  Benefit Plan and all
employee  communications and/or written  interpretations or descriptions thereof
relating  to each  Benefit  Plan;  (F) with  respect  to each  Benefit  Plan,  a
description  setting  forth the amount of any  liability of the Seller as of the
date hereof or as of the Closing Date or which  arises or accrues in  connection
with the Closing Date for:  (1)  payments  which are or will be more than thirty
(30)  days past due,  or (2)  unfunded  accrued  benefits,  including  severance
benefits,  the present value of which on an aggregate estimated basis exceeds or
will exceed Twenty-Five  Thousand Dollars ($25,000);  and (G) any correspondence
between any Benefit Plan and any  governmental  agency during the last three (3)
years.

                                                                              17
<PAGE>

                        (xiv)  There  is  no  contract,   agreement,   plan,  or
arrangement  covering  any  employee  or former  employee  of the  Seller  that,
individually  or  collectively,  provides  for the  payment by the Seller of any
amount (A) that is not deductible under Section  162(a)(1) or 404 of the Code or
(B) that is an "excess parachute payment" pursuant to Section 280G of the Code.

                        (xv)  Neither the Seller nor any plan  fiduciary  of any
Pension Plan or Welfare Plan engaged in any transaction in violation of Sections
101 or 106 of ERISA or any  "prohibited  transaction,"  as  defined  in  Section
4975(c)(1) of the Code, for which no exemption exists under Section 408 of ERISA
or Section 4975(c)(2) or (d) of the Code.

                        (xvi)  Seller  has not  announced  any  plan or  legally
binding  commitment to create any additional  Pension Plans,  Welfare Plans,  or
Benefit Arrangements or to amend or modify any existing Benefit Plan.

                        (xvii) No event has  occurred in  connection  with which
Seller or any Pension Plan,  Welfare Plan, or Benefit  Arrangement,  directly or
indirectly, could be subject to any liability (A) under any statute, regulation,
or  governmental  order  relating to any Benefit  Plans,  or (B) pursuant to any
obligation  of the Seller to indemnify  any person  against  liability  incurred
under any statute, regulation or order as they relate to the Benefit Plans.

            (s) Bank Accounts;  Powers of Attorney. The Disclosure Schedule sets
forth:  (i) the names of all  financial  institutions,  investment  banking  and
brokerage  houses,  and other similar  institutions at which the Seller maintain
accounts,  deposits,  safe  deposit  boxes of any  nature,  and the names of all
persons  authorized  to draw thereon or make  withdrawals  there from;  (ii) the
terms and  conditions  thereof and any  limitations or  restrictions  as to use,
withdrawal or otherwise;  and (iii) the names of all persons or entities holding
general or special  powers of  attorney  from  Seller and a summary of the terms
thereof.

            (t)         Contracts and Commitments; No Default.

                        (i)  Except  as set  forth in the  Disclosure  Schedule,
Seller:

                        (A)  does not have  any  written  contract,  commitment,
            agreement or arrangement with any person or, to Seller's  knowledge,
            any oral contract,  commitment,  agreement or arrangement  which (1)
            requires  payments  individually  in excess of $5,000 annually or in
            excess  of  $10,000  over its  term  (including  without  limitation
            periods  covered by any  option to extend or renew by either  party)
            and (2) is not  terminable  on  ninety  (90)  days'  or less  notice
            without cost or other liability;

                        (B) does not pay any person or entity cash  remuneration
            at the annual rate (including without limitation guaranteed bonuses)
            of more than Forty Thousand Dollars ($40,000) for services rendered;

                        (C) is not  restricted  by  agreement  from  carrying on
            their  businesses or any part thereof  anywhere in the world or from
            competing in any line of business with any person or entity;

                        (D) is not subject to any  obligation or  requirement to
            provide  funds  to or make  any  investment  (in the form of a loan,
            capital contribution or otherwise) in any person or entity;

                        (E) is not party to any agreement,  contract, commitment
            or loan to which any of its directors,  officers or  shareholders or
            any   "affiliate"  or  "associate"   (as  defined  in  Rule  405  as
            promulgated  under the Securities Act of 1933) (or former  affiliate
            or associate) thereof is a party;

                                                                              18
<PAGE>

                        (F) is not subject to any outstanding  sales or purchase
            contracts,  commitments  or proposals  which will result in any loss
            upon completion or performance thereof;

                        (G) is not a party to any  purchase or sale  contract or
            agreement that calls for aggregate purchases or sales in excess over
            the course of such  contract or agreement  of Ten  Thousand  Dollars
            ($10,000) or which  continues  for a period of more than twelve (12)
            months (including  without  limitation periods covered by any option
            to renew or extend  by  either  party)  which is not  terminable  on
            ninety (90) days' or less notice without cost or other  liability at
            or any time after the Closing;

                        (H)  is  not  subject  to  any   contract,   commitment,
            agreement or  arrangement  with any  "disqualified  individual"  (as
            defined in Section 280G(c) of the Code) which contains any severance
            or termination pay liabilities  which would result in a disallowance
            of the deduction for any "excess  parachute  payment" (as defined in
            Section 280G(b)(1) of the Code) under Section 280G of the Code; or

                        (I)  has  any  distributorship,  dealer,  manufacturer's
            representative,  franchise or similar sales contract relating to the
            payment of a commission.

                        (ii) True and  complete  copies (or  summaries  with all
material terms and conditions, in the case of oral contracts and
commitments)  of all oral  contracts and  commitments  in excess of Ten Thousand
Dollars  ($10,000)  and written  contracts and  commitments  in excess of Twenty
Thousand Dollars ($20,000)  disclosed pursuant to Section 4(t)(i) have been made
available  to  Purchaser  for  review.  Except  as set  forth in the  Disclosure
Schedule,  all such contracts and  commitments  are valid and enforceable by and
against  Seller in all material  respects in  accordance  with their  respective
terms;  Seller is not in breach,  violation or default,  however defined, in the
performance of any of its  obligations  thereunder,  and to the best of Seller's
knowledge,  no facts and circumstances  exist which,  whether with the giving of
due notice, lapse of time, or both, would constitute such a breach, violation or
default thereunder or thereof; and, to the best of Seller's knowledge,  no other
parties  thereto  are  in a  breach,  violation  or  default,  however  defined,
thereunder or thereof,  and no facts or circumstances exist which,  whether with
the  giving of due  notice,  lapse of time,  or both,  would  constitute  such a
breach,  violation or default  thereunder or thereof which would have a material
adverse effect on the business and operations of Seller.

            (u)  Orders,  Commitments  and  Returns.  Except as set forth in the
Disclosure  Schedule,  all  accepted  and  unfulfilled  orders  for the  sale of
products  and  the  performance  of  services  entered  into by  Seller  and all
outstanding contracts or commitments for the purchase of supplies, materials and
services were made in bona fide transactions in the ordinary course of business.
Except  as set  forth  in the  Disclosure  Schedule,  to the  best  of  Seller's
knowledge, there are no claims (in excess of $5,000 individually,  or $10,000 in
the  aggregate)   against  Seller  to  return  products  by  reason  of  alleged
over-shipments,  defective products or otherwise, or of products in the hands of
customers,  retailers or distributors  under an understanding that such products
would be returnable.

            (v)         Labor Matters.

                        (i) The  Disclosure  Schedule  set forth a complete  and
accurate list of all employees of Seller as of the date hereof.


                                                                              19
<PAGE>

                        (ii) Except as set forth in the Disclosure Schedule: (A)
Seller has been in  material  compliance  with all  applicable  Laws  respecting
employment  and  employment  practices,  terms and  conditions of employment and
wages  and  hours,   including  without  limitation  any  such  Laws  respecting
employment discrimination and occupational safety and health requirements; labor
and management relations;  affirmative action plans;  pension/employee  benefits
laws;  worker's  compensation  laws and has not and is not engaged in any unfair
labor practice and to Seller's  knowledge no charge is being brought with regard
thereto nor has been threatened; (B) there is no unfair labor practice complaint
or  investigation  against the Seller for any violation of any employment law or
discrimination pending or, to the best of Seller's knowledge,  threatened before
the National Labor Relations Board or any other comparable Authority;  (C) there
is no labor strike,  dispute,  slowdown or stoppage  actually pending or, to the
best of Seller's knowledge, threatened against or directly affecting Seller; (D)
to the best of  Seller's  knowledge,  no labor  representation  question  exists
respecting  the  employees of Seller and there is not pending or, to the best of
Seller's  knowledge,  threatened any activity  intended or likely to result in a
labor  representation  vote  respecting the employees of the Seller;  (E) to the
best of Seller's knowledge,  no grievance or any arbitration  proceeding arising
out of or under  collective  bargaining  agreements  is  pending  and no  claims
therefore exist or, to the best of Seller's knowledge, have been threatened; (F)
no collective  bargaining  agreement is binding and in force  against  Seller or
currently  being  negotiated  by  Seller;  (G) Seller  has not  experienced  any
significant work stoppage or other significant labor difficulties; (H) Seller is
not delinquent in payments to any persons for any wages, salaries,  commissions,
bonuses or other direct or indirect  compensation for any services  performed by
them or amounts  required to be reimbursed to such  persons,  including  without
limitation  any  amounts  due under any Pension  Plan,  Welfare  Plan or Benefit
Arrangement;  (I) upon  termination  of the  employment  of any person,  neither
Seller, any Subsidiary, Purchaser or any subsidiary of Purchaser will, by reason
of anything  done at or prior to or as of the Closing  Date, be liable to any of
such persons for so-called  "severance  pay" or any other payments other than in
accordance  with  existing  severance  policies;  (J)  Seller  has no  policies,
practices,  or  procedures  which require the Purchaser or the Seller to provide
severance  benefits to any employees  terminated by the Purchaser or the Seller;
(K) Seller  has made no  contract,  agreement,  handbook,  practice,  procedure,
policy  or  written,  oral or other  representation  to its  employees  that are
inconsistent with their status as employees-at-will who may be terminated at any
time without cause; (L) Seller has made no written or oral representation to its
employees  that  Purchaser  will retain them as employees or employ them for any
period of time  subsequent  to the  Closing  Date,  and Seller has made no other
representation  inconsistent  with their  employment  by Purchaser on an at-will
basis;  and (M) Seller has complied and will comply,  to the extent  required by
law, with all notices to employees and their unions required by the transactions
contemplated  hereunder  including  without  limitation  those  required  by the
Federal "Warn Act" statute and all applicable similar state law statutes.

