SYNERGY BRANDS, INC.

                          SECURITIES PURCHASE AGREEMENT

                                  April 2, 2004


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                                Table of Contents
                                                                           Page

1.       Agreement to Sell and Purchase......................................1

2.       Fees and Warrant....................................................1

3.       Closing, Delivery and Payment.......................................1
         3.1        Closing..................................................1
         3.2        Delivery.................................................1

4.       Representations and Warranties of the Company.......................1
         4.1        Organization, Good Standing and Qualification............1
         4.2        Subsidiaries.............................................1
         4.3        Capitalization; Voting Rights............................1
         4.4        Authorization; Binding Obligations.......................1
         4.5        Liabilities..............................................1
         4.6        Agreements; Action.......................................1
         4.7        Obligations to Related Parties...........................1
         4.8        Changes..................................................1
         4.9        Title to Properties and Assets; Liens, Etc...............1
         4.10       Intellectual Property....................................1
         4.11       Compliance with Other Instruments........................1
         4.12       Litigation...............................................1
         4.13       Tax Returns and Payments.................................1
         4.14       Employees................................................1
         4.15       Registration Rights and Voting Rights....................1
         4.16       Compliance with Laws; Permits............................1
         4.17       Environmental and Safety Laws............................1
         4.18       Valid Offering...........................................1
         4.19       Full Disclosure..........................................1
         4.20       Insurance................................................1
         4.21       SEC Reports..............................................1
         4.22       Listing..................................................1
         4.23       No Integrated Offering...................................1
         4.24       Stop Transfer............................................1
         4.25       Dilution.................................................1

5.       Representations and Warranties of the Purchaser.....................1
         5.1        No Shorting..............................................1
         5.2        Requisite Power and Authority............................1
         5.3        Investment Representations...............................1
         5.4        Purchaser Bears Economic Risk............................1
         5.5        Acquisition for Own Account..............................1
         5.6        Purchaser Can Protect Its Interest.......................1
         5.7        Accredited Investor......................................1
         5.8        Legends..................................................1

6.       Covenants of the Company............................................1
         6.1        Stop-Orders..............................................1
         6.2        Listing..................................................1
         6.3        Market Regulations.......................................1
         6.4        Reporting Requirements...................................1
         6.5        Use of Funds.............................................1
         6.6        Access to Facilities.....................................1
         6.7        Taxes....................................................1
         6.8        Insurance................................................1
         6.9        Intellectual Property....................................1
         6.10       Properties...............................................1
         6.11       Confidentiality..........................................1
         6.12       Required Approvals.......................................1
         6.13       Reissuance of Securities.................................1
         6.14       Opinion..................................................1

7.       Covenants of the Purchaser..........................................1
         7.1        Confidentiality..........................................1
         7.2        Non-Public Information...................................1

8.       Covenants of the Company and Purchaser Regarding Indemnification....1
         8.1        Company Indemnification..................................1
         8.2        Purchaser's Indemnification..............................1

9.       Conversion of Convertible Note......................................1
         9.1        Mechanics of Conversion..................................1
         9.2        Maximum Conversion.......................................
         9.3


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10.      Registration Rights.................................................1
         10.1       Registration Rights Granted..............................1

         10.2       Offering Restrictions....................................1

11.      Miscellaneous.......................................................1
         11.1       Governing Law............................................1
         11.2       Survival.................................................1
         11.3       Successors...............................................1
         11.4       Entire Agreement.........................................1
         11.5       Severability.............................................1
         11.6       Amendment and Waiver.....................................1
         11.7       Delays or Omissions......................................1
         11.8       Notices..................................................1
         11.9       Attorneys' Fees..........................................1
         11.10      Titles and Subtitles.....................................1
         11.11      Facsimile Signatures; Counterparts.......................1
         11.12      Broker's Fees............................................1
         11.13      Construction.............................................1


                                LIST OF EXHIBITS
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Form of Convertible Term Note....................................     Exhibit A
Form of Warrant..................................................     Exhibit B
Form of Opinion..................................................     Exhibit C
Form of Escrow Agreement.........................................     Exhibit D


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                          SECURITIES PURCHASE AGREEMENT

     THIS SECURITIES  PURCHASE  AGREEMENT (this "Agreement") is made and entered
into as of April 2,  2004,  by and  between  Synergy  Brands,  Inc.,  a Delaware
corporation  (the  "Company"),  and Laurus Master Fund,  Ltd., a Cayman  Islands
company (the "Purchaser").

                                    RECITALS

     WHEREAS,  the  Company  has  authorized  the  sale  to the  Purchaser  of a
Convertible  Term Note in the  aggregate  principal  amount of one million  five
hundred thousand dollars  ($1,500,000)  (the "Note"),  which Note is convertible
into  shares of the  Company's  common  stock,  $.001  par value per share  (the
"Common Stock") at a fixed  conversion  price of $5.00 per share of Common Stock
("Fixed Conversion Price");

     WHEREAS, the Company wishes to issue a warrant to the Purchaser to purchase
up to 100,000  shares of the  Company's  Common Stock  (subject to adjustment as
provided therein) in connection with Purchaser's purchase of the Note;

     WHEREAS, Purchaser desires to purchase the Note and the Warrant (as defined
in Section 2) on the terms and conditions set forth herein; and

     WHEREAS,  the  Company  desires  to issue and sell the Note and  Warrant to
Purchaser on the terms and conditions set forth herein.

                                    AGREEMENT

     NOW,  THEREFORE,  in consideration of the foregoing recitals and the mutual
promises,  representations,  warranties and covenants  hereinafter set forth and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

     1. Agreement to Sell and Purchase. Pursuant to the terms and conditions set
forth in this  Agreement,  on the  Closing  Date (as  defined in Section 3), the
Company  agrees to sell to the  Purchaser,  and the  Purchaser  hereby agrees to
purchase  from  the  Company,  a  Note  in the  aggregate  principal  amount  of
$1,500,000  convertible in accordance  with the terms thereof into shares of the
Company's  Common  Stock  in  accordance  with  the  terms  of the Note and this
Agreement.  The  Note  purchased  on the  Closing  Date  shall  be  known as the
"Offering."  A form of the Note is  annexed  hereto as  Exhibit A. The Note will
mature on the Maturity Date (as defined in the Note). Collectively, the Note and
the  Warrant  and the Common  Stock  issuable as payment in respect of the Note,
upon  conversion of the Note and upon exercise of the Warrant are referred to as
the "Securities."

     2. Fees and Warrant. On the Closing Date:

     (a) The  Company  will  issue and  deliver  to the  Purchaser  a Warrant to
purchase up to 100,000 shares of Common Stock (subject to adjustment as provided
therein) in connection with the Offering (the  "Warrant")  pursuant to Section 1
hereof.  The Warrant must be delivered on the Closing Date. A form of Warrant is
annexed  hereto as Exhibit B. All the  representations,  covenants,  warranties,
undertakings,  and  indemnification,  and other rights made or granted to or for
the benefit of the  Purchaser by the Company are hereby also made and granted in
respect of the Warrant and shares of the  Company's  Common Stock  issuable upon
exercise of the Warrant (the "Warrant Shares").

     (b) Subject to the terms of  Section 2(d)  below,  the Company shall pay to
Laurus Capital Management,  LLC, the manager of the Purchaser, a closing payment
in an amount  equal to three  and  one-half  percent  (3.50%)  of the  aggregate
principal  amount of the Note.  The  foregoing  fee is referred to herein as the
"Closing Payment."

     (c) The Company shall reimburse the Purchaser for its reasonable legal fees
for services  rendered to the Purchaser in preparation of this Agreement and the
Related Agreements (as hereinafter defined), and expenses incurred in connection
with the  Purchaser's due diligence  review of the Company and its  Subsidiaries
(as defined in Section 6.8) and all related matters. Amounts required to be paid
under this  Section  2(c) will be paid on the Closing  Date and shall be $39,500
for  legal  fees  and for  expenses  incurred  while  performing  due  diligence
inquiries on the Company and its Subsidiaries.

     (d) The Closing Payment, the legal fees and the due diligence expenses (net
of  deposits  previously  paid by the  Company)  shall be paid at closing out of
funds held pursuant to a Funds Escrow  Agreement of even date herewith among the
Company,  Purchaser,  and an Escrow Agent (the "Funds Escrow  Agreement")  and a
disbursement letter (the "Disbursement Letter").

<PAGE>

     3. Closing, Delivery and Payment.

     3.1 Closing. Subject to the terms and conditions herein, the closing of the
transactions  contemplated hereby (the "Closing"),  shall take place on the date
hereof,  at such time or place as the Company and Purchaser  may mutually  agree
(such date is hereinafter referred to as the "Closing Date").

     3.2 Delivery.  Pursuant to the Funds Escrow  Agreement in the form attached
hereto as Exhibit C, at the  Closing  on the  Closing  Date,  the  Company  will
deliver to the  Purchaser,  among other  things,  a Note in the form attached as
Exhibit A  representing  the  aggregate  principal  amount of  $1,500,000  and a
Warrant in the form attached as Exhibit B in the Purchaser's  name  representing
100,000  Warrant  Shares and the  Purchaser  will deliver to the Company,  among
other  things,  the amounts set forth in the  Disbursement  Letter by  certified
funds or wire transfer.

