-----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, GvUi476RtADZVx+GxRLD8Bu/KOyNp9M9zi5ZV4+FnS6ud4eKxCCSO8Qljoj1U2il hdFvfskS5vkkin3+RlIVjw== 0001005477-98-001115.txt : 19980427 0001005477-98-001115.hdr.sgml : 19980427 ACCESSION NUMBER: 0001005477-98-001115 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 19980102 FILED AS OF DATE: 19980402 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTERN BEEF INC /DE/ CENTRAL INDEX KEY: 0000081942 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 133266114 STATE OF INCORPORATION: DE FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-04485 FILM NUMBER: 98586535 BUSINESS ADDRESS: STREET 1: 47 05 METROPOLITAN AVE CITY: RIDGEWOOD STATE: NY ZIP: 11385 BUSINESS PHONE: 7188210011 FORMER COMPANY: FORMER CONFORMED NAME: QUAREX INDUSTRIES INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: RANCHERS PACKING CORP DATE OF NAME CHANGE: 19830713 10-K 1 FORM 10-K FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 2, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ___________________ Commission File Number 0-4485 WESTERN BEEF, INC. - - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3266114 - - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. employer identification no.) incorporation or organization) 47-05 Metropolitan Avenue, Ridgewood, New York 11385 - - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (718) 417-3770 Securities registered pursuant to Section 12 (b) of the Act: None Securities registered pursuant to Section 12 (g) of the Act: Common Stock par value $.05 per share ("Common Stock") - - -------------------------------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |_| The aggregate market value of the voting stock held by non-affiliates of the registrant based on the $7.565 average of the closing bid and asked prices reported by NASDAQ/NMS on March 16, 1998 was $11,659,027. As of March 16, 1998, the registrant had issued and outstanding 5,469,220 shares of Common Stock. DOCUMENTS INCORPORATED BY REFERENCE The following documents or the indicated portions thereof have been incorporated herein by reference: (1) Specifically identified information in the registrant's definitive proxy material for its 1998 Annual Meeting of Stockholders is incorporated by reference as Part III hereof, which definitive proxy material shall be filed not later than 120 days after January 2, 1998. CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this Annual Report on Form 10-K is forward-looking, such as information relating to the renovation of the Company's existing stores and the construction or acquisition of new stores, the recoverability of deferred taxes, the continued availability of credit lines for capital expansion, the suitability of facilities, access to suppliers, implementation of technological improvement programs and year 2000 issues relating to computer applications. Such forward-looking information involves important risks and uncertainties that could significantly affect expected or actual results in the future from those expressed in any forward-looking statements made by, or on behalf of, the Company. These risks and uncertainties include, but are not limited to, uncertainties relating to economic conditions; delays and other hazards inherent in building and construction; competition in both the retail and wholesale markets; government and regulatory policies and certifications (in particular those relating to the United States Department of Agriculture food stamp program); the pricing and availability of the products the Company sells and distributes, including Western Beef label brand products; potential delays in the implementation of the Company's technological improvement programs; and the effectiveness of such programs upon the implementation of, and the Company's ability to resolve, any and all year 2000 computer applications. 2 PART 1 ITEM 1. BUSINESS General Western Beef, Inc. ("Western Beef" or the "Company") consists principally of a retail food business that currently operates 19 high-volume, warehouse-type supermarkets, one outlet-type foodstore and a wholesale food business that primarily deals in beef, pork, poultry, provisions, produce and private label groceries. The Company's supermarkets serve the New York Metropolitan area, while the Company's wholesale business operates in the New York, New Jersey and Eastern Pennsylvania markets. In the fiscal years ended January 2, 1998 ("1997"), January 3, 1997 ("1996") (a fifty-three week fiscal year), and December 29, 1995 ("1995"), the retail supermarket business accounted for approximately 73%, 70% and 69% respectively, of the Company's total net sales. See ITEM 7. Management Discussion and Analysis of Financial Condition and Results of Operations. Western Beef's supermarkets are distinguishable from traditional supermarket formats by their unusually broad selection of meat and produce items and their limited selection of "non-food" items, such as health and beauty aids. Western Beef's supermarkets are truly "food stores". Key elements in Western Beef's business strategy include: o Competitive Prices - Western Beef's objective is to be perceived as the "value leader" in its markets by offering the best values to its customers on a consistent basis. Western Beef reinforces its image as a value leader by offering a large selection of high quality grocery items under the "Western Beef" label. These private label items are priced substantially below comparable national brand items. Western Beef sets its prices based on "everyday low pricing" policies rather than the "high-low" pricing strategy, i.e., high regular prices with deep discounts on sale items, utilized by many other retailers. o Neighborhood/Ethnic Appeal - Western Beef's supermarkets are located in densely populated, culturally diverse neighborhoods in the New York Metropolitan area. The merchandise offerings in Western Beef's supermarkets are tailored to the preferences, i.e., specific items, brand names and packaging, of the various ethnic groups represented in each store's market area. Some of these products are not generally available in supermarkets operated by national chains. o Low-Cost Warehouse Format - In order to offer the lowest possible prices to its customers, Western Beef uses a low cost, no-frills warehouse store format. Management believes it can be successful in providing superior value to Western Beef's customers by carefully controlling all operating costs on a continuous basis. The retail and wholesale food businesses are generally characterized by low profit margins with earnings primarily dependent on rapid inventory turnover, careful cost control and the ability to achieve high sales volume. Since many food products, particularly produce, meat and dairy products, are subject to spoilage and become unmarketable with the passage of time, it is important to avoid overstocking and to reduce excess inventories when they occur. This is usually accomplished by promotional sales at reduced prices. It is advantageous to combine wholesale and retail businesses under common ownership because overstocking in the wholesale business can be relieved by promotional sales in commonly owned retail stores. Commonly owned operations can also more readily take advantage of opportunities for bargain purchases, including stocks with shorter than usual shelf life, as they become available in wholesale markets. 3 For a description of certain financial information of the Company relative to the Company's industry segments, see Note 11. Segments of Business to the Company's Consolidated Financial Statements attached hereto. History Western Beef, Inc. was incorporated in Delaware on June 3, 1991 under the name New Southern Blvd. Supermarkets, Inc. The Company is the successor of the October 30, 1992 combination (the "Combination") of the food businesses of Quarex Industries, Inc. ("Quarex"), P.S.L. Food Market, Inc. ("PSL") and Southern Blvd. Supermarkets, Inc. ("Southern"). Certain members of the Castellana family and their affiliates were controlling stockholders (the "Principal Stockholders") of each of these entities. Since the consummation of the Combination, the Principal Stockholders have held in excess of 70% of the outstanding Common Stock of the Company. In January 1993, the Company's name was changed to "Western Beef, Inc." The Company leases certain retail food stores, office and warehouse facilities from the Principal Stockholders. Concurrent with the Combination, independent appraisals were obtained of the rentals under all then existing Company leases in which the Principal Stockholders had an interest as landlord or tenant (other than one food store lease which was fixed on a formula basis). Any necessary revisions to the leases were made so that in the aggregate, such rentals did not exceed fair market value. The Company and the Principal Stockholders agreed that any future leases from such affiliates would be based on fair market value as established by independent appraisal. All Company leases in which the Principal Stockholders had an interest have been amended periodically, so that the rentals thereunder do not exceed fair market value 1997 Developments The Company did not open any supermarkets in 1997; however, it commenced construction of two outlet-type food stores. These two stores, to be located on Rockaway Boulevard in Queens, N.Y. and Myrtle Avenue in Brooklyn, N.Y., will each be approximately 11,000 square feet in size. The Rockaway Boulevard store opened for business on March 30, 1998, and the Myrtle Avenue store is expected to be opened in mid-1998. Through January 2, 1998, the Company has expended a total of $1,866,000 for these two outlet-type stores out of a total estimated construction cost of $2,500,000. Unlike conventional supermarkets, these two stores will sell a limited selection of food staples, most of which will be Western Beef brand grocery products, as well as prepackaged meats, cheese and fish. These products will be distributed from the Company's Central Cutting operation, where they are cut into convenient sizes, custom packed and distributed to the Company's supermarkets. This operation produces uniform packaging, saves expensive store butcher labor costs and employs new packaging concepts which reduce moisture and eliminate bacteria. As a result, product shelf life is increased from one week to as much as six weeks. Consequently, spoilage is significantly reduced and customer acceptance is increased. Recognizing the importance of maintaining clean, modern stores, the Company continued its existing store renovation program. In 1997, the Company completed the renovation of four stores located in East New York, Springfield Gardens, Elmont and Mineola at an aggregate cost of approximately $1,600,000. The Company installed new shelving in all four stores, and new light fixtures and produce and frozen food display cases in three of the stores. Other store renovations included new front door vestibules in two stores, roof and parking lot repairs, new ceilings and floors and new cash register check out counters where needed. To improve office efficiency and to reduce overhead costs, the Company added approximately 2,100 square feet of office space to its executive and administrative office building at a cost of approximately $190,000. The Company intends to consolidate all administrative personnel into one building as opposed to the three buildings currently in use. 4 To pay for these and other capital improvements, the Company borrowed the remaining $647,000 of a $3,000,000 credit facility obtained from Amplicon Financial in 1995. This borrowing was made at the interest rate of 7.75% per annum and is payable over a five year period. In December 1997, the Company entered into a sale/leaseback agreement in the amount of $2,332,000 with General Electric Capital Corporation ("G.E.C.C."). This agreement is for a six-year term (including three-one year renewals) with a combined interest rate of 7.48% per annum and provides for monthly lease payments of $33,659 commencing January 1, 1998. At the end of the initial three-year term and each subsequent anniversary date, the Company has the option to purchase the leased equipment at a reducing percentage of the original cost of the equipment leased under this agreement. G.E.C.C. has committed to provide a total credit line of $5,500,000 under this agreement. The Company also has a $3,000,000 working capital line of credit from North Fork Bank, all of which is available to fund future operating and construction programs. Technology and Year 2000 Issues The Company is committed to improving its operating efficiencies through computer technology and automation. All of the Company's stores are equipped with scanning registers, automated time clocks and hand held inventory ordering equipment. The Company supports all its operating technology through an integrated data and voice wide area network ("WAN") connecting the headquarters office to its stores and distribution facilities. The WAN allows the Company to integrate all its computer applications into a complete accounting and management reporting system. During 1997, the Company greatly expanded its supplier participation in its electronic data interchange ("EDI") invoicing program. Expanded implementation of this program has allowed for reduction in clerical administration and improved price accuracy. During 1997, the Company also installed electronic article surveillance ("EAS") equipment in all its retail stores to help control retail theft and improve selling margins. The Company has certain existing computer programs that were written using two digits rather than four to define the applicable year. As a result, those computer programs have time sensitive software that recognizes a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including among other things, a temporary inability to process transactions, send orders and invoices, or engage in similar normal business activities. The Company has completed the identification of its "legacy" applications that are not year 2000 compliant and has commenced modification or replacements of such systems, as necessary. In addition, the Company has received representations from all vendors from whom it has purchased software in the last three years that such software is year 2000 compliant. Given the information known at this time about the Company's systems that are non-compliant and the Company's ongoing efforts to upgrade or replace critical systems, Management does not expect the year 2000 compliance of the Company's systems to have a material adverse effect on either the retail or wholesale segments of the Company's business. No assurance can be given, however, that all of the Company's systems will be year 2000 compliant or that compliance costs or the impact of a failure by the Company to achieve substantial year 2000 compliance will not have a material adverse effect on either the retail or wholesale segments of the Company's business. The Company has initiated communications with its significant suppliers and customers to determine the extent to which the Company is vulnerable to the failure of such parties to remediate their year 2000 compliance issues. In addition, the Company has undertaken a project to create a software "patch" which would convert any data sent to the Company which was not year 2000 compliant into a format that is compliant. No assurance can be given, however, that the systems of these outside parties will be made year 2000 compliant in a timely manner or that the noncompliance of the systems of any of these parties would not have a material adverse effect on either the retail or wholesale segments of the Company's business. 5 Retail Operations Western Beef operates nineteen retail supermarkets in the New York Metropolitan area under the trade name "Western Beef" and one outlet-type food store that operates under the trade name "Junior's Food Outlet" ("Junior's"). Its first two stores were opened in 1973 and 1979. In the late 1980's, management decided to pursue a more aggressive growth and expansion program consisting of new store acquisitions and remodeling and/or closing of smaller stores. Since that time, the Company has continued to search for suitable locations in the New York Metropolitan area to open new stores. In 1996 and 1995 the Company opened two and three stores, respectively. No new stores were opened in 1997. During 1997, 1996 and 1995, the Company's capital expenditures for its retail business were $7,085,000, $12,933,000 and $9,027,000, respectively. All stores are owned or leased by separate subsidiaries of the Company, with the exception of two subsidiaries, which each have two stores. Most stores are free standing. All stores are open seven days a week, including evenings, and are high-volume operations. Most stores are refrigerated, warehouse-type facilities which are divided into separate areas kept at different temperatures. Non-perishable items are displayed in an area maintained at normal room temperatures. In most of the Company's stores, meat is displayed in large refrigerated rooms where the Company sells both bulk meat, which is custom cut by store butchers, as well as a full variety of pre-packaged meats. In seventeen of its stores, the Company sells produce which is displayed in refrigerated cases maintained at 37 degrees Fahrenheit and where moisture content is regulated by automatic misting equipment. Dairy and deli products are sold in separate areas of the Company's stores, maintained at 30-40 degrees Fahrenheit. Most of the Company's stores also contain stand-alone freezers, which maintain temperatures suitable for storage of frozen foods, such as ice cream, vegetables and dinner entrees. The Company's stores also sell a complete line of dry groceries and some non-food products such as paper products and household utensils. Four of the Company's stores operate scratch brick oven bakeries, which bake a large variety of old world bread and rolls from basic ingredients. One of these stores supplies three other Company stores with fresh baked goods. It is anticipated that as capacity permits these baked goods will be introduced into all of the Company's stores. Thirteen stores also operate full service delicatessen departments, which cut-to-order the various cheese and processed meats displayed. The Company's other stores have self-service delicatessen departments. The Company promotes its "Western Beef" retail food stores in full color store circulars and local newspapers, generally at least once a week. In addition, advertisements are also placed on local radio stations and smaller cable television networks in both the English and Spanish languages. The Company distributes its weekly circulars door-to-door in selected neighborhoods and through insertions in local newspapers. Advertising expenditures for 1997 were $2,066,000, covering ad promotion, preparation, placement and distribution. The Company's nineteen retail supermarkets range in size from 9,000 square feet to 83,000 square feet, with an average of 30,000 square feet per store. They are supported by the Company's wholesale division warehouses totaling 117,000 square feet. In 1997, approximately 47% of the Company's retail purchases were derived from the Company's warehouses; the remaining purchases being delivered directly to the stores from manufacturers or outside wholesalers. Junior's was designed and constructed using a "non-frills" approach from initial construction to daily operation. The building structure is of pre-fabricated material which reduced the cost of construction and is designed to be energy efficient. Refrigerated dairy, meat and frozen food products are merchandised in rear-fed door display units. Dry grocery products are displayed on floor pallet stacks and "warehouse" type racking utilizing "cut case" display techniques. This merchandising format is unlike conventional supermarket formats in that it features a limited selection of high turnover food staples with a heavy emphasis on the Company's own Western Beef label brand products. In addition, Junior's sells a wide selection of pre-packaged meat and cheese products which are distributed from the Company's Central Cutting food processing facility thereby eliminating the need for expensive store butcher labor costs. In 1997, the Company made an evaluation of its warehouse operations including, the costs of acquiring and maintaining inventories and supplying the Company's stores. Based on this evaluation, the Company decided not to renew a grocery warehouse lease and decided instead to increase its purchases from White Rose Foods ("White Rose") currently, the Company's largest outside supplier. As a result, the Company has reduced certain overhead costs and reduced its inventory by approximately $2,600,000, thereby improving the Company's cash flow from operations. The Company does not have a formal supply agreement with White Rose. From time-to-time, the Company meets with other wholesale suppliers to ascertain if the service and prices charged by White Rose are as favorable as could be received from other sources. Based on these meetings, the Company has determined that purchasing from White Rose continues to be competitive with other supply sources and in the best interest of the Company. 6 In 1997, White Rose accounted for approximately 16% of the Company's retail purchases. In 1997, no other supplier accounted for more than 10% of the Company's purchases. Management believes that the loss of White Rose as a supplier would not have a long-term adverse effect on the Company's performance since the Company has access to several other similar suppliers. During 1997, the Company increased both the number and diversity of the products marketed under the Western Beef brand label. These products are purchased from national and local food manufacturers. Western Beef brand products are generally well accepted by the Company's retail customers and more Western Beef brand products are expected to be introduced. In general, Western Beef brand products, which are priced 20% to 50% lower than the comparable national brand products, generate higher gross profit margins for the Company than brand name merchandise. Wholesale Operations The Company also conducts a wholesale food business. It purchases beef, pork, poultry and provisions directly from major slaughterhouses, meat and poultry processors and other suppliers on a daily basis to ensure a supply of fresh products and to be responsive to customer needs. The Company does not have formal supply agreements with any of these entities. It purchases merchandise for its wholesale business by purchase orders, the terms of which are subject to normal market conditions such as pricing and availability at the time of purchase. None of these suppliers are material to the Company. Additionally, the Company's wholesale business warehouses and distributes grocery, produce, dairy and frozen food products to the Company's own retail food stores. The Company distributes products from its warehouses in Ridgewood, New York, which operate 24 hours a day. On average, the perishable inventory is turned over approximately once a week. Not withstanding such turnover, the wholesale business requires large amounts of working capital for financing inventory and accounts receivable. To facilitate its wholesale business and retail distribution, the Company (through a subsidiary) owns and operates a fleet of tractors, trailers and trucks, most of which are refrigerated. At various times since 1989, the Company has transported food products for others on a limited basis; however, substantially all trucking operations now are conducted for the Company's own distribution facilities. In addition, to enhance profitability, the Company "back hauls" merchandise inventory to achieve reduced product cost. Competition The wholesale and retail segments of the food industry are competitive throughout the market areas served by the Company. These businesses are generally characterized by low profit margins, with earnings primarily dependent on rapid inventory turnover, careful cost control and the ability to achieve high sales volume. Competition manifests itself in virtually every aspect of the retail food business, including pricing, advertising and promotion, store size, location and attractiveness, hours of operation, product selection and quality, employee friendliness, service and parking facilities. Although Management believes the Company's retail stores price their products competitively, such pricing has been made possible principally because of the low overhead costs incurred by presenting the food in no-frills, warehouse type, bulk display settings without the typical shelving, lighting, decor and other amenities offered by most suburban supermarkets. In the past, the Company's retail food business has grown by opening food stores in locations in Metropolitan New York City areas where its stores were larger than existing independent supermarkets and convenience food stores and where there had been a limited presence of national or regional chain supermarkets. In recent years, however, the Company has experienced competition from larger supermarket chains, some of which have greater resources than the Company, as well as with other independent operators. Such competitors have expanded and are likely to continue expanding, by opening retail food stores within the Company's markets. Although Management believes it will be able to continue to compete on the basis of quality, price and reputation, there can be no assurance that the Company will be able to maintain or improve its current competitive position. 7 Wholesale competition is based principally on price, quality and service, including the extension of favorable credit terms. Financially stronger wholesale competitors may be better suited to take advantage of distressed, "bargain" price opportunities, which arise during periods of over-supply, and to finance the cost of carrying large inventories and receivables during periods of market weakness. The wholesale division competes with several other companies on the wholesale level, some of which are larger than the Company and may have greater resources. Currently, there are adequate suppliers and multiple sources of the products which the Company distributes and sells. However, there is a trend toward consolidation in the food industry with many smaller suppliers being acquired by larger concerns. Government Regulation The food business is subject to, and affected by, substantial and complex federal, state and local laws and regulations that apply to the sale of food at both the wholesale and retail level, and it is required to obtain certain federal, state and local permits and/or licenses for accepting United States Department of Agriculture ("USDA") food stamps and WIC (Women, Infants and Children) checks (assistance checks which can only be used to purchase certain dairy and grocery items), operating a bakery, processing meat, selling produce, beer and wine coolers, and otherwise in order to conduct business. In addition, such regulation includes unannounced inspections by government officials investigating sanitary conditions, weights, measures and other matters. The Company believes it currently holds all licenses and permits required to conduct its business and is in compliance in all-material respects with applicable regulations. For fiscal 1997, 1996 and 1995, respectively, food stamp redemptions accounted for approximately 20%, 24% and 25% of the Company's retail sales. There would be a material adverse effect on the Company if it were to suffer the loss of its USDA permits to accept food stamps or if the Government was to reduce or eliminate the food stamp program. Management believes that the decline in 1997 food stamp redemptions resulted from modifications made by the USDA regarding eligibility requirements for obtaining food stamps. Employees As of March 18, 1998, the Company's retail business employed approximately 1,800 people and its wholesale business employed approximately 100 people. During the year, an attempt was made to unionize the Company's store and warehouse employees under a collective bargaining agreement. In November 1997, this unionization effort was defeated in a vote by the Company's employees. Seasonality No material portion of the Company's business is affected by seasonal fluctuations, except that sales are generally strongest around holidays, particularly the Fourth of July and Easter. 