-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QtPhq8FIBQihI7g1yMTavHanEI0J8J7ZbDsMwSqzZs9o9LRm0cGenNxEvFK1s+dY TbkSjsBBD7HDef2FKK+K8A== 0001026018-08-000019.txt : 20080530 0001026018-08-000019.hdr.sgml : 20080530 20080530154148 ACCESSION NUMBER: 0001026018-08-000019 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080529 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets FILED AS OF DATE: 20080530 DATE AS OF CHANGE: 20080530 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNERGY BRANDS INC CENTRAL INDEX KEY: 0000870228 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-GROCERIES & GENERAL LINE [5141] IRS NUMBER: 222993066 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19409 FILM NUMBER: 08870567 BUSINESS ADDRESS: STREET 1: 223 UNDERHILL BLVD CITY: SYOSSET STATE: NY ZIP: 11791 BUSINESS PHONE: 5167148200 MAIL ADDRESS: STREET 1: 223 UNDERHILL BLVD CITY: SYOSSET STATE: NY ZIP: 11791 FORMER COMPANY: FORMER CONFORMED NAME: KRANTOR CORP DATE OF NAME CHANGE: 19930328 FORMER COMPANY: FORMER CONFORMED NAME: DELTA VENTURES INC DATE OF NAME CHANGE: 19600201 8-K 1 file001.txt SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report: May 29, 2008 Synergy Brands, Inc. (Exact name of registrant as specified in its charter) Delaware 0-19409 22-2993066 (State of incorporation) (Commission File No.) (IRS Employer Identification No.) 223 UNDERHILL BLVD., SYOSSET, NY 11791 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: 1-516-714-8200 Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K Filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions. [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement Item 2.01 Completion of Acquisition or Disposition of Assets On April 14, 2008 the Registrant entered an agreement to sell its ownership interest in Gran Reserve Corporation ("GRC") to GRC Group Inc., a Florida corporation (the "Purchaser") and such transaction closed May 29, 2008. Said GRC Group Inc. is an entity the ownership interest therein being of a group of management and supervisory personnel associated with the GRC Cigar operation but who otherwise have no official capacity with the Registrant. The purchase price is $400,000 of which $350,000 thereof is being financed by the Registrant on a promissory note basis with a term of five years and at an annual interest rate of 5%, and by such agreement the Registrant is allowed repayment thereon to be collateralized and secured by a lien on the stock ownership and assets of GRC as transferred. Until paid in full the current lien on such assets of GRC held by the Registrant's present business lender, which outstanding loans were also part collaterialized by the assets of GRC as a subsidiary of the Registrant, will also by agreement between Registrant and said Purchaser remain attached to these assets with the sale transaction conditioned on release thereof once the purchase price has been paid in full. With such condition the sale transfer has also been approved by the referenced Registrant business lender. Copies of the subject Stock Purchase Agreement and Secured Promissory Note and acknowledgement of continued present lender lien status are included herewith as exhibits to which referral is made for further reference. The Registrant did not consider the present state of its cigar operations conducted through GRC to be a significant asset. GRC assets and operations accounted at the time of sale for less than 2% of the Registrant's consolidated revenues and of its total assets, and this fact together with the diminished capacity of the GRC cigar operations in the overall business plan for the Registrant and cost savings opportunity for the Registrant of GRC operating independent of the Registrant, as well as regulatory burdens perceived by Registrant as increasing in the future for the Registrant if the cigar operations were to be retained, formed a basis for the Registrant to accept the opportunity available for the sale of this segment of the Registrant's operations. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Synergy Brands, Inc. By: /s/ Mair Faibish ---------------- Mair Faibish Chairman of the Board By: /s/ Mitchell Gerstein --------------------- Mitchell Gerstein Chief Financial Officer Dated: May 29, 2008 EX-99 2 file002.txt THE COMPANY STOCK SUBJECT TO TRANSFER AND/OR TO BE TRANSFERRED AS STATED IN AND/OR PER THIS AGREEMENT HAS NOT BEEN REGISTERED UNDER ANY APPLICABLE STATE OR FEDERAL REGULATION. NO SALE, OFFER TO SELL OR TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933 AS AMENDED, AND COMPLIANCE WITH ANY APPLICABLE STATE LAW WITH RESPECT TO THE EXISTENCE AND TRANSFERABILITY OF SUCH SHARES IS THEN IN EFFECT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS THEN IN FACT APPLICABLE TO SUCH SHARES. STOCK PURCHASE AGREEMENT This Agreement is made this _____ day of April, 2008 by and among GRC Group, a Florida corporation with offices at 15804 NW 57th Ave., Miami Lakes, Florida 33014, ("Purchaser"), SYNERGY BRANDS INC., a Delaware corporation, ("Seller") whose address is 223 Underhill Blvd., Syosset, NY 11791, and GRAN RESERVE CORPORATION, (the "Company") a Florida corporation with offices at 7601 NW 68th Street, No. 128, Miami, Florida 33166. WHEREAS, the Seller owns all of the outstanding stock (the "Company Stock") in the Company and the Company owns all of the Business Assets (as hereinafter defined), and Seller has offered to sell to Purchaser and Purchaser is interested in buying all of the Company Stock and thereby to control utilization of all of the Business Assets; and WHEREAS, the Purchaser desires to acquire, on the terms and subject to the conditions reflected below, the Company Stock and to continue the Company Business (as hereinafter defined) at Purchaser's choice; and WHEREAS, the Seller believes that it is desirable and in the best interests of the Seller and the Company that it sell the Company Stock and resulting control over the associated Company Business and Business Assets to the Purchaser subject to all current restrictions in place as agreed between the parties hereto; SECTION 1. DEFINITIONS. 1.1 Business Assets. The assets of the Company, which include all accounts receivable, inventory; all and all applicable rights to utilize trade names, trademarks and other proprietary rights as owned and/or being otherwise used by the Company; the principals of the Purchaser, being familiar with the Company because of they having managed the Company Business, rely upon the public security filings of the Seller for more particulars regarding such Company Business and Business Assets. 1.2 Business Liabilities. All liabilities and responsibilities regarding the Company Business and Business Assets. 