     4.  Representations  and  Warranties  of the  Company.  The Company  hereby
represents and warrants to the Purchaser as follows (which  representations  and
warranties  are  supplemented  by the  Company's  filings  under the  Securities
Exchange Act of 1934 (collectively, the "Exchange Act Filings"), copies of which
have been provided to the Purchaser):

     4.1 Organization, Good Standing and Qualification.  Each of the Company and
each of its  Subsidiaries  is a corporation,  partnership  or limited  liability
company,  as the case  may be,  duly  organized,  validly  existing  and in good
standing under the laws of its jurisdiction of organization. Each of the Company
and each of its  Subsidiaries  has the corporate  power and authority to own and
operate its properties and assets,  and to execute and deliver,  to the extent a
party thereto, (i) this Agreement, (ii) the Note and the Warrant to be issued in
connection with this Agreement,  (iii) the Master Security Agreement dated as of
the date hereof between the Company, certain Subsidiaries of the Company and the
Purchaser (as amended,  modified or supplemented  from time to time, the "Master
Security  Agreement"),  (iv) the Registration  Rights Agreement  relating to the
Securities  dated as of the date hereof  between the Company and the  Purchaser,
(v) the  Subsidiary  Guaranty  dated  as of the  date  hereof  made  by  certain
Subsidiaries of the Company (as amended,  modified or supplemented  from time to
time, the "Subsidiary  Guaranty"),  (vi) the Stock Pledge  Agreement dated as of
the date hereof among the Company and the  Purchaser  (as  amended,  modified or
supplemented from time to time, the "Stock Pledge Agreement"),  (vii) the Escrow
Agreement  dated as of the date hereof among the Company,  the Purchaser and the
escrow  agent  referred  to  therein,  and (ix) the  Intercompany  Subordination
Agreement dated as of the date hereof among the Company, certain Subsidiaries of
the Company and the Purchaser (the "Intercompany  Subordination  Agreement") and
(ix) all other agreements related to this Agreement and the Note and referred to
herein (the  preceding  clauses (ii) through  (ix),  collectively,  the "Related
Agreements"), to issue and sell the Note and the shares of Common Stock issuable
upon conversion of the Note (the "Note  Shares"),  to issue and sell the Warrant
and the Warrant  Shares,  and to carry out the  provisions of this Agreement and
the Related Agreements and to carry on its business as presently conducted. Each
of the Company and each of its  Subsidiaries is duly qualified and is authorized
to do business and is in good standing as a foreign corporation,  partnership or
limited liability company, as the case may be, in all jurisdictions in which the
nature of its  activities  and of its  properties  (both owned and leased) makes
such qualification necessary, except for those jurisdictions in which failure to
do so has not, or could not reasonably be expected to have,  individually  or in
the aggregate, a material adverse effect on the business,  assets,  liabilities,
condition (financial or otherwise),  properties,  operations or prospects of the
Company and it  Subsidiaries,  taken  individually  and as a whole (a  "Material
Adverse Effect").

     4.2 Subsidiaries.  Each direct and indirect Subsidiary of the Company,  the
direct owner of such  Subsidiary and its percentage  ownership  thereof,  is set
forth on Schedule 4.2. For the purpose of this Agreement,  a "Subsidiary" of any
person or entity means (i) a  corporation  or other entity whose shares of stock
or other ownership  interests  having ordinary voting power (other than stock or
other ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the directors of such corporation,  or other
persons or entities  performing similar functions for such person or entity, are
owned, directly or indirectly, by such person or entity or (ii) a corporation or
other entity in which such person or entity owns,  directly or indirectly,  more
than 50% of the equity  interests at such time,  provided that,  notwithstanding
the foregoing,  the entities (x) designated as inactive subsidiaries on Schedule
4.2 and (y) and such other entities  designated by the Company in writing to the
Purchaser  after the date hereof  (collectively,  the  "Inactive  Subsidiaries")
shall  be  explicitly  excluded  from the  definition  of  "Subsidiary"  for the
purposes of this Agreement and the Related Agreements, solely to the extent that
such Inactive  Subsidiaries do not own any assets (other than immaterial assets)
or have any liabilities (other than immaterial liabilities).


<PAGE>

     4.3 Capitalization; Voting Rights.

     (a) The  authorized  and  issued  capital  stock  of the  Company  and each
Subsidiary of the Company is as set forth on Schedule 4.3.

     (b)  Except as  disclosed  on  Schedule  4.3,  other  than:  (i) the shares
reserved for issuance  under the Company's  stock option plans;  and (ii) shares
which may be granted  pursuant to this  Agreement  and the  Related  Agreements,
there are no outstanding  options,  warrants,  rights  (including  conversion or
preemptive rights and rights of first refusal), proxy or stockholder agreements,
or arrangements  or agreements of any kind for the purchase or acquisition  from
the Company of any of its  securities.  Except as  disclosed  on  Schedule  4.3,
neither the offer,  issuance or sale of any of the Note or the  Warrant,  or the
issuance of any of the Note Shares or Warrant  Shares,  nor the  consummation of
any  transaction  contemplated  hereby  will  result in a change in the price or
number of any  securities of the Company  outstanding,  under  anti-dilution  or
other similar provisions contained in or affecting any such securities.

     (c) All issued and outstanding  shares of the Company's  Common Stock:  (i)
have  been  duly   authorized   and  validly  issued  and  are  fully  paid  and
nonassessable;  and (ii) were issued in compliance with all applicable state and
federal laws concerning the issuance of securities.

     (d) The rights,  preferences,  privileges and restrictions of the shares of
the Common Stock are as stated in the  Company's  Certificate  of  Incorporation
(the  "Charter").  The Note Shares and Warrant Shares have been duly and validly
reserved for  issuance.  When issued in compliance  with the  provisions of this
Agreement and the Company's  Charter,  the  Securities  will be validly  issued,
fully  paid and  nonassessable,  and will be free of any liens or  encumbrances;
provided,  however,  that the  Securities  may be  subject  to  restrictions  on
transfer  under state and/or federal  securities  laws as set forth herein or as
otherwise required by such laws at the time a transfer is proposed.

     4.4  Authorization;  Binding  Obligations.  All  corporate,  partnership or
limited liability company, as the case may be, action on the part of the Company
and each of its Subsidiaries  (including the respective  officers and directors)
necessary for the  authorization  of this Agreement and the Related  Agreements,
the performance of all obligations of the Company and its Subsidiaries hereunder
and under the other Related  Agreements  at the Closing and, the  authorization,
sale,  issuance  and  delivery of the Note and Warrant has been taken or will be
taken prior to the Closing,  so long as, after giving effect to the transactions
contemplated  hereby,  (x) the  Purchaser  does not own more than  19.99% of the
Common  Stock and (y) the shares of Common  Stock  that are being  issued to the
Purchaser  hereunder and under the Related  Agreements are not issued at a price
per share less than the  market  value of the share of the  Common  Stock.  This
Agreement and the other Related  Agreements,  when executed and delivered and to
the extent it is a party thereto,  will be valid and binding obligations of each
of the  Company  and each of its  Subsidiaries,  enforceable  against  each such
person in accordance with their terms, except:

     (a)  as  limited  by  applicable  bankruptcy,  insolvency,  reorganization,
moratorium  or  other  laws of  general  application  affecting  enforcement  of
creditors' rights; and

     (b)  general  principles  of  equity  that  restrict  the  availability  of
equitable or legal remedies.

     The sale of the Note and the  subsequent  conversion  of the Note into Note
Shares  are not and will not be subject  to any  preemptive  rights or rights of
first refusal that have not been properly  waived or complied with. The issuance
of the Warrant and the subsequent exercise of the Warrant for Warrant Shares are
not and will not be subject to any preemptive  rights or rights of first refusal
that have not been properly waived or complied with.


<PAGE>

     4.5  Liabilities.  Neither the Company nor any of its  Subsidiaries has any
contingent  liabilities,  except  current  liabilities  incurred in the ordinary
course of business and liabilities disclosed in any Exchange Act Filings.

     4.6 Agreements; Action. Except as set forth on Schedule 4.6 or as disclosed
in any Exchange Act Filings:

     (a)  there  are  no  agreements,  understandings,  instruments,  contracts,
proposed transactions,  judgments, orders, writs or decrees to which the Company
or any of its Subsidiaries is a party or by which it is bound which may involve:
(i)  obligations  (contingent  or otherwise)  of, or payments to, the Company in
excess of $50,000  (other  than  obligations  of, or  payments  to, the  Company
arising from purchase or sale agreements  entered into in the ordinary course of
business);  or (ii) the  transfer  or license of any  patent,  copyright,  trade
secret or other  proprietary  right to or from the Company  (other than licenses
arising from the  purchase of "off the shelf" or other  standard  products);  or
(iii) provisions restricting the development, manufacture or distribution of the
Company's  products or  services;  or (iv)  indemnification  by the Company with
respect to infringements of proprietary rights.

     (b)  Since  December  31,  2002,   neither  the  Company  nor  any  of  its
Subsidiaries has: (i) declared or paid any dividends,  or authorized or made any
distribution  upon or with respect to any class or series of its capital  stock;
(ii)  incurred  any  indebtedness  for money  borrowed or any other  liabilities
(other than ordinary course  obligations)  individually in excess of $50,000 or,
in the case of indebtedness  and/or liabilities  individually less than $50,000,
in excess of $100,000 in the aggregate; (iii) (ii) made any loans or advances to
any person not in excess,  individually or in the aggregate, of $100,000,  other
than ordinary course advances for business expenses;  or (iv) sold, exchanged or
otherwise disposed of any of its material assets or rights,  other than the sale
of its inventory in the ordinary course of business.

     (c) For the purposes of subsections  (a) and (b) above,  all  indebtedness,
liabilities,  agreements,  understandings,  instruments,  contracts and proposed
transactions  involving the same person or entity (including persons or entities
the Company has reason to believe are affiliated  therewith) shall be aggregated
for the  purpose  of  meeting  the  individual  minimum  dollar  amounts of such
subsections.

     4.7  Obligations to Related  Parties.  Except as set forth on Schedule 4.7,
there are no obligations of the Company or any of its  Subsidiaries to officers,
directors,  stockholders or employees of the Company or any of its  Subsidiaries
other than:

     (a) for payment of fees in the ordinary  course of business  and/or  salary
for services rendered and for bonus payments;

     (b) reimbursement for reasonable expenses incurred on behalf of the Company
and its Subsidiaries;

     (c) for other standard  employee  benefits made generally  available to all
employees (including stock option agreements  outstanding under any stock option
plan approved by the Board of Directors of the Company); and

     (d) obligations listed in the Company's  financial  statements or disclosed
in any of its Exchange Act Filings.

     Except  as  described  above or set  forth  on  Schedule  4.7,  none of the
officers, directors or, to the best of the Company's knowledge, key employees or
stockholders  of the Company or any  members of their  immediate  families,  are
indebted to the Company,  individually or in the aggregate, in excess of $50,000
or have any direct or indirect  ownership  interest  in any firm or  corporation
with which the  Company is  affiliated  or with which the Company has a business
relationship,  or any firm or corporation which competes with the Company, other
than passive  investments in publicly traded companies  (representing  less than
one percent (1%) of such company) which may compete with the Company.  Except as
described  above, no officer,  director or  stockholder,  or any member of their
immediate  families,  is,  directly or  indirectly,  interested  in any material
contract  with  the  Company  and  no  agreements,  understandings  or  proposed
transactions are contemplated between the Company and any such person. Except as
set forth on Schedule  4.7, the Company is not a guarantor or  indemnitor of any
indebtedness of any other person, firm or corporation.