            (w) Permits and Other Operating  Rights.  Except as set forth in the
Disclosure  Schedule,  Seller does not require the Consent of any  Authority  to
permit them to operate in the manner in which it  presently  is being  operated,
and possess all permits and other authorizations from all Authorities  presently
required  to permit them to operate  its  businesses  in the manner in which its
businesses are presently  conducted except where failure to possess such permits
or other  authorizations  would result in a loss,  liability  or damage,  in the
aggregate, in excess of Ten Thousand Dollars ($10,000).

                                                                              20
<PAGE>

            (x)  Compliance with Law.

                 (i) Except as set forth in the Disclosure Schedule, and without
limiting the scope of any other  representations or warranties contained in this
Agreement, the assets,  properties,  businesses and operations of Seller are and
have been in compliance with all Laws applicable to the ownership and conduct of
their assets, properties, Seller's businesses and operations,  including without
limitation all franchising and similar  licensing Laws, all applicable  rules of
the  Civil  Rights  Act of 1964,  as  amended,  Executive  Order  No.11246,  the
Occupational  Safety and Health Act of 1970,  as amended,  the  Clayton  Act, as
amended,  the Sherman Act, as amended,  the Foreign  Corrupt  Practices  Act, as
amended,  the boycott and export  control  regulations  promulgated  by the U.S.
Department  of Commerce,  the boycott  regulations  promulgated  by the Internal
Revenue Service,  the Equal Employment  Opportunity Act of 1974, as amended, the
Clean  Air Act as  amended,  the Clean  Water  Act,  as  amended,  the  Resource
Conservation and Recovery Act, as amended,  the Toxic Substances Control Act, as
amended, the Comprehensive  Environmental  Response,  Liability and Compensation
Act of 1980,  as amended,  and the related  employee and public  right-to-  know
provisions.  There are no outstanding and unsatisfied  deficiency reports, plans
of  correction,  notices of  noncompliance  or work orders  relating to any such
Authorities,  and no such discussions with any such Authorities are scheduled or
pending, to the best of Seller's knowledge.

                 (ii)  No  Franchise.  Except  as set  forth  in the  Disclosure
Schedule,  Seller  has not  been,  for the  past  three  (3)  years,  and is not
currently a party to any contract, agreement, or arrangement which would require
Seller to comply with, and Seller has not violated,  any  applicable  federal or
state law, rule, or regulation  governing  franchises and  franchisor-franchisee
relationships.

            (y) Assets of Business.  Except as set forth in Exhibit 3(a)(iv) and
the Disclosure Schedule,  the assets owned or leased by Seller constitute all of
the assets held for use or used primarily in connection  with its businesses and
are adequate to carry on such businesses as presently conducted.

            (z) Hazardous  Substances and Hazardous Wastes.  Except as set forth
in the Disclosure Schedule, to the best of Seller's knowledge:

                 (i) there is not now,  nor has there ever been,  any  disposal,
release or threatened release of Hazardous Materials (as defined below) on, from
or under  properties now or ever owned or leased by or to Seller or by or to any
former  subsidiary  (the  "Properties").  There has not been  generated by or on
behalf of Seller or any former  subsidiary (while owned by Seller) any Hazardous
Material.  No Hazardous  Material has been disposed of or allowed to be disposed
of on  or  off  any  of  the  Properties  which  may  give  rise  to a  clean-up
responsibility,  personal  injury  liability or property  damage  claim  against
Seller,  or Seller  being  named a  potentially  responsible  party for any such
clean-up  costs,  personal  injuries or  property  damage or create any cause of
action by any third party against Seller.  For purposes of this subsection,  the
terms "disposal," "release," and "threatened release" shall have the definitions
assigned to them by the Comprehensive  Environmental Response,  Compensation and
Liability Act of 1980, as amended,  and the term "Hazardous  Material" means any
hazardous or toxic substance,  material or waste or pollutants,  contaminants or
asbestos  containing  material which is or becomes regulated by any Authority in
any jurisdiction in which any of the Properties is located.  The term "Hazardous
Material"  includes  without  limitation any material or substance  which is (A)
defined as a "hazardous waste" or a "hazardous  substance" under applicable Law;
(B) designated as a "hazardous substance" pursuant to Section 311 of the Federal
Water


                                                                              21
<PAGE>

Pollution  Control Act; (C) defined as a "hazardous  waste"  pursuant to Section
1004 of the Federal Resource  Conservation and Recovery Act; or (D) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.

                 (ii) None of Properties is (or, with respect to past Properties
and  Properties  of  former  subsidiaries,  was at the time of  disposition)  in
violation of any Law (with respect to past  Properties  and Properties of former
subsidiaries,  Laws in effect at the time of disposition) relating to industrial
hygiene or to the  environmental  conditions on, under or about such Properties,
including  without  limitation soil and ground water condition and there are (or
at the  time of  disposition  were) no  underground  tanks  or  related  piping,
conduits or related structures which would result in a loss, liability or damage
in excess of Ten Thousand  Dollars  ($10,000).  During the period that Seller or
former  subsidiaries  owned or leased  the  Properties,  neither  Seller nor its
Subsidiaries nor its former subsidiaries nor, to Seller's  knowledge,  any third
party used, generated, manufactured or stored on, under or about such Properties
or transported to or from such Properties any Hazardous  Materials and there has
been no litigation or other claim or action brought or threatened against Seller
or any  settlements  reached  by Seller  with any third  party or third  parties
alleging the presence,  disposal, release or threatened release of any Hazardous
Materials on, from or under any of such Properties which would result in a loss,
liability  or  damage,  in the  aggregate,  in  excess of Ten  Thousand  Dollars
($10,000).

            (aa)  Brokers.  Except  as set  forth  in the  Disclosure  Schedule,
neither  Seller nor its  Subsidiaries,  nor any of its  directors,  officers  or
employees has employed any broker,  finder or financial  advisor or incurred any
liability  for  any  brokerage  fee or  commission,  finder's  fee or  financial
advisory fee, in connection with the transactions  contemplated  hereby,  nor is
there any basis known to Seller for any such fee or  commission to be claimed by
any person or entity.

            (bb) SEC Reports. Seller has duly made all required filings with the
Securities and Exchange Commission under the Securities Exchange Act of 1934 and
all similar  required  filings with any other  Authority and all of the reports,
forms  and  documents  so  filed  complied  in all  material  respects  with all
applicable  requirements and Laws.  Seller will promptly furnish to Purchaser an
accurate and complete copy of the reports,  forms and documents  filed after the
date of this Agreement or such reports,  forms or documents reasonably requested
by Purchaser.

            (cc) Financial  Capacity.  As of the Closing Date, Seller shall have
the financial  capacity to pay its debts as they become due and funds sufficient
to carry on its business as conducted and as proposed to be conducted.

            (dd)  Ralcorp.  Without  limiting the  generality of any of Seller's
representations  and  warranties  herein,  Seller  represents and warrants that,
except as set forth in the Disclosure Schedule:

                 (i) Seller has no written agreement with Ralcorp;

                 (ii)  the  main  provisions,   terms  (including  pricing)  and
conditions  of  Seller's  oral   agreement  with  Ralcorp   (including   without
limitation,  invoicing  procedures between Seller and Ralcorp,  on the one hand,
and among  Seller,  Ralcorp  and  customers  on the  other) are set forth on the
Disclosure Schedule;

                 (iii)  Purchaser  will be able, at any time after  Closing,  to
terminate  Seller's  agreement with Ralcorp without any liability except as such
liability relates to the purchase of products,  inventory, and packaging, or the
exhaustion of such through  manufacture  upon termination as is customary in the
existing  relationship between the Parties described in the Disclosure Schedule;
and

                                                                              22
<PAGE>

                        (iv)  Seller  has not at any time  disclosed  any of its
customers lists to Ralcorp.

            (ee) Y2K. Sellers' computer and information  technology  systems are
all Y2K compliant and Seller has not experienced any damages, costs, expenses or
interruptions  in its systems or of its business as a result of Y2K resulting in
costs, losses, or damages exceeding $25,000 in the aggregate.

            (ff)  Accuracy  of  Information.  No  representation  or warranty by
Seller in this  Agreement  contains  or will  contain  any untrue  statement  of
material  fact or omits or will omit to state any  material  fact  necessary  in
order to make the statements  herein or therein,  in light of the  circumstances
under which they were made, not misleading as of the date of the  representation
or warranty.


                                    Section 5
                   Representations and Warranties of Purchaser

            Purchaser represents and warrants to Seller as of the date hereof as
follows:

            (a)  Corporate   Organization.   Purchaser  is  a  corporation  duly
organized,  validly  existing and in good standing under the law of the State of
Delaware.

            (b) Authorization.  Purchaser has full corporate power and authority
to enter  into this  Agreement  and to carry out the  transactions  contemplated
herein.  The Board of Directors of  Purchaser  has taken all action  required by
law, its articles or  certificate  of  incorporation  and bylaws or otherwise to
authorize the  execution,  delivery and  performance  of this  Agreement and the
consummation  of the  transactions  contemplated  herein.  This Agreement is the
valid and  binding  legal  obligation  of  Purchaser  enforceable  against it in
accordance with its terms.