1.3 Closing. The date and proceeding of consummation of the transfer in compliance with this Agreement, of the Company Stock by Seller to Purchaser. 1.4 Company. GRAN RESERVE CORPORATION 1.5 Company Business: The business conducted by the Company in which the Company utilizes, utilized or may utilize the Business Assets, and associated business, which shall include but not be limited to cigar sales, both traditional wholesale and retail and wholesale via the internet predominately but not restricted to restaurants, private and public clubs and other hospitality and destination venues. 1.6 Exchange Act: The Securities Exchange Act of 1934, as amended to the date as of which any reference thereto is relevant under this Agreement, including any substitute or replacement statute adopted in place or lieu thereof. 1.7 Proprietary Rights: Customers lists, contact names, phone numbers, customer purchase information, ordering patterns and all information regarding the conduct of business with each customer associated with the Company Business shall be part of the assets transferred to the Purchaser, exclusive where such be the nature of the asset. Trade secrets, copyrights, patents, trademarks, service marks, customer lists, websites, URLs, domain names, software, e-commerce platforms, and other internet identification and access codes and information and all similar types of intangible property developed, created or owned exclusively by the Company, or otherwise used by the Company in connection with the Company Business, whether or not the same are entitled to legal protection, all to be transferred as part of the Business Assets of the Company over which control is represented by the Company Stock, without, however, any representation made as to rights and exclusivity as to use and only to the extent of use in the Company Business. -1- 1.8 Purchaser: GRC Group Inc.(or whatever entity it may assign its rights to), which, under the terms of this Agreement, is acquiring the Company Stock. 1.9 Seller. SYNERGY BRANDS INC. 1.10 Transaction: The Sale of the Company Stock for the Consideration as contemplated by, and subject to and in compliance with the terms and conditions of, this Agreement. SECTION 2. CONSIDERATION The purchase price shall be $400,000 to be provided to Seller in exchange for transfer of the Company Stock (and consequently the transfer of control over the Company Business and Business Assets) to Purchaser payable as follows: (i) $50,000 payable in cash at the Closing, (ii) balance to paid by way of payment pursuant to the terms of a promissory note (the "Note") to include a term of five years at an annual interest rate of 5% payable in equal monthly installments amortized over the full length of such term, each monthly payment due by the 10th day of the month with a 10% penalty for any late payment, no prepayment penalty, excepting that any prepayment shall not reduce the monthly payment amount but shall instead reduce the length of the term of such Note as appropriate. The Note shall be in the form, and substance, as to provisions in addition to payment terms as stated herein, as attached hereto and incorporated herein as an Exhibit to this Agreement, and payment and compliance otherwise with such Note shall be secured by all of the Business Assets in form as acceptable to Seller. SECTION 3. PURCHASER REPRESENTATIONS Purchaser hereby represents and warrants to the Seller (which representations and warranties shall be confirmed as of the Closing Date): 3.1 Authority Relative to this Agreement. The Purchaser has the power and authority to enter into and to perform this Agreement in its name without the necessity of any third party approval, including governmental. This Agreement has been duly and validly executed and delivered by the Purchaser, and constitutes a valid and binding Agreement of the Purchaser, enforceable in accordance with its terms. 3.2 Absence of Breach. The execution, delivery and performance of this Agreement, and the performance by the Purchaser of its obligations hereunder do not (1) contravene any law, rule or regulation known to Purchaser of any State or Commonwealth or of the United States, or of any applicable foreign jurisdiction, or any order, writ, judgment, injunction, decree, determination, or award affecting or binding upon the Purchaser, in such a manner as to provide a basis for enjoining or otherwise preventing consummation of the Transaction; (2) conflict with or result in a material breach of or default under any material indenture or loan or credit agreement or any other material agreement or instruments to which Purchaser is a party, in such a manner as to provide a basis for enjoining or otherwise preventing consummation of the Transaction; or (3) require the authorization, consent, approval or license of any third party of such a nature that the failure to obtain the same would provide a basis for enjoining or otherwise preventing consummation of the Transaction. 3.3 Brokers. No broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission in connection with this Agreement or the Transaction or any related transaction of Purchaser based upon any agreements, written or oral, made by or on behalf of Purchaser. 3.4 Investment Intent. Purchaser is acquiring the Company Stock for its own account for investment without a view to the sale or other public distribution thereof. -2- SECTION 4. SELLER AND COMPANY REPRESENTATIONS The Company and the Seller represent and warrant to the Purchaser as follows, (which representations and warranties shall be confirmed as of the Closing Date): 4.1 Organization and Qualification. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Florida and has the requisite corporate power and authority to carry on its business as it is now being conducted, including the Company Business. The Company is duly qualified as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned as a foreign corporation in that jurisdiction or the conduct of its business there requires authorization by law. No part of the Company Business is separately incorporated. 4.2 Authority Relative to this Agreement. This Agreement has been duly and validly executed and delivered by the Seller and the Company and constitutes a valid and binding Agreement of the Seller and the Company enforceable in accordance with its terms. The Seller and the Company have all requisite corporate power and/or other authority as necessary to enter into this Agreement and to carry out the Transaction contemplated hereby, and their doing so has been duly and sufficiently authorized, including shareholder approval where necessary. 