<PAGE>

     4.8 Changes.  Since December 31, 2002,  except as disclosed in any Exchange
Act  Filing  or in any  Schedule  to  this  Agreement  or to any of the  Related
Agreements, there has not been:

     (a) any change in the business, assets,  liabilities,  condition (financial
or otherwise),  properties, operations or prospects of the Company or any of its
Subsidiaries,  which  individually  or  in  the  aggregate  has  had,  or  could
reasonably be expected to have,  individually  or in the  aggregate,  a Material
Adverse Effect;

     (b) any resignation or termination of any officer, key employee or group of
employees of the Company or any of its Subsidiaries;

     (c) any material change,  except in the ordinary course of business, in the
contingent  obligations  of the  Company  or any of its  Subsidiaries  by way of
guaranty, endorsement, indemnity, warranty or otherwise;

     (d) any damage,  destruction or loss,  whether or not covered by insurance,
has had,  or could  reasonably  be  expected  to  have,  individually  or in the
aggregate, a Material Adverse Effect;

     (e) any  waiver by the  Company  or any of its  Subsidiaries  of a valuable
right or of a material debt owed to it;

     (f)  any  direct  or  indirect  loans  made  by the  Company  or any of its
Subsidiaries to any stockholder, employee, officer or director of the Company or
any of its  Subsidiaries,  other than  advances  made in the ordinary  course of
business;

     (g) any material change in any  compensation  arrangement or agreement with
any  employee,  officer,  director or  stockholder  of the Company or any of its
Subsidiaries;

     (h) any declaration or payment of any dividend or other distribution of the
assets of the Company or any of its Subsidiaries;

     (i) any labor  organization  activity  related to the Company or any of its
Subsidiaries;

     (j) any debt,  obligation or liability  incurred,  assumed or guaranteed by
the Company or any of its Subsidiaries,  except those for immaterial amounts and
for current liabilities incurred in the ordinary course of business;

     (k)  any  sale,   assignment  or  transfer  of  any  patents,   trademarks,
copyrights, trade secrets or other intangible assets owned by the Company or any
of its Subsidiaries;

     (l) any change in any material agreement to which the Company is a party or
by which it is bound which either  individually  or in the aggregate has had, or
could  reasonably  be  expected to have,  individually  or in the  aggregate,  a
Material Adverse Effect;

     (m) any other event or condition of any character that, either individually
or in the  aggregate,  has  had,  or  could  reasonably  be  expected  to  have,
individually or in the aggregate, a Material Adverse Effect; or

     (n) any arrangement or commitment by the Company or any of its Subsidiaries
to do any of the acts  described in subsection  (a) through (m) above as limited
therein.

<PAGE>

     4.9 Title to  Properties  and Assets;  Liens,  Etc.  Except as set forth on
Schedule  4.9,  each of the  Company and each of its  Subsidiaries  has good and
marketable  title to its properties and assets,  and good title to its leasehold
estates, in each case subject to no mortgage,  pledge, lien, lease,  encumbrance
or charge, other than:

     (a) those resulting from taxes which have not yet become delinquent;

     (b) minor liens and encumbrances which it is to the Company's belief do not
materially  detract from the value of the property subject thereto or materially
impair the operations of the Company or any of its Subsidiaries; and

     (c) those that have otherwise arisen in the ordinary course of business.

     All  facilities,   machinery,   equipment,  fixtures,  vehicles  and  other
properties owned, leased or used by the Company and its Subsidiaries are in good
operating  condition  and  repair  and are  reasonably  fit and  usable  for the
purposes for which they are being used. Except as set forth on Schedule 4.9, the
Company and its  Subsidiaries  are in compliance with all material terms of each
lease to which it is a party or is otherwise bound.

     4.10 Intellectual Property.

     (a) Each of the  Company  and each of its  Subsidiaries  owns or  possesses
sufficient legal rights to all patents, trademarks,  service marks, trade names,
copyrights,  trade secrets,  licenses,  information and other proprietary rights
and  processes  necessary for its business as now conducted and to the Company's
knowledge,as  presently proposed to be conducted (the "Intellectual  Property"),
without any known infringement of the rights of others. There are no outstanding
options,   licenses  or  agreements  of  any  kind  relating  to  the  foregoing
proprietary  rights, nor is the Company or any of its Subsidiaries bound by or a
party to any  options,  licenses or  agreements  of any kind with respect to the
patents,  trademarks,  service marks,  trade names,  copyrights,  trade secrets,
licenses,  information and other  proprietary  rights and processes of any other
person or entity  other  than  such  licenses  or  agreements  arising  from the
purchase of "off the shelf" or standard products.

     (b)  Neither  the  Company nor any of its  Subsidiaries  has  received  any
communications alleging that the Company or any of its Subsidiaries has violated
any of the patents, trademarks,  service marks, trade names, copyrights or trade
secrets or other  proprietary  rights of any other person or entity,  nor is the
Company or any of its Subsidiaries aware of any basis therefor.

     (c) The Company  does not believe it is or will be necessary to utilize any
inventions,  trade secrets or  proprietary  information  of any of its employees
made prior to their employment by the Company or any of its Subsidiaries, except
for  inventions,  trade  secrets  or  proprietary  information  that  have  been
rightfully assigned to the Company or any of its Subsidiaries.


<PAGE>

     4.11 Compliance with Other Instruments.  Neither the Company nor any of its
Subsidiaries  is in  violation  or  default  of (x) any term of its  Charter  or
Bylaws,  or (y) of any  provision  of  any  indebtedness,  mortgage,  indenture,
contract,  agreement or  instrument to which it is party or by which it is bound
or of any judgment,  decree,  order or writ, which violation or default,  in the
case of this  clause  (y),  has had,  or could  reasonably  be expected to have,
either  individually  or in  the  aggregate,  a  Material  Adverse  Effect.  The
execution,  delivery and  performance of and compliance  with this Agreement and
the Related  Agreements to which it is a party, and the issuance and sale of the
Note by the Company and the other Securities by the Company each pursuant hereto
and thereto,  will not, with or without the passage of time or giving of notice,
result in any such  material  violation,  or be in conflict with or constitute a
default  under any such term or  provision,  or  result in the  creation  of any
mortgage,  pledge,  lien,  encumbrance  or charge upon any of the  properties or
assets of the Company or any of its Subsidiaries or the suspension,  revocation,
impairment,  forfeiture or nonrenewal of any permit,  license,  authorization or
approval  applicable  to the Company,  its business or  operations or any of its
assets or properties.

     4.12 Litigation.  Except as set forth on Schedule 4.12 hereto,  there is no
action,  suit,   proceeding  or  investigation  pending  or,  to  the  Company's
knowledge,  currently  threatened against the Company or any of its Subsidiaries
that  prevents the Company or any of its  Subsidiaries  from  entering into this
Agreement or the other Related Agreements, or from consummating the transactions
contemplated  hereby  or  thereby,  or which  has had,  or could  reasonably  be
expected to have,  either  individually or in the aggregate,  a Material Adverse
Effect or any change in the current  equity  ownership  of the Company or any of
its Subsidiaries, nor is the Company aware that there is any basis to assert any
of the foregoing.  Neither the Company nor any of its Subsidiaries is a party or
subject to the provisions of any order, writ, injunction,  judgment or decree of
any court or  government  agency  or  instrumentality  which  has had,  or could
reasonably  be expected to have,  either  individually  or in the  aggregate,  a
Material Adverse Effect. There is no action,  suit,  proceeding or investigation
by the Company or any of its Subsidiaries currently pending or which the Company
or any of its Subsidiaries intends to initiate.

     4.13  Tax  Returns  and  Payments.  Each  of the  Company  and  each of its
Subsidiaries  have  timely  filed all tax  returns  (federal,  state and  local)
required  to be filed by it.  All  taxes  shown  to be due and  payable  on such
returns,  any  assessments  imposed,  and all other taxes due and payable by the
Company or any of its  Subsidiaries on or before the Closing,  have been paid or
will be paid prior to the time they  become  delinquent.  Except as set forth on
Schedule 4.13, neither the Company nor any of its Subsidiaries has been advised:

     (a) that any of its  returns,  federal,  state or  other,  have been or are
being audited as of the date hereof; or

     (b) of any  deficiency in  assessment or proposed  judgment to its federal,
state or other taxes.

     The Company has no knowledge of any liability of any tax to be imposed upon
its properties or assets as of the date of this Agreement that is not adequately
provided for.

     4.14 Employees.  Except as set forth on Schedule 4.14,  neither the Company
nor any of its Subsidiaries has any collective bargaining agreements with any of
its employees.  There is no labor union  organizing  activity pending or, to the
Company's  knowledge,  threatened  with  respect  to the  Company  or any of its
Subsidiaries.  Except as  disclosed  in the  Exchange Act Filings or on Schedule
4.14,  neither the Company nor any of its Subsidiaries is a party to or bound by
any currently  effective material  employment  contract,  deferred  compensation
arrangement,  bonus  plan,  incentive  plan,  profit  sharing  plan,  retirement
agreement or other  employee  compensation  plan or agreement.  To the Company's
knowledge,  no  employee  of the  Company  or any of its  Subsidiaries,  nor any
consultant with whom the Company or any of its Subsidiaries  has contracted,  is
in violation of any term of any  employment  contract,  proprietary  information
agreement or any other agreement relating to the right of any such individual to
be employed  by, or to  contract  with,  the Company or any of its  Subsidiaries
because of the nature of the  business to be  conducted by the Company or any of
its Subsidiaries; and to the Company's knowledge the continued employment by the
Company or any of its Subsidiaries of its present employees, and the performance
of  the  Company's  and  its   Subsidiaries'   contracts  with  its  independent
contractors,  will not result in any such violation. Neither the Company nor any
of its  Subsidiaries  is aware that any of its employees is obligated  under any
contract (including  licenses,  covenants or commitments of any nature) or other
agreement,  or  subject  to any  judgment,  decree  or  order  of any  court  or
administrative  agency, that would interfere with their duties to the Company or
any of its  Subsidiaries.  Neither the Company nor any of its  Subsidiaries  has
received any notice  alleging that any such  violation has occurred.  Except for
employees who have a current effective  employment agreement with the Company or
any of its  Subsidiaries,  no employee of the Company or any of its Subsidiaries
has been granted the right to continued  employment by the Company or any of its
Subsidiaries or to any material compensation following termination of employment
with the  Company or any of its  Subsidiaries.  Except as set forth on  Schedule
4.14,  the  Company  is not aware that any  officer,  key  employee  or group of
employees  intends to terminate his, her or their employment with the Company or
any of its Subsidiaries,  nor does the Company or any of its Subsidiaries have a
present  intention to terminate the  employment of any officer,  key employee or
group of employees.

<PAGE>

     4.15 Registration Rights and Voting Rights. Except as set forth on Schedule
4.15 and except as disclosed  in Exchange  Act Filings,  neither the Company nor
any of its  Subsidiaries is presently under any obligation,  and has not granted
any rights,  to register  any of the  Company's or its  Subsidiaries'  presently
outstanding  securities or any of its  securities  that may hereafter be issued.
Except as set forth on Schedule  4.15 and except as  disclosed  in Exchange  Act
Filings, to the Company's knowledge, no stockholder of the Company or any of its
Subsidiaries has entered into any agreement with respect to the voting of equity
securities of the Company or any of its Subsidiaries.