            (c)   Non-Contravention.   Neither  the   execution,   delivery  and
performance  of  this  Agreement  nor  the   consummation  of  the  transactions
contemplated herein will:

                 (i) violate any  provision  of the articles or  certificate  of
incorporation or bylaws of Purchaser,  which violation will materially adversely
affect Purchaser's ability to consummate the transactions  contemplated  herein;
or

                 (ii)  violate,  be in conflict  with,  or constitute a default,
however  defined (or an event  which,  with the giving of due notice or lapse of
time, or both, would  constitute such a default),  under, or cause or permit the
acceleration  of the  maturity  of, or give rise to,  any right of  termination,
cancellation,  imposition  of fees or penalties  under,  any debt,  note,  bond,
lease,  mortgage,   indenture,   license,  obligation,   contract,   commitment,
franchise,  permit,  instrument  or  other  agreement  or  obligation  to  which
Purchaser or any  subsidiary  of Purchaser is a party or by which they or any of
their  properties  or assets is or may be bound  (unless  with  respect to which
defaults or other rights, requisite waivers or consents shall have been obtained
at or prior to the Closing),  which violation will materially  adversely  affect
Purchaser's ability to consummate the transactions contemplated herein, or

                 (iii) result in the creation or  imposition  of any Lien,  upon
any  property or assets of Purchaser or any  subsidiary  of Purchaser  under any
debt,  obligation,  contract,  agreement or commitment to which Purchaser or any
subsidiary  of Purchaser is a party or by which  Purchaser or any  subsidiary of
Purchaser or any of their assets or  properties  is or may be bound,  which Lien
will  materially   adversely  affect  Purchaser's   ability  to  consummate  the
transactions contemplated herein; or


                                                                              23
<PAGE>

                 (iv) to the  knowledge  of  Purchaser,  violate  any Law  which
violation will materially adversely affect Purchaser's ability to consummate the
transactions contemplated herein.

            (d) Consents and  Approvals.  Except for the Consents  identified on
Exhibit 5(d) hereto,  no Consent is required by any person or entity,  including
without limitation any Authority, in connection with the execution, delivery and
performance  by  Purchaser  of  this  Agreement,  or  the  consummation  of  the
transactions  contemplated  herein, other than any Consent which, if not made or
obtained,  will not,  individually or in the aggregate,  have a material adverse
effect on the business of Purchaser and its subsidiaries taken as a whole.

            (e) Brokers.  Except as  disclosed  on Exhibit 5(e) hereto,  neither
Purchaser nor any of its directors,  officers or key employees have employed any
broker or finder,  or incurred any liability for any brokerage fee or commission
or finder's fee, in connection with the transactions contemplated hereby, nor is
there any basis known to Purchaser  for any such fee or commission to be claimed
by any person or entity.

            (f) Disclosure.  No  representation or warranty by Purchaser in this
Agreement  contains or will  contain any untrue  statement  of material  fact or
omits or will omit to state any  material  fact  necessary  in order to make the
statements herein or therein,  in light of the  circumstances  under which made,
not misleading as of the date of the representation or warranty.

            (g) Current  Business  Practices.  Purchaser will use its reasonable
commercial  efforts to continue the Seller's  customary practice relating to the
termination  of services  with its  third-party  manufacturers  and suppliers by
purchasing unsold or unused product,  inventory, and packaging, or allowing such
third party to continue manufacturing throughout the exhaustion of such product,
inventory,  and  packaging.  A  description  of such  practices  is set forth on
Exhibit 5(g).

            (h) Availability of Funds.  Purchaser has the assets,  resources and
the financial  capacity  necessary to  consummate  the  transactions  (including
without  limitation  the payment of the  Purchase  Price)  contemplated  by this
Agreement.


                                    Section 6
                                    Covenants

            (a)  Seller's   Agreements  as  to  Specified  Matters.   Except  as
specifically set forth on the Disclosure Schedule, except in the ordinary course
of business and consistent  with past  practice,  and except as may be otherwise
agreed in writing by Purchaser,  from the date hereof until the Closing,  Seller
shall not:

                 (i) Amend its  articles  or  certificate  of  incorporation  or
bylaws;

                 (ii) Borrow or agree to borrow any funds;

                 (iii)  Incur,  assume,  suffer or become  subject  to,  whether
directly  or  by  way  of  guarantee  or  otherwise,  any  claims,  obligations,
liabilities or loss contingencies which, individually or in the aggregate, is or
are in excess of Twenty-Five Thousand Dollars ($25,000) or would have an adverse
effect on the financial condition of Seller;

                 (iv) Pay,  discharge  or satisfy  any  claims,  liabilities  or
obligations;

                                                                              24
<PAGE>

                        (v) Permit or allow any of its  properties  or assets to
be subjected to any Lien, except the Permitted Liens;

                        (vi) Write down the value of any  inventory or write-off
as uncollectible any notes or accounts receivable or any trade
accounts or trade notes;

                        (vii)  Cancel or amend any  debts,  waive any  claims or
rights or sell, transfer or otherwise dispose of any properties or
assets;

                        (viii)  License,   sell,   transfer,   pledge,   modify,
disclose, dispose of or permit to lapse any right to the use of any
Intellectual Property Rights;

                        (ix) (A)  Terminate,  enter into,  adopt,  institute  or
otherwise  become  subject to or amend in any  material  respect any  collective
bargaining  agreement or employment or similar agreement or arrangement with any
of its  directors,  officers or employees;  (B)  terminate,  enter into,  adopt,
institute or otherwise  become  subject to or amend in any material  respect any
Benefit Arrangement; (C) contribute, set aside for contribution or authorize the
contribution of any amounts for any such Benefit  Arrangement except as required
(and not discretionary) by the terms of such Benefit  Arrangement;  or (D) grant
or become  obligated to grant any general  increase in the  compensation  of any
directors, officers or employees (including without limitation any such increase
pursuant to any Benefit Arrangement);

                        (x)  Make or  enter  into  any  commitment  for  capital
expenditures for additions to property,  plant or equipment individually,  or in
the  aggregate,  in excess of  Twenty-Five  Thousand  Dollars  ($25,000)  unless
consented  to in writing by  Purchaser  which  consent  may not be  unreasonably
withheld;

                        (xi) (A)  Declare,  pay or set  aside  for  payment  any
dividend  or  other  distribution  in  respect  of its  capital  stock  or other
securities   (including  without  limitation   distributions  in  redemption  or
liquidation) or redeem,  purchase or otherwise acquire any shares of its capital
stock or other securities,  except with respect to securities  comprising Seller
Capital Stock  outstanding as of the date hereof;  (B) issue,  grant or sell any
shares of its capital stock or equity  securities of any class,  or any options,
warrants,  conversion  or other rights to purchase or acquire any such shares or
equity  securities or any securities  convertible  into or exchangeable for such
shares or equity securities, except issuance of securities pursuant to the terms
of issuance of Seller  Capital Stock  outstanding  as of the date hereof and the
issuance of additional  Seller capital stock consisting of Series C and Series D
Preferred  Stock to raise the working  capital  funds  required  hereunder;  (C)
become  a  party  to any  merger,  exchange,  reorganization,  recapitalization,
liquidation, dissolution or other similar corporate transaction; or (D) organize
any new  subsidiary,  acquire any capital  stock or other equity  securities  or
other  ownership  interest  in, or assets of, any person or entity or  otherwise
make  any  investment  by  purchase  of stock or  securities,  contributions  to
capital, property transfer or purchase of any properties or assets of any person
or entity;

                        (xii) Pay,  lend or  advance  any  amounts  to, or sell,
transfer or lease any  properties  or assets to, or enter into any  agreement or
arrangement with, any director, officer, employee or shareholder;

                        (xiii)  Terminate,  enter into or amend in any  material
respect any item identified in Part 4(t) of the Disclosure Schedule, or take any
action  or omit to take any  action  which  will  cause a breach,  violation  or
default (however defined) under any such item; or

                        (xiv) Agree,  whether in writing or  otherwise,  to take
any action described in this subsection.

                                                                              25
<PAGE>
            (b)  Conduct  of  Seller  Business.  Except  as  set  forth  in  the
Disclosure  Schedule,  Seller shall maintain its assets and properties and carry
on its  businesses  and  operations  in  the  ordinary  course  of  business  in
substantially the same manner as previously  operated;  and Seller shall use its
best efforts to preserve intact its business  organizations,  existing  business
relationships  (including  without  limitation its relationships  with officers,
employees,  dealers,  distributors,   independent  contractors,   customers  and
suppliers), good will and going concern value.

            (c) No Seller Solicitation of Alternate Transaction.

                (i) Seller  shall not,  and will use its best  efforts to ensure
that  its   directors,   officers  and   employees,   independent   contractors,
consultants, counsel, accountants, investment advisors and other representatives
and agents shall not,  directly or  indirectly,  solicit,  initiate or encourage
discussions  or  negotiations   with,  provide  any  confidential  or  nonpublic
information to, or enter into any agreement with, any third party concerning (or
concerning  the  business  of  Seller  in  connection  with)  any  tender  offer
(including a self tender offer), exchange offer, merger, consolidation,  sale of
substantial  assets or of a significant  amount of assets,  sale of  securities,
acquisition  of  beneficial  ownership  of  or  the  right  to  vote  securities
representing  more than five  percent  (5%) of the total voting power of Seller,
liquidation,  dissolution or similar transactions;  provided,  however, that the
foregoing shall not prohibit Seller (either  directly or indirectly  through its
directors, officers, employees, independent advisors, consultants,  counsel, and
accountants) from:

                        (A) furnishing information concerning the Seller and its
            businesses,  properties,  or  assets  to  any  person,  corporation,
            entity,  or "group" as defined in Section 13(d) of the Exchange Act,
            other than  Purchaser or any of its  affiliates (a "Third Party") in
            response to any bona fide unsolicited inquiry,  proposal or offer by
            such Third Party;

                        (B) engaging in  discussions or  negotiations  with such
            Third  Party  that has made  such  bona  fide  unsolicited  inquiry,
            proposal, or offer;

                        (C)  following  receipt of such a bona fide  unsolicited
            proposal  for  acquisition  of the Seller or its Assets,  taking and
            disclosing  to its  shareholders  a  position  contemplated  by Rule
            14c-2(a)  under the Exchange Act or otherwise  making  disclosure to
            its shareholders; and

                        (D) taking any  non-appealable,  final action ordered to
            be taken by the Seller by any court of competent jurisdiction but in
            each case referred to in the foregoing clauses (A) through (C), only
            to the extent that the Board of  Directors  of the Seller shall have
            concluded  in good faith that such action is required to prevent the
            Board of Directors of the Seller from breaching its fiduciary duties
            to the shareholders of the Seller under applicable law.

                (ii)  Break-up Fee. If for the reasons set forth in this Section
6(c),  this  Agreement  and  the  transactions   contemplated  hereby  shall  be
terminated by Seller  pursuant to Section  9(a)(iv)  without the Closing  having
occurred  (whether  such Third  Party  offer  results in the  consummation  of a
transaction or not),  then Seller agrees to pay Purchaser a "Break-up  Fee". The
Break-up  Fee shall  consist of the sum of One  Million  Five  Hundred  Thousand
Dollars  ($1,500,000),  payable immediately upon termination hereof. The Parties
acknowledge that the Break-up Fee represents a negotiated  figure which is not a
penalty  and  constitutes  a  reasonable  estimate of the damages and costs that
would be incurred by Purchaser in the event of termination giving rise thereto.