4.3 Absence of Breach; No Consents. To the best knowledge of Seller and the Company, the execution, delivery and performance of this Agreement, and the performance by the Seller and/or the Company of their obligations hereunder, do not (1) conflict with or result in a breach of any of the provisions of the Articles of Incorporation or By-Laws of the Company; (2) contravene any law, ordinance, rule or regulation of any State or Commonwealth or political subdivision of either, or of any applicable foreign jurisdiction, or contravene any order, writ, judgment, injunction, decree, determination, or award of any court or other authority having jurisdiction, or cause the suspension or revocation of any authorization, consent, approval, or license, presently in effect and/or necessary to continue the Company Business, which affects or binds, the Seller, the Company or all or any part of the Business Assets, Company Business or any material properties of the Company, except in any such case where such contravention will not have a material adverse effect on the business condition (financial or otherwise), operations or prospects of the Company and Company Business and will not have a material adverse effect on the validity of this Agreement or on the validity of the consummation the Transaction; (3) conflict with or result in a material breach of or default under any material indenture or loan or credit agreement or any other material agreement or instrument to which the Seller and/or the Company is a party or by which the Business Assets, Company Business, or any of the material properties of the Company may be affected or bound where appropriate approval for the transfer has not been received; or (4) require the authorization, consent, approval, or license of any third party, governmental or otherwise which shall not be received at or before Closing. 4.4 Taxes. The Seller and the Company have properly filed or caused to be filed, all federal, state, local and foreign income, payroll, sales and/or other tax returns, reports, and declarations that are required by applicable law to be filed by them and that relate to or in any way affect the Company Business, the Business Assets and/or the Company Stock, and have paid, or made full and adequate provision for the payment of all federal, state, local and foreign income, payroll, sales, and/or other taxes properly due for the periods covered by such returns, reports and declarations, as to which they are aware. -3- 4.5 Litigation. (a) No material investigation or review by any governmental entity with respect to the Company Business, the Company Stock or any of the Business Assets or the use thereof is pending, or, to the best of the knowledge of the Seller and/or the Company, threatened (other than inspections and reviews customarily made of businesses such as the Company Business), nor has any governmental entity indicated to the Seller and/or the Company an intention to conduct the same, and (b) there is no action, suit or proceeding pending, or, to the best of the knowledge of the Seller, and/or the Company threatened against or affecting the Company Business, Company Stock, or the Business Assets at law or in equity, or before any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality. 4.6 Compliance with Laws. To the best knowledge of the Seller and the Company, the Company, Company Business and the Business Assets are in substantial compliance with all, and no notice has been received by Seller or the Company of any violation of any laws or regulations known by Seller and/or the Company to be applicable to the operation of the Company Business and/or utilization of the Business Assets in connection therewith, including, without limitation, the laws and regulations relevant to the use or utilization of and collection upon said assets by the Company, Seller, Purchaser or any other applicable and relevant person or entity, or with respect to which compliance is a condition of engaging in any aspect of the business of the Company Business and the Company Business has all permits, licenses, and other governmental authorization understood by Seller and the Company to be necessary to conduct its business as presently conducted, including but not limited to the sale of cigars and related products. All such permits, licenses, and other governmental authorizations will, as a part and consequence of the Transaction, be transferred as part of the Company Business at the Closing and Seller will cooperate in assisting Purchaser, where necessary or reasonably requested, to accede to the authority to use and benefits of ownership of such permits, licenses and other government authorizations for which Purchaser is required to apply as owner of the Company or proprietor and/or conductor of the Company Business. 4.7 Ownership of Assets. To the best knowledge of Seller and the Company, the Company has good, marketable and insurable title to all of the Business Assets and the Company Business; such ownership upon transfer of the Company Stock per this Agreement shall be free and clear of all liens and encumbrances known to Seller; no other person shall at Closing have any ownership or similar right in, or contractual or other right to acquire any such right in, any of such assets; and such ownership will be conveyed to the Purchaser through transfer of the Company Stock at the Closing pursuant to the Transaction. Neither the Seller nor the Company knows of any potential action by any party, governmental or other, and no proceedings with respect thereto have been instituted of which the Seller or the Company has notice, that would materially affect the Purchaser's and/or Company's ability to use and to utilize each of such assets in the business of the Company Business while same shall be managed by the Purchaser and/or its affiliate(s) or appointee(s). 4.8 Proprietary Rights. The Company possesses rights to use (without payment), all Proprietary Rights used in the Company Business or utilized in conjunction with the Business Assets, and all such rights shall be conveyed as part of the Business Assets through transfer of the Company Stock to Purchaser at the Closing pursuant to the Transaction; neither the Company nor the Seller has received any notice of conflict which asserts the right of others with respect thereto; and to the best knowledge of the Company and the Seller the Company has in all material respects performed all of the obligations required to be performed, and is not in default in any material respect, under any agreement to which they are a party relating to any such Proprietary Rights. 