     4.16  Compliance  with Laws;  Permits.  Neither  the Company nor any of its
Subsidiaries is in violation of any applicable statute, rule, regulation,  order
or restriction of any domestic or foreign  government or any  instrumentality or
agency thereof in respect of the conduct of its business or the ownership of its
properties  which has had,  or could  reasonably  be  expected  to have,  either
individually or in the aggregate,  a Material  Adverse  Effect.  No governmental
orders,  permissions,  consents,  approvals or authorizations are required to be
obtained  and no  registrations  or  declarations  are  required  to be filed in
connection  with the  execution  and  delivery  of this  Agreement  or any other
Related Agreement and the issuance of any of the Securities,  except such as has
been duly and validly  obtained or filed,  or with  respect to any filings  that
must be made after the Closing, as will be filed in a timely manner. Each of the
Company and its Subsidiaries has all material franchises,  permits, licenses and
any similar  authority  necessary  for the conduct of its  business as now being
conducted  by it,  the  lack  of  which  could,  either  individually  or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

     4.17  Environmental  and Safety  Laws.  Neither  the Company nor any of its
Subsidiaries  is in  violation  of any  applicable  statute,  law or  regulation
relating to the environment or occupational  health and safety,  which violation
has had, or could reasonably be expected to have, either  individually or in the
aggregate with all other such  violations,  a Material Adverse Effect and to its
knowledge,  no material  expenditures are or will be required in order to comply
with any such  existing  statute,  law or  regulation.  Except  as set  forth on
Schedule  4.17, no Hazardous  Materials (as defined below) are used or have been
used,  stored,  or disposed of by the Company or any of its  Subsidiaries or, to
the Company's  knowledge,  by any other person or entity on any property  owned,
leased or used by the Company or any of its  Subsidiaries.  For the  purposes of
the preceding sentence, "Hazardous Materials" shall mean:

     (a)  materials  which are listed or  otherwise  defined as  "hazardous"  or
"toxic" under any  applicable  local,  state,  federal  and/or  foreign laws and
regulations  that  govern  the  existence  and/or  remedy  of  contamination  on
property,  the protection of the environment from contamination,  the control of
hazardous wastes, or other activities involving hazardous substances,  including
building materials; or

     (b) any petroleum products or nuclear materials.

<PAGE>

     4.18 Valid  Offering.  Assuming  the  accuracy of the  representations  and
warranties of the Purchaser  contained in this  Agreement,  the offer,  sale and
issuance of the Securities will be exempt from the registration  requirements of
the Securities  Act of 1933, as amended (the  "Securities  Act"),  and will have
been registered or qualified (or are exempt from registration and qualification)
under the registration,  permit or qualification  requirements of all applicable
state securities laws.

     4.19 Full Disclosure.  Each of the Company and each of its Subsidiaries has
provided  the  Purchaser  with all  information  requested  by the  Purchaser in
connection  with its decision to purchase the Note and  Warrant,  including  all
information the Company and its Subsidiaries believes is reasonably necessary to
make such investment decision.  Neither this Agreement,  the Related Agreements,
the exhibits and schedules  hereto and thereto nor any other document  delivered
by the Company or any of its  Subsidiaries  to  Purchaser  or its  attorneys  or
agents in connection herewith or therewith or with the transactions contemplated
hereby or thereby,  contain any untrue  statement of a material fact nor omit to
state a material fact necessary in order to make the statements contained herein
or  therein,  in  light  of the  circumstances  in  which  they  are  made,  not
misleading.  Any  financial  projections  and other  estimates  provided  to the
Purchaser by the Company or any of its Subsidiaries  were based on the Company's
and its Subsidiaries'  experience in the industry and on assumptions of fact and
opinion as to future events which the Company or any of its Subsidiaries, at the
date  of  the  issuance  of  such  projections  or  estimates,  believed  to  be
reasonable.

     4.20  Insurance.  Each of the  Company  and  each of its  Subsidiaries  has
general commercial, product liability, fire and casualty insurance policies with
coverages  which the Company  believes are  customary  for  companies  similarly
situated to the Company and its Subsidiaries in the same or similar business.

     4.21 SEC  Reports.  Except as set forth on Schedule  4.21,  the Company has
filed all proxy statements,  reports and other documents required to be filed by
it under the Exchange Act. The Company has  furnished the Purchaser  with copies
of: (i) its Annual  Reports on Form 10-KSB for its fiscal  years ended  December
31, 2003 and December 31, 2002;  and (ii) its  Quarterly  Reports on Form 10-QSB
for its  fiscal  quarter  ended  September  30,  2003  (collectively,  the  "SEC
Reports").  Except as set forth on  Schedule  4.21,  each SEC Report was, at the
time of its filing,  in  substantial  compliance  with the  requirements  of its
respective form and none of the SEC Reports,  nor the financial  statements (and
the notes thereto)  included in the SEC Reports,  as of their respective  filing
dates,  contained any untrue  statement of a material fact or omitted to state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.

     4.22  Listing.  The  Company's  Common  Stock is listed for  trading on the
NASDAQ  SmallCap  Market  ("NASDAQ SC") and satisfies all  requirements  for the
continuation  of such  listing.  The  Company  has not  received  any  currently
effective  notice that its Common Stock will be delisted  from NASDAQ SC or that
its Common Stock does not meet all requirements for listing.

     4.23  No  Integrated  Offering.   Neither  the  Company,  nor  any  of  its
Subsidiaries  or affiliates,  nor any person acting on its or their behalf,  has
directly or indirectly made any offers or sales of any security or solicited any
offers to buy any security under  circumstances that would cause the offering of
the Securities pursuant to this Agreement or any of the Related Agreements to be
integrated  with prior  offerings by the Company for purposes of the  Securities
Act which would prevent the Company from selling the Securities pursuant to Rule
506 under the  Securities  Act, or any applicable  exchange-related  stockholder
approval  provisions,  nor  will  the  Company  or  any  of  its  affiliates  or
Subsidiaries  take any  action or steps  that would  cause the  offering  of the
Securities to be integrated with other offerings.

<PAGE>

     4.24 Stop Transfer. The Securities are restricted securities as of the date
of this Agreement.  Neither the Company nor any of its  Subsidiaries  will issue
any stop transfer  order or other order impeding the sale and delivery of any of
the  Securities at such time as the Securities are registered for public sale or
an exemption  from  registration  is available,  except as required by state and
federal securities laws.

     4.25 Dilution. The Company specifically acknowledges that its obligation to
issue the shares of Common Stock upon conversion of the Note and exercise of the
Warrant is binding upon the Company and  enforceable  regardless of the dilution
such issuance may have on the ownership  interests of other  shareholders of the
Company.

     4.26  Patriot  Act. The Company  certifies  that,  to the best of Company's
knowledge,  neither the Company nor any of its Subsidiaries has been designated,
and is not  owned or  controlled,  by a  "suspected  terrorist"  as  defined  in
Executive Order 13224. The Company hereby  acknowledges that the Purchaser seeks
to comply with all  applicable  laws  concerning  money  laundering  and related
activities.  In  furtherance of those  efforts,  the Company hereby  represents,
warrants and agrees that:  (i) none of the cash or property  that the Company or
any of its Subsidiaries will pay or will contribute to the Purchaser has been or
shall be derived from, or related to, any activity that is deemed criminal under
United States law; and (ii) no  contribution or payment by the Company or any of
its  Subsidiaries  to the  Purchaser,  to the  extent  that they are  within the
Company's  and/or its  Subsidiaries'  control shall cause the Purchaser to be in
violation of the United States Bank Secrecy Act, the United States International
Money Laundering  Control Act of 1986 or the United States  International  Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001. The Company shall
promptly notify the Purchaser if any of these representations  ceases to be true
and  accurate  regarding  the  Company or any of its  Subsidiaries.  The Company
agrees to provide in  confidence to the  Purchaser  any  additional  information
regarding  the  Company  or any of its  Subsidiaries  that the  Purchaser  deems
necessary or convenient to ensure compliance with all applicable laws concerning
money laundering and similar activities. The Company understands and agrees that
if at any time it is discovered  that any of the foregoing  representations  are
incorrect,  or if otherwise  required by applicable law or regulation related to
money laundering  similar  activities,  the Purchaser may undertake  appropriate
actions to ensure  compliance with  applicable law or regulation,  including but
not limited to segregation  and/or  redemption of the Purchaser's  investment in
the Company.  The Company  further  understands  that the  Purchaser may release
confidential  information  about  the  Company  and  its  Subsidiaries  and,  if
applicable,  any  underlying  beneficial  owners,  to proper  authorities if the
Purchaser,  in its sole discretion,  determines that it is in the best interests
of the Purchaser in light of relevant rules and  regulations  under the laws set
forth in subsection (ii) above.

<PAGE>

     5.  Representations  and Warranties of the Purchaser.  The Purchaser hereby
represents  and  warrants to the Company as follows  (such  representations  and
warranties do not lessen or obviate the  representations  and  warranties of the
Company set forth in this Agreement):

     5.1 No Shorting.  The  Purchaser or any of its  affiliates  and  investment
partners has not, will not and will not cause any person or entity,  directly or
indirectly,  to engage in "short  sales" of the  Company's  Common  Stock or any
other hedging strategies as long as the Note shall be outstanding.

     5.2 Requisite  Power and Authority.  The Purchaser has all necessary  power
and authority under all applicable provisions of law to execute and deliver this
Agreement  and the Related  Agreements  and to carry out their  provisions.  All
corporate  action on  Purchaser's  part  required for the lawful  execution  and
delivery  of this  Agreement  and the  Related  Agreements  have been or will be
effectively taken prior to the Closing. Upon their execution and delivery,  this
Agreement and the Related  Agreements  will be valid and binding  obligations of
Purchaser, enforceable in accordance with their terms, except:

     (a)  as  limited  by  applicable  bankruptcy,  insolvency,  reorganization,
moratorium  or  other  laws of  general  application  affecting  enforcement  of
creditors' rights; and

     (b)  as  limited  by  general   principles  of  equity  that  restrict  the
availability of equitable and legal remedies.