8 Environmental Laws The Company is subject to various applicable federal, state and local laws and regulations relating to environmental matters. Under such laws, the Company is exposed to liability primarily as an owner or operator or real property and, as such, the Company may be responsible for the proper management or remediation of hazardous substances. Such substances for which the Company may be liable could include historic contamination of real property, asbestos-containing material in improvements and hazardous substances and oil used in the course of regular business operations. Remediation requirements may be imposed whether or not the owner or operator knew of, or was responsible for, the presence of contamination by hazardous substances. Also, the presence of contamination may hinder the owner or operator's ability to lease or sell property or to use the property as loan collateral. The Company believes that it does not have any material environmental liability and that compliance with environmental laws and regulations will not, individually or in the aggregate, have a material adverse effect on the Company's operations or its financial condition. There can be no assurance, however, that new or amended environmental laws or regulations or the future discovery of environmental conditions will not require additional expenditures by the Company. Dependence on Major Customers The business of the Company is not dependent on a single or a few customers. Order Backlog The Company does not have any backlog of orders. Research and Development Activity The Company has not expended material amounts on research and development activities. Government Contracts Other than licenses to accept USDA food stamps and WIC checks, the Company does not have any material contracts or sub-contracts with any governmental agency. See "Government Regulation". ITEM 2. PROPERTIES-GENERAL The buildings utilized by the Company were constructed at various dates between 1918 and 1998. The Company considers its warehouse facilities to be in good condition. All of the Company's retail facilities have been opened or modernized in recent years and the Company considers these facilities to be in good condition. The Company believes, to the best of its knowledge, that all its physical facilities, both owned and leased, are suitable and adequate for their intended uses and purposes. Property-Retail The Company's nineteen retail supermarkets range in size from 9,000 square feet to 83,000 square feet, with an average of 30,000 square feet per store. They are supported by Company warehouses totaling 117,000 square feet. As of January 2, 1998, the Company owned four and leased fifteen of its stores currently in operation. Nine of the leased stores are rented from non-affiliated real estate developers and the other six are leased from entities owned by the Principal Stockholders. See "Item 1. Business-History". 9 In January 1997, the Company signed a lease with the Principal Stockholders for a building located on Rockaway Boulevard in Queens, New York. The Company renovated this building converting it into its first outlet-type store of approximately 11,000 square feet. This store opened for business on March 30, 1998. In 1996 and 1997 the Company purchased several adjoining parcels of land for $366,000 on Myrtle Avenue in Brooklyn, N.Y. The Company is building its second outlet-type store on this site. This store will be approximately 11,000 square feet in size and is expected to open in mid-1998. The Company has made a deposit on a piece of property in the Bronx. Subject to meeting certain zoning requirements, the Company intends to construct a retail supermarket with satellite rental units. The estimated cost of this project for the purchase of the land and the renovation of this existing building is estimated to be $5,000,000. The Company's supermarkets are leased for terms, including options, of up to 40 years under leases which generally require the Company to pay for all real estate taxes, repairs and insurance. The average remaining life, including renewal options, on supermarkets leased from non-affiliates and from the Principal Stockholders is 24 and 11 years, respectively. Property-Wholesale Under a lease purchase agreement, the Company occupies a two-story warehouse building located in Ridgewood, New York, of approximately 178,000 square feet with an adjacent parking area, requiring annual base rental payments of approximately $251,000 per year plus taxes, utilities and all other operating costs with the final payment scheduled for August 2004. The Company utilizes approximately half of the building for its wholesale operations and the remainder for its retail operations. ITEM 3. LEGAL PROCEEDINGS The Company has various outstanding litigation matters which it considers to be in the ordinary course of business. In the opinion of Management, the outcome of these litigation matters will not materially, adversely affect the Company's financial position. The Company was a party to a lawsuit commenced in April 1991 in New York Supreme Court, Putnam County wherein the plaintiffs sought to prevent a scheduled auction of property held as collateral for a loan to one of the plaintiffs and brought three actions against the Company seeking compensatory and exemplary damages for fraud and abuse of process allegedly committed by the Company. In February 1998 these matters were settled for an amount, not considered by the Company to be material. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report. 10 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's Common Stock is traded over-the-counter in the NASDAQ National Market System ("NASDAQ") under the symbol "BEEF". The range of the high and low bid prices per share of the Common Stock during the last two years, listed under the name Western Beef, Inc. as reported by NASDAQ, is set forth below: 1997 HIGH LOW ---- ---- --- 1st Quarter 14 10 3/8 2nd Quarter 12 1/4 8 3rd Quarter 10 3/4 7 3/4 4th Quarter 9 1/2 6 1996 HIGH LOW ---- ---- --- 1st Quarter 8 1/8 5 1/8 2nd Quarter 9 3/4 8 1/8 3rd Quarter 11 1/8 9 1/8 4th Quarter 11 1/8 10 1/4 As of March 16, 1998, there were 313 holders of record of the Company's Common Stock whose closing bid price on NASDAQ was $7 3/8 per share. The Company has never paid cash dividends on its Common Stock. Payment of dividends if any, will be within the discretion of the Company's Board of Directors and will depend, among other factors, on earnings, capital requirements and the operating and financial condition of the Company. At the present time, the Company's anticipated capital requirements are such that it intends to follow a policy of retaining earnings, if any, in order to finance the development of its business. ITEM 6. SELECTED FINANCIAL DATA The selected financial data set forth below is derived from the Company's consolidated financial statements and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report. See ITEM 7. Management Discussion and Analysis of Financial Condition and Results of Operations. 11 WESTERN BEEF, INC. SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA)
- - ------------------------------------------------------------------------------------------------ January 2, January 3, December 29, December 30, December 31, 1998 1997 (2) 1995 1994 1993 - - ------------------------------------------------------------------------------------------------ Net sales $ 317,079 $ 340,873 $ 301,387 $ 291,886 $ 274,107 Net income $ 3,203 $ 5,989 $ 4,934 $ 4,773 $ 4,422 Net income per share of common stock-basic(1) $ .59 $ 1.10 $ .90 $ .87 $ .81 Net income per share of common stock-diluted (1) $ .58 $ 1.09 $ .90 $ .87 $ .81 Total assets $ 76,254 $ 74,499 $ 63,313 $ 54,731 $ 48,530 Long-term obligations $ 8,837 $ 11,011 $ 7,691 $ 7,224 $ 5,614 - - ------------------------------------------------------------------------------------------------
(1) Adjusted to reflect a 1.1 for 1 stock split in January 1993. (2) Fifty-three week fiscal year. The other fiscal years presented have fifty-two weeks. ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following should be read in conjunction with the Company's financial statements and the related notes included herein. OVERVIEW The Company expects competition in the retail segment from major chains as the Company expands and continues to open new retail supermarkets. Several of the Company's retail stores have been impacted by this competition; however, the Company believes that its ability to serve its customers with quality merchandise at the lowest price should allow it to stay profitable and maintain a significant part of its market share. General In March 1998, the Company opened one outlettype supermarket and is constructing a second outlet-type store which is expected to open in mid-1998. The first store was constructed on property leased from the Principal Stockholders and the second store is being constructed on several adjoining parcels of land purchased by the Company in 1996 and 1997. Through January 2, 1998, the Company has expended a total of $1,866,000 for the two outlettype stores. When completed these stores are expected to cost a combined total of $2,500,000. The Company is actively seeking more sites for possible openings of new stores in 1998. The Company has made a deposit on a piece of property in the Bronx. Subject to meeting certain zoning requirements, the Company intends to construct a retail supermarket with satellite rental units. The estimated cost of this project for the purchase of the land and the renovation of this existing building is estimated to be $5,000,000. The cost of opening a new supermarket is dependent upon the size of the supermarket and the amount of building renovations necessary to convert the property into a supermarket. Other factors involved would be the amount of equipment to be installed along with the number of product departments in the store. There can be no assurance that the Company can implement this strategy in a timely manner or at the costs stated above or that such strategy, when implemented, will be successful. The Company's growth and expansion program is susceptible to the hazards inherent in building and construction, including delays, cost overruns and zoning issues. While in the past such issues have not materially affected the Company's growth and expansion program, there can be no assurance that in the future such issues will not delay the implementation of this program or have a material effect on this program and the Company. 12 For 1998, the Company plans on improving its inventory management system in both the distribution facilities and stores. The wholesale division warehouse will be equipped with hand held terminals to allow for scanning of product bar codes in billing and inventory management applications. To allow for this and future software enhancements the Company has completed an upgrade of its host client server hardware. Year 2000 Issues The Company has completed the identification of its "legacy" applications that are not year 2000 compliant and has commenced modification or replacements of such systems, as necessary. In addition, the Company has received representations from all vendors from whom it has purchased software in the last three years that such software is year 2000 compliant. Given the information known at this time about the Company's systems that are non-compliant and the Company's ongoing efforts to upgrade or replace critical systems, Management does not expect the year 2000 compliance of the Company's systems to have a material adverse effect on the Company's liquidity or results of operations. No assurance can be given, however, that all of the Company's systems will be year 2000 compliant or that compliance costs or the impact of a failure by the Company to achieve substantial year 2000 compliance will not have a material adverse effect on the Company's future liquidity or results of operations. The Company has initiated communications with its significant suppliers and customers to determine the extent to which the Company is vulnerable to the failure of such parties to remediate their year 2000 compliance issues. In addition, the Company has undertaken a project to create a software "patch" which would convert any data sent to the Company which was not year 2000 compliant into a format that is compliant. No assurance can be given, however, that the systems of these outside parties will be made year 2000 compliant in a timely manner or that the noncompliance of the systems of any of these parties would not have a material adverse effect on the Company's liquidity or results of operations. RESULTS OF OPERATIONS 1997 Compared to 1996 For 1997, the Company achieved net income of $3,203,000, or $.58 per share, on net sales of $317,079,000 as compared to 1996 net income of $5,989,000, or $1.09 per share, on net sales of $340,873,000. The 7.0% decrease in net sales in 1997 compared to 1996 resulted from (i) 1996 being a 53-week fiscal year, whereas 1997 was a 52-week fiscal year; (ii) a decline in retail and wholesale net sales as a result of lower food stamp redemptions, which the Company believes resulted from modifications made by the USDA to food stamp eligibility requirements; (iii) a decline of 16.3% in wholesale net sales as a result of a tighter credit policy adopted by the Company; (iv) low food price inflation; (v) increased competition; and was partially offset by the full year's sales in 1997 of the two stores that opened in 1996. The retail segment provided 73.3% of total net sales in 1997, as compared with 70.3% of total net sales in 1996. Gross profits, as a percentage of net sales, for 1997 and 1996 were 25.0% and 24.2%, respectively. The increase in the gross profit percentage for 1997 resulted primarily from the increased ratio of retail to wholesale sales in 1997 as compared with 1996. For the years 1997 and 1996, the retail segment contributed 90.9% and 89.0% of the gross profit, respectively. Selling, general and administrative expenses expressed as a percentage of sales increased to 23.5% in 1997 from 21.3% in 1996 primarily as a result of (i) the inclusion of the full year's cost in 1997 of the two stores that opened in 1996; (ii) certain occupancy costs, such as utilities, rent and depreciation which do not vary directly with sales declines thereby increasing the expense ratio; and (iii) wage and related benefit costs which were unfavorably impacted by increases in the federal minimum wage. 13 Income from operations decreased 51.3% to $4,732,000 in 1997 from $9,717,000 in 1996. This decrease was principally the result of (i) decreased sales partially offset by an increase in the gross profit percentage; and (ii) higher selling, general and administrative expenses. Income Taxes The effective tax rate of the Company decreased to 40.0% for 1997 from 43.3% for 1996 as a result of the utilization of low income housing tax credits and lower state and local income taxes resulting from investment tax credits. The Company's deferred tax asset resulted from temporary differences of this asset in reporting depreciation expense for income tax and financial reporting purposes which accelerated the reporting of taxable income for income tax purposes. These temporary differences are expected to reverse themselves in future periods and Management believes the Company will recover the entire amount of this asset. The Company's investment in low income housing credits reduced the Company's effective tax rate approximately 4.3% in 1997 and 2.1% in 1996. In addition to the low income housing credits, the Company participated in the federally sponsored Work Opportunity Tax Credit ("WOTC") program which helped to reduce the 1997 effective tax rate by 1.3%. Retail Segment Net sales in the retail segment decreased 3.0% in 1997 compared to 1996 as a result of (i) 1996 being a 53-week fiscal year, whereas 1997 was a 52-week fiscal year; (ii) a decline in food stamp redemptions, which the Company believes resulted from modifications made by the USDA to food stamp eligibility requirements; (iii) low food price inflation; and (iv) increased competition. These declines were partly offset by the inclusion in 1997 net sales of full year net sales for the two stores opened by the Company in 1996. Same stores sales decreased 4.01% in 1997 as compared to 1996 due to 1997 being a shorter fiscal year and decreased food stamp redemptions. Retail gross profits as a percentage of sales increased to 31.0% in 1997 from 30.6% in 1996, principally as a result of the increased ratio of retail to wholesale sales, as well as the capital expansion program, which increased the selling square footage dedicated to the higher gross profit dairy, frozen and bakery merchandise categories. Retail income from operations decreased 46.2% to $4,727,000 in 1997 from $8,793,000 in 1996. This decrease was principally the result of (i) decreased net sales; and (ii) higher selling, general and administrative expenses. Wholesale Segment Wholesale net sales decreased 16.3% to $84,679,000 from $101,162,000 in 1996. This decrease in wholesale net sales resulted primarily from (i) an adjustment of the Company's credit policy to sell only to customers who have the requisite credit worthiness; (ii) low food price inflation; and (iii) reduced food stamp redemptions at wholesale customers of the Company. Wholesale gross profit for 1997 and 1996 was 8.6% and 8.9%, respectively. Wholesale income from operations decreased 99.5% to $5,000 in 1997 as compared with $924,000 in 1996 due principally to increased write offs of uncollectable receivables. Wholesale gross profits as a percentage of sales decreased to 8.6% in 1997 from 8.9% in 1996, principally as a result of (i) higher purchase costs; and (ii) increased competition. 14 Recent Accounting Standards In 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components within financial statements. Comprehensive income consists of all changes in equity during a period except those resulting from investments by and distributions to owners. SFAS No. 130 also requires that all components of comprehensive income be disclosed in a separate financial statement or on the face of the income statement. This statement is effective for the Company beginning in 1998 and requires reclassification of prior period information for comparative purposes. In 1997, the FASB also issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprises and Related Information" ("SFAS No. 131"). SFAS No. 131 replaces the products and services approach of SFAS No. 14's to reporting business segments with the management approach. Under the provision of SFAS No. 131, business segments are based on the way that the chief operating decision maker organizes the segments within the enterprises, for deciding how to allocate resources and in assessing performance. SFAS No. 131 is effective for the Company in 1998, and segment information that is reported with corresponding information for the initial year must be restated unless it is impractical to do so. In 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Post-retirement Benefits" ("SFAS No. 132"), an amendment of FASB Statements No. 87, 88 and 106. SFAS No. 132 revises employers' disclosure about pension and other post-retirement benefit plans. SFAS No. 132 is effective for the Company in 1998. The adoption of these statements is not expected to have a material effect on the consolidated financial statements of the Company. 1996 Compared to 1995 For 1996, the Company achieved net income of $5,989,000, or $1.09 per share, on net sales of $340,873,000, as compared to 1995 net income of $4,934,000, or $.90 per share, on net sales of $301,387,000. The 13.0% increase in net sales in 1996 compared with 1995 net sales resulted from (i) inclusion of the full year sales for the three stores that were opened in mid-1995; (ii) inclusion of sales of the two stores that were opened in 1996; (iii) a 8.8% increase in wholesale sales; and (iv) 1996 being a 53-week fiscal year, whereas 1995 was a 52- week fiscal year. Net sales from the new retail stores raised net sales of the retail segment to 70.3% of total net sales in 1996, as compared with 69.2% of total net sales in 1996. Gross profits as a percentage of net sales for 1996 and 1995 were 24.2% and 24.0%, respectively. This increase was principally the result of the increased ratio of retail to wholesale sales in 1996 as compared to 1995. The retail segment contributed 89% of the gross profit for both years. Selling, general and administrative expenses expressed as a percentage of net sales increased to 21.3% in 1996 from 21.17% in 1995 principally as a result of (i) the costs of the two new stores that opened in 1996; and (ii) the full year costs in 1996 of the stores that opened in 1995. Income from operations increased 9.3% to $9,717,000 in 1996 from $8,889,000 in 1995. This increase income from operatons was 15 principally the result of the total of (i) increased net sales; and (ii) higher gross profit percentage; which was partially offset by increased selling, general and administrative expense. Retail Segment Net sales in the retail segment increased 15.0% in 1996 compared to 1995 as a result of (i) 1996 being a 53-week fiscal year, whereas 1995 was a 52-week fiscal year; and (ii) inclusion of sales of the two stores that were opened in 1996. Same store sales increased 1.1% in 1996 as compared to 1995 due to 1996 being a longer fiscal year. Gross profits for 1996 and 1995 were 30.6% and 30.8%, respectively. Income from operations for the retail segment increased 13.0% to $8,793,000 in 1996 from $7,781,000 in 1995. In 1996, the Company incurred competition in the retail segment from major chains as the Company expanded and continued to open new retail supermarkets. Several of the Company's retail stores were impacted by this competition; however, the Company was able to stay profitable and believes that it has retained a significant part of its market share. Wholesale Segment Wholesale net sales increased 8.8% to $101,162,000 in 1996 from $92,961,000 in 1995. This increase was the result of higher net sales to an existing supermarket chain customer and expanded sales in Philadelphia, PA. The Company believes this increase in sales also arose as a result of the closure of a competitor of the Company. Wholesale gross profit for 1996 and 1995 remained constant at the 1995 level of 8.9%. Wholesale income from operations decreased 16.6% to $924,000 from $1,108,000 in fiscal 1995 due to higher delivery, general and administrative expenses. The wholesale division continued to have competition in its market segment in 1996 compared with 1995. Income Taxes The effective tax rate of the Company decreased to 43.3% for 1996 from 45.5% for 1995, primarily as a result of the utilization of low income housing tax credits and lower state and local income taxes. The Company's deferred tax asset resulted from temporary differences of this asset in reporting depreciation expense for income tax and financial reporting purposes which accelerated the reporting of taxable income for income tax purposes. These temporary differences are expected to reverse themselves in future periods and Management believes the Company will recover the entire amount of this asset. The Company's investment in low income housing credits reduced the Company's effective tax rate approximately 2.1% in 1996 and 1.6% in 1995. Liquidity and Capital Resources Net cash flow from operations was $12,046,000 for 1997. The Company had capital expenditures of $7,322,000 in 1997, primarily on (i) equipment purchases and improvements at the two outlet-type food stores under construction; (ii) the renovation of four older stores; and (iii) the expanded office space at the Company's executive and administrative office building. The Company also repaid long-term debt of $3,006,000 in 1997. As of January 2, 1998, the Company had $7,527,000 in cash and cash equivalents available for acquisitions and expansion. These additions and improvements were funded by cash flow from operations, the drawdown of $647,000 under a loan obtained from Amplicon Financial and $2,232,000 received from General Electric Capital Corporation pursuant to a sale/leaseback agreement. The Amplicon Financial loan drawdown, the 16 final drawdown under a $3,000,000 facility, was at the interest rate of 7.75% per annum and is payable over a five year period. The General Electric Capital Corporation sale/leaseback agreement was at a rate of 7.48% per annum payable over a three year period, with three-one year renewals, and a declining balloon payment option at the end of each rental term. The Company has available a $3,000,000 working capital line of credit from North Fork Bank expiring on July 1, 1998, which the Company expects will be renewed for another year on similar terms. At January 2, 1998, the entire balance was available for use by the Company. The Company also has several financial institutions that it believes would be available to finance new store equipment, usually over a five to ten year period. The Company plans to utilize most of its available cash flow to fund capital expenditures for renovating existing stores and for opening new retail outlets. There are no restrictions on the transfer of assets between segments, though the Company intends to let each segment develop its own growth. The Company expects that available cash flow from the wholesale segment will be used to expand its customer base, which should result in higher levels of inventory and accounts receivable. Although Management believes that these expenditures will enable the Company to expand its customer base, there can be no assurance that this strategy will be successful. The Company believes that its cash flow from operations will be sufficient to meets its current obligations and commitments for the next twelve months. In addition to the two outlet-type stores currently under construction and the property being developed in the Bronx, the Company has no other material capital commitments. The Company expects the aggregate 1998 capital commitments for these projects to be approximately $6,000,000. See "Overview" for a description of the factors that may effect the costs of opening a new supermarket, and the risks inherent in the Company's growth and expansion plan. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Pursuant to a resolution of the Company's Board of Directors and the Audit Committee thereof, dated September 15, 1997, the Company discontinued the engagement of BDO Seidman, LLP ("BDO") and engaged Price Waterhouse LLP as the Company's independent accountants for the Company's 1997 fiscal year. During the 1995 and 1996 fiscal years and the subsequent interim period preceding the termination of BDO, the Company had no disagreements with BDO on any matter of accounting principles or practices, financial statement disclosure or auditory scope or procedure, which disagreements, if not resolved to the satisfaction of BDO, would have caused it to make reference to the subject matter of the disagreements in connection with its reports. PART III All items under this section are incorporated by reference to the Company's proxy statement that will be filed no later than 120 days after January 2, 1998. 17 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8K The following documents are being filed as a part of this report: (a) 1. Financial Statements 2. Financial Statement Schedule All other schedules are omitted since the required information is either not required or not present. 3. Exhibits 3.1 Certificate of Incorporation of the Company, as amended (1) 3.2 Certificate of Amendment to the Certificate of Incorporation of the Company, dated January 13, 1993 (3) 3.3 By-Laws of the Company (2) 10.1 Agreement of Combination (2) 10.2 Agreement of Merger (1) 10.3 Certificate of Merger (1) 10.4 Master Lease Agreement dated December 29, 1997 between the Company and General Electric Capital Corporation (4) 10.5 $3,000,000 Line of Credit Agreement expiring July 1, 1998 between the Company and North Fork Bank in the form of a Promissory Note dated September 17, 1997 from the Company to North Fork Bank (4) 10.6 Lease Agreement dated November 1, 1991 between P.M.C. Supermarket, Inc. d/b/a/ Western Beef Forest Avenue Inc. and Forest Associates, an affiliate of the Principal Stockholders for the rental of the Company's Forest Avenue store. (4) 10.7 Store Lease dated February 6, 1990 between the Company and 130-35 Merrick Boulevard Associates, L.P., an affiliate of the Principal Stockholders, for the rental of the Company's Merrick Boulevard Store. (4) 10.8 Parking Lot Lease dated February 6, 1990 between the Company and CM Boulevard Associates, L.P., an affiliate of the Principal Stockholders, for the rental of the parking lot at the Company's Merrick Boulevard Store. (4) 10.9 Agreement of Lease dated July 6, 1989 between Quarex, Inc. and Elmont Q. Properties, an affiliate of the Principal Stockholders, for the rental of the Company's Elmont Store. (4) 18 10.10 Lease Agreement dated November 1, 1992 between Western Beef - 173rd Street Inc. and Peter Castellana, Jr. and Marie Castellana for the rental of the Company's 173rd Street Store. (4) 10.11 Lease Agreement dated March 1, 1990 between western Beef East New York Inc. and Elmont Q. Properties, Inc., an affiliate of the Principal Stockholders, for the rental of the Company's East New York Store. (4) 10.12 Store Lease dated January 30, 1997 between the Company and ANT Realty Corp., an affiliate of the Principal Stockholders, for the lease of the Company's Rockaway Boulevard Store. (4) 10.13 Lease Agreement dated January 23, 1992 between Quarex Inc. and 61 2nd Street Associates, an affiliate of the Principal Stockholders for the lease of the Company's Mineola Store. (4) 10.14 Agreement dated September 18, 1995 between the Company and Amplicon Financial Corp. (4) 10.15 Assignment dated March 19, 1996 between Western Beef-Steinway Street, Inc. and Metlife Capital Financial Corporation (4) 10.16 Amended and Restated Mortgage dated March 19, 1996 between Western Beef - Steinway Street, Inc. and Metlife Capital Financial Corporation (4) 10.17 Amended and Restated Promissory Noted dated March 19, 1996 between Western Beef-Steinway Street, Inc. and Metlife Capital Financial Corporation (4) 10.18 Indenture dated September 17, 1993 between Ranbar Packing, Inc. and Astoria Federal Savings and Loan Association (4) 10.19 Note dated September 17, 1993 between Ranbar Packing, Inc. and Astoria Federal Savings and Loan Association (4) 10.20 Contract of Sale dated June 29, 1993 between Ranbar packing, Inc. and Astoria Federal Savings and Loan Association (4) 21 Subsidiaries (4) 23.1 Consent of Price Waterhouse LLP (4) 23.2 Consent of BDO Seidman, LLP (4) 27 Financial Data Schedule (4) - - -------------------------------------------------------------------------------- (1) Incorporated by reference to the Form 8-K Current Report filed November 13, 1992 (the "8-K") (2) Incorporated by reference to Form S-4 File No. 33-44494. (3) Filed with the Annual Report on Form 10-K for the fiscal year 1992. 19 (4) Filed herewith. (b) No reports on Form 8-K have been filed during the last quarter of the fiscal year covered by this report on Form 10-K. (c) See Item 14(a)3, above (d) Not applicable 20 SIGNATURES Pursuant to the requirements of section 13 or 15 (d) of the securities exchange act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WESTERN BEEF, INC. By: /s/Peter Castellana, Jr., Peter Castellana, Jr., President, Chief Executive Officer and Director Date: March 30, 1998 SIGNATURE TITLE DATE --------- ----- ---- /s/Peter Castellana, Jr. President, Chief Executive March 30, 1998 - - -------------------------- Officer and Director Peter Castellana, Jr. /s/Chris Darrow Principal Financial March 30, 1998 - - -------------------------- and Accounting Officer Chris Darrow /s/Joseph Castellana Director March 30, 1998 - - -------------------------- Joseph Castellana /s/Stephen R.Bokser Director March 30, 1998 - - -------------------------- Stephen R. Bokser /s/Arnold B. Becker Director March 30, 1998 - - -------------------------- Arnold B. Becker Western Beef, Inc. and Subsidiaries Consolidated Financial Statements Years Ended January 2, 1998, January 3, 1997 and December 29, 1995 Western Beef, Inc. and Subsidiaries Contents Reports of Independent Accountants F - 1-2 Consolidated financial statements: Consolidated balance sheets F - 3 Consolidated statements of income F - 4 Consolidated statements of stockholders' equity F - 5 Consolidated statements of cash flows F - 6 Notes to consolidated financial statements F - 7-24 Report of Independent Accountants on consolidated financial statement schedule F - 25 Schedule II - Valuation and Qualifying Accounts F - 26 Report of Independent Accountants To the Board of Directors and Stockholders of Western Beef, Inc. In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, stockholders' equity and cash flows present fairly, in all material respects, the financial position of Western Beef, Inc. and Subsidiaries at January 2, 1998 and the results of their operations and their cash flows for the fifty-two week period then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP New York, New York March 5, 1998 F-1 Report of Independent Certified Public Accountants To the Stockholders and Directors of Western Beef, Inc.: We have audited the accompanying consolidated balance sheet of Western Beef, Inc. and Subsidiaries as of January 3, 1997, and the related consolidated statements of income, stockholders' equity and cash flows for each of the two years in the period ended January 3, 1997. We have also audited the schedule listed in the accompanying index. These consolidated financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements and schedule are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements and schedule. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and schedule. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Western Beef, Inc. and Subsidiaries as of January 3, 1997, and the results of their operations and their cash flows for each of the two years in the period ended January 3, 1997, in conformity with generally accepted accounting principles. Also, in our opinion, the schedule presents fairly, in all material respects, the information set forth therein for each of the two years in the period ended January 3, 1997. BDO Seidman, LLP New York, New York March 5, 1997 F-2 Western Beef, Inc. and Subsidiaries Consolidated Balance Sheets (In Thousands, Except Par Value) - - --------------------------------------------------------------------------------