4.9 Stock. The Company has present authority only to issue one class of stock which is common stock of which the Company Stock is a part and the Company Stock when transferred shall constitute all of the outstanding stock in the Company and validly issued shares of common stock of the Company, and be fully paid and non assessable. There are no outstanding puts, calls, warrants, commitments, agreements, claims or demands of any character relating to the Company Stock or other authorized but not issued stock of the Company, nor has Seller and/or the Company issued any bond, note or other instruments convertible into or otherwise given any right to purchase any of the Company Stock or other authorized but not issued stock of the Company. SECTION 5. MISCELLANEOUS 5.1 Name. The Seller agrees that following consummation of the Transaction, neither it nor any entity under its control or affiliated with it other than the Company as owned by Purchaser or otherwise as Purchaser shall provide, shall make any attempt to make any use of any formal filed tradename under which the Company has conducted business while the Company has been owned by Seller, or authorize others to do so, without the written consent of the Purchaser. -4- 5.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or mailed by registered or certified mail (return receipt requested), or is sent by telefax to the parties at the address as stated at the outset hereof (or at such other address for a party as shall be specified by like notice given at least five (5) days prior thereto). 5.3 Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 5.4 Survival of Representations, Warranties, Et Cetera. The representations and warranties of the parties contained herein shall survive the Closing for a period of one (1) year from the Closing. Covenants and agreements shall survive for the longer of one (1) year from the Closing or one (1) year after they were to have been performed and were capable of performance. 5.5 Miscellaneous. This Agreement (1) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the parties, with respect to the subject matter hereof, except as specifically provided otherwise or referred to herein, so that no such external or separate agreements relating to the subject matter of this Agreement shall have any effect or be binding, unless the same is referred to specifically in this Agreement, or is executed by the parties after the date hereof; (2) is not intended to confer upon any other person any rights or remedies hereunder; (3) shall not be assigned by operation of law or otherwise except as specifically authorized herein; and (4) shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of New York without regard to the principles of conflict of laws thereof and all parties submit themselves to the jurisdiction of the courts in the State of New York if such courts are called upon to decide any issue relating to this Agreement and counsel for the respective parties are authorized to accept service of process to such parties in such court proceedings. This Agreement may be executed in two or more counterparts, which together shall constitute a single agreement. 5.6 Publicity. Prior to the Closing any written news releases or other public disclosure by any of the parties hereto pertaining to this Agreement or the Transaction shall be submitted to the Seller for review and approval prior to release and shall be released only in a form approved by the Seller, provided, however, that (a) such approval shall not be unreasonably withheld, and (b) such review and approval shall not be required of releases if prior review and approval would prevent the timely and accurate dissemination of such as required to comply, in the judgment of counsel for any of the parties hereto, with any applicable law, rule of policy. 5.7. The parties hereto are aware that the Company Stock is presently subject to pledge to and lien interest by both Laurus Master Fund LLC, Lloyd Miller III and Milfam I LLP under financing arrangements between such lenders and Seller and consummation of this Transaction is and shall be conditioned upon release of those lien interests and approval of such lenders to be evidenced in writing by Seller at or before Closing. 5.8 The principals of Purchaser have been involved in management of the business affairs of the Company and are therefore familiar with the status of the Company Business and Business Assets and are satisfied as to the good standing of such as being appropriate for the purposes of the Purchaser in continuing the Company Business and Seller is therefore not making and Purchaser is not relying on any representations regarding the Company Business and/or the Business Assets other than the limited representations made in this written Agreement being strictly construed and Purchaser is acquiring such Company Business and Business Assets in their AS IS condition at the date of this Agreement and waive any inspection/due diligence rights they may otherwise be entitled to thereby regarding. 5.9 Purchaser agrees after the Closing on the Transaction to allow Seller access to the business records of the Company sufficient to facilitate the Seller's regulatory reporting of its interest in the Company and transfer of such interest and Purchaser agrees to cooperate to the full extent as Seller deems appropriate to make disclosure of this Agreement and the Transaction for all applicable regulatory purposes. -5- 5.10 Attorney Representation. Purchaser confirms herein that it is not being represented by counsel in this Transaction but that Seller and the Company are is being represented by Randall J. Perry, Esq. as counsel. Seller further represents that it has been advised of its right to counsel but has voluntary chosen not to be so represented. The parties hereby consent to the purchase of the Company Stock per the terms of this Stock Purchase Agreement. Synergy Brands Inc. by____________________ Mair Faibish, CEO Gran Reserve Corporation by______________________ Stephen Barbella President GRC Group Inc. by______________________ President -6- EX-99.1 3 file003.txt THE COMPANY STOCK SUBJECT TO TRANSFER AND/OR TO BE TRANSFERRED AS STATED IN AND/OR PER THIS AGREEMENT HAS NOT BEEN REGISTERED UNDER ANY APPLICABLE STATE OR FEDERAL REGULATION. NO SALE, OFFER TO SELL OR TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933 AS AMENDED, AND COMPLIANCE WITH ANY APPLICABLE STATE LAW WITH RESPECT TO THE EXISTENCE AND TRANSFERABILITY OF SUCH SHARES IS THEN IN EFFECT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS THEN IN FACT APPLICABLE TO SUCH SHARES. SECURED PROMISSORY NOTE $350,000 New York, NY April , 2008 FOR VALUE RECEIVED, GRC GROUP INC., a FLORIDA corporation ("Maker") whose address is 15804 NW 57th Ave., Miami, Florida promises to pay $350,000, in equal monthly installments of principal and interest over a five (5) year term (the "Term") beginning the first month following the closing on the stock purchase by Maker of the securities (hereinafter referred to as the "Company Stock") of