     5.3 Investment  Representations.  Purchaser understands that the Securities
are being offered and sold pursuant to an exemption from registration  contained
in the Securities Act based in part upon Purchaser's  representations  contained
in the  Agreement,  including,  without  limitation,  that the  Purchaser  is an
"accredited  investor"  within the meaning of Regulation D under the  Securities
Act of 1933, as amended (the "Securities  Act"). The Purchaser  confirms that it
has  received  or has had  full  access  to all  the  information  it  considers
necessary or appropriate to make an informed investment decision with respect to
the Note and the Warrant to be purchased by it under this Agreement and the Note
Shares and the Warrant Shares acquired by it upon the conversion of the Note and
the exercise of the Warrant,  respectively.  The Purchaser further confirms that
it has had an opportunity to ask questions and receive  answers from the Company
regarding the Company's and its Subsidiaries' business, management and financial
affairs and the terms and conditions of the Offering,  the Note, the Warrant and
the Securities and to obtain  additional  information (to the extent the Company
possessed such  information or could acquire it without  unreasonable  effort or
expense)  necessary to verify any  information  furnished to the Purchaser or to
which the Purchaser had access.

     5.4 Purchaser Bears Economic Risk. The Purchaser has substantial experience
in evaluating and investing in private  placement  transactions of securities in
companies  similar to the Company so that it is capable of evaluating the merits
and risks of its  investment  in the Company and has the capacity to protect its
own  interests.  The Purchaser  must bear the economic  risk of this  investment
until  the  Securities  are sold  pursuant  to:  (i) an  effective  registration
statement  under the Securities  Act; or (ii) an exemption from  registration is
available with respect to such sale.

<PAGE>

     5.5  Acquisition  for Own Account.  The Purchaser is acquiring the Note and
Warrant  and the Note  Shares and the  Warrant  Shares for the  Purchaser's  own
account for  investment  only, and not as a nominee or agent and not with a view
towards or for resale in connection with their distribution.

     5.6 Purchaser Can Protect Its Interest.  The Purchaser  represents  that by
reason of its, or of its management's,  business and financial  experience,  the
Purchaser has the capacity to evaluate the merits and risks of its investment in
the Note,  the Warrant and the  Securities  and to protect its own  interests in
connection  with the  transactions  contemplated in this Agreement and the other
Related  Agreements.  Further,  Purchaser  is  aware  of no  publication  of any
advertisement in connection with the transactions  contemplated in the Agreement
or the Related Agreements.

     5.7  Accredited  Investor.  Purchaser  represents  that it is an accredited
investor within the meaning of Regulation D under the Securities Act.

     5.8 Legends.

     (a) The Note shall bear substantially the following legend:

     "THIS NOTE AND THE COMMON STOCK ISSUABLE UPON  CONVERSION OF THIS NOTE HAVE
NOT BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933,  AS  AMENDED,  OR ANY
APPLICABLE,  STATE SECURITIES LAWS. THIS NOTE AND THE COMMON STOCK ISSUABLE UPON
CONVERSION  OF  THIS  NOTE  MAY  NOT BE  SOLD,  OFFERED  FOR  SALE,  PLEDGED  OR
HYPOTHECATED  IN THE ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT AS TO THIS
NOTE OR SUCH SHARES UNDER SAID ACT AND APPLICABLE  STATE  SECURITIES  LAWS OR AN
OPINION OF COUNSEL  REASONABLY  SATISFACTORY TO SYNERGY  BRANDS,  INC. THAT SUCH
REGISTRATION IS NOT REQUIRED."

     (b) The Note  Shares and the Warrant  Shares,  if not issued by DWAC system
(as hereinafter  defined),  shall bear a legend which shall be in  substantially
the  following  form until such shares are covered by an effective  registration
statement filed with the SEC:

     "THE SHARES  REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.
THESE SHARES MAY NOT BE SOLD,  OFFERED FOR SALE,  PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT  UNDER SUCH  SECURITIES ACT AND
APPLICABLE STATE LAWS OR AN OPINION OF COUNSEL REASONABLY  SATISFACTORY TO NEWCO
THAT SUCH REGISTRATION IS NOT REQUIRED."

     (c) The Warrant shall bear substantially the following legend:

     "THIS WARRANT AND THE COMMON SHARES  ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,  OR ANY
APPLICABLE  STATE  SECURITIES  LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE
UPON  EXERCISE  OF THIS  WARRANT MAY NOT BE SOLD,  OFFERED FOR SALE,  PLEDGED OR
HYPOTHECATED  IN THE ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT AS TO THIS
WARRANT OR THE  UNDERLYING  SHARES OF COMMON STOCK UNDER SAID ACT AND APPLICABLE
STATE  SECURITIES  LAWS OR AN  OPINION  OF COUNSEL  REASONABLY  SATISFACTORY  TO
SYNERGY BRANDS, INC. THAT SUCH REGISTRATION IS NOT REQUIRED."


<PAGE>

     6.  Covenants of the  Company.  The Company  covenants  and agrees with the
Purchaser as follows:

     6.1 Stop-Orders.  The Company will advise the Purchaser,  promptly after it
receives  notice of issuance by the  Securities  and  Exchange  Commission  (the
"SEC"), any state securities commission or any other regulatory authority of any
stop  order  or of any  order  preventing  or  suspending  any  offering  of any
securities  of the Company,  or of the  suspension of the  qualification  of the
Common  Stock of the Company for  offering or sale in any  jurisdiction,  or the
initiation of any proceeding for any such purpose.

     6.2 Listing. The Company shall promptly secure the listing of the shares of
Common Stock  issuable upon  conversion of the Note and upon the exercise of the
Warrant on the NASDAQ Small Cap (the  "Principal  Market")  upon which shares of
Common  Stock are listed  (subject to  official  notice of  issuance)  and shall
maintain  such  listing so long as any other  shares of Common Stock shall be so
listed.  The  Company  will  maintain  the  listing of its  Common  Stock on the
Principal  Market,  and will comply in all material  respects with the Company's
reporting,  filing  and  other  obligations  under  the  bylaws  or rules of the
National  Association  of Securities  Dealers  ("NASD") and such  exchanges,  as
applicable.

     6.3  Market  Regulations.  The  Company  shall  notify  the  SEC,  NASD and
applicable  state  authorities,  in accordance with their  requirements,  of the
transactions  contemplated by this Agreement, and shall take all other necessary
action and  proceedings as may be required and permitted by applicable law, rule
and  regulation,  for the legal  and valid  issuance  of the  Securities  to the
Purchaser and promptly provide copies thereof to the Purchaser.

     6.4 Reporting  Requirements.  The Company will timely file with the SEC all
reports  required to be filed  pursuant  to the  Exchange  Act and refrain  from
terminating its status as an issuer required by the Exchange Act to file reports
thereunder even if the Exchange Act or the rules or regulations thereunder would
permit such termination.

     6.5 Use of Funds.  The Company  agrees that it will use the proceeds of the
sale of the Note and the Warrant for general working capital purposes only.

     6.6 Access to Facilities. As long as any principal,  interest and fees with
respect to the Note  remain  outstanding,  each of the  Company  and each of its
Subsidiaries will permit any representatives designated by the Purchaser (or any
successor of the Purchaser),  upon  reasonable  advance notice and during normal
business hours reasonably  convenient to the Company,  its  Subsidiaries  and/or
representatives  of  the  Company  and/or  any  of  its  Subsidiaries  that  are
responsible  for the  maintenance  of such records at such person's  expense and
accompanied by a representative of the Company and/or the applicable Subsidiary,
to:

     (a) visit and  inspect any of the  properties  of the Company or any of its
Subsidiaries;

     (b) examine the corporate  and  financial  records of the Company or any of
its Subsidiaries (unless such examination is not permitted by federal,  state or
local law or by contract) and make copies thereof or extracts therefrom; and

     (c) discuss the affairs, finances and accounts of the Company or any of its
Subsidiaries  with the directors,  officers and  independent  accountants of the
Company or any of its Subsidiaries.

     Notwithstanding  the  foregoing,   neither  the  Company  nor  any  of  its
Subsidiaries will provide any material,  non-public information to the Purchaser
unless the Purchaser signs a  confidentiality  agreement and otherwise  complies
with Regulation FD, under the federal securities laws.

<PAGE>

     6.7 Taxes.  Each of the Company and each of its Subsidiaries  will promptly
pay and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes,  assessments and  governmental  charges or levies imposed upon the
income,  profits,  property or  business  of the  Company and its  Subsidiaries;
provided,  however,  that any such tax,  assessment,  charge or levy need not be
paid if the  validity  thereof  shall  currently  be  contested in good faith by
appropriate proceedings and if the Company and/or such Subsidiary shall have set
aside on its  books  adequate  reserves  with  respect  thereto,  and  provided,
further,  that  the  Company  and its  Subsidiaries  will  pay all  such  taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefor.