                                                                              26
<PAGE>

            (d) Full Access to Purchaser. Seller has and shall provide Purchaser
all  information  in its  possession  requested  by  Purchaser  after using best
efforts to procure such  information  and afford to Purchaser and its directors,
officers,  employees,  counsel,  accountants,   investment  advisors  and  other
authorized  representatives  and  agents  free and  full  access  during  normal
business  hours to the  facilities,  properties,  books and records of Seller in
order that Purchaser may have full opportunity to make such investigations as it
shall desire to make of the affairs of Seller; provided,  however, that any such
investigation  shall  be  conducted  in  such  a  manner  as  not  to  interfere
unreasonably with business operations;  and Seller shall furnish such additional
financial and operating data and other information as Purchaser shall, from time
to time, reasonably request,  including without limitation access to the working
papers of their independent  certified public  accountants (as and to the extent
permitted by such independent  certified  public  accountants);  and,  provided,
further,  that any such investigation  shall not affect or otherwise diminish or
obviate in any  respect  any of the  representations  and  warranties  of Seller
herein.

            (e)  Confidentiality.  Each of the  Parties  agrees that it will not
use,  or permit the use of, any of the  information  relating to any other Party
hereto furnished to it in connection with the transactions  contemplated  herein
("Information") in a manner or for a purpose  detrimental to such other Party or
otherwise  than in  connection  with the  transaction,  and that  they  will not
disclose,  divulge, provide or make accessible  (collectively,  "Disclose"),  or
permit the Disclosure of, any of the Information to any person or entity,  other
than their responsible  directors,  officers,  employees,  investment  advisors,
accountants,  counsel and other authorized representatives and agents, except as
may be required by judicial or administrative process or, in the opinion of such
Party's regular counsel, by other requirements of Law; provided,  however,  that
prior to any Disclosure of any Information  permitted hereunder,  the disclosing
Party  shall  first  obtain  the  recipients'  undertaking  to  comply  with the
provisions  of this  subsection  with  respect  to such  information.  The  term
"Information"  as used herein  shall not include any  information  relating to a
Party which the Party  disclosing such information can show: (i) to have been in
its possession prior to its receipt from another Party hereto; (ii) to be now or
to later  became  generally  available  to the  public  through  no fault of the
disclosing Party;  (iii) to have been available to the public at the time of its
receipt by the disclosing  Party;  (iv) to have been received  separately by the
disclosing  Party in an  unrestricted  manner from a person entitled to disclose
such information;  or (v) to have been developed independently by the disclosing
Party  without  regard  to any  information  received  in  connection  with this
transaction.  Each Party hereto also agrees to promptly return to the Party from
whom originally  received all original and duplicate copies of written materials
containing Information should the transactions  contemplated herein not occur. A
Party  hereto  shall be deemed to have  satisfied  its  obligations  to hold the
Information  confidential if it exercises the same care as it takes with respect
to its own similar  information.  The Parties  acknowledge  that the transaction
described herein is of a confidential  nature,  and agree that the terms hereof,
including the purchase  price  hereunder,  shall be  maintained  in  confidence.
Sellers, with the prior approval of Purchaser, at a time and in a manner that is
acceptable to both  Purchaser and Sellers,  may notify  employees of the fact of
the subject transaction.

            (f) Filings; Consents;  Removal of Objections.  Subject to the terms
and conditions herein provided, the Parties shall use their best efforts to take
or  cause  to be  taken  all  actions  and do or  cause  to be done  all  things
necessary,  proper or advisable  under  applicable  Laws to consummate  and make
effective,  as soon as reasonably  practicable,  the  transactions  contemplated
hereby,  including  without  limitation  obtaining all Consents of any person or

                                                                              27
<PAGE>

entity,  whether  private  or  governmental,  required  in  connection  with the
consummation of the transactions contemplated herein. In furtherance, and not in
limitation of the  foregoing,  it is the intent of the parties to consummate the
transactions  contemplated  herein at the earliest  practicable  time,  and they
respectively  agree to exert their best efforts to that end,  including  without
limitation,  if  required:  (i) the filing  with the  Federal  Trade  Commission
("FTC") and the Antitrust  Division of the Department of Justice (the "Antitrust
Division")  all requisite  documents and  notifications  in connection  with the
transactions  contemplated hereby pursuant to the HSR Act as soon as practicable
following  the date  hereof,  and to respond as promptly as  practicable  to all
inquiries from the FTC or the Antitrust Division in connection  therewith;  (ii)
the removal or satisfaction,  if possible,  of any objections to the validity or
legality of the transactions  contemplated herein; and (iii) the satisfaction of
the conditions to consummation of the transactions contemplated hereby.

            (g)         Further Assurances; Cooperation; Notification.

                        (i)  Each  Party  hereto  shall,  before,  at and  after
Closing, execute and deliver such instruments and take such other actions as the
other Party or Parties may  reasonably  require in order to carry out the intent
of this Agreement.

                        (ii) Seller shall  cooperate  with Purchaser to promptly
develop plans for the management of the businesses after the Closing,  including
without  limitation  plans relating to productivity,  marketing,  operations and
improvements,  and Seller shall further  cooperate with Purchaser to provide for
the  implementation  of such  plans as soon as  practicable  after the  Closing.
Subject to applicable Law, Seller shall confer on a regular and reasonable basis
with one or more  representatives of Purchaser to report on material operational
matters and the general status of ongoing operations.

                        (iii)  At all  times  from  the date  hereof  until  the
Closing, each Party shall promptly notify the other in writing of the occurrence
of any event  which it  reasonably  believes  will or may result in a failure by
such Party to satisfy the conditions specified in Section 7 and Section 8 hereof
within seven (7) days.

            (h)  Supplements to Disclosure  Schedule.  Within a reasonable  time
(but in no event  later  than three (3)  Business  Days)  prior to the  Closing,
Seller shall  supplement  or amend the  Disclosure  Schedule with respect to any
event or development  which, if existing or occurring at or prior to the date of
this  Agreement,  would have been  required to be set forth or  described in the
Disclosure  Schedule or which is  necessary  to correct any  information  in the
Disclosure  Schedule or in any  representation  and warranty of Seller which has
been rendered inaccurate by reason of such event or development. For purposes of
determining  the  accuracy  as of the date  hereof  of the  representations  and
warranties  of Seller  contained in Section 4 hereof in order to  determine  the
fulfillment of the  conditions  set forth in Section 7, the Disclosure  Schedule
shall be deemed to  exclude  any  information  contained  in any  supplement  or
amendment hereto delivered after the delivery of the Disclosure Schedule.

            (i) Public Announcements.  None of the Parties shall make any public
announcement  with  respect  to  the  transactions  contemplated  herein  or the
purchase price  hereunder  without the prior written consent of the other Party;
provided,   however,  that  any  of  the  Parties  may  at  any  time  make  any
announcements  which  are  required  by  applicable  Law so long as the Party so
required to make an  announcement,  promptly upon learning of such  requirement,
notifies the other Party of such requirement and discusses with it in good faith
the exact  proposed  wording of any such  announcement  for such  other  Party's
reasonable approval which shall not be unreasonably  withheld.  Without limiting
the  generality of the  foregoing,



                                                                              28
<PAGE>

Seller hereby agrees to deliver to Purchaser  final draft(s) of any  information
statements (any such information  statement,  an "Information  Statement") to be
distributed to its  shareholders  pursuant to applicable Law in connection  with
this Agreement and the terms and conditions contemplated hereby and the issuance
of the securities disclosed in Part 6(a)(xi)(B) of the Disclosure  Schedule,  it
being understood and agreed that any such Information  Statement shall be (x) in
form and  substance  reasonably  acceptable  to  Purchaser  and (y)  provided to
Purchaser at least two (2) Business Days prior to its  distribution  to Seller's
securities holders or filing with any applicable Authority.

            (j)         Transactional Tax Undertakings.

                        (i) The Parties  shall  cooperate to make any  necessary
filings  with state and local  taxing  authorities  and to furnish any  required
supplemental   information  to  any  federal,  state,  local,  and  foreign  tax
liabilities  resulting from the  consummation of the  transactions  contemplated
herein.

                        (ii) In the event that any sales or use tax,  or any tax
in the  nature of a sales or use tax,  or any  transactional  tax is  payable or
assessed relative to the transactions  contemplated herein, Seller shall pay all
such taxes and shall not  collect any part  thereof  from  Purchaser,  provided,
however,  that  Purchaser  shall pay any excise tax required with respect to the
relicensing of any motor vehicles which are part of Seller's Assets.

            (k) Bulk Transfers.  Seller has requested that Purchaser  waive, and
Purchaser  hereby agrees to waive,  the  requirements of the Uniform  Commercial
Code  concerning  bulk  transfers,  as in effect in the various  states in which
Seller has assets,  including  without  limitation the  requirement of notice to
creditors.  It is  expressly  agreed  by the  Parties  that  the  obligation  to
indemnify   Purchaser  under  Section  10(e)  includes  any  and  all  liability
(including claims,  suits or demands against  Purchaser),  loss, cost (including
reasonable  attorney's fees),  expense or damage of any kind which Purchaser may
suffer in connection with such request and waiver.

            (l)         Employee Benefits.