Gran Reserve Corporation, a Florida corporation (the "Company") as owned by Payee, such agreement to purchase (the "Stock Purchase Agreement") being entered between all such parties contemporaneous herewith and for which transaction the dollar amount of this Note represents part payment of the purchase price. Payment shall be made on this Note to the order of SYNERGY BRANDS INC., a Delaware corporation ("Payee"), at 223 Underhill Blvd., Syosset, NY 11791, or at such other place as may be designated by Payee in writing. The principal sum of $350,000 shall be paid together with interest on the unpaid principal balance thereof at the rate of five percentum (5%) per annum. Both principal and interest are payable in lawful money of the United States. Repayment on this Note shall be secured by a first lien on all assets of Maker including those as made part of the Business Assets included with the change of corporate control related thereto represented by the transfer of the aforementioned Company Stock as well as a pledge of and lien on the Company Stock being transferred, which until this debt is paid in full, shall be held in escrow by and/or for Payee, which lien interest of Payee shall be evidenced by a UCC-1 Financing Statement to be executed by Maker in the form acceptable to Payee. The terms of this Note shall become additional terms of the aforesaid Stock Purchase Agreement and be dependent upon compliance therewith, such that default under one of such agreements shall constitute default under the other. Unless expressly indicated to the contrary herein, all payments received on account of this Note shall be applied first to accrued interest, then to charges and fees payable hereunder and then to the unpaid principal balance hereof. Any monthly payment due which is not paid by the fifth (5th) day of the month when due shall result in assessment to Maker of a 10% penalty on such payment which is to be added to and paid with the next following monthly payment. The occurrence of any of the following shall constitute an "Event of Default" hereunder" (a) If Maker fails to pay any installment of principal or interest when due. (b) If Maker becomes insolvent, or generally fails to pay its debts as such debtors become due, or make an assignment for the benefit of creditors, or requests or has instituted against it any liquidation, reorganization, rearrangement or other proceeding under any bankruptcy law or other law for the relief of debtors. (c) If Maker seeks, consents to, permits, or acquiesces in, or fails to cause to be vacated or stayed within sixty (60) days (or vacated within sixty (60) days of such stay), the voluntary or involuntary appointment of a receiver, trustee or liquidator for itself or for all of any substantial part of its property. (d) If Maker dissolves or terminates its existence. (e) Default under the terms of the aforementioned Stock Purchase Agreement. (f) Maker shall breach any term, provision, warranty, or representative under the Note. This Note may be prepaid in whole or in part at any time, at the option of Maker, without penalty or charge of any kind, any such prepayment with respect to this Note to be applied first to the payment of interest and the balance thereof to the payment of principal, whereby this Note shall be reduced as to principal owed without interruption but not have the amount of any monthly payment reduced; rather resulting lessening of principal amount shall shorten the Term of the Note. Notwithstanding anything to the contrary contained in this Note, no interest shall accrue hereunder that is in excess of the maximum amount permitted under the applicable law relating to usury. Any interest that is in excess of the maximum amount permitted under the applicable law relating to usury shall be applied to reduce the outstanding principal balance hereof and shall be deemed to represent a prepayment of principal hereunder. The acceptance by any holder of this Note of any payment that is less than the total of all amounts due and payable at the time of such payment shall not constitute a waiver of such holder's rights or remedies at the time or at any subsequent time, without the express written consent of such holder, except as and to the extent otherwise provided by law. If this Note of any part of the indebtedness represented hereby shall not be paid as aforesaid, then the holder may place this Note of any part of the indebtedness represented hereby in the hands of an attorney for collection, and Maker agrees to pay, in addition to all other amounts due hereunder, all costs of collection, including, without limitation, attorney's fees, whether or not suit be brought. This Note may be waived, changed, modified or discharged only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. If any provision of this Note, or the application thereof to any circumstances, is found to be unenforceable, invalid or illegal, such provision shall be deemed deleted from this Note as not applicable to such circumstance, as the case may be, and the remainder of this Note shall not be affected or impaired thereby. Upon receipt of evidence, reasonably satisfactory to the Maker, of the loss, theft, destruction or mutilation of the Note, and upon receipt of indemnity reasonably satisfactory to the Maker, the Maker will, at the expense of the Payee or other holder, execute and deliver, in lieu thereof, a new note of like tenor and amount. No delay, failure or omission by the Payee or any subsequent holder in respect of the exercise of any right or remedy granted to the Payee or other holder or allowed to the payee or other holder by law, herein, or otherwise, shall constitute a waiver of the right to exercise the right or remedy at that or nay future time or in the same of other circumstances. Notices and demands hereunder on the Maker may be given in writing at the address set forth below. This Note shall bind the Maker and its successors, assigns, heirs and legal representatives. This Note is delivered in and shall be construed under the laws of the State of New York, and in any litigation in connection with the enforcement of this Note or any security given to secure payment hereunder, the undersigned hereby consent to and confer personal jurisdiction on the Courts of the State of New York and of the Federal Government, expressly waive any objections to venue in any of such courts, and agree that service of process may be made on the undersigned by mailing a copy of the summons to their address as stated at the outset of this Note, certified mail, return receipt requested. WITNESS: GRC GROUP INC. (MAKER) _______________________ by____________________ (Maker) EX-99.2 4 file004.txt ACKNOWLEDGMENT, RATIFICATION AND SUBORDINATION AGREEMENT THIS