     6.8  Insurance.  Each of the  Company  and its  Subsidiaries  will keep its
assets  which are of an insurable  character  insured by  financially  sound and
reputable  insurers  against loss or damage by fire,  explosion  and other risks
customarily  insured against by companies in similar business similarly situated
as the Company and its  Subsidiaries;  and the Company and its Subsidiaries will
maintain, with financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons and property to the extent and in the
manner  which the Company  reasonably  believes is  customary  for  companies in
similar business  similarly  situated as the Company and its Subsidiaries and to
the extent available on commercially  reasonable terms. The Company, and each of
its Subsidiaries  will jointly and severally bear the full risk of loss from any
loss  of any  nature  whatsoever  with  respect  to the  assets  pledged  to the
Purchaser  as  security  for its  obligations  hereunder  and under the  Related
Agreements.  At the  Company's and each of its  Subsidiaries'  joint and several
cost  and  expense  in  amounts  and  with  carriers  reasonably  acceptable  to
Purchaser,  the  Company  and  each  of its  Subsidiaries  shall  to the  extent
customary  in their  respective  lines of business,  (i) keep all its  insurable
properties  and  properties  in which it has an  interest  insured  against  the
hazards of fire,  flood,  sprinkler  leakage,  those hazards covered by extended
coverage insurance and such other hazards, and for such amounts, as is customary
in the case of companies  engaged in businesses  similar to the Company's or the
respective Subsidiary's including business interruption insurance; (ii) maintain
a bond in such  amounts  as is  customary  in the case of  companies  engaged in
businesses  similar to the  Company's or the  respective  Subsidiary's  insuring
against larceny,  embezzlement or other criminal  misappropriation  of insured's
officers and  employees who may either singly or jointly with others at any time
have  access to the assets or funds of the  Company  or any of its  Subsidiaries
either directly or through governmental  authority to draw upon such funds or to
direct  generally the  disposition  of such assets;  (iii)  maintain  public and
liability insurance against claims for personal injury, death or property damage
suffered by others;  (iv)  maintain all such  worker's  compensation  or similar
insurance  as may be  required  under the laws of any state or  jurisdiction  in
which the Company or the respective  Subsidiary is engaged in business;  and (x)
excepting the  Company's  workers'  compensation  policy,  endorsements  to such
policies  naming   Purchaser  as   "co-insured"  or  "additional   insured"  and
appropriate  loss payable  endorsements  in form and substance  satisfactory  to
Purchaser, naming Purchaser as loss payee, and (y) evidence that as to Purchaser
the  insurance  coverage  shall not be  impaired  or  invalidated  by any act or
neglect of the Company or any Subsidiary and the insurer will provide  Purchaser
with at least  thirty (30) days notice  prior to  cancellation.  The Company and
each  Subsidiary  shall  instruct  the  insurance  carriers as to all  insurance
covering and/or reasonably  contemplated to affect any of the Collateral that in
the event of any loss thereunder,  the carriers shall make payment for such loss
to the Company  and/or the  Subsidiary  and Purchaser  jointly  (unless (x) such
payment is required  to be paid to IIG Capital LLC  pursuant to the terms of any
agreement  governing  indebtedness owed to IIG Capital LLC by the Company or its
Subsidiaries (as in effect on the date hereof) or (y) such  alternative  payment
is agreed to in writing by the  Purchaser).  In the event that as of the date of
receipt of each loss  recovery  upon any such  insurance,  the Purchaser has not
declared  an event of  default  with  respect  to this  Agreement  or any of the
Related  Agreements,  then the Company and/or such Subsidiary shall be permitted
to direct the application of such loss recovery  proceeds  toward  investment in
property,  plant and  equipment  that  would  comprise  "Collateral"  secured by
Purchaser's  security  interest  pursuant to its  security  agreement,  with any
surplus funds to be applied toward payment of the  obligations of the Company to
Purchaser. In the event that Purchaser has properly declared an event of default
with respect to this Agreement or any of the Related  Agreements,  then all loss
recoveries  received by  Purchaser  upon any such  insurance  thereafter  may be
applied  to the  obligations  of the  Company  hereunder  and under the  Related
Agreements, in such order as the Purchaser may determine. Any surplus (following
satisfaction of all Company obligations to Purchaser) shall be paid by Purchaser
to the Company or applied as may be otherwise  required by law.  Any  deficiency
thereon  shall be paid by the  Company  or the  Subsidiary,  as  applicable,  to
Purchaser, on demand.

<PAGE>

     6.9 Intellectual Property. Each of the Company and each of its Subsidiaries
shall maintain in full force and effect its existence, rights and franchises and
all licenses and other rights to use Intellectual Property owned or possessed by
it and reasonably deemed to be necessary to the conduct of its business.

     6.10 Properties. Each of the Company and each of its Subsidiaries will keep
its properties in good repair, working order and condition,  reasonable wear and
tear  excepted,  and from  time to time make all  needful  and  proper  repairs,
renewals,  replacements,  additions and  improvements  thereto;  and each of the
Company  and  each  of its  Subsidiaries  will at all  times  comply  with  each
provision  of all  leases  to which it is a party  or  under  which it  occupies
property if the breach of such provision  could,  either  individually or in the
aggregate, reasonably be expected tohave a Material Adverse Effect.

     6.11  Confidentiality.  The Company  agrees that it will not disclose,  and
will not include in any public announcement,  the name of the Purchaser,  unless
expressly  agreed to by the  Purchaser  or unless and until such  disclosure  is
required by law or  applicable  regulation,  and then only to the extent of such
requirement. Notwithstanding the foregoing, the Company may disclose Purchaser's
identity and the terms of this Agreement to its current and prospective debt and
equity financing sources.

     6.12 Required  Approvals.  For so long as twenty-five  percent (25%) of the
principal  amount of the Note is  outstanding,  the  Company,  without the prior
written consent of the Purchaser, shall not:

     (a) directly or  indirectly  declare or pay any  dividends,  other than (i)
dividends paid to the Company or any of its  wholly-owned  Subsidiaries  or (ii)
dividends paid in connection with preferred stock issued by the Company, so long
as any such  dividends  paid pursuant to this clause (ii) do not exceed,  in the
aggregate $400,000 in any fiscal year of the Company;

     (b) liquidate, dissolve or effect a material reorganization;

     (c) become subject to (including,  without limitation,  by way of amendment
to or  modification  of) any  agreement or  instrument  which by its terms would
(under any  circumstances)  restrict the  Company's  or any of its  Subsidiaries
right to perform the provisions of this Agreement,  any other Related  Agreement
or any of the agreements contemplated hereby or thereby;

     (d) materially alter or change the scope of the business of the Company;

     (e) create, incur, assume or suffer to exist any indebtedness,  or issue or
suffer to exist any preferred equity interests (exclusive of trade debt and debt
incurred to finance the purchase of equipment and/or inventory (not in excess of
five percent (5%) per annum of the fair market  value of the  Company's  and its
Subsidiaries  assets)  whether secured or unsecured other than (w) the Company's
and its  indebtedness to the Purchaser,  (x)  indebtedness  and preferred equity
interersts set forth on Schedule  6.12(e) attached hereto and made a part hereof
and any  refinancings or replacements  thereof on terms no less favorable to the
Purchaser than the  indebtedness or preferred  equity interests being refinanced
or replaced,  (y) subject to Section 11.14,  additional  indebtedness  incurred,
and/or  preferred  equity  issuances  issued (with the amount of such  preferred
equity interests to equal the greater of the liquidation preference with respect
thereto and the maximum fixed  repurchase  price with respect  thereto),  not to
exceed  three  million  dollars  ($3,000,000)  in  the  aggregate  at  any  time
outstanding,  so  long  as the  obligation  of  the  Company  and/or  any of its
Subsidiaries to repay such indebtedness  and/or the redeem such preferred equity
interests  incurred or issued,  as the case may be, pursuant to this clause (y),
shall be  unsecured  and  expressly  subordinated  to the payment in full of the
Company's and its Subsidiaries obligations to the Purchaser under this Agreement
and the Related  Agreements,  and (z) any debt incurred in  connection  with the
purchase of assets in the ordinary  course of business,  or any  refinancings or
replacements  thereof  on  terms no less  favorable  to the  Purchaser  than the
indebtedness  being refinanced or replaced;  (ii) cancel any debt owing to it in
excess of $50,000 in the  aggregate  during any 12 month  period;  (iii) assume,
guarantee,  endorse or  otherwise  become  directly  or  contingently  liable in
connection with any  obligations of any other Person,  except the endorsement of
negotiable  instruments  by the  Company for  deposit or  collection  or similar
transactions  in the ordinary  course of business or guarantees of  indebtedness
otherwise permitted to be outstanding pursuant to this clause (e);

<PAGE>

     (f) create or acquire any Subsidiary  after the date hereof unless (i) such
Subsidiary is a wholly-owned  Subsidiary of the Company and (ii) such Subsidiary
becomes  party to the Master  Security  Agreement  and the  Subsidiary  Guaranty
(either by executing a counterpart thereof or an assumption or joinder agreement
in respect thereof) and, to the extent required by the Purchaser, satisfies each
condition of this  Agreement and the Related  Agreements  as if such  Subsidiary
were a Subsidiary on the Closing Date; and

     (g) (i) make  investments  in, make any loans or  advances  to, or transfer
assets to, any of the Immaterial  Subsidiaries  or (ii) permit any Subsidiary to
make  investments  in, make any loans or advances to, or transfer assets to, any
of the Immaterial Subsidiaries, other than, in the case of each of the foregoing
clauses (i) and (ii),  immaterial  investments,  loans,  advances  and/or  asset
transfers made in the ordinary course of business.

     6.13 Reissuance of Securities.  The Company agrees to reissue  certificates
representing  the Securities  without the legends set forth in Section 5.7 above
at such time as:

     (a) the holder thereof is permitted to dispose of such Securities  pursuant
to Rule 144(k) under the Securities Act; or

     (b) upon resale subject to an effective  registration  statement after such
Securities are registered under the Securities Act.

     The Company agrees to cooperate  with the Purchaser in connection  with all
resales  pursuant  to Rule 144(d) and Rule  144(k) and  provide  legal  opinions
deemed  reasonably  necessary by the Purchaser (at the Company's  cost) to allow
such resales provided the Company and its counsel receive  reasonably  requested
representations  from the selling  Purchaser and broker, if any, and the Company
and  its  counsel  are   reasonably   satisfied   with  the   validity  of  such
representations.

     6.14  Opinion.  On the  Closing  Date,  the  Company  will  deliver  to the
Purchaser an opinion  acceptable  to the Purchaser  from the Company's  external
legal counsel.  The Company will provide,  at the Company's expense,  such other
legal opinions in the future as are deemed reasonably necessary by the Purchaser
(and  acceptable to the Purchaser) in connection with the conversion of the Note
and exercise of the Warrant.

     7. Covenants of the Purchaser.  The Purchaser covenants and agrees with the
Company as follows:

     7.1  Confidentiality.  The Purchaser agrees that it will not disclose,  and
will not include in any public  announcement,  the name of the  Company,  unless
expressly  agreed to by the  Company  or unless  and until  such  disclosure  is
required by law or  applicable  regulation,  and then only to the extent of such
requirement.

     7.2 Non-Public Information. The Purchaser agrees not to effect any sales in
the shares of the  Company's  Common  Stock  while in  possession  of  material,
non-public  information  regarding  the  Company  if such  sales  would  violate
applicable securities law.

     8. Covenants of the Company and Purchaser Regarding Indemnification.

     8.1  Company  Indemnification.   The  Company  agrees  to  indemnify,  hold
harmless,  reimburse and defend the Purchaser, each of the Purchaser's officers,
directors,  agents,  affiliates,  control persons,  and principal  shareholders,
against  any  claim,  cost,  expense,  liability,  obligation,  loss  or  damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Purchaser   which   results,   arises  out  of  or  is  based   upon:   (i)  any
misrepresentation  by the  Company or any of its  Subsidiaries  or breach of any
warranty by the Company or any of its Subsidiaries in this Agreement,  any other
Related Agreement or in any exhibits or schedules attached hereto or thereto, in
each case, in any material respect; or (ii) any breach or default in performance
by Company or any of its  Subsidiaries  of any  covenant  or  undertaking  to be
performed  by  Company  or any of its  Subsidiaries  hereunder,  under any other
Related  Agreement or any other agreement entered into by the Company and/or any
of its Subsidiaries and Purchaser  relating hereto or thereto,  in each case, in
any material respect.