January 2, January 3, 1998 1997 Assets Current: Cash and cash equivalents $ 7,527 $ 2,634 Accounts receivable, net of allowance for doubtful accounts of $552 and $386 6,275 8,434 Inventories 14,113 17,668 Prepaid expenses and other current assets 2,933 1,461 Deferred income taxes 1,235 1,253 -------- -------- Total current assets 32,083 31,450 Property, plant and equipment, net 42,258 41,276 Other assets 1,913 1,773 -------- -------- Total assets $ 76,254 $ 74,499 ======== ======== Liabilities and Stockholders' Equity Current: Current portion of long-term debt $ 1,571 $ 1,505 Current portion of obligations under capital leases 1,090 1,341 Accounts payable 8,903 10,617 Accrued expenses and other current liabilities 4,834 4,720 Accounts payable-related party 1,997 797 -------- -------- Total current liabilities 18,395 18,980 Long-term debt, net of current portion 5,707 7,310 Obligations under capital leases, net of current portion 3,130 3,701 Deferred income taxes payable 2,059 1,484 Other non-current liabilities 1,834 1,142 -------- -------- Total liabilities 31,125 32,617 -------- -------- Commitments and contingencies (Note 7) Stockholders' equity: Preferred stock, $.05 par value - 2,000 shares authorized; none issued -- -- Common stock, $.05 par value - 15,000 shares authorized; 5,466 and 5,463 shares, respectively, issued and outstanding 273 273 Capital in excess of par value 11,390 11,379 Retained earnings 33,563 30,360 Deferred compensation (97) (130) -------- -------- Total stockholders' equity 45,129 41,882 -------- -------- $ 76,254 $ 74,499 ======== ========
The accompanying notes are an integral part of these financial statements. F-3 Western Beef, Inc. and Subsidiaries Consolidated Statements of Income (In Thousands, Except Per Share Amounts) - - --------------------------------------------------------------------------------
1997 1996 1995 Net sales $317,079 $340,873 $301,387 Cost of sales 237,808 258,402 228,923 -------- -------- -------- Gross profit 79,271 82,471 72,464 Selling, general and administrative expenses 74,539 72,754 63,575 -------- -------- -------- Income from operations 4,732 9,717 8,889 Other income, net 603 837 162 -------- -------- -------- Income before provision for income taxes 5,335 10,554 9,051 Provision for income taxes 2,132 4,565 4,117 -------- -------- -------- Net income $ 3,203 $ 5,989 $ 4,934 ======== ======== ======== Net income per share of common stock-basic $ .59 $ 1.10 $ .90 ======== ======== ======== Net income per share of common stock - diluted $ .58 $ 1.09 $ .90 ======== ======== ======== Weighted average shares outstanding - basic 5,465 5,463 5,463 ======== ======== ======== Weighted average shares outstanding - diluted 5,503 5,497 5,477 ======== ======== ========
The accompanying notes are an integral part of these financial statements. F-4 Western Beef, Inc. and Subsidiaries Consolidated Statements of Stockholders' Equity (In Thousands) - - --------------------------------------------------------------------------------
Common Stock Capital in -------------------- excess of Retained Deferred Shares Par value par value Earnings Compensation Balance, December 30, 1994 5,463 $ 273 $ 11,516 $ 19,437 $ -- Net income for 1995 -- -- -- 4,934 -- Other -- -- (305) -- -- Granting of below-market stock options -- -- 168 -- (168) Amortization of deferred compensation -- -- -- -- 4 -------- -------- -------- -------- -------- Balance, December 29, 1995 5,463 273 11,379 24,371 (164) Net income for 1996 -- -- -- 5,989 -- Amortization of deferred compensation -- -- -- -- 34 -------- -------- -------- -------- -------- Balance, January 3, 1997 5,463 273 11,379 30,360 (130) Net income for 1997 -- -- -- 3,203 -- Amortization of deferred compensation -- -- -- -- 33 Stock options exercised 3 -- 11 -- -- -------- -------- -------- -------- -------- Balance, January 2, 1998 5,466 $ 273 $ 11,390 $ 33,563 $ (97) ======== ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements. F-5 Western Beef, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In Thousands) - - --------------------------------------------------------------------------------
1997 1996 1995 Cash flows from operating activities: Net income $ 3,203 $ 5,989 $ 4,934 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,172 3,395 2,747 Provision for losses on accounts receivable 955 611 539 Deferred income taxes 593 (316) 916 (Gain) loss on disposal of property, plant and equipment (80) (20) 19 (Increase) decrease in current assets: Accounts receivable 1,204 (291) (2,386) Inventories 3,555 (1,709) (2,620) Prepaid expenses and other current assets (1,472) 559 780 Other assets (140) (59) 240 (Decrease) increase in current liabilities: Accounts payable and accounts payable - related party (514) (1,720) 537 Accrued expenses and other current liabilities 114 1,530 1,711 Increase in non-current liabilities 456 1,142 -- -------- -------- -------- Net cash provided by operating activities 12,046 9,111 7,417 -------- -------- -------- Cash flows from investing activities: Capital expenditures (7,322) (13,121) (9,304) Investment in low-income housing credits -- -- (1,067) -------- -------- -------- Net cash (used in) investing activities (7,322) (13,121) (10,371) -------- -------- -------- Cash flows from financing activities: Proceeds from sale of property, plant and equipment 2,517 112 228 Proceeds on issuance of long-term debt 647 6,377 2,777 Payments on long-term debt (3,006) (2,276) (1,931) Issuance of common stock 11 -- -- -------- -------- -------- Net cash provided by financing activities 169 4,213 1,074 -------- -------- -------- Net increase (decrease) in cash and cash equivalents 4,893 203 (1,880) Cash and cash equivalents, beginning of year 2,634 2,431 4,311 -------- -------- -------- Cash and cash equivalents, end of year $ 7,527 $ 2,634 $ 2,431 ======== ======== ======== Cash paid during the year for: Interest $ 1,086 $ 1,071 $ 775 Income taxes $ 2,569 $ 4,442 $ 2,741
The accompanying notes are an integral part of these financial statements. F-6 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- 1. Summary of Significant Accounting Policies Description of Business Western Beef, Inc. and Subsidiaries, all of which are wholly-owned, (the "Company") operate high-volume, warehouse-type, retail food stores and a wholesale meat and poultry business. During 1997 and 1996, the Company operated nineteen retail food stores. During 1995, the Company operated seventeen retail stores. The Company also sells poultry, beef, pork and provisions through its wholesale operations to supermarket chains, retailers and other distributors. The retail stores serve the New York/New Jersey metropolitan area and the wholesale business operates principally in the New York, New Jersey and Eastern Pennsylvania markets. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Fiscal Year The Company uses a 52-53 week fiscal year, with the year ending on the Friday closest to December 31. The fiscal years ended January 2, 1998, January 3, 1997 and December 29, 1995 are referred to as 1997, 1996 and 1995, respectively, throughout the financial statements. Fiscal years 1997 and 1995 include 52 weeks and fiscal year 1996 includes 53 weeks. Revenue Recognition Retail revenues are recorded at the time of sale. Wholesale revenues are recorded at the time the products are shipped. Inventories Inventories consisting of meats, poultry, groceries and other food products held for resale, are stated at the lower of cost (first-in, first-out retail method) or market. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation and amortization are computed on the straight-line method over the estimated useful lives of the assets. The buildings under capital lease and leasehold improvements are being amortized over their useful lives. Repairs and maintenance are charged to operations. Renewals and improvements are capitalized. F-7 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" requires that long-lived assets held and used by the Company be reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment is recognized, to the extent that the sum of undiscounted estimated future cash flows expected to result from the asset's use is less than its carrying value. The Company has evaluated its asset base under the guidelines established by SFAS No. 121 and determined that no impairment is present. Estimated Fair Value of Financial Instruments Statement of Financial Accounting Standards No. 107 ("SFAS No. 107"), "Disclosure about Fair Value of Financial Instruments", requires disclosures of fair value information about financial instruments for which it is practicable to estimate the value, whether or not recognized on the balance sheet. The fair value of financial instruments, including cash, accounts receivable, accounts payable and accrued expenses, approximate carrying value. The carrying amounts of long-term debt and obligations under capital leases approximate fair value because the interest rates approximate current market rates. Income Taxes Deferred income taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred income taxes represent the future tax return consequences of those differences which will either be taxable or deductible when the assets and liabilities are recovered or settled. Other Assets Included in other assets are investments of approximately $901,000 and $974,000 at January 2, 1998 and January 3, 1997, respectively, which the Company made in two limited partnerships during 1995. These investments have generated low income housing tax credits to be used to offset future federal income taxes. In accordance with Emerging Issues Task Force Issue No. 94-1, "Accounting for Tax Benefits Resulting from Investments in Affordable Housing Projects", these investments are accounted for under the effective yield method. The credits are guaranteed by an indemnification agreement in the partnership contract. Net Income Per Share Effective January 1997, the Company accounts for its net income per share in accordance with Statement of Financial F-8 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- Accounting Standards No. 128, "Earnings Per Share" ("SFAS No. 128"). Under SFAS No. 128, the Company is required to report both basic net income per share based on the weighted average number of common shares outstanding and diluted net income per share based on the weighted average number of common shares outstanding plus all potentially dilutive common shares issuable. In accordance with SFAS No. 128, all prior period net income per share data have been restated. Net income per share calculations for 1997, 1996 and 1995 are presented in Note 5. Cash Equivalents Cash equivalents include all highly liquid debt instruments with an original maturity of three months or less. Cash equivalents consist primarily of money market accounts. Concentration of Credit Risk Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of cash and trade accounts receivable. The Company maintains some of its cash balances in accounts which exceed federally insured limits, but has not experienced any losses to date resulting from this policy. The Company sells primarily to retail customers and wholesale food businesses located in the New York metropolitan area. Although the Company is directly affected by the well-being of the food industry, management does not believe significant credit risk exists. Store Opening Costs Costs associated with the opening of new stores are expensed as incurred. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, costs and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Standards In 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No.130 establishes standards for reporting and display of comprehensive income and its components within financial F-9 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- statements. Comprehensive income consists of all changes in equity during a period except those resulting from investments by and distributions to owners. SFAS No. 130 also requires that all components of comprehensive income be disclosed in a separate financial statement or on the face of the income statement. This statement is effective for the Company beginning in 1998 and requires reclassification of prior period information for comparative purposes. In 1997, the FASB also issued Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131 replaces the products and services approach of SFAS No. 14 to reporting business segments with the management approach. Under the provisions of SFAS No. 131, business segments are based on the way that the chief operating decision maker organizes the segments within the enterprise for deciding on how to allocate resources and in assessing performance. SFAS No. 131 is effective for the Company in 1998, and segment information that is reported with corresponding information for the initial year must be restated, unless it is impractical to do so. In 1998, the FASB issued Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Post Retirement Benefits" ("SFAS No. 132"), an amendment of FASB Statements Nos. 87, 88 and 106. SFAS No. 132 is effective for the Company in 1998. The adoption of these statements is not expected to have a material effect on the consolidated financial statements. Reclassifications Certain reclassifications have been made to the prior year amounts to conform to the fiscal 1997 presentation. F-10 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- 2. Property, Plant and Equipment Property, plant and equipment consist of the following (in thousands):
Depreciable life January 2, January 3, in years 1998 1997 Land $ 2,723 $ 2,703 Land under capital leases 650 650 Buildings 35 to 39 4,053 4,053 Buildings under capital leases 35 to 39 1,950 1,950 Improvements 10 to 30 30,811 26,599 Machinery and equipment 6 to 20 12,253 12,462 Equipment under capital leases 10 to 30 7,341 6,382 Furniture and fixtures 5 to 7 2,814 2,692 Transportation equipment 5 189 720 ------- ------- 62,784 58,211 Less: accumulated depreciation and amortization 20,526 16,935 ------- ------- $42,258 $41,276 ======= =======
F-11 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- 3. Debt Installment Notes January 2, January 3, 1998 1997 Long-term debt consists of the following (in thousands): Installment notes payable in monthly installments of $133 including interest at rates ranging from 7.55% to 10.0%, expiring at various dates through 2001 and collateralized by certain accounts receivable, inventory and equipment $3,407 $4,731 Installment notes payable in monthly installments of $44 including interest at rates ranging from 8.25% to 9.38%, expiring at various date through 2006 and collateralized by land and buildings 3,711 3,924 Installment note payable in annual principal payments of $16, plus interest at 8%; payments commence in 2001 through 2010 160 160 ------ ------ 7,278 8,815 Less: Current maturities 1,571 1,505 ------ ------ $5,707 $7,310 ====== ====== As of January 2, 1998, debt matures as follows (in thousands): 1998 $1,571 1999 1,523 2000 943 2001 358 2002 195 Thereafter 2,688 ------ $7,278 ====== At January 2, 1998, land, property and equipment with a net book value of $9,061,000 was pledged as collateral for the debt. For fiscal years 1997, 1996 and 1995, interest expense (net of interest income of $106,000, $164,000 and $142,000, respectively) was $965,000, $907,000 and $633,000, respectively. F-12 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- Bank Facility During 1997, the Company renewed its agreement for a credit facility that permits borrowings of up to $3,000,000, expiring July 1, 1998. The facility is available for working capital purposes and is secured by all monies possessed by the bank that are at any time credited by or due from the bank to the Company. Borrowings under the facility bear interest at the bank's prime rate. The facility provides for an additional fee payable (at the bank's prime rate plus 4%) if and to the extent that the aggregate average monthly balance in non-interest bearing deposit accounts is less than $1,000,000. During 1997, the Company had no borrowings under this facility. Capital Lease Obligations The Company utilizes certain land, buildings and equipment in its operations pursuant to lease agreements which are accounted for as capital leases. Future minimum lease payments under capital lease obligations, together with the present value of the net minimum lease payments at January 2, 1998, were as follows (in thousands): Fiscal Year 1998 $1,396 1999 932 2000 932 2001 932 2002 553 Thereafter 418 ------ 5,163 Less: Amounts representing interest 943 ------ Present value of net minimum lease payments 4,220 Less: Current portion 1,090 ------ $3,130 ====== F-13 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- 4. Income Taxes The provision for income taxes consists of the following (dollars in thousands): 1997 1996 1995 Federal: Current $ 704 $ 2,744 $ 1,474 Deferred 467 (183) 515 ------- ------- ------- 1,171 2,561 1,989 ------- ------- ------- State and local: Current 837 2,137 1,727 Deferred 124 (133) 401 ------- ------- ------- 961 2,004 2,128 ------- ------- ------- $ 2,132 $ 4,565 $ 4,117 ======= ======= ======= The deferred income tax provision (benefit) results primarily from the annual change in temporary differences between the basis of assets and liabilities for financial reporting purposes and such amounts as measured by income tax laws. A reconciliation of income taxes at the 34% federal statutory income tax rate for 1997, 1996 and 1995 to income taxes as reported is as follows: 1997 1996 1995 Statutory federal income tax rate 34.0% 34.0% 34.0% State and local income taxes, net of federal income tax benefit 12.2 12.1 13.1 Low income housing tax credits (4.3) (2.1) (1.6) Work opportunity tax credit (1.3) -- -- Other (.6) (.7) -- ---- ---- ---- Effective income tax rate 40.0% 43.3% 45.5% ==== ==== ==== The Company has qualified low income housing tax credits of $1,464,000 which are available to reduce future regular federal income taxes. F-14 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- Thecomponents of net deferred tax assets (liabilities) are as follows (dollars in thousands): January 2, January 3, 1998 1997 Deferred tax assets: Capitalized costs for income tax purposes $ 877 $ 1,078 Accounts receivable allowance 280 175 Lease obligations 78 -- ------- ------- Deferred income taxes included in current assets $ 1,235 $ 1,253 ======= ======= Non-current assets: Investment in low-income housing credit $ 37 $ 42 Non-current liabilities: Depreciation and amortization (2,096) (1,526) ------- ------- Deferred income taxes payable $(2,059) $(1,484) ======= ======= F-15 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- 5. Reconciliation of Basic and Diluted Net Income per Share (in thousands, except per share amounts) Weighted Average Net Shares Per Share Income Outstanding Amount 1997 Basic net income per share $3,203 5,465 $ .59 Effect of dilutive securities: Stock options -- 38 (.01) ------ ------ -------- Diluted net income per share $3,203 5,503 $ .58 ====== ====== ======== 1996 Basic net income per share $5,989 5,463 $ 1.10 Effect of dilutive securities: Stock options -- 34 (.01) ------ ------ -------- Diluted net income per share $5,989 5,497 $ 1.09 ====== ====== ======== 1995 Basic net income per share $4,934 5,463 $ .90 Effect of dilutive securities: Stock options -- 14 -- ------ ------ -------- Diluted net income per share $4,934 5,477 $ .90 ====== ====== ======== A total of 27,700 options were not included in the 1997 effect of diluted securities due to the anti-dilutive nature of the options. 6. Stock Options At January 2, 1998, the Company has two stock option plans which are described below. The Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for the plans. Under APB Opinion No. 25, when the exercise price of the stock option equals the market price of the underlying stock on the date of grant, no compensation cost is recognized. In 1997 and 1996, no options were granted with exercise prices below market. Certain options were granted in 1995 at below-market exercise prices. Related compensation expense, totaling $168,000, was deferred and is being amortized over five years. Pursuant to the 1995 Stock Option Plan (the "Plan"), options to purchase an aggregate of not more than 1,300,000 shares of F-16 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- common stock may be granted from time to time to key employees, officers, directors, advisors and independent consultants to the Company or to any of its subsidiaries. The total number of shares of common stock for which options may be granted under the Plan shall not exceed 2% cumulatively of the number of shares issued as of January 1 of each year. The Plan is administered by a committee of the Board of Directors. The per share exercise price for incentive stock options ("ISO's") will not be less than 100% of the fair market value of a share of common stock on the date the option is granted (ISO's may not be granted if the optionee owns more than 10% of the Company's common stock and nonqualified stock options will not be less than 25% of the fair market value on the date the option is granted. Options may be granted for a term, to be determined by the committee, of not more than ten years from the date of grant. Pursuant to the 1995 Nonemployee Director Stock Option Plan (the "Directors' Plan"), options to purchase an aggregate of not more than 200,000 shares of common stock may be granted from time to time to directors who are neither employees nor officers of the Company. The Directors' Plan is administered by a committee of the Board of Directors. Each option granted prior to December 31, 1996 shall vest one year from the date granted and will expire at a term, determined by the committee, not to exceed ten years. Options granted after January 1, 1997 will vest over a five year period, at equal percentages, and will expire at a term, determined by the committee, not to exceed ten years. Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), requires the Company, if material, to provide pro forma information regarding net income and net income per share as if compensation cost for the Company's stock option plans had been determined in accordance with the fair value based method prescribed in SFAS No. 123. The compensation costs associated with the Company's stock option plan determined in accordance with SFAS No. 123 would have been $77,000, $70,000 and $0 for 1997, 1996 and 1995, respectively. The following table contains information regarding the 1995 Stock Option Plan and the 1995 Nonemployee Director Stock Option Plan: F-17 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- Exercise Weighted Option price range average shares per share price Balance, December 31, 1994 -- -- -- Granted during 1995 81,949 $1.50 to $6.00 $ 3.93 ------- Balance, December 29, 1995 81,949 $1.50 to $6.00 3.93 Granted during 1996 15,000 $9.31 9.31 Canceled during 1996 (7,000) $5.88 to $6.00 5.91 ------- Balance, January 3, 1997 89,949 $1.50 to $9.31 4.67 Granted during 1997 32,300 $11.50 11.50 Exercised during 1997 (2,833) $1.50 to $6.00 3.88 Canceled during 1997 (16,600) $6.00 to $11.50 8.52 ------- Balance, January 2, 1998 102,816 $1.50 to $11.50 $ 6.22 ======= As of January 2, 1998, approximately 43,000 of the options granted were exercisable and approximately 355,000 options were available for future grants. F-18 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- 7. Commitments and Contingencies Operating Leases The Company has commitments for various noncancellable operating leases which expire at various dates through January 2017. Certain of the leases are with related parties (see Note 9). Many of the leases have renewal options and most contain provisions for passing through incremental costs. Future minimum rental payments required under noncancellable operating leases at January 2, 1998 are as follows (in thousands): Fiscal Year 1998 $ 5,143 1999 4,952 2000 4,426 2001 4,327 2002 3,322 Thereafter 15,739 ------- Total future minimum rentals $37,909 ======= For fiscal years 1997, 1996 and 1995, rent expense was $5,225,000, $4,838,000 and $4,195,000, respectively. The Company has entered into sublease agreements for certain space located within its various retail facilities. For fiscal years 1997, 1996 and 1995 rental income from subleases was $997,000, $906,000 and $681,000, respectively. The Company retains the right to sublease the additional unoccupied space. The subleases currently in effect provide for future rental income as follows (in thousands): Fiscal Year 1998 $1,015 1999 967 2000 957 2001 786 2002 689 Thereafter 867 ------ $5,281 ====== Litigation The Company is engaged in various outstanding litigation F-19 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- matters which arose in the ordinary course of business. In the opinion of management, the outcome of such matters will not have a material adverse effect on the Company's financial position or operating results. F-20 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- Standby Letter of Credit The Company has outstanding letters of credit totaling $3,558,000 to collateralize incurred but unpaid insurance claims. 