ACKNOWLEDGMENT, RATIFICATION AND SUBORDINATION AGREEMENT (this "Agreement") dated as of May 29, 2008, by and among Gran Reserve Corporation, a Florida corporation and a wholly owned indirect subsidiary of Synergy (as defined below) ("Gran Reserve"), GRC Group Inc., a Florida corporation ("GRC"), Synergy Brands Inc., a Delaware corporation (referred to herein as either "Synergy" or the "Junior Secured Party"), and Lloyd I. Miller, III ("Miller") and Milfam I L.P., a Georgia limited partnership ("Milfam" and collectively referred to herein with Miller as the "Senior Secured Parties"). The Senior Secured Parties and Synergy are collectively referred to herein as the "Secured Parties". Capitalized terms not otherwise defined herein shall have the meaning as set forth in the Security Agreement (as defined below). R E C I T A L S A. WHEREAS, Synergy, PHS Group Inc., a Pennsylvania corporation and a wholly owned indirect subsidiary of Synergy ("PHS"), and the Senior Secured Parties are parties to that certain Securities Purchase Agreement dated as of January 19, 2007, as amended by that certain First Amendment to Securities Purchase Agreement, dated as of April 5, 2007 (as so amended and as further amended, supplemented or otherwise modified from time to time, the "Purchase Agreement"), pursuant to which (x) PHS issued and sold to the Senior Secured Parties an initial aggregate principal amount of $8,000,000 of its secured promissory notes (the "Secured Notes") and (y) Synergy issued and sold to the Senior Secured Parties an aggregate of 1,075,000 shares of common stock, par value $0.01 per share, of Synergy. B. WHEREAS, as a condition to the Senior Secured Parties' obligations to enter into the Purchase Agreement and to extend credit to PHS thereunder, PHS, Synergy and certain subsidiaries of Synergy, including Gran Reserve, executed and delivered that certain Security, Pledge and Guaranty Agreement, dated as of January 19, 2007, as amended by that certain First Amendment to Security, Pledge and Guaranty Agreement, dated as of April 5, 2007 (as so amended and as further amended, supplemented or otherwise modified from time to time, the "Security Agreement"), as security for the payment and performance of all obligations of PHS and Synergy to the Senior Secured Parties and to guarantee all of the obligations of PHS and Synergy under the Purchase Agreement. C. WHEREAS, Synergy intends to enter into a Stock Purchase Agreement (the "Stock Purchase Agreement"), in substantially the form attached hereto as Exhibit A, with GRC, and Gran Reserve, pursuant to which, among other things, Synergy would sell, transfer and assign to GRC all of the Company Stock (as defined in the recitals of the Stock Purchase Agreement) for the Purchase Price (as defined in Section 2 of the Stock Purchase Agreement) (the "Sale Transaction"); D. WHEREAS, in connection with the Sale Transaction, GRC has issued a secured promissory note (the "Gran Reserve Note") to Synergy whereby Gran Reserve has granted a security interest to Synergy in all of the assets owned by Gran Reserve as collateral for the indebtedness owed by GRC to Synergy under the Gran Reserve Note; E. WHEREAS, pursuant to that certain Waiver and Consent Agreement, dated as of the date hereof (the "Waiver Agreement"), the Senior Secured Parties have consented to the Sale Transaction; and F. WHEREAS, in connection with the Senior Secured Parties consenting to the Sale Transaction pursuant to the Waiver Agreement, GRC and Gran Reserve have agreed to enter into this Agreement which shall, among other things, (i) contain the acknowledgment and ratification by GRC and Gran Reserve of the continuation after the consummation of the Sale Transaction of the security interest pursuant to the Security Agreement of the Senior Secured Parties in all of the assets and property now owned or hereafter acquired by Gran Reserve and (ii) provide for the lien priority between the Senior Secured Parties and the Junior Secured Party. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Acknowledgment and Agreements Regarding Security Interest and Priorities. (a) Acknowledgment and Ratification of Security Interest: GRC and Gran Reserve hereby represent, warrant, acknowledge, ratify and agree that (i) the security interest granted by Gran Reserve to the Senior Secured Parties pursuant to the Security Agreement, continues to secure the payment and performance of the obligations owed to the Senior Secured Parties under the Purchase Agreement and (ii) the first priority continuing security interest granted to the Senior Secured Parties in, lien on and right of set-off against, all of the assets and property now owned and hereafter acquired by Gran Reserve pursuant to the Security Agreement shall continue and remain in full force and effect following the consummation of the Sale Transaction, including, without limitation, the following agreements and obligations of Gran Reserve pursuant to the Security Agreement: (i) Name Change or Change of Jurisdiction: Gran Reserve shall not change its jurisdiction of organization without first giving 30 days' prior written notice of its intent to do so to the Secured Parties. Gran Reserve shall not change its legal name or transact business under any other trade name without first giving 30 days' prior written notice of its intent to do so to the Secured Parties. With respect to such new name or jurisdiction of organization, Gran Reserve shall have taken all action reasonably requested by the Secured Parties, to maintain the security interest granted by Gran Reserve to the Secured Parties at all times fully perfected and in full force and effect. (ii) Authorization: To the extent required, Gran Reserve hereby authorizes the Secured Parties to file a UCC financing statement naming Gran Reserve, as debtor, and Secured Parties, as secured party, and covering all the Collateral (as defined in the Security Agreement) in the jurisdictions and filing locations deemed appropriate by Secured Parties to the extent necessary to perfect Secured Parties' security interest in the Collateral. (b) Maintenance of Existence: GRC and Gran Reserve will preserve and maintain its existence. (c) Mergers, Consolidations and Asset Sales: Neither GRC nor Gran Reserve will be a party to any merger or consolidation, or sell, transfer, lease or otherwise dispose of all or any substantial part of its assets without the prior written consent of the Secured Parties. (d) Change in the Nature of Business: Gran Reserve will not engage in any business or activity other than the general nature of the business engaged in by it as of the closing date of the Sale Transaction and Gran Reserve shall not discontinue its engagement in any business or activity engaged in by it as of the closing date of the Sale Transaction without the prior written consent of the Secured Parties. 