     8.2  Purchaser's  Indemnification.  Purchaser  agrees  to  indemnify,  hold
harmless,  reimburse and defend the Company and each of the Company's  officers,
directors,  agents, affiliates,  control persons and principal shareholders,  at
all times  against any claim,  cost,  expense,  liability,  obligation,  loss or
damage (including  reasonable legal fees) of any nature,  incurred by or imposed
upon  the  Company  which  results,  arises  out of or is  based  upon:  (i) any
misrepresentation  by  Purchaser  or breach of any warranty by Purchaser in this
Agreement  or in any  exhibits  or  schedules  attached  hereto  or any  Related
Agreement,  in each case, in any material respect; or (ii) any breach or default
in  performance  by Purchaser of any covenant or  undertaking to be performed by
Purchaser  hereunder,  or any other  agreement  entered  into by the Company and
Purchaser relating hereto, in each case, in any material respect.

<PAGE>

     9. Conversion of Convertible Note.

     9.1 Mechanics of Conversion.

     (a) Provided  the  Purchaser  has  notified the Company of the  Purchaser's
intention  to sell the  Note  Shares  and the Note  Shares  are  included  in an
effective  registration statement or are otherwise exempt from registration when
sold: (i) upon the conversion of the Note or part thereof, the Company shall, at
its own cost and expense,  take all necessary action  (including the issuance of
an opinion of counsel reasonably acceptable to the Purchaser following a request
by the Purchaser) to assure that the Company's transfer agent shall issue shares
of the  Company's  Common Stock in the name of the Purchaser (or its nominee) or
such other persons as  designated  by the  Purchaser in accordance  with Section
9.1(b) hereof and in such denominations to be specified  representing the number
of Note Shares issuable upon such conversion; and (ii) the Company warrants that
no instructions  other than these instructions have been or will be given to the
transfer  agent of the Company's  Common Stock and that after the  Effectiveness
Date (as defined in the  Registration  Rights  Agreement) the Note Shares issued
will be freely transferable  subject to the prospectus delivery  requirements of
the Securities Act and the provisions of this Agreement,  and will not contain a
legend restricting the resale or transferability of the Note Shares.

     (b)  Purchaser  will give notice of its  decision to exercise  its right to
convert the Note or part  thereof by  telecopying  or  otherwise  delivering  an
executed  and  completed  notice of the number of shares to be  converted to the
Company  (the "Notice of  Conversion").  The  Purchaser  will not be required to
surrender the Note until the  Purchaser  receives a credit to the account of the
Purchaser's   prime  broker   through  the  DWAC  system  (as  defined   below),
representing  the Note Shares or until the Note has been fully  satisfied.  Each
date on which a Notice of  Conversion  is telecopied or delivered to the Company
in accordance  with the provisions  hereof shall be deemed a "Conversion  Date."
Pursuant  to the terms of the  Notice of  Conversion,  the  Borrower  will issue
instructions  to the transfer agent  accompanied by an opinion of counsel within
two(2)  business  days of the date of the  delivery to Borrower of the Notice of
Conversion  and shall  causethe  transfer  agent to  transmit  the  certificates
representing the Conversion Shares to the Holder by crediting the account of the
Purchaser's  prime broker with the Depository  Trust Company ("DTC") through its
Deposit  Withdrawal Agent  Commission  ("DWAC") system within three (3) business
days after  receipt by the Company of the Notice of  Conversion  (the  "Delivery
Date").

     (c) The Company understands that a delay in the delivery of the Note Shares
in the form required pursuant to Section 9 hereof beyond the Delivery Date could
result in economic loss to the Purchaser. In the event that the Company fails to
direct its transfer  agent to deliver the Note Shares to the  Purchaser  via the
DWAC system within the time frame set forth in Section 9.1(b) above and the Note
Shares are not delivered to the Purchaser by the Delivery Date, as  compensation
to the Purchaser for such loss,  the Company  agrees to pay late payments to the
Purchaser for late issuance of the Note Shares in the form required  pursuant to
Section 9 hereof upon  conversion of the Note in the amount equal to the greater
of: (i) $500 per business day after the Delivery  Date; or (ii) the  Purchaser's
actual damages from such delayed delivery.  Notwithstanding  the foregoing,  the
Company  will  not owe the  Purchaser  any  late  payments  if the  delay in the
delivery  of the Note  Shares  beyond  the  Delivery  Date is solely  out of the
control of the Company  and the Company is actively  trying to cure the cause of
the delay.  The Company  shall pay any payments  incurred  under this Section in
immediately  available  funds upon demand  and,  in the case of actual  damages,
accompanied  by reasonable  documentation  of the amount of such  damages.  Such
documentation  shall show the number of shares of Common Stock the  Purchaser is
forced  to  purchase  (in  an  open  market  transaction)  which  the  Purchaser
anticipated  receiving  upon such  conversion,  and shall be  calculated  as the
amount by which (A) the Purchaser's  total purchase price  (including  customary
brokerage  commissions,  if any) for the  shares  of Common  Stock so  purchased
exceeds (B) the aggregate  principal  and/or  interest  amount of the Note,  for
which such Conversion Notice was not timely honored.

<PAGE>

     Nothing contained herein or in any document referred to herein or delivered
in connection  herewith shall be deemed to establish or require the payment of a
rate of  interest  or other  charges  in  excess  of the  maximum  permitted  by
applicable law. In the event that the rate of interest or dividends  required to
be paid or other charges  hereunder  exceed the maximum amount permitted by such
law, any payments in excess of such maximum  shall be credited  against  amounts
owed by the Company to a Purchaser and thus refunded to the Company.

     10. Registration Rights

     10.1 Registration  Rights Granted.  The Company hereby grants  registration
rights to the Purchaser pursuant to a Registration  Rights Agreement dated as of
even date herewith between the Company and the Purchaser.

     10.2  Offering  Restrictions.  Except as  previously  disclosed  in the SEC
Reports or in the  Exchange Act Filings,  or stock or stock  options  granted to
employees or directors of the Company(these  exceptions  hereinafter referred to
as the "Excepted  Issuances"),  neither the Company nor any of its  Subsidiaries
will  issue any  securities  with a  continuously  variable/floating  conversion
feature  which  are or could be (by  conversion  or  registration)  free-trading
securities (i.e. common stock subject to a registration  statement) prior to the
full  repayment or conversion of the Note  (together with all accrued and unpaid
interest and fees related thereto) (the "Exclusion Period").

     11. Miscellaneous.

     11.1  Governing  Law. THIS  AGREEMENT AND EACH RELATED  AGREEMENT  SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT  REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT BY EITHER
PARTY  AGAINST  THE  OTHER  CONCERNING  THE  TRANSACTIONS  CONTEMPLATED  BY THIS
AGREEMENT AND EACH RELATED  AGREEMENT  SHALL BE BROUGHT ONLY IN THE STATE COURTS
OF NEW YORK OR IN THE  FEDERAL  COURTS  LOCATED  IN THE STATE OF NEW YORK.  BOTH
PARTIES AND THE INDIVIDUALS  EXECUTING THIS AGREEMENT AND THE RELATED AGREEMENTS
ON BEHALF OF THE COMPANY AGREE TO SUBMIT TO THE  JURISDICTION OF SUCH COURTS AND
WAIVE TRIAL BY JURY.  IN THE EVENT THAT ANY  PROVISION OF THIS  AGREEMENT OR ANY
RELATED AGREEMENT  DELIVERED IN CONNECTION  HEREWITH IS INVALID OR UNENFORCEABLE
UNDER ANY APPLICABLE STATUTE OR RULE OF LAW, THEN SUCH PROVISION SHALL BE DEEMED
INOPERATIVE  TO THE EXTENT THAT IT MAY  CONFLICT  THEREWITH  AND SHALL BE DEEMED
MODIFIED TO CONFORM WITH SUCH STATUTE OR RULE OF LAW. ANY SUCH  PROVISION  WHICH
MAY PROVE INVALID OR UNENFORCEABLE  UNDER ANY LAW SHALL NOT AFFECT THE VALIDITY,
ENFORCEABILITY  OR  MEANING  OF ANY OTHER  PROVISION  OF THIS  AGREEMENT  OR ANY
RELATED AGREEMENT.

     11.2 Survival.  The representations,  warranties,  covenants and agreements
made  herein  shall  survive any  investigation  made by the  Purchaser  and the
closing of the transactions  contemplated hereby to the extent provided therein.
All  statements  as to factual  matters  contained in any  certificate  or other
instrument  delivered  by or  on  behalf  of  the  Company  pursuant  hereto  in
connection  with the  transactions  contemplated  hereby  shall be  deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.

     11.3  Successors.  Except  as  otherwise  expressly  provided  herein,  the
provisions  hereof  shall  inure to the  benefit  of, and be binding  upon,  the
successors,  heirs, executors and administrators of the parties hereto and shall
inure to the benefit of and be  enforceable by each person who shall be a holder
of obligations owed by the Company or any of its Subsidiaries  from time to time
under this Agreement or any Related Agreement,  other than the holders of Common
Stock which has been sold by the Purchaser  pursuant to Rule 144 or an effective
registration  statement.  The Purchaser may not assign its rights hereunder to a
competitor of the Company.

<PAGE>

     11.4 Entire Agreement. This Agreement, the Related Agreements, the exhibits
and  schedules  hereto and thereto and the other  documents  delivered  pursuant
hereto  constitute the full and entire  understanding  and agreement between the
parties with regard to the subjects hereof and no party shall be liable or bound
to any other in any manner by any  representations,  warranties,  covenants  and
agreements except as specifically set forth herein and therein.

     11.5 Severability. In case any provision of the Agreement shall be invalid,
illegal or  unenforceable,  the  validity,  legality and  enforceability  of the
remaining provisions shall not in any way be affected or impaired thereby.

     11.6 Amendment and Waiver.

     (a) This Agreement may be amended or modified only upon the written consent
of the Company and the Purchaser.

     (b) The  obligations  of the Company and the rights of the Purchaser  under
this Agreement may be waived only with the written consent of the Purchaser.

     (c) The  obligations  of the  Purchaser and the rights of the Company under
this Agreement may be waived only with the written consent of the Company.

     11.7  Delays  or  Omissions.  It is  agreed  that no delay or  omission  to
exercise  any right,  power or remedy  accruing  to any party,  upon any breach,
default or  noncompliance  by another party under this  Agreement or the Related
Agreements,  shall  impair  any such  right,  power or  remedy,  nor shall it be
construed to be a waiver of any such breach,  default or  noncompliance,  or any
acquiescence  therein, or of or in any similar breach,  default or noncompliance
thereafter occurring.  All remedies,  either under this Agreement or the Related
Agreements,  by law or otherwise  afforded to any party, shall be cumulative and
not alternative.