                        (i) Employees. On the Closing Date, Purchaser:  (A) will
assume the employees covered by the collective  bargaining  agreements listed in
Part 4(v)(ii)(F), and in Part 4(v)(i) under "union" employees, of the Disclosure
Schedule and (B) shall have the right (but not the  obligation)  to offer to all
or any  number  of  the  other  employees  then  employed  with  respect  to the
businesses  relating  to  Seller's  Assets  the  opportunity  to  maintain  such
employee's  current  employment  and shall provide within thirty (30) days after
the execution of this Agreement, but not later than ten (10) Business Days prior
to Closing, a list of those employees of Seller to whom it will offer employment
(collectively,  the "Transferred  Employees");  provided, that Purchaser, in its
sole discretion and considering its best interests, may terminate the employment
of any  employees  who accept  such offer at any time after such  Closing  Date.
During the first twelve (12) months after the Closing Date, the compensation and
benefits  provided by Purchaser  shall be  reasonably  comparable  on an overall
basis  (including  without  limitation all  compensation and benefits accrued by
such employees as of the Closing Date under all Pension Plans, Welfare Plans and
Benefit Arrangements  irrespective of whether such accrued benefits are actually
received by such  employees) to those  provided to such  employees  prior to the
Closing Date with credit given for the length of actual  service with Seller (or
both)  prior to the  Closing  Date.  Purchaser  has not  agreed  to  assume  any
obligation  or  liability  under  any  Pension  Plans,  Welfare  Plans,  Benefit
Arrangements,   severance   obligation  or  other  employment   benefit  related
obligation but may do so in its sole discretion.


                                                                              29
<PAGE>

                        (ii)  Severance.  If the  employment of any employee who
accepts  the  offer  referred  to in  Section  6(1)(i)  above is  terminated  by
Purchaser  other than for cause  within the twelve (12) months after the Closing
Date,   Purchaser   shall  be  responsible   for  making  payment  of  severance
compensation  to such employee in accordance  with the practice of Seller or any
of its Subsidiaries (as applicable) at the Closing Date, as described on Exhibit
6(1)  hereto,  with  credit  being given for the length of actual  service  with
Seller (or both) prior to the Closing Date.

                        (iii)  401(k)  Plan.  Purchaser  shall take  appropriate
measures  with  Seller's  assistance  as  reasonably  requested so that Seller's
401(k) plans shall be, upon Closing:  (x) assumed by Purchaser (and amended,  if
required by Purchaser),  (y) merged into an existing  401(k) plan  maintained by
Purchaser,  and/or (z) frozen or terminated  and replaced with new plans (within
Purchaser's sole discretion).

                        (iv)  Retention  of  Employees.  Neither  Seller nor any
Subsidiary  shall,  for a period of three (3) years after the Closing Date, take
any action,  other than with the  written  consent of  Purchaser,  to induce any
employee who accepts an offer  pursuant to Section  6(1)(i)  above,  while still
employed by Purchaser or any  subsidiary of Purchaser,  to enter into the employ
of Seller or other affiliate of Seller.

            (m) Use of Trade  Names  and  Corporate  Name.  As of and  after the
Closing,  Seller  shall not use any of the names  listed on  Exhibit  3(a)(i) or
title  similar  to such  name or any  other  trade  names  or  trademarks  being
transferred hereunder.

            (n) Special  Reserve Fund.  Seller has raised from among its current
shareholders  through the issuance of new Series D Preferred  Convertible  Stock
the aggregate amount of One Million Five-Hundred  Thousand Dollars ($1,500,000),
of which  Five-Hundred  Thousand  Dollars  ($500,000)  have  been set aside as a
separate cash reserve (the "Special Reserve Fund"),  for the purpose of assuring
that Seller meets its payment obligations and working capital  requirements from
the date hereof through the Closing Date; the amount of the Special Reserve Fund
has been set on the basis of Seller's  Monthly Cash Flow  Forecasts  prepared by
Seller for the period from February 1 through May 31, 2000,  attached  hereto as
Schedule 6(n). The balance of One-Million Dollars ($1,000,000) shall be injected
into Seller for normal  business and operational  purposes.  The Special Reserve
Fund,  which is free of any  Liens,  may be drawn upon only on the terms and for
the purposes set forth in the "Reserve Escrow Agreement"  delivered to Purchaser
on the date hereof substantially in the form of Exhibit 6(n).

            (o) Bank  Extension.  Annexed  hereto as Exhibit 6(o) is an executed
copy of the Fourth Amendment to Financing Agreement,  dated as of March 31, 2000
(the  "Bank  Extension"),  entered  into by  Seller  and U.S.  Bancorp  Republic
Commercial Finance, Inc. (the "Bank").  Seller represents and warrants that: (x)
the Bank  Extension is effective as of the date of execution of this  Agreement,
and (y) Seller has complied with all of the conditions set forth therein..

            (p) Noncompetition and Confidentiality  Agreements.  At the Closing,
Seller shall:

                (i)  provide  Purchaser  with copies of the  Noncompetition  and
Confidentiality  Agreements dated as of the Closing Date,  executed by Thomas J.
Guinan, Jeffrey Weiner and Adnan Durrani substantially in the forms respectively
set forth in Exhibit 7(h), and

                (ii) assign to Purchaser all of Seller's rights,  benefits,  and
interests  under each of the Worth  Agreements  with  respect to  Protection  of
Confidential  Information and  Noncompetition so that the provisions of Sections
4, 5 and 6 of each of the  Worth  Agreements



                                                                              30
<PAGE>

shall inure in full to the sole benefit of the  Purchaser;  it being  understood
and agreed that (x) Purchaser shall not assume any obligations  whatsoever under
the Worth  Agreements  and,  except as expressly  set forth above,  Seller shall
retain all rights and  obligations  under the Worth  Agreements,  and (y) in the
event of any breach of the provisions of those rights under the Worth Agreements
assigned to  Purchaser,  Seller shall,  at  Purchaser's  cost,  take any and all
reasonable  action requested by Purchaser to enforce those  provisions.  As used
herein,  the "Worth  Agreements" shall mean: (A) that certain  Consulting,  Loan
Repayment  and  Noncompetition  Agreement  dated as of August 13,  1997  between
Richard S. Worth and Seller, and (B) that certain Consulting, Loan Repayment and
Noncompetition  Agreement  dated as of August 13, 1997 between  Randye Worth and
Seller.

            (q) Payoff  Schedule;  Termination  of Financing  Agreement.  (i) At
least five (5) Business Days prior to Closing, Seller shall deliver to Purchaser
a "Payoff  Schedule" to be attached hereto as Exhibit 6(q),  setting forth (x) a
list of every  creditor of Seller  (including  but not limited to: stock,  note,
warrant,   option,  and  securities  holders  of  Seller;  banks  and  financial
institutions;  trade creditors other than those assumed by Purchaser;  suppliers
other than those assumed by Purchaser;  and other third parties) to which Seller
owes  amounts  which are due or to become  due  within  ninety  (90) days  after
Closing in excess of Ten Thousand Dollars  ($10,000),  (y) each such amount with
respect  to each  creditor  as of a date  which  shall not be more than five (5)
Business Days prior to the Closing, and (z) for each creditors to be paid off at
or immediately  after the Closing,  the payment  instructions  to Purchaser with
information  on the relevant bank account into which  payment of the  respective
payoff amounts shall be made at or immediately after the Closing.

                 (ii) On or before the Closing,  Seller shall provide  Purchaser
with fully executed  originals,  in form and substance  acceptable to Purchaser,
of: (A) an  agreement  in writing  between  Bank and  Seller  providing  for (x)
Seller's  payment in full of all amounts due or outstanding  under the Financing
Agreement  (as  defined in, and  amended  by, the Bank  Extension),  and (y) the
termination of such Financing  Agreement and of any and all Liens granted to the
Bank on any of Seller's  Assets,  and (B) an  instrument  in writing of the Bank
releasing  any and all of its  Liens in any of  Seller's  Intellectual  Property
Rights,  and  whereby  the Bank  covenants  and agrees to execute and deliver to
Purchaser  any  further  documents  and  instruments  as  may  be  necessary  or
reasonably  requested by Purchaser in order to fully  release such  Intellectual
Property Rights and other Seller's Assets from any Liens held in Bank's favor.

            (r) Further Covenants of Seller.  Without limiting the generality of
any other provision of this Agreement,

                (i) On or prior to Closing, Seller shall: (A) be qualified to do
business and be in good standing in the state of Illinois or indemnify Purchaser
pursuant  to Section  10(c) from and  against  any and all loss,  liability,  or
damage suffered or incurred by Purchaser in connection with Seller's  failure to
so qualify or be in good  standing;  (B) obtain  acknowledgement  and consent of
Condor Ventures, Inc.; Laner, Muchin, Dombrow, Becker, Levin and Tominberg, Ltd.
(LMDBLT),  and the Bank that the execution of this Agreement and consummation of
the transactions  contemplated hereby do not contravene the agreements set forth
in Part 4(e)(ii) of the Disclosure  Schedule or indemnify  Purchaser pursuant to
Section 10(c) from and against any and all loss,  liability,  or damage suffered
or  incurred  by  Purchaser  in  connection  with  Seller's  failure  to  obtain
acknowledgement and consent;  (C) in relation to the Pate's litigation disclosed
in Part 4(o) of the Disclosure  Schedule,  indemnify and hold Purchaser harmless
to the  fullest  extent  set forth in Section  10 below,  against  all claims or
causes of action  commenced,  directly  or  indirectly,  by Pate's  Bakery,  LLC
against  Purchaser;  and (D) make all



                                                                              31
<PAGE>

necessary  filings,  cure  any  outstanding  deficiencies  and pay all  fees and
penalties  necessary  to bring  the  401(k)  plans set forth in Part 4(r) of the
Disclosure  Schedule in full compliance with law or, if Purchaser so chooses, at
Purchaser's sole discretion,  indemnify Purchaser pursuant to Section 10(c) from
and  against  any and all loss,  liability,  or damage  suffered  or incurred by
Purchaser in connection  with Seller's  failure to make such filings,  cure such
deficiencies or pay such fees and penalties;

                 (ii) Except as provided in Section 6(l)(i),  Seller represents,
warrants  and  covenants  that  Purchaser  has not,  and will  not,  assume  any
obligation whatsoever for any employment  agreement(s) of Seller with any of its
employees  including,  but not limited to those with Mark Robson,  Thomas Guinan
and Jeffrey Weiner.


                                    Section 7
                     Conditions to Obligations of Purchaser

            Notwithstanding  any  other  provision  of  this  Agreement  to  the
contrary,  the obligation of Purchaser to effect the  transactions  contemplated
herein shall be subject to the  satisfaction  at or prior to the Closing of each
of the following conditions:

            (a)  Representations  and Warranties True. The  representations  and
warranties of Seller contained in this Agreement,  including without  limitation
in the Disclosure  Schedule  initially  delivered to Purchaser as Exhibit 4 (and
not  including  any changes or  additions  delivered  to  Purchaser  pursuant to
Section 6(h)), shall be in all material respects true,  complete and accurate as
of  the  date  when  made  and  at  and  as  of  the   Closing  as  though  such
representations  and  warranties  were made at and as of such  time,  except for
changes specifically permitted or contemplated by this Agreement.