2. Subordination: Any lien on the assets of Gran Reserve held by Junior Secured Party which secures the obligations owed by GRC under the Gran Reserve Note shall be fully subordinate to any lien granted by Gran Reserve pursuant to the Security Agreement in favor of the Senior Secured Parties which secures the Obligations (as defined in the Security Agreement). (a) Priority of Payments: All cash or other proceeds from any sale, exchange, destruction, condemnation, foreclosure, or other disposition of any Collateral (as such term is defined in the Security Agreement) shall, for so long as the Security Agreement shall not have terminated in accordance with Section 4 hereof, be applied first to satisfy the Obligations owed to the Senior Secured Parties in full and second, to satisfy the obligations owed to Junior Secured Party by GRC under the Gran Reserve Note. (b) Exercise of Remedies: The Junior Secured Party may not exercise or seek to exercise any rights or remedies (including, without limitation, any set-off, commencement, prosecution, foreclosure or cause of action) with respect to the assets of Gran Reserve or any collateral granted by Gran Reserve to the Secured Parties until the earlier of (i) the payment in full in cash to Senior Secured Parties with respect to the Obligations and (ii) the termination of the Security Agreement in accordance with Section 4 hereof. (c) Turnover of Proceeds: If any payment or distribution of any character in respect of the Collateral, whether in cash, securities or other property shall be received by Junior Secured Party in contravention of any of the terms hereof or otherwise before the earlier of (i) the payment in full in cash to Senior Secured Parties with respect to the Obligations and (ii) the termination of the Security Agreement in accordance with Section 4 hereof, such payment or distribution shall be received in trust for the benefit of, and shall be immediately paid over or delivered and transferred to Senior Secured Parties for application to the payment of all Obligations remaining unpaid, to the extent necessary to pay all such Obligations owed to Senior Secured Parties in full. 3. Representations and Warranties. Each of the parties hereto each hereby represent and warrant to the Purchasers (as of the date hereof) that it has full power and authority to enter into this Agreement, and the agreements contemplated hereby have been duly authorized, are valid and enforceable against it, are not in contravention of any law, order or agreement by which it is bound and do not require any consent, notice or filing of any kind. 4. Termination. This Agreement shall terminate upon the receipt by the Secured Parties of a notice in writing by Synergy that the Gran Reserve Note has been paid in full in cash. Upon receipt of such notice by the Secured Parties the security interests granted by Gran Reserve to the Secured Parties shall automatically terminate and the Security Agreement, solely with respect to the security interest granted by Gran Reserve with respect to the Collateral thereto, shall be of no further force nor effect. 5. Miscellaneous. (a) No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by GRC, Gran Reserve and the Secured Parties, respectively. (b) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York (without regard to any conflicts of law). (c) This Agreement may be executed in counterparts, which together shall constitute one Agreement. (d) By their signatures below, the parties acknowledge that they have had sufficient opportunity to read and consider, and that they have carefully read and considered, each provision of this Agreement and that they are voluntarily signing this Agreement. [SIGNATURES BEGIN NEXT PAGE] IN WITNESS WHEREOF, the parties hereto have caused this Acknowledgment, Ratification and Subordination Agreement to be duly executed as of the date first written above. GRAN RESERVE CORPORATION By: ----------------------------- Name: ----------------------------- Title: ----------------------------- GRC GROUP INC. By: ----------------------------- Name: ----------------------------- Title: ----------------------------- SECURED PARTIES: MILFAM I L.P. By: Milfam LLC Its: General Partner By: - --------------------------- Name: Lloyd I. Miller, III Title: Manager LLOYD I. MILLER, III By: - -------------------------- Name: Lloyd I. Miller, III SYNERGY BRANDS INC. By: - ------------------------- Name: Title: EXHIBIT A Stock Purchase Agreement EX-99.3 5 file005.txt WAIVER AND CONSENT AGREEMENT THIS WAIVER AND CONSENT AGREEMENT (this "Agreement") dated as of May 29, 2008, is by and among PHS Group Inc., a Pennsylvania corporation (the "Borrower"), Synergy Brands Inc., a Delaware corporation (the "Parent Company"), and Lloyd I. Miller, III ("Miller") and Milfam I L.P., a Georgia limited partnership, ("Milfam" and collectively referred to herein with Miller as the "Purchasers"). Capitalized terms not otherwise defined herein shall have the meaning as set forth in the Purchase Agreement (as defined below). R E C I T A L S A. WHEREAS, the Borrower, the Parent Company and the Purchasers are parties to that certain Securities Purchase Agreement dated as of January 19, 2007, as amended by that certain First Amendment to Securities Purchase Agreement, dated as of April 5, 2007, as further amended, supplemented or otherwise modified from time to time (the "Purchase Agreement"), pursuant to which (x) the Borrower issued and sold to the Purchasers an initial aggregate principal amount of $8,000,000 of its secured promissory notes (the "Secured Notes") and (y) the Parent Company issued and sold to the Purchasers an aggregate of 1,075,000 shares of common stock, par value $0.01 per share, of the Parent Company. B. WHEREAS, as a condition to the Purchasers' obligations to enter into the Purchase Agreement and to extend credit to the Borrower thereunder, the Borrower, the Parent Company and certain subsidiaries of the Parent Company, including Gran Reserve Corporation, a Florida corporation ("Gran Reserve") executed and delivered that certain Security, Pledge and Guaranty Agreement, dated as of January 19, 2007, as amended by that certain First Amendment to Security, Pledge and Guaranty Agreement, dated as of April 5, 2007, as further amended, supplemented or otherwise modified from time to time (the "Security Agreement" and collectively referred to with the Purchase Agreement and any related ancillary documents thereto, including any related exhibits and schedules, each as amended, supplemented or otherwise modified from time to time the "Loan Documents"), as security for the payment and performance of