     11.8  Notices.  All notices  required or  permitted  hereunder  shall be in
writing and shall be deemed effectively given:

     (a) upon personal delivery to the party to be notified;

     (b) when sent by confirmed  facsimile if sent during normal  business hours
of the recipient, if not, then on the next business day;

     (c) three (3)  business  days  after  having  been  sent by  registered  or
certified mail, return receipt requested, postage prepaid; or

     (d)  one (1) day  after  deposit  with a  nationally  recognized  overnight
courier, specifying next day delivery, with written verification of receipt.

     All communications shall be sent as follows:

         If to the Company, to:      Synergy Brands, Inc.
                                     1175 Walt Whitman Road
                                     Melville, NY 11717



                                     Attention:........Chief Financial Officer
                                     Facsimile:........801-340-6434

                                     with a copy to:  Randall J. Perry, Esq.
                                                      44 Union Avenue
                                                      P.O. Box 108
                                                      Rutherford, NJ 07070

                                     Attention:........Randall J. Perry
                                     Facsimile:       201-939-7348

         If to the Purchaser, to:    Laurus Master Fund, Ltd.
                                     c/o Ironshore Corporate Services ltd.
                                     P.O. Box 1234 G.T.
                                     Queensgate House, South Church Street
                                     Grand Cayman, Cayman Islands
                                     Facsimile:........345-949-9877

                                     with a copy to:

                                     John E. Tucker, Esq.
                                     825 Third Avenue 14th Floor
                                     New York, NY 10022
                                     Facsimile:........212-541-4434

or at such  other  address as the  Company or the  Purchaser  may  designate  by
written notice to the other parties hereto given in accordance herewith.


<PAGE>

     11.9 Attorneys' Fees. In the event that any suit or action is instituted to
enforce any provision in this  Agreement,  the prevailing  party in such dispute
shall be entitled to recover from the losing party all fees,  costs and expenses
of enforcing  any right of such  prevailing  party under or with respect to this
Agreement,  including,  without limitation, such reasonable fees and expenses of
attorneys and accountants,  which shall include,  without limitation,  all fees,
costs and expenses of appeals.

     11.10 Titles and Subtitles.  The titles of the sections and  subsections of
this  Agreement  are  for  convenience  of  reference  only  and  are  not to be
considered in construing this Agreement.

     11.11 Facsimile Signatures; Counterparts. This Agreement may be executed by
facsimile  signatures and in any number of counterparts,  each of which shall be
an original, but all of which together shall constitute one instrument.

     11.12  Broker's Fees.  Except as set forth on Schedule  11.12 hereof,  each
party hereto represents and warrants that no agent,  broker,  investment banker,
person or firm acting on behalf of or under the  authority  of such party hereto
is or will be entitled to any broker's or finder's  fee or any other  commission
directly or indirectly in connection with the transactions  contemplated herein.
Each party hereto  further  agrees to indemnify each other party for any claims,
losses  or   expenses   incurred  by  such  other  party  as  a  result  of  the
representation in this Section 11.12 being untrue.

     11.13  Construction.   Each  party  acknowledges  that  its  legal  counsel
participated  in the  preparation of this  Agreement and the Related  Agreements
and, therefore, stipulates that the rule of construction that ambiguities are to
be  resolved   against  the   drafting   party  shall  not  be  applied  in  the
interpretation of this Agreement to favor any party against the other.

<PAGE>

     11.14  Right  of  First  Refusal.  Prior to the  incurrence  of  additional
indebtedness  in excess of an  aggregate  principal  amount of  $500,000  or the
issuance of any additional  preferred equity interests,  in each case, after the
date hereof,  the Company and/or any Subsidiary of the Company,  as the case may
be, shall notify the  Purchaser  of its  intention to incur any such  additional
indebtedness  or issue any such preferred  equity  interests,  together with the
terms upon which such proposed  indebtedness  will be incurred or such preferred
equity  interests  will be issued.  Following such  notification,  the Purchaser
shall have the right,  but not the  obligation,  to provide  any such  financing
referred to in the  immediately  preceding  sentence  to the Company  and/or the
applicable  Subsidiary  thereof on  substantially  similar terms, and subject to
definitive  documentation,  acceptable to the Company and/or such Subsidiary and
the Purchaser,  in each case, prior to the acceptance by the Company and/or such
Subsidiary of any such  financing from any other person or entity other than the
Purchaser.



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<PAGE>

     IN WITNESS WHEREOF,  the parties hereto have executed the this AGREEMENT as
of the date set forth in the first paragraph hereof.

COMPANY:                                        PURCHASER:

SYNERGY BRANDS, INC.                            Laurus Master Fund, Ltd.

By:                                              By:
------------------------------------------      -------------------------------
------------------------------------------      -------------------------------
Name:                                           Name:
------------------------------------------      -------------------------------
------------------------------------------      -------------------------------
Title:                                          Title:
------------------------------------------      -------------------------------


<PAGE>

                                       A-1
                                    EXHIBIT A

                            FORM OF CONVERTIBLE NOTE



<PAGE>


                                       B-1
                                    EXHIBIT B

                                 FORM OF WARRANT

<PAGE>

                                       C-1
                                    EXHIBIT C

                                 FORM OF OPINION

     1........Each  of the Company and each of its Subsidiaries is a corporation
duly  incorporated,  validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate power and authority
to own,  operate and lease its  properties and to carry on its business as it is
now being conducted.

     2........Each of the Company and each of its Subsidiaries has the requisite
corporate  power and authority to execute,  deliver and perform its  obligations
under the Agreement and the other Related  Agreements.  All corporate  action on
the part of the Company and each of its Subsidiaries and its officers, directors
and  stockholders  necessary  has been taken for: (i) the  authorization  of the
Agreement  and  the  other  Related   Agreements  and  the  performance  of  all
obligations of the Company and each of its Subsidiaries thereunder; and (ii) the
authorization,  sale,  issuance and delivery of the  Securities  pursuant to the
Agreement  and the other  Related  Agreements.  The Note  Shares and the Warrant
Shares,  when  issued  pursuant  to and in  accordance  with  the  terms  of the
Agreement  and the other Related  Documents  and upon delivery  shall be validly
issued and outstanding, fully paid and non assessable.

     3........The execution, delivery and performance by each of the Company and
each of its  Subsidiaries  of the Agreement and the other Related  Agreements to
which  it is a party  and  the  consummation  of the  transactions  on its  part
contemplated  by any thereof,  will not, with or without the giving of notice or
the passage of time or both:

     (a) Violate the provisions of their respective Charter or bylaws; or

     (b) Violate any judgment,  decree, order or award of any court binding upon
the Company or any of its Subsidiaries known to counsel; or

     (c) Violate any New Jersey and/or New York or federal law applicable to the
transactions  of  the  type  contemplated  by  the  Agreement  and  the  Related
Agreements.

<PAGE>

     4........The  Agreement and Related  Agreements will constitute,  valid and
legally binding  obligations of each of the Company and each of its Subsidiaries
(to the extent such person is a party thereto), and are enforceable against each
of the Company and each of its  Subsidiaries in accordance with their respective
terms, except:

     (a)  as  limited  by  applicable  bankruptcy,  insolvency,  reorganization,
moratorium  or  other  laws of  general  application  affecting  enforcement  of
creditors' rights; and

     (b)  general  principles  of  equity  that  restrict  the  availability  of
equitable or legal remedies.

     5........To  such  counsel's  knowledge,  the  sale  of the  Note  and  the
subsequent  conversion  of the Note  into Note  Shares  are not  subject  to any
preemptive  rights or rights of first refusal that have not been properly waived
or complied with. To such counsel's  knowledge,  the sale of the Warrant and the
subsequent  exercise of the  Warrant  for Warrant  Shares are not subject to any
preemptive rights or, to such counsel's knowledge,  rights of first refusal that
have not been properly waived or complied with.

     6........Assuming the accuracy of the representations and warranties of the
Purchaser  contained in the  Agreement and the  description  of the Purchaser as
known by counsel,  the offer, sale and issuance of the Securities on the Closing
Date will be exempt from the registration requirements of the Securities Act. To
such counsel's knowledge,  neither the Company,  nor any of its affiliates,  nor
any person  acting on its or their behalf,  has directly or indirectly  made any
offers or sales of any  security  or  solicited  any offers to buy and  security
under  circumstances that would cause the offering of the Securities pursuant to
this Agreement to be integrated with prior offerings by the Company for purposes
of the  Securities  Act  which  would  prevent  the  Company  from  selling  the
Securities  pursuant to Rule 506 under the  Securities  Act,  or any  applicable
exchange-related stockholder approval provisions.

<PAGE>

     7........To  the best of  counsel's  knowledge,  there is no action,  suit,
proceeding or investigation  pending or, to such counsel's knowledge,  currently
threatened  against the Company or any of its  Subsidiaries  that  prevents  the
right of the Company or any of its  Subsidiaries to enter into this Agreement or
any  of  the  other  Related  Agreements,  or  to  consummate  the  transactions
contemplated thereby. To such counsel's knowledge, the Company is not a party or
subject to the provisions of any order, writ, injunction,  judgment or decree of
any court or  government  agency  or  instrumentality,  which has had,  or could
reasonably be expected to have, a Material Adverse Effect.

     8........The terms and provisions of the Master Security Agreement create a
valid  security  interest in favor of the Purchaser,  in the respective  rights,
title and interests of the Company and its Subsidiaries in and to the Collateral
(as defined in the Master Security  Agreement).  Each UCC-1 Financing  Statement
naming the  Company or any  Subsidiary  thereof as debtor and the  Purchaser  as
secured  party  are in proper  form for  filing  and  assuming  that such  UCC-1
Financing Statements have been filed with the Secretary of State of Delaware and
other applicable  jurisdictions,  the security interest created under the Master
Security  Agreement  will  constitute a perfected  security  interest  under the
Uniform  Commercial  Code in favor of the Purchaser in respect of the Collateral
that can be perfected by filing a financing  statement.  After giving  effect to
the delivery to the Purchaser of the stock certificates representing the Pledged
Stock (as  defined  in the Stock  Pledge  Agreement)  (together  with  effective
endorsements)  and assuming the  continued  possession  by the Purchaser of such
stock  certificates in the State of New York, the security  interest  created in
favor of the Purchaser under the Stock Pledge Agreement  constitutes a valid and
enforceable first perfected  security interest in such Pledged Stock in favor of
the Purchaser, subject to no other security interest. No filings,  registrations
or  recordings  are required in order to perfect (or maintain the  perfection or
priority of) the security  interest  created under the Stock Pledge Agreement in
respect of such Pledged Stock. .

<PAGE>

                                       D-3
                                    EXHIBIT D

                            FORM OF ESCROW AGREEMENT