            (b)  Performance.  Seller shall have  performed  and complied in all
material  respects with all  agreements,  covenants,  obligations and conditions
required by this  Agreement  to be  performed  or complied  with by Seller on or
prior to the Closing.

            (c) Required Approvals and Consents.

                (i) All action  required by law and otherwise to be taken by the
Board of Directors  of Seller and the  shareholders  of Seller to authorize  the
execution,  delivery  and  performance  of this  Agreement by the Seller and the
consummation of the  transactions  contemplated  hereby shall have been duly and
validly taken.

                (ii) All Consents of or from all Authorities  required hereunder
to  consummate  the  transactions   contemplated   herein   including,   without
limitation,  those required by the HSR Act, and all Consents of from all persons
and  entities  other than  Authorities  that are  identified  in the  Disclosure
Schedule shall have been delivered,  made or obtained,  and Purchaser shall have
received copies thereof.

            (d) No Proceeding or Litigation.  To the best of Seller's knowledge,
no suit, action, investigation,  inquiry or other proceeding by any Authority or
other person or entity shall have been instituted or threatened  which questions
the validity or legality of the  transactions  contemplated  hereby or which, if
successfully asserted, would individually or in the aggregate, otherwise have an
adverse effect on the conduct of the businesses relating to Seller's Assets.

            (e)  Opinion of Seller  Counsel.  Purchaser  shall have  received an
opinion from Olshan,  Grundman,  Frome,  Rosenzweig & Wolosky,  LLP,  counsel to
Seller,  dated the Closing  Date,  substantially  in the form and  substance set
forth as Exhibit 7(e) hereto.

                                                                              32
<PAGE>

            (f) Certificates. Purchaser shall have received such certificates of
Seller's  officers   (including  but  not  limited  to  an  officer  certificate
certifying that the Estimated Closing Working Capital  Balance/(Deficit) and the
other  unaudited  financial  statements  and balance  sheets  provided by Seller
hereunder  are  in  compliance  with  Section  4(g))  in a  form  and  substance
reasonably  satisfactory  to  Purchaser,  dated the  Closing  Date,  to evidence
compliance  with the  conditions  set  forth in this  Section  7 and such  other
matters as may be reasonably requested by Purchaser.

            (g) Escrow  Agreements.  The parties thereto shall have executed and
delivered an Escrow Agreement in the form of Exhibit 7(g) hereto and the Reserve
Escrow Agreement in the form of Exhibit 6(n).

            (h) Noncompetition and Confidentiality  Agreements. On or before the
Closing  Date,  Seller  shall have  delivered to  Purchaser  Noncompetition  and
Confidentiality  Agreements  dated as of the Closing Date and executed by Thomas
J. Guinan,  Jeffrey Weiner and Adnan Durrani respectively,  substantially in the
forms respectively set forth in Exhibit 7(h).

            (i) Documentation for Conveyance of Seller's Assets. Purchaser shall
have received, in form and substance reasonably satisfactory to Purchaser, dated
the Closing  Date,  all of the Bill(s) of Sale,  deeds,  assignments  including,
without  limitation,  assignments of trademarks and other intellectual  property
rights,  certificates  of title,  and any and all other  conveyance and transfer
documentation  listed on Exhibit  7(i) hereto as may be  supplemented  after the
date hereof but before Closing.

            (j) Certificates of Amendment.  On the Closing Date,  Seller's shall
deliver:  (i) Certificate of Amendment of its certificate of incorporation to be
filed in the State of  Delaware  amending  its  corporate  name from  "Delicious
Brands,  Inc." to any other name which is in  compliance  with Section 6(m) (the
"New  Name"),  (ii)  Certificates  of  Amendment  (or  equivalent)  amending its
certificates  of  authority  to be filed  in  Illinois,  New York and  Michigan,
respectively,  amending its corporate name from "Delicious Brands,  Inc." to the
New Name,  (iii) any other  documents for any other  jurisdiction in which it is
qualified to do business or uses the "Delicious Brands, Inc." name, and (iv) any
other documents otherwise necessary or convenient to consummate the transactions
contemplated  in this Agreement,  including but not limited to,  certificates of
good standing from the States of Delaware, Illinois, New York and Michigan dated
no earlier than two (2) Business  Days prior to Closing.  All such  certificates
shall be in form and substance reasonably satisfactory to Purchaser.

            (k)  Environmental  Phase I. The "Phase I"  environmental  report on
Seller's  premises  (which  Purchaser  in its  discretion  may procure  prior to
Closing) does not require, in Purchaser's  reasonable  discretion,  any material
repairs  to  any  of  Seller's  premises  or  will  not  cause  or  require  the
interruption of the use of Seller's premises, interfere with the carrying out of
the business in the regular course, or otherwise present material liabilities or
other legal risks.

            (l)  Employees.  Purchaser  shall provide a list of the  Transferred
Employees  pursuant to Section 6(l). Seller shall be solely  responsible for any
severance  and all other  employment  benefits to and rights of the  Transferred
Employees  through the Closing Date and for the remainder of Seller's  employees
that are not assumed or employed by Purchaser through and after Closing.

            (m) Payoff Schedule.  At Closing,  Purchaser shall have received the
Payoff  Schedule  pursuant to Section 6(q),  with any amendments as necessary to
make it current as of the  Closing  Date;  it being  understood  and agreed that
Seller shall provide  Purchaser with a draft



                                                                              33
<PAGE>

of the updated Payoff Schedule at least five (5) Business Days prior to Closing.


                                    Section 8
                       Conditions to Seller's Obligations

            Notwithstanding  anything in this  Agreement  to the  contrary,  the
obligation  of Seller to effect the  transactions  contemplated  herein shall be
subject to the  satisfaction at or prior to the Closing of each of the following
conditions:

            (a)  Representations  and Warranties True. The  representations  and
warranties  of Purchaser  contained in this  Agreement  shall be in all material
respects  true,  complete and accurate as of the date when made and at and as of
the Closing,  as though such  representations and warranties were made at and as
of such time, except for changes permitted or contemplated in this Agreement.

            (b) Performance.  Purchaser shall have performed and complied in all
material  respects with all  agreements,  covenants,  obligations and conditions
required by this  Agreement to be performed or complied  with by Purchaser at or
prior to the Closing.

            (c)  Corporate  Approvals.  The  shareholders  of Seller  shall have
approved the transactions  contemplated  hereby.  All Consents listed on Exhibit
5(d) hereto shall have been delivered,  made or obtained. All action required to
be taken by Purchaser to authorize the  execution,  delivery and  performance of
this  Agreement  by  Purchaser  and  the   consummation   of  the   transactions
contemplated hereby shall have been duly and validly taken.

            (d) No Proceeding or  Litigation.  No suit,  action,  investigation,
inquiry or other  proceeding  by any  Authority  or other person or entity shall
have been  instituted or threatened  which questions the validity or legality of
the transactions contemplated hereby.

            (e)  Certificates.  Purchaser shall have furnished  Seller with such
certificates of Seller officers,  in a form and substance reasonably  acceptable
to Seller,  dated the Closing Date, to evidence  compliance  with the conditions
set  forth  in this  Section  6 and  such  other  matters  as may be  reasonably
requested by Seller.

            (f) Opinion of Purchaser Counsel.  Purchaser shall have delivered to
Seller an opinion from BBLP - Pavia e Ansaldo Beiten  Burkhardt  Mittl & Wegener
Moquet Borde & Associes Meyer Lustenberger, Professional Corporation, counsel to
Purchaser,  dated  the  Closing  Date,  in the form and  substance  set forth as
Exhibit 8(f) hereto.

            (g)   Payment  of   Consideration.   Seller   shall  have   received
satisfactory  evidence that the wire transfers  required by Sections  3(b)(A)(i)
and  3(b)(A)(ii)  hereof  have  been  completed  and the  Liability  Undertaking
required by Section 3(b)(B) hereof has been executed and delivered.

            (h) Escrow  Agreements.  The parties thereto shall have executed and
delivered an Escrow Agreement in the form of Exhibit 7(g) hereto and the Reserve
Escrow Agreement in the form of Exhibit 6 (n) hereto.


                                    Section 9
                           Termination and Abandonment

            (a) Methods of Termination. This Agreement may be terminated and the
transactions  contemplated  herein may be abandoned at any time  notwithstanding
approval


                                                                              34
<PAGE>

thereof by the shareholders of Seller, but not later than the Closing:

                 (i) By mutual written consent of Purchaser and Seller; or

                 (ii) By  Purchaser  on or after  the  Termination  Date or such
later date as may be  established  pursuant  to Section 3 hereof,  if any of the
conditions  provided  for in  Section  7 of this  Agreement  shall not have been
satisfied or waived in writing by Purchaser prior to such date; or

                 (iii) By Seller on or after the Termination  Date or such later
date  as  may  be  established  pursuant  to  Section  3  hereof,  if any of the
conditions  provided  for in  Section  8 of this  Agreement  shall not have been
satisfied or waived in writing by Seller prior to such date; or

                 (iv) By Seller if, prior to Closing,  in good faith, based upon
written  advice  from  outside  counsel,  and in order to  prevent  the Board of
Directors  from  breaching its fiduciary  duty, the Board of Directors of Seller
shall have withdrawn or modified, in a manner adverse to Purchaser, its approval
or recommendation of this Agreement or its  recommendation  that shareholders of
the Seller adopt and approve this Agreement in order to permit Seller to execute
a definitive agreement providing for the acquisition of the assets of the Seller
or in order to approve a tender or exchange offer for any or all of the Seller's
Common Stock, in either case,  that is determined,  by the Board of Directors of
the Company to be a superior proposal.  In the foregoing event, Seller shall pay
Purchaser the Break-up Fee as set forth above in Section 6(c)(ii).

                 (v) By any Party if the Closing  shall not have  occurred on or
before June 15, 2000.