all obligations of the Borrower and the Parent Company to the Purchasers and to guarantee all of the obligations of the Borrower and the Parent Company under the Purchase Agreement. C.. WHEREAS, the Parent Company intends to enter into a Stock Purchase Agreement (the "Stock Purchase Agreement"), in substantially the form attached hereto as Exhibit A, with GRC Group, a Florida corporation ("GRC'), and Gran Reserve, a wholly owned indirect subsidiary of the Parent Company, pursuant to which, among other things, the Parent Company would sell, transfer and assign to GRC all of the Company Stock (as defined in the recitals of the Stock Purchase Agreement) for the Purchase Price (as defined in Section 2 of the Stock Purchase Agreement) (the "Sale Transaction"); D. WHEREAS, pursuant to Section 5.10 of the Purchase Agreement ("Section 5.10"), the sale and transfer of the Company Stock by the Parent Company in connection with the Sale Transaction would constitute a substantial asset sale; E. WHEREAS, pursuant to Section 2.2 of the Security Agreement ("Section 2.2"), the transfer of the Company Stock in connection with the Sale Transaction would constitute a transfer of a portion of the Collateral (as defined in the Security Agreement); and F. WHEREAS, each of the Purchasers consents to the sale and transfer of the Company Stock and the receipt of the Purchase Price in connection therewith, and desires to waive any breach or default which may arise as a result of the consummation of the Sale Transaction. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Waiver and Consent. (a) Section 5.10 of the Purchase Agreement. Each of the Purchasers hereby consents to the Parent Company's sale and transfer of the Company Shares in connection with the consummation of the Sale Transaction. Each of the Purchasers hereby expressly acknowledges and agrees that the sale and transfer of the Company Stock will not constitute a breach or default under Section 5.10 of the Purchase Agreement. (b) Section 2.2 of the Security Agreements. Each of the Purchasers hereby consents to the Company's sale and transfer of the Company Stock in connection with the consummation of the Sale Transaction. Each of the Purchasers hereby expressly acknowledges and agrees that the sale and transfer of the Company Stock will not constitute a breach or default under Section 2.2 of the Security Agreement. 2. Effect on Loan Documents. Other than as expressly set forth in this Agreement: (a) Nothing in this Agreement shall constitute a waiver or relinquishment of (i) any Event of Default under the Loan Documents, (ii) any of the agreements, terms or conditions contained in the Loan Documents and all such agreements, terms and conditions contained in the Loan Documents shall remain in full force and effect, (iii) any rights, remedies or claims of the Purchasers with respect to the Loan Documents, or (iv) the rights of the Purchasers to collect the full amounts owing to them under the Secured Notes; and (b) The foregoing waivers and consents by the Purchasers shall not be construed as waivers of, or consents to, any other breach by the Parent Company, the Borrower or any of their direct and indirect subsidiaries pursuant to any other provision(s) of the Loan Documents. 3. Representations and Warranties. The Parent Company and the Borrower each hereby represent and warrant to the Purchasers (as of the date hereof) that: (i) it has full power and authority to enter into this Agreement, the Stock Purchase Agreement and the transactions contemplated thereby and such transactions have been duly authorized, are valid and enforceable against it, are not in contravention of any law, order or agreement by which it is bound and do not require any consent, notice or filing of any kind; and (ii) no Event of Default under the Purchase Agreement nor Default under the Security Agreement has occurred and is continuing. 4. Continuing Security Interest. Both the Parent Company and the Borrower hereby represent, warrant, acknowledge, ratify and agree that the Security Interest (as defined in the Security Agreement) secures and shall continues to secure the payment and performance of the Obligations (as defined in the Security Agreement), including, without limitation, the Secured Notes; provided, however, that solely with respect to the grant of the Security Interest made by Gran Reserve for the benefit of the Secured Parties under the Security Agreement, such grant made by Gran Reserve shall terminate upon the receipt by the Secured Parties of a notice in writing by the Parent Company that the indebtedness owed by GRC to the Parent Company under that certain secured promissory note issued by GRC to the Parent Company in connection with the Sale Transaction in the initial principal amount of $400,000 has been paid in full in cash. Upon receipt of such notice by the Secured Parties the Security Interest granted by Gran Reserve to the Secured Parties under the Security Agreement shall automatically terminate and the Security Agreement with respect thereto shall be of no further force nor effect. 5. Entire Agreement. This Agreement shall be construed in connection with and as part of the Loan Documents, and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents and each other document, schedule, exhibit or instrument referenced in the Loan Documents, except as herein expressly waived, are hereby ratified and confirmed and shall remain in full force and effect. 6. Miscellaneous. (a) No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Parent Company, the Borrower and the Purchasers, respectively. (b) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York (without regard to any conflicts of law). (c) This Agreement may be executed in counterparts, which together shall constitute one Agreement. (d) By their signatures below, the parties acknowledge that they have had sufficient opportunity to read and consider, and that they have carefully read and considered, each provision of this Agreement and that they are voluntarily signing this Agreement. [SIGNATURES BEGIN NEXT PAGE] IN WITNESS WHEREOF, the parties hereto have caused this Waiver and Consent Agreement to be duly executed as of the date first written above. PHS GROUP INC., the Borrower By: ---------------------------- Name: ---------------------------- Title: ---------------------------- SYNERGY BRANDS INC., the Parent Company By: ---------------------------- Name: ---------------------------- Title: ---------------------------- PURCHASERS: MILFAM I L.P. By: Milfam LLC Its: General Partner By: - ---------------------------- Name: Lloyd I. Miller, III Title: Manager LLOYD I. MILLER, III By: - --------------------------- Name: Lloyd I. Miller, III -----END PRIVACY-ENHANCED MESSAGE-----