8. Profit Sharing Plans The Company has a profit sharing plan which covers all eligible employees. The plan allows for salary deferral arrangements under the provisions of Section 401(k) of the Internal Revenue Code. The Company does not contribute to this plan. Additionally, the Company has a noncontributory profit sharing plan for its employees. Funding requirements for the plan are nonobligatory. For fiscal years 1997, 1996 and 1995, the noncontributory profit sharing plan expense was $750,000, $625,000 and $602,000, respectively. 9. Related Party Transactions The Company leases land, various retail food stores and warehouse storage and office space from affiliates of the principal stockholders under various leases which expire through January 2017. For fiscal years 1997, 1996 and 1995 rent expense relating to these leases was $2,829,000, $2,737,000 and $2,772,000, respectively (see Note 7). The Company made capital expenditures of approximately $2,022,000, $725,000 and $374,000 during 1997, 1996 and 1995, respectively, at leaseholds owned by affiliates of the principal stockholders. For fiscal years 1997, 1996 and 1995, the Company purchased various food products in the amounts of $37,111,000, $27,423,000 and $21,954,000 respectively, from a company in which an officer is also a director of the Company. As of January 2, 1998 and January 3, 1997, the Company had accounts payable of $1,997,000 and $797,000, respectively, due to such company. For fiscal years 1997, 1996 and 1995, the Company had sales to related parties of $894,000, $335,000 and $528,000, respectively. The Company does its banking at a bank which has an officer who was a member of the Company's Board of Directors until April 1, 1996. The credit facility described in Note 3 is F-21 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- with the same bank. F-22 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- 10. Segments of Business The Company operates in two industry segments. The wholesale segment primarily sells poultry, beef, pork and provisions to retailers, restaurants and institutions. The retail segment sells various meat and grocery items to the general public. A summary of certain aspects of such segments is as follows (in thousands): 1997 1996 1995 Net sales: Retail $232,400 $239,711 $208,426 Wholesale 84,679 101,162 92,961 -------- -------- -------- $317,079 $340,873 $301,387 ======== ======== ======== Intersegment sales: Wholesale $ 53,931 $ 60,775 $ 28,790 ======== ======== ======== Income from operations: Retail $ 4,727 $ 8,793 $ 7,781 Wholesale 5 924 1,108 -------- -------- -------- $ 4,732 $ 9,717 $ 8,889 ======== ======== ======== Identifiable assets: Retail $ 63,738 $ 60,475 $ 49,124 Wholesale 12,516 14,024 14,189 -------- -------- -------- $ 76,254 $ 74,499 $ 63,313 ======== ======== ======== Depreciation and amortization: Retail $ 4,034 $ 3,214 $ 2,541 Wholesale 138 181 206 -------- -------- -------- $ 4,172 $ 3,395 $ 2,747 ======== ======== ======== Capital expenditures: Retail $ 7,085 $ 12,933 $ 9,027 Wholesale 237 188 424 -------- -------- -------- $ 7,322 $ 13,121 $ 9,451 ======== ======== ======== F-23 Western Beef, Inc. and Subsidiaries Notes to Consolidated Financial Statements - - -------------------------------------------------------------------------------- 11. Quarterly Information (Unaudited) The summarized quarterly financial data presented below (in thousands except per share amounts) reflects all adjustments which, in the opinion of management, are of a normal and recurring nature necessary to present fairly the results of operations for the periods presented.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Fiscal year ended January 2, 1998 Sales $72,795 $81,881 $86,372 $76,031 Gross profit 18,142 19,939 21,605 19,585 Net income 813 779 867 744 Net income per share of common stock - basic .15 .14 .16 .14 ============================================== Sales $79,349 $84,180 $85,167 $92,177 Gross profit on sales 19,589 20,014 20,680 22,188 Net income 1,262 1,520 1,522 1,685 Net income per share of common stock - basic .23 .28 .28 .31 ============================================== Fiscal year ended December 29, 1995 Sales $67,574 $73,058 $78,407 $82,348 Gross profit 15,526 17,705 19,209 20,024 Net income 797 1,154 1,360 1,623 Net income per share of common stock - basic .15 .21 .25 .29 ==============================================
F-24 REPORT OF INDEPENDENT ACCOUNTANTS ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Stockholders of Western Beef, Inc. Our audit of the consolidated financial statements referred to in our report dated March 5, 1998 appearing on page F-1 of this 1997 Annual Report on Form 10-K also included an audit of the financial statement schedule listed on page F-26 of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statement. PRICE WATERHOUSE LLP New York, New York March 5, 1998 F-25 Western Beef, Inc. and Subsidiaries Schedule II - Valuation and Qualifying Accounts (In Thousands) - - --------------------------------------------------------------------------------
Additions ------------------------- Balance at Charged to Balance at beginning of cost and Charge to end of year expenses other accounts Deductions year Year ended January 2, 1998: Allowance for doubtful accounts $386 $955 $ -- $(789) $552 Year ended January 3, 1997: Allowance for doubtful accounts $326 $611 $ -- $(551) $386
F-26 EX-10.4 2 MASTER LEASE AGREEMENT EX. 10.4 MASTER LEASE AGREEMENT THIS MASTER LEASE AGREEMENT ("Agreement") is made as of the 29th day of December, 1997, between GENERAL ELECTRIC CAPITAL CORPORATION, with an office at 4 North Park Drive, Suite 500, Hunt Valley, Maryland 21030 (hereinafter called, together with its successors and assigns, if any, "Lessor"), and WESTERN BEEF, INC., a Delaware corporation with its mailing address and chief place of business at 47-05 Metropolitan Avenue, Ridgewood, NY 11385 (hereinafter called "Lessee"). WITNESSETH: 1. LEASING: (a) This Agreement shall be effective from and after the date of execution hereof. Subject to the terms and conditions set forth below, Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the equipment ("Equipment") described in Annex A to any schedule hereto ("Schedule"). Terms defined or specified in a Schedule and not otherwise defined herein shall have the meanings ascribed to them in such Schedule. (b) The obligation of Lessor to purchase the Equipment from Lessee and to lease the same to Lessee shall be subject to receipt by Lessor, on or prior to the earlier of the Lease Commencement Date or Last Delivery Date therefor, of each of the following documents in form and substance satisfactory to Lessor: (i) a Schedule relating to the Equipment then to be leased hereunder, (ii) a Bill of Sale, in the form of Annex B to the applicable Schedule, in favor of Lessor, (iii) evidence of insurance which complies with the requirements of Section 6, and (iv) such other documents as Lessor may reasonably request. Simultaneously with the execution of the Bill of Sale, Lessee shall also execute a Certificate of Acceptance, in the form of Annex C to the applicable Schedule, covering all of the Equipment described in the Bill of Sale. Upon execution by Lessee of any Certificate of Acceptance, the Equipment described thereon shall be deemed to have been delivered to, and irrevocably accepted by, Lessee for lease hereunder. (c) LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT MAKE, HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All such risks, as between Lessor and Lessee, are to be borne by Lessee. Without limiting the foregoing, Lessor shall have no responsibility or liability to Lessee or any other person with respect to any of the following (i) any liability, loss or damage caused or alleged to be caused directly or indirectly by any Equipment, any inadequacy thereof, any deficiency or defect (latent or otherwise) therein, or any other circumstance in connection therewith; (ii) the use, operation or performance of any Equipment or any risks relating thereto; (iii) any interruption of service, loss of business or anticipated profits or consequential damages; or (iv) the delivery, operation, servicing, maintenance, repair, improvement or replacement of any Equipment. If, and so long as, no Default (as hereinafter defined) exists under this Agreement, Lessee shall be, and hereby is, authorized during the Term (as hereinafter defined) to assert and enforce, at Lessee's sole cost and expense, from time to time, in the name of and for the account of Lessor and/or Lessee, as their interests may appear, whatever claims and rights Lessor may have against any Supplier of the Equipment. 2. TERM, RENT AND PAYMENT: (a) The rent payable hereunder (the "Rent") and Lessee's right to use the Equipment shall commence on the date of execution by Lessee of the Certificate of Acceptance for such Equipment (the "Lease Commencement Date"). The term of this Agreement (the "Term") shall be the period specified in the applicable Schedule. If any Term is extended or renewed, the word "Term" shall be deemed to refer to all extended or renewed terms, and all provisions of this Agreement shall apply during any extended or renewed terms, except as otherwise may be specifically provided in writing. (b) Rent shall be paid to Lessor electronic funds transfer in the manner prescribed by Lessor, or by such other method as Lessor may direct in writing; and shall be effective upon receipt. Payments of Rent shall be in the amount set forth in, and due in accordance with, the provisions of the applicable Schedule. In no event shall any Rent payments be refunded to Lessee. If Rent is not paid within ten (10) days of its due date, Lessee agrees to pay a late charge of Three Cents ($0.03) per dollar on, and in addition to, the amount of such Rent but not exceeding the lawful maximum, if any. (c) This Agreement is a net lease. Lessee's obligation to pay Rent and other amounts due hereunder shall be absolute and unconditional. Lessee shall not be entitled to any abatement or reductions of, or set-offs against, said Rent or other amounts, including, without limitation, those arising or allegedly arising out of claims (present or future, alleged or actual, and including claims arising out of strict liability in tort or negligence of Lessor) of Lessee against Lessor under this Agreement or otherwise. This Agreement shall not terminate and the obligations of Lessee shall not be affected by reason of any defect in or damage to, or loss of possession, use or destruction of, any Equipment from whatsoever cause. It is the intention of the parties that Rents and other amounts due hereunder shall continue to be payable in all events in the manner and at the times set forth herein unless the obligation to do so shall have been terminated pursuant to the express terms hereof. 3. TAXES: Lessee shall have no liability for taxes imposed by the United States of America or any State or political subdivision thereof which are on or measured by the net income of Lessor. Lessee shall report (to the extent that it is legally permissible) and pay promptly all other taxes, fees and assessments due, imposed, assessed or levied against any Equipment (or the purchase, ownership, delivery, leasing, possession, use, or operation thereof), this Agreement (or any rentals or receipts hereunder), any Schedule, Lessor or Lessee by any foreign, Federal, state or local government or taxing authority during or related to the term of this Agreement, including, without limitation, all license and registration fees, and all sales, use, personal property, excise, gross receipts and franchise taxes (but excluding those imposed in lieu of income taxes), stamp or other taxes, imposts, duties and charges, together with any penalties, fines or interest thereon (all hereinafter called "Taxes"). Lessee shall (i) reimburse Lessor on an after-tax basis upon receipt of written request for reimbursement for any Taxes charged to or assessed against Lessor, (ii) on request of Lessor, submit to Lessor written evidence of Lessee's payment of Taxes, (iii) on all reports or returns show the ownership of the Equipment by Lessee, and (iv) send a copy thereof to Lessor. Lessee's obligations under this Section 3 shall survive the expiration of termination of this Agreement. 4. DELIVERY, USE AND OPERATION: (a) The parties acknowledge that this is a sale/leaseback transaction and the Equipment is in Lessee's possession as of the Lease Commencement Date. (b) Lessee agrees that the Equipment will be used by Lessee solely in the conduct of its business and in a manner complying with all applicable Federal, state, and local laws and regulations, and any applicable insurance policies, and Lessee shall not discontinue use of the Equipment. (c) Lessee will keep the Equipment free and clear of all liens and encumbrances other than those which result from acts of Lessor. 5. MAINTENANCE: (a) Lessee will, at its sole expense, maintain each unit of Equipment in good operating order, repair, condition and appearance in accordance with manufacturer's recommendations, normal wear and 2 tear excepted. Lessee shall, if at any time reasonably requested by Lessor, affix in a prominent position on each unit of Equipment plates, tags or other identifying labels showing the interest therein of Lessor. (b) Lessee will not, without the prior consent of Lessor, affix or install any accessory, equipment or device on any Equipment if such addition will impair the value, originally intended function or use of such Equipment. All additions, repairs, parts, supplies, accessories, equipment, and devices furnished, attached or affixed to any Equipment which are not readily removable shall be made only in compliance with applicable law, shall be free and clear of all liens, encumbrances or rights of others, and shall become the property of Lessor. Lessee will not, without the prior written consent of Lessor and subject to such conditions as Lessor may impose for its protection, affix or install any Equipment to (unless readily removable) or in any other personal or real property. (c) Any alterations or modifications to the Equipment that may, at any time during the term of this Agreement, be required to comply with any applicable law, rule or regulation shall be made at the expense of Lessee. 6. INSURANCE: Lessee agrees, at its own expense, to keep all Equipment insured for such amounts as specified in Paragraph D of the Equipment Schedule and against such hazards as Lessor may require, including, but not limited to, insurance for damage to or loss of such Equipment and liability coverage for personal injuries, death or property damage, with Lessor named as additional insured and with a loss payable clause in favor of Lessor, as its interest may appear, irrespective of any breach of warranty or other act or omission of Lessee. All such policies shall be with companies, and on terms, satisfactory to Lessor. Lessee agrees to deliver to Lessor evidence of insurance satisfactory to Lessor. No insurance shall be subject to any co-insurance clause. Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make proof of loss and claim for insurance, and to make adjustments with insurers and to receive payment of and execute or endorse all documents, checks or drafts in connection with payments made as a result of such insurance policies. Any reasonable expense of Lessor in adjusting or collecting insurance shall be borne by Lessee. Lessee will not make adjustments with insurers except (i) with respect to claims for damage to any unit of Equipment where the repair costs do not exceed ten (10%) of such unit's fair market value, or (ii) with Lessors written consent. Said policies shall provide that the insurance may not be altered or cancelled by the insurer until after thirty (30) days written notice to Lessor. Lessor may, at its option, apply proceeds of insurance, in whole or in part, to (i) repair or replace Equipment or any portion thereof, or (ii) satisfy any obligation of Lessee to Lessor hereunder. 7. LOSS OR DAMAGE: (a) Lessee hereby assumes and shall bear the entire risk of any loss, theft, damage to, or destruction of, any unit of Equipment from any cause whatsoever from the time the Equipment is shipped to Lessee. (b) Lessee shall promptly and fully notify Lessor in writing if any unit of Equipment shall be or become worn out, lost, stolen, destroyed, irreparably damaged in the reasonable determination of Lessee, or permanently rendered unfit for use from any cause whatsoever (such occurrences being hereinafter called "Casualty Occurrences"). On the Rental Payment Date next succeeding a Casualty Occurrence (the "Payment Date"), Lessee shall pay Lessor the sum of (x) the Stipulated Loss Value of such unit calculated in accordance with Annex D as of the Rent Payment Date next preceding such Casualty Occurrence ("Calculation Date"); and (y) all rental and other amounts which are due hereunder as of the Payment Date. Upon payment of all sums due hereunder, the term of this lease as to such unit shall terminate and transfer title, to such units, to Lessee. 8. REPORTS: (a) Lessee will notify Lessor in writing, within ten (10) days after any tax or other lien shall attach to any Equipment, of the full particulars thereof and of the location of such Equipment on the date of such notification. 3 (b) Lessee will deliver to Lessor, within ninety (90) days of the close of each fiscal year of Lessee, Lessee's balance sheet and profit and loss statement, prepared in accordance with generally accepted accounting principles ("GAAP") consistently applied, certified by a recognized firm of certified public accountants, together, if applicable, with Lessee's Form 10K filed with the Securities and Exchange Commission ("SEC"). Lessee will, if applicable, deliver to Lessor quarterly, within ninety (90) days of the close of each fiscal quarter of Lessee, in reasonable detail, copies of Lessee's quarterly financial report certified by the chief financial officer of Lessee, together with Lessee's Form 10Q filed with the SEC. (c) Lessee will permit Lessor to inspect any Equipment during normal business hours upon reasonable notice. (d) Lessee will keep the Equipment at the Equipment Location (specified in the applicable Schedule) within the Continental United States and will promptly notify Lessor of any relocation of Equipment. Upon the written request of Lessor, Lessee will notify Lessor forthwith in writing of the location of any Equipment as of the date of such notification. (e) Lessee will promptly and fully report to Lessor in writing if any Equipment is lost or damaged (where the estimated repair costs would exceed ten percent (10%) of its then fair market value), or is otherwise involved in an accident causing personal injury or property damage. (f) Within thirty (30) days after any request by Lessor, Lessee will furnish a certificate of an authorized officer of Lessee stating that he has reviewed the activities of Lessee and that, to the best of his knowledge, there exists no Default or event which, with the giving of notice or the lapse of time (or both), would become such a Default. 9. END OF LEASE OPTIONS: Upon the expiration of the Term of each Schedule, Lessee shall return, or purchase, or extend or renew the Term with respect to, all (but not less than all) of the Equipment leased under all Schedules executed hereunder upon the following terms and conditions. The end of lease option selected by Lessee with respect to the first Schedule to be executed under this Agreement shall be applicable with respect to all Schedules executed under this Agreement. (a) Renewal. So long as Lessee shall not have exercised its option to return the Equipment or its purchase option pursuant to this Section, Lessee shall have the option, upon the expiration of the Basic Term of the first Schedule to be executed under this Agreement, and/or the first two (2) Renewal Terms of the first Schedule to be executed under this Agreement, to renew the Agreement with respect to all, but not less than all, of the Equipment leased under all Schedules executed hereunder for an additional term of twelve (12) months (each, a "Renewal Term"). Including all Renewal Terms, the maximum term of each Schedule shall be six (6) years (the Basic Term plus three (3) Renewal Terms) (the "Maximum Lease Term"). (b) Purchase. So long as Lessee shall not have exercised its extension option or its option to renew this Agreement or its option to return the Equipment pursuant to this Section, Lessee shall have the option, upon the expiration of the Term of each Schedule, to purchase all (but not less than all) of the Equipment described on all Schedules executed hereunder upon the following terms and conditions: If Lessee desires to exercise this option with respect to the Equipment, Lessee shall pay to Lessor on the last day of the Term with respect to each individual Schedule (the "Termination Date"), in addition to the scheduled Rent (if any) then due on such date and all other sums then due hereunder, in cash the purchase price for the Equipment so purchased, determined as hereinafter provided. The purchase price of the Equipment shall be an amount equal to the Fixed Purchase Price of such Equipment (as specified on the Schedule), plus the Make Whole Amount, if any, plus all taxes and charges upon sale and all other reasonable and documented expenses incurred by Lessor in connection with such sale, including, without limitation, any such expenses incurred based on a notice from Lessee to Lessor that Lessee intended to return any such items of Equipment. Upon satisfaction of the conditions specified in this Paragraph, Lessor will transfer, on an AS IS, WHERE IS BASIS, without recourse or warranty, express or 4 implied, of any kind whatsoever ("AS IS BASIS"), all of Lessors interest in and to the Equipment. Lessor shall not be required to make and may specifically disclaim any representation or warranty as to the condition of such Equipment and other matters (except that Lessor shall warrant that it has conveyed whatever interest it received in the Equipment free and clear of any lien or encumbrance created by Lessor). Lessor shall execute and deliver to Lessee such Uniform Commercial Code Statements of Termination as reasonably may be required in order to terminate any interest of Lessor in and to the Equipment. For purposes of this Section 9, "Make Whole Amount" shall mean that amount equal to the excess, if any, of (i) the aggregate present value as of the Termination Date of the sum of (A) the remaining scheduled Rent payments during the Maximum Lease Term, plus (B) the full amount of the Fixed Purchase Price that but for exercise of the option contained in this Section 9 would have been payable on the last Rent Payment Date during the Maximum Lease Term, discounted to the date of payment at the Reinvestment Rate, over (ii) the aggregate present value as of the Termination Date of the sum of (A) the remaining scheduled Rent payments during the Maximum Lease Term, plus (B) the full amount of the Fixed Purchase Price that but for exercise of the option contained in this Section 9 would have been payable on the last Rent Payment Date during the Maximum Lease Term, discounted to the date of payment at the Assumed Interest Rate (specified in the applicable Schedule); provided, however, that if the Reinvestment Rate is equal to or higher than the Assumed Interest Rate, the Make Whole Amount shall be zero. As used herein, "Reinvestment Rate" shall mean the sum of (i) the Applicable Treasury Yield plus (ii) fifty (50) basis points. As used herein, "Applicable Treasury Yield" at any time shall mean the yield to maturity of United States Treasury Notes with a maturity equal to the average life of the remaining Maximum Lease Term as published in The Wall Street Journal three (3) Business Days prior to the Termination Date. If no maturity exactly corresponds to such remaining Maximum Lease Term, the Applicable Treasury Yield shall be interpolated on a straight-line basis, utilizing the yields for the two maturities which most closely correspond to the requisite maturity. (c) Return. Unless Lessee shall have exercised its extension option or its purchase option pursuant to this Section, upon the expiration of the Term of each Schedule, Lessee shall return all (but not less than all) of the Equipment described on all Schedules executed hereunder, to Lessor upon the following terms and conditions: Lessee shall (i) pay to Lessor on the last day of the Term with respect to each individual Schedule, in addition to the scheduled Rent then due on such date and all other sums then due hereunder, a terminal rental adjustment amount equal to the Fixed Purchase Price of such Equipment, plus the Make Whole Amount, if any, and (ii) return the Equipment to Lessor in accordance with the provisions of Annex F attached hereto. Thereafter, upon return of all of the Equipment described on all Schedules executed hereunder, Lessor and Lessee shall arrange for the commercially reasonable sale, scrap or other disposition of the Equipment. Upon satisfaction of the conditions specified in this Paragraph, Lessor will transfer, on an AS IS BASIS, all of Lessors interest in and to the Equipment. Lessor shall not be required to make and may specifically disclaim any representation or warranty as the condition of such Equipment and other matters (except that Lessor shall warrant that it has conveyed whatever interest it received in the Equipment free and clear of any liens or encumbrances created by Lessor). Lessor shall execute and deliver to Lessee such Uniform Commercial Code Statements of Termination as reasonably may be required in order to terminate any interest of Lessor in and to the Equipment. Upon the sale, scrap or other disposition of the Equipment the net sales proceeds with respect to the Equipment sold will be paid to, and held and applied by, Lessor as follows: Lessor shall promptly thereafter pay to Lessee an amount equal to the Residual Risk Amount (as specified in the Schedule) of the Equipment (less all reasonable costs, expenses and fees, including storage, reasonable and necessary maintenance and other remarketing fees incurred in connection with the sale, scrap, or disposition of such Equipment) plus all net proceeds, if any, of such sale in excess of the Residual Risk Amount of the Equipment and applicable taxes, if any. Lessor shall be obligated to pay to Lessee the residual risk amount regardless of the amount of net sales proceeds. (d) Extension. So long as Lessee shall not have exercised its option to return the Equipment or its purchase option pursuant to this Section, and provided that Lessee shall have exercised its option to renew this Agreement pursuant to this Section with respect to all available Renewal Terms, Lessee shall have the option, upon the expiration of all available Renewal Terms, to extend the Agreement with respect to all, but not less than all, of the Equipment for an additional term of twelve (12) months (the "Extension Term") at a monthly rental to be paid in arrears on the same day of each month on which the prior Renewal Term Rent installment was paid, and calculated as the product of (i) the Capitalized Lessor's 5 Cost, times (ii) a lease rate factor calculated by Lessor, which when so multiplied times the Capitalized Lessor's Cost, will result in a product that is equal to the amount necessary to fully repay to Lessor any unpaid balance of the Capitalized Lessors Cost (determined as of the date on which the last available Renewal Term expired), together with interest thereon at a rate per annum equal to three hundred (300) basis points over the then current yield to maturity of U.S. Treasury Notes having a one year maturity, in twelve (12) equal monthly installments. At the end of the Extension Term, provided that Lessee is not then in Default under this Agreement, Lessee shall purchase all, and not less than all, of such Equipment for $1.00 cash, together with all Rent and other sums then due on such date, plus all taxes and charges upon transfer and all other reasonable and documented expenses incurred by Lessor in connection with such transfer. Upon satisfaction of the conditions specified in this Paragraph, Lessor will transfer, on an AS IS BASIS, all of Lessors interest in and to the Equipment. Lessor shall not be required to make and may specifically disclaim any representation or warranty as to the condition of the Equipment and any other matters (except that Lessor shall warrant that it has conveyed whatever interest it received in the Equipment free and clear of any lien or encumbrance created by Lessor). (e) Notice of Election. Lessee shall give Lessor written notice of its election of the options specified in this Section not less than one hundred twenty (120) days nor more than three hundred sixty-five (365) days before the expiration of the Basic Term or any Renewal Term of the first Schedule to be executed under this Agreement. Such election shall be effective with respect to all Equipment described on all Schedules executed hereunder. If Lessee fails timely to provide such notice, without further action Lessee automatically shall be deemed to have elected (1) to renew the Term of this Agreement pursuant to Paragraph (a) of this Section if a Renewal Term is then available hereunder, or (2) to purchase the Equipment pursuant to Paragraph (a) of this Section if a Renewal Term is not then available hereunder. 