            (b) Procedure  Upon  Termination.  In the event of  termination  and
abandonment  pursuant to subsection (a),  written notice thereof shall forthwith
be given to the other Party or Parties,  and the  provisions  of this  Agreement
(except to the  extent  provided  in Section  11(a))  shall  terminate,  and the
transactions  contemplated herein shall be abandoned,  without further action by
any Party hereto.  If this Agreement is terminated as provided herein:  (i) each
Party  will,  upon  request,  redeliver  all  documents,  work  papers and other
material  of  any  other  Party  (and  all  copies  thereof)   relating  to  the
transactions  contemplated  herein,  whether  so  obtained  before  or after the
execution  hereof,  to the Party  furnishing the same; (ii) the  confidentiality
obligations of Section 6 (e) shall  continue to be applicable;  and (iii) except
as provided in this  subsection,  no Party shall have any liability for a breach
of any representation,  warranty, agreement, covenant or other provision of this
Agreement,  unless  such  breach  was due to a willful  or bad  faith  action or
omission of such Party or any  representative,  agent,  employee or  independent
contractor thereof.


                                   Section 10
                          Survival and Indemnification

            (a)  Survival.  The  representations  and  warranties of each of the
Parties shall survive the Closing for a period of two (2) years from the Closing
Date.

            (b)  Indemnification  by  Purchaser.  Purchaser  agrees to indemnify
Seller  from and  against  any and all loss,  liability  or damage  suffered  or
incurred  by it by  reason  of (i) any  untrue  representation  of, or breach of
warranty or covenant  by,  Purchaser  in any part of this  Agreement,  provided,
however,  that no claim for indemnity  may be made  pursuant to this  subsection
after the second anniversary of the Closing Date; (ii) any nonfulfillment of any
covenant,  agreement or  undertaking  of Purchaser in any part of this Agreement
which by its



                                                                              35
<PAGE>

terms is to remain in effect  after the  Closing  and has not been  specifically
waived in writing at the Closing by the Party or Parties hereof  entitled to the
benefits  thereof;  and (iii) any  obligations of Seller assumed by Purchaser in
the Liability Undertaking.

            (c)  Indemnification by Seller;  Untrue  Representation or Breach of
Warranty or Covenant.  Seller agrees to indemnify Purchaser from and against any
and all loss,  liability  or damage  suffered or incurred by it by reason of any
untrue  representation  of, or breach of  warranty or covenant by Seller in this
Agreement, provided, however, that Purchaser shall make any claim(s) pursuant to
this subsection  (c): (A)  exclusively  against the Escrow Fund (and then to the
Seller  only in the event that the Escrow Fund is no longer  available  or lacks
sufficient  funds)  until  the  aggregate  amount  of all  such  claims  exceeds
Five-Hundred Thousand Dollars ($500,000), and (B) either against the Escrow Fund
or directly against Seller,  in Purchaser's sole discretion,  once the amount of
all such claims exceeds Five-Hundred Thousand Dollars ($500,000),  and provided,
further,  that no claims for indemnity  may be made pursuant to this  subsection
after the second anniversary of the Closing Date.

            (d)  Indemnification  by Parties;  Closing  Working  Capital Balance
Adjustment. Seller and Purchaser agree to indemnify each other for the amount of
the Closing Working Capital Balance  Adjustment  determined  pursuant to Section
3(c) and resulting in any shortfall or excess, as the case may be. Any shortfall
shall result in a dollar-for-dollar  reduction in the Purchase Price in the full
amount of such shortfall. Purchaser shall, in its sole discretion, either make a
claim for such amount under the Escrow  Agreement or directly in writing against
Seller,  which  shall be  payable  within ten (10)  Business  Days of receipt by
Seller. Any excess shall result in a dollar-for-dollar  increase in the Purchase
Price in the full amount of such excess.  Seller shall make a written  demand to
Purchaser and such excess amount shall be payable  within ten (10) Business Days
of receipt thereof by Purchaser.

            (e)  Indemnification  by Seller;  Other.  Seller agrees to indemnify
Purchaser from and against:  (i) any and all loss,  liability or damage suffered
or incurred by it by reason of any nonfulfillment of any covenant,  agreement or
undertaking  of  Seller  in this  Agreement  which by its  terms is to remain in
effect after the Closing and has not been specifically  waived in writing at the
Closing by the Party or  Parties  entitled  to the  benefits  thereof;  (ii) any
obligations  of Seller not  specifically  assumed by Purchaser in the  Liability
Undertaking;  and  (iii)  any and all costs  and  expenses,  including,  without
limitation,   legal  fees  and  expenses,   in  connection  with  enforcing  the
indemnification rights of Purchaser pursuant to Sections 10(c), 10(d) and 10(e).

            (f) Basket Amount.  Notwithstanding  anything in Sections 10(b), (c)
and  10(e)  to  the   contrary,   neither   Party   shall  be  entitled  to  any
indemnification  under such subsections against the other Party if the aggregate
amount of all claims of the Indemnified  Party (as defined below)  thereunder is
less than  One-Hundred  Twenty-Five  Thousand  Dollars  ($125,000)  (the "Basket
Amount"),  but if the aggregate  amount of all such  Indemnified  Party's claims
exceeds the Basket Amount,  then the Indemnified Party shall be entitled to full
indemnification   of  all   claims  and  there   shall  be  no  Basket   Amount.
Notwithstanding  anything in this Agreement to the contrary, for the purposes of
calculating the Basket Amount,  Purchaser and Seller agree that each dollar from
the very first dollar on the very first claim incurred by the Indemnified  Party
shall be included in calculating  the Basket Amount  regardless of any threshold
set forth in any provision of this Agreement. The Parties do not intend that the
Basket Amount be deemed to be a definition of what is "material" for any purpose
in this Agreement.  Neither Party shall be entitled to any indemnification under
the  subsection   hereof  in  excess  of  the  Purchase  Price.   The  foregoing
notwithstanding,  there shall be no Basket  Amount  applicable  to claims  under
Section 10(d).


                                                                              36
<PAGE>

            (g) Claims for  Indemnification.  Whenever any claim shall arise for
indemnification  hereunder,  the Party seeking indemnification (the "Indemnified
Party") shall promptly notify the Party from whom indemnification is sought (the
"Indemnifying  Party") of the claim and, when known, the facts  constituting the
basis  for  such  claim.  In the  case of any such  claim  for  indemnification,
hereunder resulting from or in connection with any claim or legal proceedings of
a third party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the  liability  arising  there from.  The
Indemnified  Party shall not settle or compromise any claim by a third party for
which it is  entitled to  indemnification  hereunder  without the prior  written
consent of the Indemnifying Party, which shall not be unreasonably  withheld. If
the  Indemnifying  Party is of the  opinion  that the  Indemnified  Party is not
entitled to indemnification, or is not entitled to indemnification in the amount
claimed in such  notice,  it shall  deliver,  within  thirty (30) days after the
receipt  of  such  notice,  a  written  objection  to  such  claim  and  written
specifications  in reasonable  detail of the aspects or details objected to, and
the  grounds for such  objection.  If the  Indemnifying  Party shall file timely
written notice of objection to any claim for  indemnification,  the validity and
amount of such claim  shall be  determined  by  arbitration  pursuant to Section
11(l) hereof. If timely notice of objection is not delivered or if a claim by an
Indemnified  Party is  admitted  in  writing by an  Indemnifying  Party or if an
arbitration  award is made in favor of an Indemnified  Party pursuant to Section
11(1), the Indemnified Party, as a non-exclusive remedy, shall have the right to
(i) receive from the Escrow Agent,  upon five (5) days prior  written  notice to
the other party by the Escrow Agent of such release of funds, the amount of such
claim or award on a  dollar-for-dollar  basis in order to satisfy  such claim or
award;  (ii) set off the  amount of such claim or award  against  any amount yet
owed,  whether due or to become due, by the Indemnified  Party or any subsidiary
thereof to any  Indemnifying  Party by reason of this Agreement or any agreement
or arrangement  or contract to be entered into at the Closing;  or (iii) recover
the amount of such claim or award by using a combination  of  subparagraphs  (i)
and (ii).

            (h)  The   Parties   here  agree  and   acknowledge   that   certain
representations,  warranties,  covenants and indemnification  rights may survive
the term of the Escrow Agreement and, therefore,  the availability of any Escrow
Funds (as defined  therein).  In the event that after  termination of the Escrow
Agreement,  a Party intends to make a claim to an Indemnifying Party pursuant to
a right hereunder, the Indemnified Party shall do so directly setting forth in a
written  notice the basis for the claim and the amount  sought.  If the  Parties
cannot  mutually  agree to resolve  such  claim  within  thirty  (30) days after
receipt by the  Indemnifying  Party of such notice,  the  Indemnified  Party may
pursue its remedies, under Section 11(l) of this Agreement.


                                   Section 11
                            Miscellaneous Provisions

            (a) Expense.  Each of the Parties shall bear its own costs, fees and
expenses in connection with the negotiation,  preparation,  execution,  delivery
and  performance  of this  Agreement and the  consummation  of the  transactions
contemplated hereby, including without limitation fees, commissions and expenses
payable to  brokers,  finders,  investment  bankers,  consultants,  exchange  or
transfer agents, attorneys, accountants and other professionals,  whether or not
the transactions  contemplated herein are consummated;  provided,  however, that
each Party  shall  bear  fifty  percent  (50%) of the fees and  expenses  of the
Independent Accountant and each Party shall bear fifty percent (50%) of the fees
of the Escrow Agent.

            (b) Amendment  and  Modification.  Subject to  applicable  Law, this
Agreement  may be amended or  modified  by the  Parties at any time prior to the
Closing with respect to any of the


                                                                              37
<PAGE>

terms  contained  herein;  provided,  however,  that  all  such  amendments  and
modifications must be in writing duly executed by all of the Parties.

            (c) Waiver of Compliance; Consents. Any failure of a Party to comply
with any obligation,  covenant,  agreement or condition  herein may be expressly
waived in  writing by the Party  entitled  hereby to such  compliance,  but such
waiver or  failure  to  insist  upon  strict  compliance  with such  obligation,
covenant,  agreement or condition  shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.  No single or partial exercise
of a right or remedy shall preclude any other or further  exercise thereof or of
any other right or remedy hereunder. Whenever this Agreement requires or permits
the consent by or on behalf of a Party,  such consent  shall be given in writing
in the same manner as for waivers of compliance.