10. DEFAULT; REMEDIES: (a) Lessor may in writing declare this Agreement in default ("Default") if: (1) Lessee breaches its obligation to pay Rent or any other sum when due and fails to cure the breach within ten (10) days; (2) Lessee breaches any of its insurance obligations under Section 6 hereof; (3) Lessee breaches any of its other obligations hereunder and fails to cure that breach within thirty (30) days after written notice thereof; (4) any representation or warranty made by Lessee in connection with this Agreement shall be false or misleading in any material respect; (5) Lessee becomes insolvent or ceases to do business as a going concern; (6) a petition is filed by or against Lessee under any bankruptcy or insolvency laws and, if filed against Lessee, shall not be dismissed within ninety (90) days; (7) Lessee shall have terminated its corporate existence, consolidated with, merged into, or conveyed or leased substantially all of its assets as an entirety to any person (such actions being referred to as an "Event"), unless not less than sixty (60) days prior to such Event: (x) such person is organized and existing under the laws of the United States or any state, and executes and delivers to Lessor an agreement containing an effective assumption by such person of the due and punctual performance of this Agreement; and (y) Lessor is reasonably satisfied as to the creditworthiness of such person; (8) there occurs a default under any guaranty executed in connection with this Agreement; or (9) Lessee shall be in default under any other agreement between Lessor and Lessee; or (10) Lessee shall be in default under any other material obligation for borrowed money, for the deferred purchase price of property or any lease agreement. Such declaration shall apply to all Schedules except as specifically excepted by Lessor. (b) After Default, Lessee shall, without further demand, forthwith pay to Lessor (i) as liquidated damages for loss of a bargain and not as a penalty, the Stipulated Loss Value of the Equipment (calculated in accordance with Annex D as of the Rent Payment Date next preceding the declaration of default), and (ii) all Rents and other sums then due hereunder. If Lessee fails to pay the amounts specified in the preceding sentence, then, at the request of Lessor, Lessee shall comply with the provisions of Section 10(a) hereof. Lessee hereby authorizes Lessor to enter, with or without legal process, any premises where any Equipment is located and take possession thereof. Lessor may, but shall not be required to, sell Equipment at private or public sale, in bulk or in parcels, with or without notice, and without having the Equipment present at the place of sale; or Lessor may, but shall not be required to, lease, otherwise dispose of or keep idle all or part of the Equipment; and Lessor may use Lessee's premises for any or all of the foregoing without liability for rent, costs, damages or otherwise. The proceeds of sale, lease or other disposition, if any, shall be applied in the following order of priorities: 6 (1) to pay all of Lessors costs, charges and expenses incurred in taking, removing, holding, repairing and selling, leasing or otherwise disposing of Equipment; then, (2) to the extent not previously paid by Lessee, to pay Lessor all sums due from Lessee hereunder; then (3) to reimburse to Lessee any sums previously paid by Lessee as liquidated damages; and (4) any surplus shall be paid to Lessee. Lessee shall pay any deficiency in clauses (1) and (2) forthwith. (c) In addition to the foregoing rights, Lessor may terminate the lease as to any or all of the Equipment. (d) The foregoing remedies are cumulative, and any or all thereof may be exercised in lieu of or in addition to each other or any remedies at law, in equity, or under statute. Lessee waives notice of sale or other disposition (and the time and place thereof), and the manner and place of any advertising. If permitted by law, Lessee shall pay reasonable attorney's fees actually incurred by Lessor in enforcing the provisions of this Lease and any ancillary documents. Waiver of any default shall not be a waiver of any other or subsequent default. (e) Any default under the terms of this or any other agreement between Lessor and Lessee may be declared by Lessor a default under this and any such other agreement. 11. ASSIGNMENT: (a) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR HYPOTHECATE ANY EQUIPMENT OR THE INTEREST OF LESSEE HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR. EXCEPT IN A TRANSACTION SATISFYING THE REQUIREMENTS OF SECTION 10(a)(7). (b) Lessor may, without the consent of Lessee, assign this Agreement or any Schedule, or the right to enter into any Schedule. Lessee agrees that it will pay all Rent and other amounts payable under each Schedule to the Lessor named therein; provided, however, if Lessee receives written notice of an assignment from Lessor, Lessee will pay all Rent and other amounts payable under any assigned Schedule to such assignee or as instructed by Lessor. Each Schedule, incorporating by reference the terms and conditions of this Agreement, constitutes a separate instrument of lease, and the Lessor named therein or its assignee shall have all rights as "Lessor" thereunder separately exercisable by such named Lessor or assignee as the case may be, exclusively and independently of Lessor or any assignee with respect to other Schedules executed pursuant hereto. Without limiting the generality of the foregoing, the grant of security interest in Section 13(b) hereof shall, as it relates to the Equipment leased under each Schedule (and to the proceeds and other collateral referred to in Section 13(b) hereof), be deemed to have been granted solely to the Lessor named therein, or to its assignee, as applicable and such Equipment (and other related collateral) shall not be deemed to collateralize Lessee's obligations under any of the Schedules to which such named Lessor or assignee, as the case may be, is not a party. Lessee further agrees to confirm in writing receipt of a notice of assignment as reasonably may be requested by assignee. Lessee hereby waives and agrees not to assert against any such assignee any defense, set-off, recoupment claim or counterclaim which Lessee has or may at any time have against Lessor or any other person for any reason whatsoever. (c) Subject always to the foregoing, this Agreement inures to the benefit of, and is binding upon, the successors and assigns of the parties hereto. 12. INDEMNIFICATION: (a) Lessee hereby agrees to indemnify, save and keep harmless Lessor, its agents, employees, successors and assigns, from and against any and all losses, damages, penalties, injuries, claims, actions and suits, including legal expenses, of whatsoever kind and nature, in contract or tort, and including, but not limited to, Lessor's strict liability in tort, arising out of (i) the selection, manufacture, purchase, acceptance or rejection of Equipment, the ownership of Equipment during the Term, and the delivery, lease, possession, maintenance, uses, condition, return or operation of the Equipment (including, without limitation, latent and other defects, whether or not discoverable by Lessor or Lessee and any claim for 7 patent, trademark or copyright infringement or environmental damage), or (ii) the condition of Equipment sold or disposed of after use by Lessee, any sublessee or employees of Lessee. Lessee shall, upon request, defend any actions based on, or arising out of, any of the foregoing. (b) All of Lessors rights, privileges and indemnities contained in this Section shall survive the expiration or other termination of this Agreement and the rights, privileges and indemnities contained herein are expressly made for the benefit of, and shall be enforceable by Lessor, its successors and assigns. 13. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY INTEREST; USURY SAVINGS: (a) For income tax purposes, Lessor will treat Lessee as the owner of the Equipment. Accordingly, Lessor agrees (i) to treat Lessee as the owner of the Equipment on its federal income tax return, (ii) not to take actions or positions inconsistent with such treatment on or with respect to its federal income tax return, and not claim any tax benefits available to an owner of the Equipment on or with respect to its federal income tax return. The foregoing undertakings by Lessor shall not be violated by Lessor's taking a tax position through inadvertence so long as such inadvertent tax position is reversed by Lessor promptly upon its discovery. Subject to the foregoing, Lessor shall in no event be liable to Lessee if Lessee fails to secure any of the tax benefits available to the owner of the Equipment. (b) In order to secure the prompt payment of the Rent and all of the other amounts from time to time outstanding under and with respect to the Schedules, and the performance and observance by Lessee of all the agreements, covenants and provisions thereof (including, without limitation, all of the agreements, covenants and provisions of the Lease that are incorporated therein), Lessee hereby grants to Lessor a first priority security interest in the Equipment leased under the Schedules, together with all additions, attachments, accessions, accessories and accessions thereto whether or not furnished by the supplier of the Equipment and any and all substitutions, replacements or exchanges therefor, in each such case in which Lessee shall from time to time acquire an interest, and any and all insurance and/or other proceeds (but without power of sale) of the property in and against which a security interest is granted hereunder. (c) It is the intention of the parties hereto to comply with any applicable usury laws to the extent that any Schedule is determined to be subject to such laws; accordingly, it is agreed that, notwithstanding any provision to the contrary in any Schedule or the Lease, in no event shall any Schedule require the payment or permit the collection of interest in excess of the maximum amount permitted by applicable law. If any such excess interest is contracted for, charged or received under any Schedule or the Lease, or in the event that all of the principal balance shall be prepaid, so that under any of such circumstances the amount of interest contracted for, charged or received under any Schedule or the Lease shall exceed the maximum amount of interest permitted by applicable law, then in such event (1) the provisions of this paragraph shall govern and control, (2) neither Lessee nor any other person or entity now or hereafter liable for the payment hereof shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of Interest permitted by applicable law, (3) any such excess which may have been collected shall be either applied as a credit against the then unpaid principal balance or refunded to Lessee, at the option of the Lessor, and (4) the effective rate of interest shall be automatically reduced to the maximum lawful contract rate allowed under applicable law as now or hereafter construed by the courts having jurisdiction thereof. It is further agreed that without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received under any Schedule or the Lease which are made for the purpose of determining whether such rate exceeds the maximum lawful contract rate, shall be made, to the extent permitted by applicable law, by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the indebtedness evidenced hereby, all interest at any time contracted for, charged or received from Lessee or otherwise by Lessor in connection with such indebtedness; provided, however, that if any applicable state law is amended or the law of the United States of America preempts any applicable state law, so that it becomes lawful for Lessor to receive a greater interest per annum rate than is presently allowed, the Lessee agrees that, on the effective date of such amendment or preemption, as the case may be, the lawful maximum hereunder shall be increased to the maximum interest per annum rate allowed by the amended state law or the law of the United States of America (but not in excess of the interest rate contemplated hereunder). 14. REPRESENTATIONS AND WARRANTIES OF LESSEE: 8 Lessee hereby represents and warrants to Lessor that on the date hereof and on the date of execution of each Schedule: (a) Lessee has adequate power and capacity to enter into, and perform under, this Agreement and all related documents (together, the "Documents") and is duly qualified to do business wherever necessary to carry on its present business and operations, including the jurisdiction(s) where the Equipment is or is to be located. (b) The Documents have been duly authorized, executed and delivered by Lessee and constitute valid, legal and binding agreements, enforceable in accordance with their terms, except to the extent that the enforcement of remedies therein provided may be limited under applicable bankruptcy and insolvency laws. (c) No approval, consent or withholding of objections is required from any governmental authority or instrumentality with respect to the entry into or performance by Lessee of the Documents except such as have already been obtained. (d) The entry into and performance by Lessee of the Documents will not: (i) violate any judgment, order, law or regulation applicable to Lessee or any provision of Lessee's articles of incorporation, charter or by-laws; or (ii) result in any breach of, constitute a default under or result in the creation of any lien, charge, security interest or other encumbrance upon any Equipment pursuant to any indenture, mortgage, deed of trust, bank loan or credit agreement or other instrument (other than this Agreement) to which Lessee is a party. (e) There are no suits or proceedings pending or threatened in court or before any commission, board or other administrative agency against or affecting Lessee, which will have a material adverse effect on the ability of Lessee to fulfill its obligations under this Agreement. (f) The Equipment accepted under any Certificate of Acceptance is and will remain tangible personal property. (g) Each financial statement delivered to Lessor has been prepared in accordance with GAAP, and since the date of the most recent such financial statement, there has been no material adverse change. (h) Lessee is duly incorporated and will be at all times validly existing and in good standing under the laws of the state of its incorporation (specified in the first sentence of this Agreement). (i) The Equipment will at all times be used for commercial or business purposes. 15. CHOICE OF LAW; JURISDICTION: THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT. The parties agree that any action or proceeding arising out of or relating to this Agreement may be commenced in the United States District Court for the Southern District of New York. 16. MISCELLANEOUS: (a) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED 9 TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE AND LESSOR. The scope of this waiver is intended to be all encompassing of any and all disputes that may be filed in any court (including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. (b) Any cancellation or termination by Lessor, pursuant to the provision of this Agreement, any Schedule, supplement or amendment hereto, or the lease of any Equipment hereunder, shall not release Lessee from any then outstanding obligations to Lessor hereunder. (c) All Equipment shall at all times remain personal property of Lessee regardless of the degree of its annexation to any real property and shall not by reason of any installation in, or affixation to, real or personal property become a part thereof. (d) Time is of the essence of this Agreement. Lessor's failure at any time to require strict performance by Lessee of any of the provisions hereof shall not waive or diminish Lessor's right thereafter to demand strict compliance therewith. (e) Lessee agrees, upon Lessor's request, to execute any instrument necessary or expedient for filing, recording or perfecting the interest of Lessor. (f) All notices required to be given hereunder shall be in writing, personally delivered, delivered by overnight courier service, or sent by certified mail, return receipt requested, addressed to the other party at its respective address stated above or at such other address as such party shall from time to time designate in writing to the other party; and shall be effective from the date of receipt. (g) This Agreement and any Schedule and Annexes thereto constitute the entire agreement of the parties with respect to the subject matter hereof. NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (h) The representations, warranties and covenants of Lessee herein shall be deemed to survive the dosing hereunder. Lessors obligations to acquire and lease specific items of Equipment shall be conditioned upon Lessee providing to Lessor such information with respect to Lessee's financial condition as Lessor may require, and Lessor being satisfied that there shall have been no material adverse change in the business or financial condition of Lessee from the date of execution hereof. The obligations of Lessee under Sections 3, 9(c), 12 and 16(l) hereof which accrue during the term of this Agreement and obligations which by their express terms survive the termination of this Agreement, shall survive the termination of this Agreement. (i) In case of a failure of Lessee to comply with any provision of this Agreement, Lessor shall have the right, but shall not be obligated, to effect such compliance, in whole or in part; and all moneys spent and expenses and obligations incurred or assumed by Lessor in effecting such compliance (together with interest thereon at the rate specified in Paragraph (j) of this Section) shall constitute additional Rent due to Lessor within five (5) days after the date Lessor sends notice to Lessee requesting payment. Lessor's effecting such compliance shall not be a waiver of Lessee's default. (j) Any Rent or other amount not paid to Lessor when due after default hereunder shall bear interest, both before and after any judgment or termination hereof, at the lesser of fifteen percent (15%) 10 per annum or the maximum rate allowed by law. (k) Any provisions in this Agreement and any Schedule which are in conflict with any statute, law or applicable rule shall be deemed omitted, modified or altered to conform thereto. (l) Lessee agrees to pay on demand all reasonable costs and expenses incurred by Lessor in connection with the preparation, execution, delivery, filing, recording, and administration of any of the Documents, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for Lessor, and all costs and expenses, if any, in connection with the enforcement of any of the Documents. In addition, Lessee shall pay any and all stamp and other taxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of any of the Documents and the other documents to be delivered under the Documents, and agrees to save Lessor harmless from and against any and all liabilities with respect to or resulting from any delay attributed to Lessee in paying or failing to pay such taxes and fees. 17. CHATTEL PAPER: To the extent that any Schedule would constitute chattel paper, as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction, no security interest therein may be created through the transfer or possession of this Agreement in and of itself without the transfer or possession of the original of a Schedule executed pursuant to this Agreement and incorporating this Agreement by reference; and no security, interest in this Agreement and a Schedule may be created by the transfer or possession of any counterpart of the Schedule other than the original thereof, which shall be identified as the document marked "Original" and all other counterparts shall be marked "Duplicate". REMAINDER OF PAGE INTENTIONALLY BLANK 11 IN WITNESS WHEREOF, Lessee and Lessor have caused this Master Lease Agreement to be executed by their duly authorized representatives as of the date first above written. LESSOR: LESSEE: GENERAL ELECTRIC CAPITAL CORPORATION WESTERN BEEF, INC. By: By: /s/ Peter Castellana, Jr ---------------------------------- --------------------------------- Name: Name: Peter Castellana -------------------------------- ------------------------------- Title: Title: President ------------------------------- ------------------------------ 12 EQUIPMENT SCHEDULE SCHEDULE NO G-1 DATED THIS 29TH DAY OF DECEMBER, 1997 TO MASTER LEASE AGREEMTN DATED AS OF DECEMBER 29, 1997 Lessor & Mailing Address: Lessee & Mailing Address: GENERAL ELECTRIC CAPITAL CORPORATION WESTERN BEEF INC. 4 North Park Drive 47-05 Metropolitan Avenue Suite 500 Ridgewood, NY 11385 Hunt Valley, Maryland 21030 This Equipment Schedule is executed pursuant to, and incorporates by reference the terms and conditions of, and capitalized terms not defined herein shall have the meanings assigned to them in, the Master Lease Agreement identified above ("Agreement said Agreement and this Schedule being collectively referred to as "Lease"). This Equipment Schedule, incorporating by reference the Agreement constitutes a separate instrument of lease. A. Equipment Pursuant to the terms of the Lease Lessor, agrees to acquire and lease to lessee the Equipment on Annex A attached hereto and made a part hereof. B. Financial Terms 1. Capitalized Lessor's Cost: $753,380.83 2. Daily Lease Rate Factor: .050273633% 3. Basic Term: Thirty-Six months 4. Basic Term Commencement Date: January 1, 1998 5. Renewal Term: Three twelve(12) month terms. 6. Maximum Lease Term: Seventy-two months 7. Last Delivery Date: December 31, 1997 8. Stipulated Loss Values: See Annex D 9. Assumed Interest Rate: 7.50% (which will be determined three (3) Business Days before the date of execution of the Certificate of Acceptance). 10. Equipment Location: Various - See Attachment to Annex A. 11. Lessee Federal Tax ID No.: 12. Supplier: Various - See Attachment to Annex A. 13. Lessee agrees and acknowledges that the Capitalized Lessor's Cost of the Equipment as stated on the Schedule is equal to the fair market value of the Equipment on the date hereof. C. Term and Rent 1. Interim Rent. For the period from and including the Lease Commencement date to the Basic Term Commencement Date ("Interim Period"), Lessee shall pay as rent ("Interim Rent") for each unit of Equipment the product of the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit times the number of days in the Interim Period. Interim Rent shall be due on December 31, 1997 (the "Interim Rent Payment Date"). 2. Basic Term Rent. Commencing on January 1, 1998, and on the same day of each month thereafter (each a "Rent Payment Date") during the Basic Term, Lessee shall pay as Rent ("Basic Term Rent") the product of the Basic Term Lease Rate Factor time the Capitalized Lessor" Cost of all Equipment on this Schedule. Said Rent consists of principal and interest components as provided in the Amortization Schedule attached hereto. 3. If the Interim Rent Payment Date or any rent Payment Date is not a Business Day, the Rent otherwise due on such date shall be payable on the immediately preceding business Day. As used herein, "Business Day" shall mean any day other than Saturday, Sunday, and any day on which banking institutions located in the States of Connecticut, Maryland or New York are authorized by law or other governmental action to close. D. Insurance 1. Public Liability: $1,000,000.00 total liability per occurrence. 2. Casualty and Property Damage: An amount equal to the higher of the Stipulated Loss Value or the full replacement cost of the Equipment. E. Fixed Purchase Price and Residual Risk Amount End of Month Fixed Purchase Price Residual Risk Amount - - ------------ -------------------- -------------------- 36 64.467082% 12.639606% 48 50.736256% 7.016677% 60 35.943408% 5.522397% 72 20.000000% 3.912113% expressed as a percent of the Capitalized lessor's Cost of the Equipment. This Schedule is not binding or effective with respect to the Agreement or Equipment until executed on behalf of lessor and Lessee by authorized representative of Lessor and Lessee, respectively. IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be executed by their duly authorized representatives as of the date first above written. LESSOR: LESSEE: GENERAL ELECTRIC CAPITAL CORPORATION WESTERN BEEF, INC. By: By: /s/ Peter Castellana, Jr ---------------------------------- --------------------------------- Name: Name: Peter Castellana Jr -------------------------------- ------------------------------- Title: Title: President ------------------------------- ------------------------------ Attest: By:_________________________________ Name:_______________________________ Title:______________________________ 2 (FISCAL AGENT) NOTICE AND ACKNOWLEDGMENT OF ASSIGNMENT Reference is hereby made to that certain Master Lease Agreement dated as of December 29, 1997 (the "Lease"), between General Electric Capital Corporation ("Lessor") and Western Beef, Inc. ("Lessee"). Lessor hereby gives Lessee notice, and Lessee hereby acknowledges receipt of notice, that Lessor has assigned to THE FIFTH THIRD LEASING COMPANY ("Assignee"), whose offices are at 38 Fountain Square, Fifth Third Center, 5th Floor, Cincinnati, OH 45263, all right, title, interest and obligations of Lessor in Schedules to the Lease and, to the extent incorporated therein by reference, the Lease, The Fifth Third Leasing Company will act as Lessor for all intents and purposes. Pursuant to such assignment, it is contemplated that Assignee will acquire and lease to Lessee certain equipment (the "Equipment") to be described on Equipment Schedule No. G-l executed pursuant to the Lease by Assignee and Lessee (collectively the "Assigned Schedules"). From and after the date of this Notice, all payments of rent and other sums now or hereafter becoming due pursuant to the Assigned Schedules or with respect to the equipment described on the Assigned Schedules (the "Equipment") shall be paid directly to Lessor as Fiscal Agent of Assignee, unless and until Assignee notified Lessee of the termination of the fiscal agency (whereupon Lessee shall make payment as directed in Assignee's invoices). In recognition of Assignee's reliance upon this Notice and Acknowledgment of Assignment, Lessee certifies, confirms and agrees as follows: 1. The Lease and the Equipment Schedule have been duly authorized, executed and delivered by Lessee; constitute the legal, valid and binding obligation of Lessee, enforceable against Lessee in accordance with the terms thereof; are in full force and effect on the date of execution of this notice by such party; are free from all defenses, set-offs and counterclaims; and no default or event which, with the passage of time or the giving of notice, or both, would constitute a default under the Lease has occurred. 2. There are no modifications, amendments or supplements to the Lease which relate to the Assigned Schedule; and any future modification, termination, amendment or supplement to the Lease which relates to the Assigned Schedule, or settlement of amounts due thereunder which relates to the Assigned Schedule, shall be ineffective without Assignee's prior written consent. 3. There has been no prepayment of rent or other sums payable under the Assigned Schedule and no casualty has occurred with respect to the Equipment. 4. Lessee acknowledges and agrees that (i) Assignee shall be the owner of the Equipment and Lessor shall have no interest or authority of any nature regarding the Equipment or the Assigned Schedule, (ii) If Assignee notifies Lessee of the termination of Lessor's fiscal agency, Lessee will deal exclusively with respect to the Assigned Schedule with Assignee, and Lessee will deliver all payments and copies of all notices and other communications given or made by Lessee to Assignee at the address listed above, (iii) so far as enforcement of the Assigned Schedule is concerned, notwithstanding the existence of other schedules or supplements thereto, the Assigned Schedule is separate and severable and Assignee may take enforcement action independently of other lessors, equipment owners or financing parties having an interest in the Lease and other equipment schedules not included in the Assigned Schedule, and (iv) Lessee will execute such other instruments and take such actions as Assignee reasonably may require to further confirm the vesting of rights under the Lease in Assignee and Assignee's ownership of the Equipment. 5. Lessee has not received notice of a prior sale, transfer, assignment, hypothecation or pledge of the Assigned Schedule or the rents reserved thereunder. 6. Lessee will keep the Lease, the Assigned Schedule and the Equipment free and clear of all liens and encumbrances (other than the interest of Lessor, Assignee or parties claiming by, through or under them). 7. All representations and duties of Lessor intended to induce Lessee to enter into the Lease, whether required by the Lease or otherwise, have been fulfilled. 8. Lessee has executed one (1) original each of the Lease and the Equipment Schedule (which were delivered to Lessor), and currently has no original of either in its possession. 9. All representations and warranties of the Lessee in the Lease are true and correct. 10. The documents described on the attached Schedule A are all the documents executed or delivered to or by Assignor and Lessee in connection with the Assigned Schedule and the Equipment, and such documents constitute the entire agreement of the parties with respect to the Assigned Schedule and the Equipment. Accepted and agreed to on this. ____ day of December, 1997. GENERAL ELECTRIC CAPITAL Western Beef, Inc. CORPORATION Lessee Lessor By: By: /s/ Peter Castellana, Jr ---------------------------------- --------------------------------- Name: Name: Peter Castellana, Jr -------------------------------- ------------------------------- Title: Title: President ------------------------------- ------------------------------ THE FIFTH THIRD LEASING COMPANY Assignee By: _________________________________ Name: _______________________________ Title: ______________________________ (FISCAL AGENT) NOTICE AND ACKNOWLEDGMENT OF ASSIGNMENT Reference is hereby made to that certain Master Lease Agreement dated as of December 29, 1997 (the "Lease"), between General Electric Capital Corporation ("Lessor") and Western Beef, Inc. ("Lessee"). Lessor hereby gives Lessee notice, and Lessee hereby acknowledges receipt of notice, that Lessor has assigned to THE FIFTH THIRD LEASING COMPANY ("Assignee"), whose offices are at 38 Fountain Square, Fifth Third Center, 5th Floor, Cincinnati, OH 45263, all right, title, interest and obligations of Lessor in Schedules to the Lease and, to the extent incorporated therein by reference, the Lease, The Fifth Third Leasing Company will act as Lessor for all intents and purposes. Pursuant to such assignment, it is contemplated that Assignee will acquire and lease to Lessee certain equipment (the "Equipment") to be described on Equipment Schedule No. F-1 executed pursuant to the Lease by Assignee and Lessee (collectively the "Assigned Schedules"). From and after the date of this Notice, all payments of rent and other sums now or hereafter becoming due pursuant to the Assigned Schedules or with respect to the equipment described on the Assigned Schedules (the "Equipment") shall be paid directly to Lessor as Fiscal Agent of Assignee, unless and until Assignee notified Lessee of the termination of the fiscal agency (whereupon Lessee shall make payment as directed in Assignee's invoices). In recognition of Assignee's reliance upon this Notice and Acknowledgment of Assignment, Lessee certifies, confirms and agrees as follows: 1. The Lease and the Equipment Schedule have been duly authorized, executed and delivered by Lessee; constitute the legal, valid and binding obligation of Lessee, enforceable against Lessee in accordance with the terms thereof; are in full force and effect on the date of execution of this notice by such party; are free from all defenses, set-offs and counterclaims; and no default or event which, with the passage of time or the giving of notice, or both, would constitute a default under the Lease has occurred. 2. There are no modifications, amendments or supplements to the Lease which relate to the Assigned Schedule; and any future modification, termination, amendment or supplement to the Lease which relates to the Assigned Schedule, or settlement of amounts due thereunder which relates to the Assigned Schedule, shall be ineffective without Assignee's prior written consent. 3. There has been no prepayment of rent or other sums payable under the Assigned Schedule and no casualty has occurred with respect to the Equipment. 4. Lessee acknowledges and agrees that (i) Assignee shall be the owner of the Equipment and Lessor shall have no interest or authority of any nature regarding the Equipment or the Assigned Schedule, (ii) If Assignee notifies Lessee of the termination of Lessor's fiscal agency, Lessee will deal exclusively with respect to the Assigned Schedule with Assignee, and Lessee will deliver all payments and copies of all notices and other communications given or made by Lessee to Assignee at the address listed above, (iii) so far as enforcement of the Assigned Schedule is concerned, notwithstanding the existence of other schedules or supplements thereto, the Assigned Schedule is separate and severable and Assignee may take enforcement action independently of other lessors, equipment owners or financing parties having an interest in the Lease and other equipment schedules not included in the Assigned Schedule, and (iv) Lessee will execute such other instruments and take such actions as Assignee reasonably may require to further confirm the vesting of rights under the Lease in Assignee and Assignee's ownership of the Equipment. 5. Lessee has not received notice of a prior sale, transfer, assignment, hypothecation or pledge of the Assigned Schedule or the rents reserved thereunder. 6. Lessee will keep the Lease, the Assigned Schedule and the Equipment free and clear of all liens and encumbrances (other than the interest of Lessor, Assignee or parties claiming by, through or under them). 7. All representations and duties of Lessor intended to induce Lessee to enter into the Lease, whether required by the Lease or otherwise, have been fulfilled. 8. Lessee has executed one (1) original each of the Lease and the Equipment Schedule (which were delivered to Lessor), and currently has no original of either in its possession. 9. All representations and warranties of the Lessee in the Lease are true and correct. 10. The documents described on the attached Schedule A are all the documents executed or delivered to or by Assignor and Lessee in connection with the Assigned Schedule and the Equipment, and such documents constitute the entire agreement of the parties with respect to the Assigned Schedule and the Equipment. Accepted and agreed to on this ____ day of December, 1997. GENERAL ELECTRIC CAPITAL Western Beef, Inc. CORPORATION Lessee Lessor By: By: /s/ Peter Castellana, Jr ---------------------------------- --------------------------------- Name: Name: Peter Castellana -------------------------------- ------------------------------- Title: Title: President ------------------------------- ------------------------------ THE FIFTH THIRD LEASING COMPANY Assignee By: _________________________________ Name: _______________________________ Title: ______________________________ EQUIPMENT SCHEDULE SCHEDULE NO. F-1 DATED THIS 29th DAY OF December, 1997 TO MASTER LEASE AGREEMENT DATED AS OF December 29. 1997 Lessor & Mailing Address: Lessee & Mailing Address: THE FIFTH THIRD LEASING COMPANY WESTERN BEEF, INC. 38 Fountain Square 47-05 Metropolitan Avenue Fifth Third Center, 5th Floor Ridgewood, NY 11385 Cincinnati, OH 45263 This Equipment Schedule is executed pursuant to, and incorporates by reference the terms and conditions of, and capitalized terms not defined herein shall have the meanings assigned to them in, the Master Lease Agreement identified above ("Agreement" said Agreement and this Schedule being collectively referred to as "Lease"). This Equipment Schedule, incorporating by reference the Agreement, constitutes a separate instrument of lease. A. Equipment. Pursuant to the terms of the Lease, Lessor agrees to acquire and lease to Lessee the Equipment listed on Annex A attached hereto and made a part hereof. B. Financial Terms. 1. Capitalized Lessor's Cost: $1,478,183.15 2. Daily Lease Rate Factor: .050273633% 3. Basic Term: Thirty-six (36) months 4. Basic Term Commencement Date: January 1, 1998. 5. Renewal Term: Three twelve (12) month terms. 6. Maximum Lease Term: Seventy-two months. 7. Last Delivery Date: December 31, 1997. 8. Stipulated Loss Values: See Annex D. 9. Assumed Interest Rate: 7.50% (which will be determined three (3) Business Days before the date of execution of the Certificate of Acceptance). 10. Equipment Location: Various - See Attachment to Annex A. 11. Lessee Federal Tax ID No.:________________________________________________ 12. Supplier: Various - See Attachment to Annex A. 13. Lessee agrees and acknowledges that the Capitalized Lessors Cost of the Equipment as stated on the Schedule is equal to the fair market value of the Equipment on the date hereof. C. Term and Rent. 1. Interim Rent. For the period from and including the Lease Commencement Date to the Basic Term Commencement Date ("Interim Period"), Lessee shall pay as rent ("Interim Rent") for each unit of Equipment, the product of the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit times the number of days in the Interim Period. Interim Rent shall be due on December 31, 1997 (the "Interim Rent Payment Date"). 2. Basic Term Rent. Commencing on January 1, 1998, and on the same day of each month thereafter (each, a "Rent Payment Date") during the Basic Term, Lessee shall pay as Rent ("Basic Term Rent") the product of the Basic Term Lease Rate Factor times the Capitalized Lessor's Cost of all Equipment on this Schedule. Said Rent consists of principal and interest components as provided in the Amortization Schedule attached hereto. 3. If the Interim Rent Payment Date or any Rent Payment Date is not a Business Day, the Rent otherwise due on such date shall be payable on the immediately preceding Business Day. As used herein, "Business Day" shall mean any day other than Saturday, Sunday, and any day on which banking institutions located in the States of Connecticut, Maryland or New York are authorized by law or other governmental action to close. D. Insurance. 1. Public Liability: $1,000,000.00, total liability per occurrence. 2. Casualty and Property Damage: An amount equal to the higher of the Stipulated Loss Value or the full replacement cost of the Equipment. E. Fixed Purchase Price and Residual Risk Amount End of Month Fixed Purchase Price Residual Risk Amount - - ------------ -------------------- -------------------- 36 64.467282% 12.639606% 48 50.738256% 7.016677% 60 35.943409% 5.522397% 72 20.000000% 3.912113% expressed as a percent of the Capitalized Lessor's Cost of the Equipment. This Schedule is not binding or effective with respect to the Agreement or Equipment until executed on behalf of Lessor and Lessee by authorized representatives of Lessor and Lessee, respectively. IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be executed by their duly authorized representatives as of the date first above written. LESSOR: LESSEE: THE FIFTH THIRD LEASING COMPANY WESTERN BEEF, INC. By: By: /s/ Peter Castellana, Jr ---------------------------------- --------------------------------- Name: Name: Peter Castellana, Jr -------------------------------- ------------------------------- Title: Title: President ------------------------------- ------------------------------ Attest: By: _________________________________ Name: _______________________________ Title: ______________________________ 2 ANNEX A TO SCHEDULE NO. F-1 DATED THIS 29th DAY OF December, 1997 TO MASTER LEASE AGREEMENT DATED AS OF December 29,1997 DESCRIPTION OF EQUIPMENT Manufacturer Serial Numbers Type and Model Number of Units Cost per Unit of Equipment ================================================================================ See Attachment to Annex A Initials: PC JR ------ --------- Lessor Lessee Attachment to Annex A Lessee: Western Beet, Inc. Lessor: The Fifth Third Leasing Company Equipment Location (Store 01): 47-05 Metropolitan Avenue Ridgewood, NY 11385
SUPPLIER Equipment Description INV.# AMOUNT - - -------------------------------------------------------------------------------------------------------- ADMIRAL AIR CONDITIONING, INC. air conditioning system 4/2/97 65,500.00 ALARMINGLY AFFORDABLE, INC. PA system 22001 16,610.96 BULLDOG GRAPHICS Furnish & install sign 970517 27,197.81 DARBY TENT CO., INC. Fiesta Frame tent, canopy 111561 14,500.00 DEVALTRONIX 2-Multiline Display High Intensity REO LEOs 1845 52,773.00 M. FRIED STORE FIXTURES Store fixtures more fully descr. on inv. 3359 117,126.50 K & D ENTERPRISES Adamatic Roll/Bread Divider, SN:221088159 280 20,500.00 ON-SITE ENERGY COMPANY Onan Model 60 ENA gas fueled generator 19,945.06 JOHN TARA INC. Supply and install custom made canopy 200 44,000.00 JOHN TARA INC. Supply and install custom made canopy 199 5,400.00 TECHNIBUILT Shevling more fully described on invoice 43802 17,158.99 UNARCO 500-shopping carts 564892 50,709.71 VHB REFRIGERATION & EQUIP. 601 Deck produce 96-375 19,229.53 VHB REFRIGERATION & EQUIP. Condensing unit racks 96-396 98,909.11 VHB REFRIGERATION & EQUIP. Condensers 96-410 65,312.64 VHB REFRIGERATION & EQUIP. 32' OIP Island Produce 96-411 33,825.96 VHB REFRIGERATION & EQUIP. 31 doors 96-485 39,600.02 VHB REFRIGERATION & EQUIP. 32' 5-deck frozen meat case, model 05Z 97-019 20,246.00 ------------ TOTAL $ 728,545.29 ============
INITIAL PC JR -------- Page 1 Attachment to Annex A Lessee: Western Beef, Inc. Lessor: The Fifth Third Leasing Company Equipment Location (Store 19): 12-03 East New York Avenue Brooklyn, NY 11212
SUPPLIER Equipment Description INV.# AMOUNT - - -------------------------------------------------------------------------------------------------------- ADMIRAL AIR CONDITIONING INC. air conditioning system 6356 37,640.00 M. FRIED STORE FIXTURES Gondolas & shelving as more fully descr. on inv. 3390 40,172.87 M. FRIED STORE FIXTURES Gondolas & shelving as more fully descr. on inv. 3524 7,388.60 M. FRIED STORE FIXTURES Gondolas & shelving as more fully descr. on inv. 3525 4,160.59 M. FRIED STORE FIXTURES Gondolas & shelving as more fully descr. on inv. 3526 1,058.72 KYSOR/WARREN Refrigerated cases 62803 47,509.84 KYSOR/WARREN Refrigerated cases 70285 5,981.90 ON-SITE ENERGY Onan Model 60 ENA gas fueled generator 17,211.75 WT WINTER ASSOC. Auto wrapper and accessories 16058 40,258.29 WT WINTER ASSOC. Step-saver equipment more fully descr. on inv. 10798 22,202.00 ------------ TOTAL $ 223,584.56 ============
INITIAL PC JR -------- Page 2 Attachment to Annex A Lessee: Western Beef, Inc. Lessor: The Fifth Third Leasing Company Equipment Location (Store 9) _____________________________
SUPPLIER Equipment Description INV.# AMOUNT - - -------------------------------------------------------------------------------------------------------------- CBS WHITCOM Newbridge 3624 Channel Bank & access. Purch. agree 25,180.00 GATES/ARROW DISTRIBUTIONS 2-AST Bravo Computers & access.- See inv. for SN 6133088 4,629.50 GATES/ARROW DISTRIBUTIONS 2-76H0945 - See invoice for S/N 5632489 2,117.15 GATES/ARROW DISTRIBUTIONS 2-AST Systems - See inv. for S/N 5634084 6,335.00 ON SITE ENERGY CO. Onan Model 60 ENA gas fueled generator 17,211.75 ----------- TOTALS $ 55,473.40 ===========
INITIAL PC JR -------- Page 3 Attachment to Annex A Lessee: Western Beef, Inc. Lessor: The Fifth Third Leasing Company Equipment Location (Store 45): 322 Nassau Road Roosevelt, NY 11575
SUPPLIER Equipment Description INV.# AMOUNT - - ----------------------------------------------------------------------------------------------------------------------- ABCO REFRIGERATION Refrigeration Equipment more fully described on inv. MA396725 55,857.00 ABCO REFRIGERATION Refrigeration Equipment more fully described on inv. MA409129 9,149.78 ACCU-SAFE Safe 6031 3,221.00 ADVANCE ENERGY TECH. Retrofix Cooler Combo 7235 44,389.00 ALARMINGLY AFFORDABLE Complete supermarket installation per invoice 20256 31,922.93 ALLTEC PRODUCTS Cold pressure washer 97537 5,493.38 CROWN EQUIPMENT PW 3000 Series Walkie Pallet Trucks 26042 15,190.00 M. FRIED STORE EQUIP. Gondolas & shelving as more fully descr. on inv. 2864 38,699.00 M. FRIED STORE EQUIP. Gondolas & shelving as more fully descr. on inv. 2941 1,380.19 M. FRIED STORE EQUIP. Gondolas & shelving as more fully descr. on inv. 2957 4,120.59 M. FRIED STORE EQUIP. Gondolas & shelving as more fully descr. on inv. 2962 1,550.44 GLOBE-MONTE METROPOLITAN Hickory 7G Rotisserie, S/N: 07907 19504 5,279.35 GLOBE-MONTE METROPOLITAN Henny Penny #500 Fryer, SIN: GBO26IF 19506 6,836.59 MID SOUTH DATA SYSTEMS Computers as more fully described on invoice 22330A 129,738.17 SIEGMEISTER SALES 8 - New machines more fully desc. on quote and del. ticket 30425 27,531.00 TREIF USA PUMA CE 700 Power Cutter 1274 21,260.00 WT WINTER ASSOCIATES Combo station, master step saver 11962 39,718.98 WT WINTER ASSOCIATES Auto wrapping weigh & accessories 12068 29,242.50 -------------- TOTAL $ 470,579.90 ============== TOTAL CAPITALIZED LESSOR'S COST $ 1,478,183.15
INITIAL PC JR -------- Page 4 Attachment to Annex A Lessee: Western Beef, Inc. Lessor: The Fifth Third Leasing Company Equipment Location (Store 45): 322 Nassau Road Roosevelt, NY 11575
SUPPLIER Equipment Description INV.# AMOUNT - - ----------------------------------------------------------------------------------------------------------------------- ABCO REFRIGERATION Refrigeration Equipment more fully described on inv. MA396725 55,857.00 ABCO REFRIGERATION Refrigeration Equipment more fully described on inv. MA409129 9,149.78 ACCU-SAFE Safe 6031 3,221.00 ADVANCE ENERGY TECH. Retrofix Cooler Combo 7235 44,389.00 ALARMINGLY AFFORDABLE Complete supermarket installation per invoice 20256 31,922.93 ALLTEC PRODUCTS Cold pressure washer 97537 5,493.38 CROWN EQUIPMENT PW 3000 Series Walkie Pallet Trucks 26042 15,190.00 M. FRIED STORE EQUIP. Gondolas & shelving as more fully descr. on inv. 2864 38,699.00 M. FRIED STORE EQUIP. Gondolas & shelving as more fully descr. on inv. 2941 1,380.19 M. FRIED STORE EQUIP. Gondolas & shelving as more fully descr. on inv. 2957 4,120.59 M. FRIED STORE EQUIP. Gondolas & shelving as more fully descr. on inv. 2962 1,550.44 GLOBE-MONTE METROPOLITAN Hickory 7G Rotisserie, S/N: 07907 19504 5,279.35 GLOBE-MONTE METROPOLITAN Henny Penny #500 Fryer, SIN: GBO26IF 19506 6,836.59 MID SOUTH DATA SYSTEMS Computers as more fully described on invoice 22330A 129,738.17 SIEGMEISTER SALES 8 - New machines more fully desc. on quote and del. ticket 30425 27,531.00 TREIF USA PUMA CE 700 Power Cutter 1274 21,260.00 WT WINTER ASSOCIATES Combo station, master step saver 11962 39,718.98 WT WINTER ASSOCIATES Auto wrapping weigh & accessories 12068 29,242.50 -------------- TOTAL $ 470,579.90 ============== TOTAL CAPITALIZED LESSOR'S COST $ 1,478,183.15
INITIAL -------- Page 4 ANNEX B TO SCHEDULE NO. F-1 DATED THIS 29TH DAY OF December, 1997 TO MASTER LEASE AGREEMENT DATED AS OF December 29, 1997 BILL OF SALE KNOW ALL MEN BY THESE PRESENTS: Western Beef, Inc. ("Seller"), for and in consideration of the sum of One Dollar ($1) and other good and valuable consideration, provided by THE FIFTH THIRD LEASING COMPANY ("Buyer"), with offices at 38 Fountain Square, Fifth Third Center, Fifth Floor, Cincinnati, OH 45263, the receipt of which is hereby acknowledged, does hereby sell, assign, transfer, set over and convey to Buyer the equipment (`the Equipment") leased under Schedule No. F-1 dated as of December 29, 1997, between Seller and Buyer, executed pursuant to the Master Lease Agreement dated December 29,1997, between Seller and Buyer, a copy of which is attached hereto and made a part hereof. Buyer and Seller agree and acknowledge that ;the sale and conveyance contemplated hereby is solely for the purpose of granting to Buyer a security interest in the Equipment and Seller shall retain legal title to such Equipment. All Equipment in which an interest is conveyed hereby shall remain in the possession of Seller pursuant to the Lease. Buyer is purchasing the Equipment described above in reliance upon its personal inspection and knowledge of the Equipment and in an "AS-IS, WHERE-IS", condition. SELLER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE EXCEPT THAT (1) SELLER HAS GOOD TITLE TO THE EQUIPMENT, FREE AND CLEAR OF ALL LIENS, CLAIMS AND ENCUMBRANCES, (2) BUYER WILL ACQUIRE ITS INTEREST IN THE EQUIPMENT FREE FROM ALL LIENS, CLAIMS AND ENCUMBRANCES, AND (3) SELLER HAS THE RIGHT TO SELL AND CONVEY THE EQUIPMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER MAKES NO WARRANTIES WITH RESPECT TO THE QUALITY, CONBTENT, CONDITION, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE OF THE EXUIPMENT AND NO WARRANTIES AGAINST PATENT INFRINGEMENT OR THE LIKE. IN WITNESS WHEREOF, Buyer and Seller have executed this Bill of Sale this 30th day of December, 1997. BUYER: SELLER: THE FIFTH THIRD LEASING COMPANY, WESTERN BEEF, INC. By: By: /s/ Peter Castellana, Jr ---------------------------------- --------------------------------- Name: Name: Peter Castellana, Jr -------------------------------- ------------------------------- Title: Title: President ------------------------------- ------------------------------ EX-10.5 3 LINE OF CREDIT AGREEMENT NORTH FORK BANK PROMISSORY NOTE BORROWER: WESTERN BEEF, INC PRINCIPAL: $3,000,000.00 DATE: PROMISE TO PAY: The undersigned, jointly and severally if more than one signer, does hereby promise to pay to the order of NORTH FORK BANK (the "Bank") at its offices at 245 Love Lane, Mattituck, New York, or any of its branches, the sum of THREE MILLION AND 00/100 ($3,000,000.00) DOLLARS or the aggregate unpaid amount of all advances made to the undersigned by the Bank, whichever is less, plus interest thereon, from the date hereof in the manner set below. RATE AND PAYMENT: Interest only on the unpaid balance hereof at the rate of North Fork Bank's Prime Rate payable on October 1, 1997 and on the 1st day of each month thereafter until July 1, 1998 when all unpaid principal and interest shall be due in full. All interest payments shall be made by automatic debit from an account maintained at the Bank in which borrower shall maintain balances sufficient to pay the monthly interest payments. Account #012398 Payments shall be applied first to interest on unpaid principal balances to the date payment is received by the Bank and then to reduction of principal. If the interest rate is based on the Bank's announced Prime Rate, the interest rate shall change when the Prime Rate changes and nothing herein shall prevent the Bank from loaning money at less than Prime on such terms and conditions as it deems advisable. Interest shall be calculated on a 360 day year and actual number of days elapsed. GRID NOTE: The Borrower may borrow, repay in whole or in part, and reborrow on a revolving basis amounts up to $3,000.000.00. However, the Bank reserves the right to make or decline any rrequest for an advance in its sole discretion and may condition the availability of an advance upon, among other things, the maintenance of a satisfactory financial condition. Borrower authorizes the Bank to keep a record of the amounts and dates of all advances and repayments hereunder, which record shall, in the absence of manifest error, be conclusive as to the outsanding principal amount due hereunder; provided, however, that the failure to record any advance or repayment shall not limit or other wise affect the obligation of Borrower under this Note. PREPAYMENT: Prepayment in whole or in part may be made at any time without penalty. Any prepayment will be applied inn inverse order of maturity and will not defer the payment schedule. DEFAULT INTEREST RATE: The unpaid principal sum due under this Note shall bear interest at a rate equal to five (5%) per centum above the Rate set forth above on and after the occurrence of any event of default and until the entire principal sum hereof has been fully paid, both before and after the entry of any judgment with respect to such event, but in no event shall the rate either before or after the occurrence of an event of default exceed the highest rate of interest, if any permitted under applicable New York or Federal Law. SECURITY: A security interest in and assignment and pledge of all monies, deposits, or other sums now or hereafter held by the bank on deposit, in safekeeping, transit or otherwise, at any time credited by or due from Bank to the undersigned, or in which the undersigned shall have an interest. RIGHT OF OFFSET: If any payment is not made on time, if the entire balance becomes due and payable and is not paid, all or part of the amount due may be offset out of any account or other property which the undersigned has at the Bank without prior notice or demand. LATE CHARGES: Undersigned will pay a charge of 4% of the amount of any payment which is not made within 10 days of when due, or, if applicable, which cannot be debited from its account due to insufficient balance on the debit date. COMPENSATION BALANCES: If at any time prior to the maturity of this note, the aggregate average monthly ledger balance maintained in the non-interest bearing deposit accounts of the undersigned are less than $1,000,000.00, the undersigned agrees to pay to the Bank an additional fee, calculated as (a) the difference between $1,000,000.00, and the aggregate average monthly ledger balance maintained in the non-interest bearing deposit accounts, multiplied by (b) a fixed rate ("the Deficiency Rate") equal to North Fork Bank's Prime rate plus four (4%) percent based on a 360 day year and actual number of days elapsed. Such Deficiency Rate shall be established on each January and July first and shall be applicable for the ensuing six month period. Such fee shall be due and payable quarterly within (15) fifteen days following the end of every calendar quarter. The fee shall be debited by the Bank from Account #3124-012398 or from any other account in which the undersigned maintains sufficient funds. The undersigned agrees to maintain sufficient funds in its accounts to permit such debit. Nothing contained herein shall be deemed to require the undersigned to maintain Demand Deposit Balances in the amount described above. In no event shall the interest rate referenced in any Note(s) executed by the undersigned either before or after the occurrence of any event of default, together with the deficiency fee payable hereunder exceed the highest rate, if any, permitted under applicable New York State or Federal law. 2 FINANCIAL STATEMENTS: Borrower and Guarantor shall furnish to the Bank the following: a) As soon as available, but in no event later than 120 days after the end of each fiscal year, with annual audited financial statements, including balance sheets as of the last day of the fiscal year, statements of income and retained earnings and statements of cash flows for such fiscal year each prepared in accordance with generally accepted accounting principles, consistently applied for the period and prior periods by an independent certified public accountant satisfactory to the Bank. b) Borrower and Guarantor shall furnish the Bank with Quarterly financial statements within 90 days. c) Borrower shall furnish the Bank with a 10-K Report within 120 days of the companies fiscal year end. FINANCIAL COVENANTS: The Borrower and or Guarantor (the "Parties") hereby agree that as long as the commitment remains in effect, the promissory note together with accrued interest thereon remains unpaid, and any other amounts, including but not limited to late charges and fees, are due and owing to the Bank, the Parties shall maintain at all times, the following financial covenants measured in accordance with generally accepted accounting principles ("GAAP") consistently applied: During the term of this loan, Borrower will repay all principal and interest outstanding so that no amounts are outstanding hereunder for a period of not less than 30 consecutive days. Negative Pledge not to further encumber inventory and receivable without the consent of the Bank. DEFAULT: The Bank may declare the entire unpaid balance of the Note due and payable on the happening of any of the following events: (a) Failure to pay any amount required by this Note when due, or any other obligation owed to the Bank by undersigned or any guarantor, or, if applicable, failure to have sufficient funds in its account for loan payments to be debited on the due date. (b) Failure to perform or keep or abide by any term, covenant or condition contained in this Note, any Guaranty or any other document given to the Bank in connection with this loan; (c) The filing of a bankruptcy proceeding, assignment for the benefit of creditors, issuance of a judgement in excess of $100,000.00 that remains unsatisfied for more than 30 days or the issuance pursuant thereto of an execution, garnishment, or levy against, or the appointment of a representative of any kind for the commencement of any proceeding for relief from indebtedness by or against the undersigned or any Guarantor; (d) The happening of any event which, in the judgement of the Bank, adversely affects Borrower's or Guarantor's ability to repay or the value of any collateral; (c) If any written representation or statement made to the Bank by Borrower or Guarantors is untrue; 3 (f) If any written representation or warranty made to the Bank by Borrower or Guarantors is breached; (g) The occurrence of a default under any Guaranty or any other document or instrument given to the Bank in connection with the loan; (h) Death or inability to manage the affairs of any individual borrower or guarantor; dissolution or a change in composition of a partnership borrower; dissolution, merger, or consolidation of a corporate borrower; (i) Failure to provide any financial information on request or permit an examination of books and records. Notwithstanding the foregoing, the balance of this Note shall become immediately due and payable upon the occurrence of any of the events set forth in (c) above, and, if this is a demand note, the Bank may declare the balance of this Note due at any time. ATTORNEYS FEES: In the event the Bank retains counsel with respect to enforcement of this Note or any other document or instrument given to the Bank, the