            (d) No Third Party  Beneficiaries.  Nothing in this Agreement  shall
entitle any person or entity  (other than an  assignee of  Purchaser  or a Party
hereto and his, her or its respective  successors and assigns  permitted hereby)
to any claim, cause of action, remedy or right of any kind.

            (e) Notices. All notices, requests, demands and other communications
to  either  party  hereunder  shall be in  writing  delivered  by  certified  or
registered mail, return receipt requested;  reputable overnight courier, by hand
and a copy by facsimile transmission and shall be given to:

            if to Purchaser, to:

            Parmalat Bakery Division
            135 Otonabee Drive
            Kitchener, Ontario
            N2C 1L7 Canada
            Attn.:      Mr. Ray Kingdon, President
            Facsimile No.: 519-893-9223
            Telephone No.: 519-893-6400 x 227

            and

            Parmalat Canada
            405 The West Mall
            Suite 1000, 10th Floor
            Etobicoke, Ontario
            M9C 5J1 Canada
            Attn.:  Mr. Peter Quintiliani, Chief Financial Officer
                    Mr. Peter Ferraro, VP and General Counsel
            Facsimile No.: 416-620-3626
            Telephone No.: 416-620-3623

            with a copy to:

            Parmalat S.p.A.
            Via O. Grassi 22/26
            43044 Collecchio
            Parma, Italy
            Attn.:  Mr. Fausto Tonna, Chief Financial Officer
            Facsimile No.: (+39) 0521 808 327
            Telephone No.: (+39) 0521 8081

                                                                              38
<PAGE>

            BBLP - Pavia e Ansaldo
            Beiten Burkhardt Mittl & Wegener
            Moquet Borde & Associes
            Meyer Lustenberger, Professional Corporation
            460 Park Avenue, 21st Floor
            New York, NY 10022
            Attn.:   Gian Paolo Zini
                     Richard P. Altieri
            Facsimile No.: (212) 980 1453
            Telephone No.: (212) 980 1633

            or to such other person or address as Purchaser shall furnish to the
other Parties in writing in accordance with this subsection.

            if to Seller, to:

            Delicious Brands, Inc.
            2070 Maple Street
            Des Plaines, Illinois 60018
            Attn.:  Mr. Thomas J. Guinan, Chief Executive Officer

            with a copy to:

            Olshan, Grundman, Frome,
            Rosenzweig & Wolosky, LLP
            505 Park Avenue
            New York, New York 10022
            Attn.:  Steven Wolosky, Esq.
            Facsimile No.:  (212) 980-7177
            Telephone No.: (212) 753-7200

            or to such other  person or address as Seller  shall  furnish to the
other Parties in writing in accordance with this subsection.

            All such notices,  requests and other communications shall be deemed
received on the date of receipt by the recipient  thereof if received prior to 5
p.m.  in the place of  receipt  and such day is a  Business  Day in the place of
receipt.  Otherwise,  any such notice,  request or communication shall be deemed
not to have been received until the next succeeding Business Day in the place of
receipt.  For notice to be effective against the respective Parties,  all copies
must be delivered as set forth above.

            (f)  Assignment.  This  Agreement and all of the  provisions  hereof
shall be  binding  upon and  inure  to the  benefit  of the  Parties  and  their
respective  successors and permitted assigns, but neither this Agreement nor any
of the rights,  interests or obligations  hereunder  shall be assigned  (whether
voluntarily,  involuntarily,  by  operation of law or  otherwise)  by any of the
Parties  without  the prior  written  consent  of the other  parties;  provided,
however, that Purchaser may assign this Agreement,  in whole or in any part, and
from time to time as set forth in this Agreement.

            (g) Governing Law. The validity, interpretation, enforceability, and
performance of this  Agreement  shall be governed by and construed in accordance
with the laws of the State of New York,  without  regard  to the  principles  of
conflicts of law thereof.

            (h) Counterparts.  This Agreement may be executed  simultaneously in
one or more



                                                                              39
<PAGE>

counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

            (i) Headings. The table of contents and the headings of the sections
and  subsections of this Agreement are inserted for  convenience  only and shall
not constitute a part hereof.

            (j) Entire Agreement.  The Disclosure  Schedule and the exhibits and
other writings  referred to in this  Agreement or in the Disclosure  Schedule or
any such  exhibit or other  writing are part of this  Agreement:  together  they
embody the entire  agreement and  understanding of the Parties in respect of the
transactions contemplated by this Agreement and together they are referred to as
"this  Agreement"  or the  "Agreement".  There  are no  restrictions,  promises,
warranties,  agreements,  covenants or undertakings,  other than those expressly
set forth or referred to in this Agreement.  This Agreement supersedes all prior
agreements  and   understandings   between  the  parties  with  respect  to  the
transaction  or  transactions  contemplated  by this  Agreement  and the subject
matter  hereof  (including  without  limitation  (i) the letter of intent  dated
October 7, 1999,  from [Parmalat] to Seller,  (ii) the memorandum  dated October
27, 1999,  from Seller to  [Parmalat],  (iii) the letter dated November 4, 1999,
from  Pricewaterhouse  Coopers  to Seller,  (iv) the  Exclusivity  Letter  dated
October 27, 1999, between [Parmalat] and Seller and (v) the  Confidentiality and
Non-Disclosure Agreement dated June 24, 1999, between [Parmalat] and Seller, and
all amendments and extensions thereof).

            (k) Injunctive Relief. It is expressly agreed among the Parties that
monetary damages would be inadequate to compensate a party hereto for any breach
by any other Party of its  covenants  and  agreements  in Sections 6(c) and 6(e)
hereof.  Accordingly,  the Parties agree and acknowledge that any such violation
or threatened violation will cause irreparable injury to the non-breaching Party
and  that,  in  addition  to any other  remedies  which  may be  available,  the
non-breaching   Party  shall  be  entitled  to  injunctive  relief  against  the
threatened  breach of Sections 6(c) and 6(e) hereof or the  continuation  of any
such breach  without the  necessity  or proving  actual  damages and may seek to
specifically enforce the terms thereof.

            (1)  Arbitration.  With the sole exception of the injunctive  relief
contemplated by Section 11(k), any dispute, controversy or claim arising out of,
or relating to, this Agreement including, without limitation, the interpretation
or the breach,  termination  or invalidity  thereof,  shall be  exclusively  and
finally  resolved by arbitration in accordance with the Commercial  Rules of the
American Arbitration  Association ("AAA") then obtaining.  The arbitration panel
shall  consist  of  three  (3)  arbitrators.  The  claimant  shall  propose  one
arbitrator;  the respondent shall propose the second  arbitrator;  and the third
arbitrator,  who shall serve as chairman,  shall be appointed by the AAA. If any
of the Parties shall fail to propose an  arbitrator,  such  arbitrator  shall be
appointed  by the AAA (the  "Appointing  Authority").  The place of  arbitration
shall be New York City, USA and the English  language  shall be used  throughout
the arbitral  proceedings.  By agreeing to  arbitrate,  the Parties  waive their
right to any form of  appeal  or  recourse  to a court of law or other  judicial
authority,  to  the  fullest  extent  permitted  by  law.   Notwithstanding  the
foregoing,  this agreement to arbitrate  shall not bar either party from seeking
temporary  or  provisional  remedies  in any  Court of  competent  jurisdiction.
Judgment  upon  any  arbitration  award  may  be  entered  in any  court  having
jurisdiction  thereon. The Parties hereby consent to the exclusive  jurisdiction
of the state and federal courts located in New York county, New York State.

            (m)  Severability.  If  any  provision  of  this  Agreement,  or the
application  thereof to any person,  place, or circumstance,  shall be held by a
court of  competent  jurisdiction  to be


                                                                              40
<PAGE>

invalid,  unenforceable,  or void,  the  remainder  of this  Agreement  and such
provisions as applied to other persons,  places, and circumstances  shall remain
in full force and effect.

                         [Signatures on following page]


                                                                              41
<PAGE>



            IN WITNESS  WHEREOF,  the Parties have executed this Agreement as of
this 5th, day of April, 2000.

            PURCHASER:

            BF USB Inc.





            By:      /s/ Brian M. Paluch          By:  /s/ Peter Quintilian
                     -------------------               --------------------
                     Name:  Brian M. Paluch            Name: Peter Quintilian
                     Title: President                  Title: Treasurer



ATTEST:



By:         ____________________
            Name:
            Title:



STATE OF Missouri     )
                      )    ss.:
COUNTY OF St. Louis   )


            On this 5th day of April,  2000,  before me  personally  came  Brian
Paluch, _______________ of BF USB Inc., a Delaware corporation, to me known, and
known to me to be the person who executed the foregoing  instrument,  who, being
by me duly sworn,  did depose and say that he is the President of BF USB Inc., a
Delaware corporation; and that he executed the foregoing instrument on behalf of
such  corporation and affixed the corporate seal to the foregoing  instrument by
order of the Board of Directors of said  corporation and signed his name thereto
by like order.



                                               /s/ Barbara Ann Brown
                                               --------------------
                                               Notary Public 3/10/2002

            [seal]


                                                                              42
<PAGE>




            SELLER:



            DELICIOUS BRANDS, INC.



            By:  /s/ Tom Guinan
                 --------------------
                 Name:  Tom Guinan
                 Title: President



ATTEST:



By:   /s/ Jeffry Weiner
      ----------------------
      Name:  Jeffry Weiner
      Title: CFO



STATE OF IL           )
                      )   ss.:
COUNTY OF DuPage      )


            On this  5th day of  April,  2000,  before  me  personally  came Tom
Guinan,  President of DELICIOUS  BRANDS,  INC.,  a Delaware  corporation,  to me
known,  and known to me to be the person who executed the foregoing  instrument,
who,  being by me duly  sworn,  did depose and say that he is the  President  of
DELICIOUS  BRANDS,  INC.,  a  Delaware  corporation;  and that he  executed  the
foregoing  instrument  on behalf of such  corporation  and affixed the corporate
seal to the  foregoing  instrument  by order of the Board of  Directors  of said
corporation and signed his name thereto by like order.


                                                /s/ Doreen Lindsey
                                                --------------------
                                                Notary Public

            [seal]


                                                                              43