undersigned agrees to pay the Bank's reasonable attorney's fees (whether or not an action is commenced and whether or not in the court of original jurisdiction, appellate court, bankruptcy court, or otherwise). MISCELLANEOUS: Delay or failure of the Bank to exercise any of its rights under this Note shall not be deemed a waiver thereof. No waiver of any condition or requirement shall operate as a waiver of any other or subsequent condition or requirement. The Bank or any other holder of this Note does not have to present it before requiring payment. The undersigned waives trial by jury with respect to any action arising out of or relating to this Note. This Note may not be modified or terminated orally. This Note shall be governed by the laws of the State of New York without regard to its conflicts of laws rules. The undersigned irrevocably consents to the jurisdiction and venue of the New York State Supreme Court, Suffolk County in any action concerning this note. The Bank may accept partial payments marked "in full" without waiving any of its rights hereunder. Any payments made after maturity or acceleration will not reinstate the Note. This Note is binding upon the undersigned, its heirs, successors and assigns. IN WITNESS WHEREOF, the undersigned has signed this note as of the 17 day of Sept., 1997. WESTERN BEEF, INC. BY: /s/ Peter Castellana, Jr. ----------------------------------- BY: ----------------------------------- 4 ANNEX C TO SCHEDULE NO. F-1 DATED THIS 29TH DAY OF December 1997 TO MASTER LEASE AGREEMENT DATED AS OF December 29, 1997 CERTIFICATE OF ACCEPTANCE To: The Fifth Third Leasing Company Pursuant to the provisions of the above Schedule and Master Lease Agreement (collectively, the "Lease"), Lessee hereby certifies and warrants that (a) all Equipment listed in the related invoice is in good condition and appearance, installed (if applicable), and in working order; and (b) Lessee accepts the Equipment for all purposes of the Lease and all attendant documents. Lessee does further certify that as of the date hereof (i) Lessee is not in default under the Lease; and (ii) the representations and warranties made by Lessee pursuant to or under the Lease are true and correct on the date hereof. - - -------------------------------------- Lessee's Authorized Representative Dated: December 30, 1997 ANNEX D TO SCHEDULE NO. F-1 DATED THIS 29TH DAY OF December, 1997 TO MASTER LEASE AGREEMENT DATED AS OF December 29, 1997 STIPULATED LOSS VALUE TABLE* Rent Payment Rent Payment Date SLV% Date SLV% 0 102.000000 37 64.334216 1 101.089013 38 63.194242 2 100.172506 39 62.047316 3 99.250445 40 60.893396 4 98.322794 41 59.732438 5 97.389520 42 58.564397 6 96.450585 43 57.389229 7 95.505956 44 56.206890 8 94.555597 45 55.017335 9 93.599472 46 53.820519 10 92.637544 47 52.616397 11 91.669778 48 51.404922 12 90.696137 49 50.186050 13 89.716585 50 48.959733 14 88.731084 51 47.725925 15 87.739597 52 46.484579 16 86.742087 53 45.2356949 17 85.738516 54 43.979086 18 84.728846 55 42.714844 19 83.713040 56 41.442874 20 82.691058 57 40.163127 21 81.662862 58 38.875556 22 80.628414 59 37.580110 23 79.587675 60 36.276742 24 78.540604 61 34.965402 25 77.487163 62 33.646039 26 76.427311 63 32.318604 27 75.361009 64 30.983046 28 74.288216 65 29.639315 29 73.208892 66 28.287358 30 72.122995 67 26.927126 31 71.030485 68 25.558565 32 69.931321 69 24.181625 33 68.825461 70 22.796253 34 67.712862 71 21.402395 35 66.593484 72 20.000000 36 65.467282 Initials: PC JR -------- ------------ Lessor Lessee - - ---------- * The stipulated Loss Value for any unit of Equipment shall be equal to the Capitalized Lessor's Cost of such unit multiplied by the appropriate percentage derived from the above table. In the event that the lease is for any reason extended, then the last percentage figure shown above shall control throughout any such extended term. ANNEX E TO SCHEDULE NO. F-1 DATED THIS 29TH DAY OF December, 1997 TO MASTER LEASE AGREEMENT DATED AS OF December 29, 1997 AMORTIZATION SCHEDULE* OUTSTANDING PRINCIPAL RENT PAYMENT DATE PRINCIPAL* INTEREST* BALANCE* - - ----------------- ---------- --------- -------- 1 0.883209% 0.625000% 99.116791% 2 0.888729% 0.619480% 98.228062% 3 0.894284% 0.613925% 97.333778% 4 0.899873% 0.608336% 96.433906% 5 0.905497% 0.602712% 95.528408% 6 0.911156% 0.597053% 94.617252% 7 0.916851% 0.591358% 93.700401% 8 0.922581% 0.585628% 92.777819% 9 0.928348% 0.579861% 91.849472% 10 0.934150% 0.574059% 90.915322% 11 0.939988% 0.568221% 89.975334% 12 0.945863% 0.562346% 89.029471% 13 0.951775% 0.556434% 88.077696% 14 0.957723% 0.550486% 87.119972% 15 0.963709% 0.544500% 86.156263% 16 0.969732% 0.538477% 85.186531% 17 0.975793% 0.532416% 84.210738% 18 0.981892% 0.526317% 83.228846% 19 0.988029% 0.520180% 82.240817% 20 0.994204% 0.514005% 85.186531% 21 1.000418% 0.507791% 80.246196% 22 1.006670% 0.501539% 79.239525% 23 1.012962% 0.495247% 78.226563% 24 1.019293% 0.488916% 77.207270% 25 1.025664% 0.482545% 76.181607% 26 1.032074% 0.476135% 75.149533% 27 1.038524% 0.469685% 74.111009% 28 1.045015% 0.463194% 73.065993% 29 1.051547% 0.456662% 72.014447% 30 1.058119% 0.450090% 70.956328% 31 1.064732% 0.443477% 69.891596% 32 1.071387% 0.436822% 68.820210% 33 1.078083% 0.430126% 67.742127% 34 1.084821% 0.423388% 66.657306% 35 1.091601% 0.416608% 65.565706% 36 1.098423% 0.409786% 64.467282% 37 1.105288% 0.402921% 63.361994% 38 1.112197% 0.396012% 62.249797% - - ---------- * The Principal, Interest and Outstanding Principal Balance as of any Rent Payment Date shall be equal to the Capitalized Lessor's Cost of such unit multiplied by the appropriate percentage derived from the above table. ANNEX E TO SCHEDULE NO. F-1 DATED THIS 29TH DAY OF December , 1997 TO MASTER LEASE AGREEMENT DATED AS OF December 29, 1997 AMORTIZATION SCHEDULE* OUTSTANDING PRINCIPAL RENT PAYMENT DATE PRINCIPAL* INTEREST* BALANCE* - - ----------------- ---------- --------- -------- 39 1.119148% 0.389061% 61.130650% 40 1.126142% 0.382067% 60.004507% 41 1.133181% 0.375028% 58.871326% 42 1.140263% 0.367946% 57.731063% 43 1.147390% 0.360819% 56.583673% 44 1.154561% 0.353648% 55.429112% 45 1.161777% 0.346432% 54.267335% 46 1.169038% 0.339171% 53.098297% 47 1.176345% 0.331864% 51.921952% 48 1.183697% 0.324512% 50.738256% 49 1.191095% 0.317114% 49.547161% 50 1.198539% 0.309670% 48.348622% 51 1.206030% 0.302179% 47.142591% 52 1.213568% 0.294641% 45.929024% 53 1.221153% 0.287056% 44.707871% 54 1.228785% 0.279424% 43.479086% 55 1.236465% 0.271744% 42.242622% 56 1.244193% 0.264016% 40.998429% 57 1.251969% 0.256240% 39.746460% 58 1.259794% 0.248415% 38.486667% 59 1.267667% 0.240542% 37.218999% 60 1.275590% 0.232619% 35.943409% 61 1.283563% 0.224646% 34.659846% 62 1.291585% 0.216624% 33.368261% 63 1.299657% 0.208552% 32.068604% 64 1.307780% 0.200429% 30.760824% 65 1.315954% 0.192255% 29.444870% 66 1.324179% 0.184030% 28.120691% 67 1.332455% 0.175754% 26.788237% 68 1.340783% 0.167426% 25.477454% 69 1.349162% 0.159047% 24.098292% 70 1.357595% 0.150614% 22.740697% 71 1.366080% 0.142129% 21.374618% 72 1.374618% 0.133591% 20.000000% Initials: PC JR -------- ------------ Lessor Lessee - - ---------- * The Principal, Interest and Outstanding Principal Balance as of any Rent Payment Date shall be equal to the Capitalized Lessor's Cost of such unit multiplied by the appropriate percentage derived from the above table. ANNEX F TO SCHEDULE NO. F-1 DATED THIS 29TH DAY OF December, 1997 TO MASTER LEASE AGREEMENT DATED AS OF December 29, 1997 RETURN PROVISIONS: Upon the expiration or any termination of the Term of this Schedule provided that Lessee has elected not to exercise its extension option or its purchase option pursuant to Section 9 of the Lease, Lessee shall, at its expense (A) (i) Perform any testing and repairs required to place the Equipment in the same condition and appearance as when received by Lessee (reasonable wear and tear accepted) and in good working order for its originally intended purpose; (ii) if deinstallation , disassembly or crating is required, cause the Equipment to be deinstalled, disassembled and crated by an authorized manufacturer's representative or such other service person as is satisfactory to Lessor; and (iii) return the Equipment, free and clear of all liens and encumbrances, to a location within the continental United States as Lessor shall direct. (B) Until Lessee fully has complied with the requirements of Paragraph (A) above, Lessee's Rent payment obligation and all other obligations under the Agreement shall continue from month to month notwithstanding any expiration or termination of the Term. Lessor may terminate such continued leasehold interest upon ten (10) days' notice to Lessee. In addition to these Rents, Lessor shall have all of its other rights and remedies available as a result of this nonperformance. (C) At least one hundred eighty (180) days and not more than two hundred forty (240) days prior to expiration or earlier termination of the Lease, provide to Lessor a detailed inventory of all components of the Equipment. The inventory should include, but not be limited to, a listing of model, serial numbers and size description (length, width, height, diameter) for all components comprising the Equipment. (D) At least one hundred eighty (180) days prior to expiration or earlier termination of the Lease, upon receiving reasonable notice from Lessor, provide or cause the vendor(s) or manufacturer(s) to provide ton Lessor the following documents: (1) one set of service manuals, blue prints, process flow diagrams and operating manuals including replacements and/or additions thereto, such that all documentation is completely up-to-date; and (2) one set of documents, detailing equipment configuration, operating requirements, maintenance records, and other technical data concerning the set-up and operation of the Equipment, including replacements and/or additions thereto, such that all documentation is completely up-to-date. (E) At least one hundred eighty (180) days prior to expiration or earlier termination of the Lease, upon receiving reasonable notice from Lessor, make the Equipment available for On-site operational inspections by potential purchasers, under power , and provide personnel, power and other requirements necessary to demonstrate electrical, mechanical and functionality of each item of the Equipment. (F) At least forty-five (45) days prior to expiration or earlier termination of the Lease, cause the manufacturer's representative(s) or qualified equipment maintenance provider(s), acceptable to Lessor, to perform a comprehensive physical inspection, including testing all material and workmanship of the Equipment.. The authorized inspector should ensure the equipment is clean and cosmetically acceptable, and in such condition so that it mayu be immediately installed and placed into use in a similar retail store environment. There shall be no missing screws, bolts, fasteners, etc. The equipment will be free from all large scratches, marks gouges, dents, discoloration or stains. There shall be no evidence of extreme use or overloading, i.e. bowed or sagging shelves,etc. If during such inspection, examination and test, the authorized inspector finds any of the material or workmanship to be defective or the Equipment not operating within manufacturer's specifications, then Lessee shall repair or replace such defective material and, after corrective measures are completed, Lessee will provide for a follow-up inspection of the Equipment by the authorized inspector as outlined in the preceding clause. (G) Have each item of Equipment returned with an in-depth field service report detailing said inspection as outlined in Section D of this Annex F. The report shall certify that the Equipment has been properly inspected, examined and tested and is operating within the manufacturer's specifications. (H) Properly remove all Lessee installed markings which are not necessary for the operation, maintenance or repair of the Equipment. (I) Ensure all Equipment and equipment operations conform to all applicable local, state , and federal laws, health and safety guidelines. (J) The Equipment shall be redelivered with all component parts in good operating condition. All components must meet or exceed the manufacturer's minimum recommended specifications unless otherwise specified. (K) Provide for the deinstallation, packing, transporting, and certifying of the Equipment to include, but not be limited to, the following: (1) the manufacturer's representative shall de-install all Equipment (including all wire, cable and mounting hardware) in accordance with the specifications of the manufacturer; (2) each item of the Equipment will be returned with a certificate supplied by the manufacturer's representative qualifying the Equipment to be in good condition and (where applicable) to be eligible for the manufacturer's maintenance plan; the certificate of eligibility shall be transferable to another operator of the Equipment; (3) the Equipment shall be packed properly and in accordance with the manufacturer's recommendations; and (4) Lessee shall transport the Equipment in a manner consistent with the manufacturer's recommendations and practices. (L) Upon sale of the Equipment to a third party, provide transportation to any locations anywhere in the continental United Stated selected by Lessor. (M) Obtain and pay for a policy of transit insurance for the redelivery period in an amount equal to the replacement value of the Equipment and Lessor shall be named as the loss payee on all such policies of insurance. Initials: PC JR -------- ------------ Lessor Lessee STATE OF_________________________ COUNTY OF_______________________ AFFIDAVIT OF OWNERSHIP The undersigned, being duly sworn according to law, upon his oath deposes and says: I am the Chief Executive Officer of WESTERN BEEF, INC. ("Lessee") and I am authorized to make this affidavit on behalf of Lessee. As of the date of this Affidavit, Lessee has good and marketable title to all of the Equipment (as such term is defined in that certain Master Lease Agreement dated as of December 29, 1997, between The Fifth Third Leasing Company ("Lessor"), as lessor, and Lessee, as Lessee), free and clear of all liens, claims, security interests and encumbrances, except for the liens granted in favor of Lessor under the aforesaid Master Lease Agreement. Signed and sealed as of the 30th day of December, 1997 /s/ Peter Castellana, Jr - - --------------------------------------------- Name: Peter Castellana, Jr ---------------------------------------- Title: Chief Executive Officer - - --------------------------------------------- Notary Public SEAL My Commission Expires:___________________,1997 EQUIPMENT SCHEDULE SCHEDULE NO. G-1 DATED THIS 29TH DAY OF December, 1997 TO MASTER LEASE AGREEMENT DATED AS OF December 29, 1997 Lessor & Mailing Address: Lessee & Mailing Address GENERAL ELECTRIC CAPITAL CORPORATION WESTERN BEEF, INC. 4 North Park Drive 47-05 Metropolitan Avenue Suite 500 Ridgewood, NY 113;85 Hunt Valley, Maryland 21030 This Equipment Schedule is executed pursuant to, and incorporates by reference the terms and conditions of, and capitalized terms not defined herein shall have the meanings assigned to them in, the Master Lease Agreement identified above ("Agreement" said agreement and this Schedule being collectively referred to as "Lease"). This Equipment Schedule, incorporating by reference the Agreement, constitutes a separate instrument of lease. A. Equipment Pursuant to the terms of the Lease, Lessor agrees to acquire and lease to Lessee the Equipment listed on Annex A attached hereto and made a part hereof. B. Financial Terms: 1. Capitalized Lessor's Cost: $753, 280.83 2. Daily Lease Rate Factor: .050273633% 3. Basic Term: Thirty-six (36) months 4. Basic Term Commencement Date: January 1, 1998 5. Renewal Term: Three twelve (12) month terms EX-10.6 4 LEASE This Lease made the 1st day of Nov. 1991, between FOREST ASSOCIATES hereinafter referred to as LANDLORD, and P.M.C. SUPERMARKET, INC. A DIVISION OF P.S.L. FOOD MARKET, INC. D/B/A Western Beef Forest Ave. Inc. hereinafter jointly, severally and collectively referred to as TENANT. Witnesseth, that the Landlord hereby leases to the Tenant, and the Tenant hereby hires and takes from the Landlord approximately 15,000 sq. ft. in the building known as 2295 FOREST AVE. STATEN ISLAND. N.Y. to be used and occupied by the Tenant AS A RETAIL SUPERMARKET and for no other purpose, for a term to commence on NOVEMBER 1 1991, and to end on OCTOBER 31, 2001, unless sooner terminated as hereinafter provided, at the ANNUAL RENT of One Hundred Fifty One Thousand Eight Hundred Seventy Five Dollars (151,875.) with an annual increase of 5% based on $9406.26, which is the original monthly rent. all payable in equal monthly installments in advance on the first day of each and every calendar month during said term, except the first installment, which shall be paid upon the execution hereof. THE TENANT JOINTLY AND SEVERALLY COVENANTS: FIRST.--That the Tenant will pay the rent as above provided. REPAIRS ORDINANCES AND VIOLATIONS ENTRY INDEMNIFY LANDLORD SECOND.--That, throughout said term the Tenant will take good care of the demised premises, fixtures and appurtenances, and all alterations, additions and improvements to either; make all repairs in and about the same necessary to preserve them in good order and condition, which repairs shall be, in quality and class, equal to the original work; promptly pay the expense of such repairs; suffer no waste or injury; give prompt notice to the Landlord of any fire that may occur; execute and comply with all laws, rules, orders, ordinances and regulations at any time issued or in force (except those requiring structural alterations), applicable to the demised premises or to the Tenant's occupation thereof, of the Federal, State and Local Governments, and of each and every department, bureau and official thereof, and of the New York Board of Fire Underwriters; permit at all times during usual business hours, the Landlord and representatives of the Landlord to enter the demised premises for the purpose of inspection, and to exhibit them for purposes of sale or rental; suffer the Landlord to make repairs and improvements to all parts of the building, and to comply with all orders and requirements of governmental authority applicable to said building or to any occupation thereof; suffer the Landlord to erect, use, maintain, repair and replace pipes and conduits in the demised premises and to the floors above and below; forever indemnify and save harmless the Landlord for and against any and all liability, penalties, damages, expenses and judgments arising from injury during said term to person or property of any nature, occasioned wholly or in part by any act or acts, omission or omissions of the Tenant, or of the employees, guests, agents, assigns or undertenants of the Tenant and also for any matter or thing growing out of the occupation of the demised premises or of the streets, sidewalks or vaults adjacent thereto; permit, during the six months next prior to the expiration of the term the usual notice to "To Let" to be placed and to remain unmolested in a conspicuous place upon the exterior of the demised premises; repair, at or before the end of the term, all injury done by the installation or removal of furniture and property; and at the end of the term, to quit and surrender the demised premises with all alterations, additions and improvements in good order and condition. MOVING INJURY SURRENDER NEGATIVE COVENANTS OBSTRUCTION SIGNS AIR CONDITIONING THIRD.--That the Tenant will not disfigure or deface any part of the building, or suffer the same to be done, except so far as may be necessary to affix such trade fixtures as are herein consented to by the Landlord; the Tenant will not obstruct, or permit the obstruction of the street or the sidewalk adjacent thereto; will not do anything, or suffer anything to be done upon the demised premises which will increase the rate of fire insurance upon the building or any of its contents, or be liable to cause structure injury to said building; will not permit the accumulation of waste or refuse matter, and will not, without the written consent of the Landlord first obtained in each case, either sell, assign, mortgage or transfer this lease, underlet the demised premises or any part thereof, permit the same or any part thereof to be occupied by anybody other than the Tenant and the Tenant's employees, make any alterations in the demised premises, use the demised premises or any part thereof for any purpose other than the one first above stipulated, or for any purpose deemed extra hazardous on account of fire risk, nor in violation of any law or ordinance. That the Tenant will not obstruct or permit the obstruction of the light, halls, stairway or entrances to the building, and will not erect or inscribe any sign, signals or advertisements unless and until the style and location thereof have been approved by the Landlord; and if any be erected or inscribed without such approval, the Landlord may remove the same. No water cooler, air conditioning unit or system or other apparatus shall be installed or used without the prior written consent of Landlord. IT IS MUTUALLY COVENANTED AND AGREED, THAT FIRE CLAUSE FOURTH.--If the demised premises shall be partially damaged by fire or other cause without the fault or neglect of Tenant, Tenant's servants, employees, agents, visitors or licensees, the damages shall be repaired by and at the expense of Landlord and the rent until such repairs shall be made shall be apportioned according to the part of the demised premises which is usable by Tenant. But if such partial damage is due to the fault or neglect of Tenant, Tenant's servants, employees, agents, visitors or licensees, without prejudice to any other rights and remedies of Landlord and without prejudice to the rights of subrogation of Landlord's insurer, the damages shall be repaired by Landlord but there shall be no apportionment or abatement of rent. No penalty shall accrue for reasonable delay which may arise by reason of adjustment of insurance on the part of the Landlord and/or Tenant, and for reasonable delay on account of "labor troubles," or any other cause beyond Landlord's control. If the demised premises are totally damaged or are rendered wholly untenantable by fire or other cause, and if Landlord shall decide not to restore or not to rebuild the same, or if the building shall be so damaged that Landlord shall decide to demolish it or to rebuild it, then or in any of such events Landlord may, within ninety (90) days after such fire or other cause, give Tenant a notice in writing of such decision, which notice shall be given as in Paragraph Twelve hereof provided, and thereupon the term of this lease shall expire by lapse of time upon the third day after such notice is given, and Tenant shall vacate the demised premises and surrender the same to Landlord. If Tenant shall not be in default under this lease then, upon the termination of this lease under the conditions provided for in the sentence immediately preceding. Tenant's liability for rent shall cease as of the day following the casualty. Tenant hereby expressly waives the provisions of Section 227 of the Real Property Law and agrees that the foregoing provisions of this Article shall govern and control in lieu thereof. If the damage or destruction be due to the fault of neglect of Tenant the debris shall be removed by, and at the expense of, Tenant. EMINENT DOMAIN FIFTH.--If the whole or any part of the premises hereby demised shall be taken or condemned by any competent authority for any public use or purpose then the term hereby granted shall cease from the time when possession of the part so taken shall be required for such public purpose and without apportionment of award, the Tenant hereby assigning to the Landlord all right and claim to any such award, the current rent, however, in such case to be apportioned. LEASE NOT IN EFFECT DEFAULTS TEN DAY NOTICE SIXTH.--If, before the commencement of the term, the Tenant be adjudicated a bankrupt, or make a "general assignment," or take the benefit of any insolvent act, or if a Receiver or Trustee be appointed for the Tenant's property, or if this lease or the estate of the Tenant hereunder be transferred or pass to or devolve upon any other person or corporation, or if the Tenant shall default in the performance of any agreement by the Tenant contained in any other lease to the Tenant by the Landlord or by any corporation of which an officer of the Landlord is a Director, this lease shall thereby, at the option of the Landlord, be terminated and in that case, neither the Tenant nor anybody claiming under the Tenant shall be entitled to go into possession of the demised premises. If after the commencement of the term, any of the events mentioned above in this subdivision shall occur, or if Tenant shall make default in fulfilling any of the covenants of this lease, other than the covenants for the payment of rent or "additional rent" or if the demised premises become vacant or deserted, the Landlord may give to the Tenant ten days' notice of intention to end the term of this lease, and thereupon at the expiration of said ten days' (if said condition which was the basis of said notice shall continue to exist) the term under this lease shall expire as fully and completely as if that day were the date herein definitely fixed for the expiration of the term and the Tenant will then quit and surrender the demised premises to the Landlord, but the Tenant shall remain liable as hereinafter provided. RE-POSSESSION BY LANDLORD RE-LETTING WAIVER BY TENANT If the Tenant shall make default in the payment of the rent reserved hereunder, or any item of "additional rent" herein mentioned, or any part of either or in making any other payment herein provided for, or if the notice last above provided for shall have been given and if the condition which was the basis of said notice shall exist at the expiration of said ten day's period, the Landlord may immediately, or at any time thereafter, re-enter the demised premises and remove all persons and all or any property therefrom, either by summary dispossess proceedings, or by any suitable action or proceeding at law, or by force or otherwise, without being liable to indictment, prosecution or damages therefor, and re-possess and enjoy said premises together with all additions, alterations and improvements. In any such case or in the event that this lease be "terminated" before the commencement of the term, as above provided, the Landlord may either re-let the demised premises or any part or parts thereof for the Landlord's own account, or may, at the Landlord's option, re-let the demised premises or any part or parts thereof as the agent of the Tenant, and receive the rents therefor, applying the same first to the payment of such expenses as the Landlord may have incurred, and then to the fulfillment of the covenants of the Tenant herein, and the balance, if any, at the expiration of the term first above provided for, shall be paid to the Tenant. Landlord may rent the premises for a term extending beyond the term hereby granted without releasing Tenant from any liability. In the event that the term of this lease shall expire as above in this subdivision "Sixth" provided, or terminate by summary proceedings or otherwise, and if the Landlord shall not re-let the demised premises for the Landlord's own account, then, whether or not the premises be re-let, the Tenant shall remain liable for, and the Tenant hereby agrees to pay to the Landlord, until the time when this lease would have expired but for such termination or expiration, the equivalent of the amount of all of the rent and "additional rent" reserved herein, less the avails of reletting, if any, and the same shall be due and payable by the Tenant to the Landlord on the several rent days above specified, that is, upon each of such rent days the Tenant shall pay to the Landlord the amount of deficiency then existing. The Tenant hereby expressly waives any and all right of redemption in case the Tenant shall be dispossessed by judgment or warrant of any court or judge, and the Tenant waives and will waive all right to trial by jury in any summary proceedings hereafter instituted by the Landlord against the Tenant in respect to the demised premises. The words "re-enter" and "re-entry" as used in this lease are not restricted to their technical legal meaning. REMEDIES ARE CUMULATIVE In the event of a breach or threatened breach by the Tenant of any of the covenants or provisions hereof, the Landlord shall have the right of injunction and the right to invoke any remedy allowed at law or in equity, as if re-entry, summary proceedings and other remedies were not herein provided for. LANDLORD MAY PERFORM ADDITIONAL RENT SEVENTH.--If the Tenant shall make default in the performance of any covenant herein contained, the Landlord may immediately, or at any time thereafter, without notice, perform the same for the account of the Tenant. If a notice of mechanic's lien be filed against the demised premises or against premises of which the demised premises are part, for, or purporting to be for, Tenant shall fail to take such action as shall cause such lien to be discharged within fifteen days after the filing of such notice, the Landlord may pay the amount of such lien or discharge the same by deposit or by bonding proceedings, and in the event of such deposit or bonding proceedings, the Landlord may require the lienor to prosecute an appropriate action to enforce the lienor's claim. In such case, the Landlord may pay any judgment recovered on such claim. Any amount paid or expense incurred by the Landlord as in this subdivision of this lease provided, and any amount as to which the Tenant shall at any time be in default for or in respect to the use of water, electric current or sprinkler supervisory service, and any expense incurred or sum of money paid by the Landlord by reason of the failure of the Tenant to comply with any provision hereof, or in defending any such action, shall be deemed to be "additional rent" for the demised premises, and shall be due and payable by the Tenant to the Landlord on the first day of the next following month, or, at the option of the Landlord, on the first day of any succeeding month. The receipt by the Landlord of any installment of the regular stipulated rent hereunder or any of said "additional rent" shall not be a waiver of any other "additional rent" then due. AS TO WAIVERS EIGHTH.--The failure of the Landlord to insist, in any one or more instances upon a strict performance of any of the covenants of this lease, or to exercise any option herein contained, shall not be construed as a waiver or a relinquishment for the future of such covenant or option, but the same shall continue and remain in full force and effect. The receipt by the Landlord of rent, with knowledge of the breach of any covenant hereof, shall not be deemed a waiver of such breach and no waiver by the Landlord of any provision hereof shall be deemed to have been made unless expressed in writing and signed by the Landlord. Even though the Landlord shall consent to an assignment hereof no further assignment shall be made without express consent in writing by the Landlord. COLLECTION OF RENT FROM OTHERS NINTH.--If this lease be assigned, or if the demised premises or any part thereof be underlet or occupied by anybody other than the Tenant the Landlord may collect rent from the assignee, under-tenant or occupant, and apply the net amount collected to the rent herein reserved, and no such collection shall be deemed a waiver of the covenant herein against assignment and underletting, or the acceptance of the assignee, under-tenant or occupant as tenant, or a release of the Tenant from the further performance by the Tenant of the covenants herein contained on the part of the Tenant. MORTGAGES TENTH.--This lease shall be subject and subordinate at all times, to the lien of the mortgages now on the demised premises, and to all advances made or hereafter to be made upon the security thereof, and subject and subordinate to the lien of any mortgage or mortgages which at any time may be made a lien upon the premises. The Tenant will execute and deliver such further instrument or instruments subordinating this lease to the lien of any such mortgage or mortgages as shall be desired, by any mortgagee or proposed mortgagee. The Tenant hereby appoints the Landlord the attorney-in-fact of the Tenant, irrevocable, to execute and delivery any such instrument or instruments for the Tenant. IMPROVEMENTS ELEVENTH.--All improvements made by the Tenant to or upon the demised premises, except said trade fixtures, shall when made, at once be deemed to be attached to the freehold, and become the property of the Landlord, and at the end or other expiration of the term, shall be surrendered to the Landlord in as good order and condition as they were when installed, reasonable wear and damages by the elements excepted. NOTICES TWELFTH.--Any notice or demand which under the terms of this lease or under any statute must or may be given or made by the parties hereto shall be in writing and shall be given or made by mailing the same by certified or registered mail addressed to the respective parties at the addresses set forth in this lease. NO LIABILITY THIRTEENTH.--The Landlord shall not be liable for any failure of water supply or electrical current, sprinkler damage, or failure or sprinkler service nor for injury or damage to person or property caused by the elements or by other tenants or persons in said building, or resulting from steam, gas, electricity, water, rain or snow, which may leak or flow from any part of said buildings, or from the pipes, appliances or plumbing works of the same, or from the street or sub-surface, or from any other place, nor for interference with light or other incorporeal hereditaments by anybody other than the Landlord, or caused by operations by or for a governmental authority in construction of any public or quasi-public work, neither shall the Landlord be liable for any latent defect in the building. NO ABATEMENT FOURTEENTH.--No diminution or abatement of rent, or other compensation shall be claimed or allowed for inconvenience or discomfort arising from the making of repairs or improvements to the building or to its appliance, nor for any space taken to comply with any law, ordinance or order of a governmental authority. In respect to the various "services," if any, herein expressly or impliedly agreed to be furnished by the Landlord to the Tenant, it is agreed that there shall be no diminution or abatement of the rent, or any other compensation, for interruption or curtailment of such "service" when such interruption or curtailment shall be due to accident, alterations or repairs desirable or necessary to be made or to inability to difficulty in securing supplies or labor for the maintenance of such "service" or to some other cause, not gross negligence on the part of the Landlord. No such interruption or curtailment of any such "service" shall be deemed a constructive eviction. The Landlord shall not be required to furnish, and the Tenant shall not be entitled to receive, any of such "services" during any period wherein the Tenant shall be in default in respect to the payment of rent. Neither shall there be any abatement or diminution of rent because of making of repairs, improvements or decorations to the demised premises after the data above fixed for the commencement of the term, it being understood that rent shall, in any event, commence to run at such date so above fixed. RULES, ETC. FIFTEENTH.--The Landlord may prescribe and regulate the placing of safes, machinery, quantities of merchandise and other things. The Landlord may also prescribe and regulate which elevator and entrances shall be used by the Tenant's employees, and for the Tenant's shipping. The Landlord may make such other and further rules and regulations as, in the Landlord's judgment, may from time to time be needful for the safety, care or cleanliness of the building, and for the preservation of good order therein. The Tenant and the employees and agents of the Tenant will observe and conform to all such rules and regulations. SHORING OF WALLS SIXTEENTH.--In the event that an excavation shall be made for building or other purposes upon land adjacent to the demised premises or shall be contemplated to be made, the Tenant shall afford to the person or persons causing or to cause such excavation, license to enter upon the demised premises for the purpose of doing such work as said person or persons shall deem to be necessary to preserve the wall or walls, structure or structures upon the demised premises from injury and to support the same by proper foundations. VAULT SPACE SEVENTEENTH.--No vaults or space not within the property line of the building are leased hereunder. Landlord makes no representation as to the location of the property line of the building. Such vaults or space as Tenant may be permitted to use or occupy are to be used or occupied under a revocable license and if such license be revoked by the Landlord as to the use of part or all of the vaults or space Landlord shall not be subject to any liability; Tenant shall not be entitled to any compensation or reduction in rent nor shall this be deemed constructive or actual eviction. Any tax, fee or charge of municipal or other authorities for such vaults or space shall be paid by the Tenant for the period of the Tenant's use or occupancy thereof. ENTRY EIGHTEENTH.--That during seven months prior to the expiration of the term hereby granted, applicants shall be admitted at all reasonable hours of the day to view the premises until rented; and the Landlord and the Landlord's agents shall be permitted at any time during the term to visit and examine them at any reasonable hour of the day, and workmen may enter at any time, when authorized by the Landlord or the Landlord's agents, to make or facilitate repairs in any part of the building; and if the said Tenant shall not be personally present to open and permit an entry into said premises, at any time, when for any reason and without rendering the Landlord or such agents liable to any claim or cause of action for damages by reason thereof (if during such entry the Landlord shall accord reasonable care to the Tenant's property) and without in any manner affecting the obligations and covenants of this lease; it is, however, expressly understood that the right and authority hereby reserved, does not impose, nor does the Landlord assume, by reason thereof, any responsibility or liability whatsoever for the care or supervision of said premises, or any of the pipes, fixtures, appliances or appurtenances therein contained or therewith in any manner connected. NO REPRESENTATIONS NINETEENTH.--The Landlord has made no representations or promises in respect to said building or to the demised premises except those contained herein, and those, if any, contained in some written communication to the Tenant, signed by the Landlord. This instrument may not be changed, modified, discharged or terminated orally. ATTORNEY'S FEES TWENTIETH.--If the Tenant shall at any time be in default hereunder, and if the Landlord shall institute an action or summary proceeding against the Tenant based upon such default, then the Tenant will reimburse the Landlord for the expense of attorneys' fees and disbursements thereby incurred by the Landlord, so far as the same are reasonable in amount. Also so long as the Tenant shall be a tenant hereunder the amount of such expenses shall be deemed to be "additional rent" hereunder and shall be due from the Tenant to the Landlord on the first day of the month following the incurring of such respective expenses. POSSESSION TWENTY-FIRST.--Landlord shall not be liable for failure to give possession of the premises upon commencement date by reason of the fact that premises are not ready for occupancy, or due to a prior Tenant wrongfully holding over or any other person wrongfully in possession or for any other reason: in such event the rent shall not commence until possession is given or is available, but the term herein shall not be extended. THE TENANT FURTHER COVENANTS: IF A FIRST FLOOR TWENTY-SECOND.--If the demised premises or any part thereof consist of a store, or of a first floor, or of any part thereof, the Tenant will keep the sidewalk and curb in front thereof clean at all times and free from snow and ice, and will keep insured in favor of the Landlord, all plate glass therein and furnish the Landlord with policies of insurance covering the same. INCREASED FIRE INSURANCE RATE TWENTY-THIRD.--If by reason of the conduct upon the demised premises of a business not herein permitted, or if by reason of the improper or careless conduct of any business upon or use of the demised premises, the fire insurance rate shall at any time be higher than it otherwise would be, then the Tenant will reimburse the Landlord, as additional rent hereunder, for that part of all fire insurance premiums hereafter paid out by the Landlord which shall have been charged because of the conduct of such business not so permitted, or because of the improper or careless conduct of any business upon or use of the demised premises, and will make such reimbursement upon the first day of the month following such outlay by the Landlord; but this covenant shall not apply to a premium for any period beyond the expiration date of this lease, first above specified. In any action or proceeding wherein the Landlord and the Tenant are parties, a schedule or "make up" of rate for the building on the demised premises, purporting to have been issued by New York Fire Insurance Exchange, or other body making fire insurance rates for the demised premises, shall be prima facie evidence of the facts therein stated and of the several items and charges included in the fire insurance rate then applicable to the demised premises. WATER RENT SEWER TWENTY-FOURTH.--If a separate water meter be installed for the demised premises, or any part thereof, the Tenant will keep the same in repair and pay the charges made by the municipality or water supply company for or in respect to the consumption of water, as and when bills therefor are rendered. If the demised premises, or any part thereof, be supplied with water through a meter which supplies other premises, the Tenant will pay to the Landlord, as and when bills are rendered therefor, the Tenant's proportionate part of all charges which the municipality or water supply company shall made for all water consumed through said meter, as indicated by said meter. Such proportionate part shall be fixed by apportioning the respective charge according to floor area against all of the rentable floor area in the building (exclusive of the basement) which shall have been occupied during the period of the respective charges, taking into account the period that each part of such area was occupied. Tenant agrees to pay as additional rent the Tenant's proportionate part, determined as aforesaid, of the sewer rent or charge imposed or assessed upon the building of which the premises are a part. ELECTRIC CURRENT TWENTY-FIFTH.--That the Tenant will purchase from the Landlord, if the Landlord shall so desire, all electric current that the Tenant requires at the demised premises and will pay the Landlord for the same, as the amount of consumption shall be indicated by the meter furnished therefor. The price for said current shall be the same as that charged for consumption similar to that of the Tenant by the company supplying electricity in the same community. Payments shall be due as and when bills shall be rendered. The Tenant shall comply with like rules, regulations and contract provisions as those prescribed by said company for a consumption similar to that of the Tenant. SPRINKLER SYSTEM TWENTY-SIXTH.--If there now is or shall be installed in said building a "sprinkler system" the Tenant agrees to keep the appliances thereto in the demised premises in repair and good working condition, and if the New York Board of Fire Underwriters or the New York Fire Insurance Exchange or any bureau, department of official of the State or local government requires or recommends that any changes, modifications, alterations or additional sprinkler heads or other equipment be made or supplied by reason of the Tenant's business, or the location of partitions, trade fixtures, or other contents of the demised premises, or if such changes, modifications, alterations, additional sprinkler heads or other equipment in the demised premises are necessary to prevent the imposition of a penalty or charge against the full allowance for a sprinkler system in the fire insurance rate as fixed by said Exchange, or by any Fire Insurance Company, the Tenant will at the Tenant's own expense, promptly made and supply such changes, modifications, alterations, additional sprinkler heads or other equipment. As additional rent hereunder the Tenant will pay to the Landlord, annually in advance, throughout the term $ toward the contract price for sprinkler supervisory service. SECURITY TWENTY-SEVENTH.--The sum of Dollars is deposited by the Tenant herein with the Landlord herein as security for the faithful performance of all the covenants and conditions of the lease by the said Tenant. If the Tenant faithfully performs all the covenants and conditions on his part to be performed, then the sum deposited shall be returned to said Tenant. NUISANCE TWENTY-EIGHTH.--This lease is granted and accepted on the especially understood and agreed condition that the Tenant will conduct his business ins such a manner, both as regards noise and kindred nuisances, as will in no wise interfere with, annoy, or disturb any other tenants, in the conduct of their several businesses, or the Landlord in the management of the building; under penalty of forfeiture of this lease and consequential damages. BROKERS COMMISSIONS TWENTY-NINTH.--The Landlord hereby recognizes as the broker who negotiated and consummated this lease with the Tenant herein, and agrees that if, as, and when the Tenant exercises the option, if any, contained herein to renew this lease, or fails to exercise the option, if any, contained therein to cancel this lease, the Landlord will pay to said broker a further commission in accordance with the rules and commission rates of the Real Estate Board in the community. A sale, transfer, or other disposition of the Landlord's interest in said lease shall not operate to defeat the Landlord's obligation to pay the said commission to the said broker. The Tenant herein hereby represents to the Landlord that the said broker is the sole and only broker who negotiated and consummated this lease with the Tenant. WINDOW CLEANING THIRTIETH.--The Tenant agrees that it will not require, permit, suffer, nor allow the cleaning of any windows, or windows, in the demised premises from the outside (within the meaning of Section 202 of the Labor Law) unless the equipment and safety devices required by law, ordinance, regulation or rule, including, without limitation, Section 202 of the New York Labor Law, are provided and used, and unless the rules, or any supplemental rules of the Industrial Board of the State of New York are fully completed with; and the Tenant hereby agrees to indemnify the Landlord, Owner, Agent, Manager and/or Superintendent, as a result of the Tenant's requiring, permitting, suffering, or allowing any window, or windows in the demised premises to be cleaned from the outside in violation of the requirements of the aforesaid laws, ordinances, regulations and/or rules. VALIDITY THIRTY-FIRST.--The invalidity or unenforceability of any provision of this lease shall in no way affect the validity or enforceability of any other provision hereof. EXECUTION & DELIVERY OF LEASE THIRTY-SECOND.--In order to avoid delay, this lease has been prepared and submitted to the Tenant for signature with the understanding that it shall not bind the Landlord unless and until it is executed and delivered by the Landlord. EXTERIOR OF PREMISES THIRTY-THIRD.--The Tenant will keep clean and polished all metal, trim, marble and stonework which are a part of the exterior of the premises, using such materials and methods as the Landlord may direct, and if the Tenant shall fail to comply with the provisions of this paragraph, the Landlord may cause such work to be done at the expense of the Tenant. PLATE GLASS THIRTY-FOURTH.--The Landlord shall replace at the expense of the Tenant any and all broken glass in the skylights, doors and walls in and about the demised premises. The Landlord may insure and keep insured all plate glass in the skylights, doors and walls in the demised premises, for and in the name of the Landlord and bills for the premiums therefor shall be rendered by the Landlord to the Tenant at such times as the Landlord may elect, and shall be due from and payable by the Tenant when rendered, and the amount thereof shall be deemed to be, and shall be paid as, additional rent. WAR EMERGENCY THIRTY-FIFTH.--This lease and the obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on part of Tenant to be performed shall in nowise be affected, impaired or excused because Landlord is unable to supply or is delayed in supplying any service expressly or impliedly to be supplied or is unable to make, or is delayed in making any repairs, additions, alterations or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Landlord is prevented or delayed from so doing by reason of governmental preemption in connection with a National Emergency declared by the President of the United States or in connection with any rule, order or regulation of any department or subdivision thereof of any government agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency. THE LANDLORD COVENANTS QUIET POSSESSION FIRST.--That if and so long as the Tenant pays the rent and "additional rent" reserved hereby, and performs and observes the covenants and provisions hereof, the Tenant shall quietly enjoy the demised premises, subject, however, to the terms of this lease, and to the mortgages above mentioned, provided however, that this covenant shall be conditioned upon the retention of title to the premises by Landlord. ELEVATOR HEAT SECOND.--Subject to the provisions of Paragraph "Fourteenth" above the Landlord will furnish the following respective services: (a) Elevator service, if the building shall contain an elevator or elevators, on all days except Sundays and holidays, from A.M. to P.M. on Saturdays from A.M. to P.M.: (b) Heat, during the same hours on the same days in the cold season in each year. THIS IS A TRIPLE NET LEASE. And it is mutually understood and agreed that the covenants and agreements contained in the within lease shall be binding upon the parties hereto and upon their respective successors, heirs, executors and administrators. In Witness Whereof, the Landlord and Tenant have respectively signed and sealed these presents th day and year first above written. /s/ Peter Castellana Jr Landlord IN PRESENCE OF: /s/ Frank Castellana Tenant State of New York, County of ss: On the day of 19 , before me personally came , to me known, who, being by me duly sworn, did depose and say that he resides at ; that he is of , the corporation described in and which executed the within instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. State of New York, County of ss: On the day of 19 , before me personally came , to me known, who, being by me duly sworn, did depose and say that he resides at ; that he is of , the corporation described in and which executed the within instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. State of New York, County of ss: On the day of 19 , before me personally came to me known and known to me to be the individual described in and who executed the foregoing instrument, and duly acknowledged that he executed the same. State of New York, County of ss: On the day of 19, , before me personally came , subscribing witness to the foregoing instrument, with whom I am personally acquainted, who, being by me duly sworn, did depose and say, that he resided, at the time of the execution of said instrument, and still resides, in that he is and then was acquainted with , and knew to be the individual described in and who executed the foregoing instrument; and that he, said subscribing witness, was present and saw execute the same; and that he, said witness, thereupon at the same time subscribed his name as witness thereto. GUARANTY In consideration of the letting of the premises within mentioned to the Tenant within named, and of the sum of One Dollar, to the undersigned in hand paid by the Landlord within named, the undersigned hereby guarantees to the Landlord and to the heirs, successors and/or assigns of the Landlord, the payment by the Tenant of the rent, within provided for, and the performance by the Tenant of all of the provisions of the within lease. Notice of all defaults is waived, and consent is hereby given to all extensions of time that any Landlord may grant. Dated, 19 L.S. STATE OF COUNTY OF ss: On this day of , 19 , before me personally appeared to me known and known to me to be the individual described in and who executed the foregoing instrument, and duly acknowledged to me that he executed the same. EX-10.7 5 STORE LEASE STORE LEASE The Landlord and the Tenant agree to lease the Rental Space for the Term and at the Rent stated as follows: (The words Landlord and Tenant include all landlords and all tenants under this lease.) Landlord: 130-35 Merrick Boulevard Associates, L.P. Address: 47-05 Metropolitan Avenue Flushing, New York 11385 Tenant: WESTERN BEEF, MERRICK BLVD., INC.. Address: 130-35 Merrick Blvd. Springfield Gardens, New York Rental Space: Approximately 37,000 square feet of ground floor space constituting the entire underroof area, In the Building at: 130-35 Merrick Blvd., Springfield Gardens, New York, together with abutting parking areas, the property being more particularly described on the Queens County Assessor's Records as Section 53 Block 12494 Lots 8, 37 & 39 Volume 3. Date of Lease: February 6, 1990 Term: 20 years, ending June 30, 2015. Rent: The rent is payable in advance at the Offices of Landlord beginning June 1, 2015 and thereafter on the first day of each and every month in accordance with the "Schedule of Rents" annexed hereto and made a party hereof. Security: none Insurance : A. Liability - Minimum $5,000,000.00-$10,000,000.00 (See P. 6A) 1 B. Property/Rental (See P. 6B) Use of Rental Space - as and for the operation of a Supermarket and no other purpose. 1. Possession and Use Landlord shall give possession of the Rental Space to Tenant for the Term. Tenant shall take possession of and use the Rental Space for the purpose stated above. Tenant may not use the Rental Space for any other purpoe without the written consent of the Landlord. Tenant shall not allow the Rental Space to be used for any unlawful or hazardous purpose. Tenant is satisfied that the Rental Space is for the Use stated. Tenant shall obtain and maintain any necessary certificate of occupancy or other certificate permitting Tenant to use the Rental Space. Tenant shall not use the Rental Space in any manner that results in (1) an increase in the rate of fire or liability insurance or (2) cancellation of any fire or liability insurance policy on the Rental Space. Tenant shall comply with all requirements of the insurance companies insuring the Rental Space. Tenant shall not abandon the Rental Space during the Term of this Lease or permit it to become vacant for more than sixty (60) continuous days. 2. Delay in Giving of Possession [This section has been intentionally deleted.] 3. No Assignment or Subletting Tenant may not do any of the following without the Landlord's prior written consent: (a) assign this Lease (if Tenant is a corporation, the sale of a majority of its shares shall be treated as an assignment), (b) sublet all or any part of the Rental Space or (c) permit any other person or business to use the Rental Space. 4. Rent and Additional Rent [This section has been intentionally deleted] 2 5. Security [This section has been intentionally deleted] 6. Insurance A. Liability Tenant shall obtain, pay for, and keep in effect for the benefit of Landlord and Tenant, public liability insurance on the Rental Space. The insurance company and the broker must be acceptable to the Landlord. This coverage must be in at least the minimum amounts stated above and shall include Landlord as a direct insured party. Tenant shall deliver the original policy to the Landlord with proof of payment of the first year's premiums. This shall be done not less than 15 days before the Beginning of the Term. Tenant shall deliver a renewal policy to the Landlord with proof of payment not less than 20 days before the expiration date of each policy. B. Property/Casualty/Rental Tenant shall throughout the term of this lease, for the benefit of both Landlord and Tenant as named insureds, maintain insurance against loss or damage by fire, and such other risks and hazards as are insurable under present and future standard forms of fire and extended coverage insurance policies on the Building and all structures, appurtenances, sprinklers, boilers and on Tenant's personal property, furniture, furnishings, and fixtures located in the demised premises, for their respective full insurable value with Broad Extended Occupancy Endorsement in amounts at all times sufficient to prevent Landlord or Tenant from becoming a co-insurer under the terms of any such policies. Tenant shall also obtain and keep in force rental insurance against loss of rental under a rental value insurance policy covering risk of loss due to the occurrence of any of the hazards insured against under Tenant's Fire and Extended Insurance on the building, in an amount sufficient to prevent Landlord from becoming a co-insurer but in any event, in an amount sufficient to pay, for not less than one year, the rent payable under this Lease. All proceeds received by Landlord under rent insurance policies will be credited as received against the rent due. 3 Each such policy shall provide that not less than ten days before expiration, evidence of its renewal, or a new certificate, together with evidence of payment of premiums for the renewal period of insurance policy, as the case may be, shall be delivered to Landlord. In the event of any fire or other casualty insured against by Tenant's policy, Landlord may assign to Tenant all of the Landlord's right, title, and interest in and to the insurance proceeds. Tenant shall accept such proceeds as full payment for any loss or damage to its property, and shall not make any claim against Landlord for any other sum therefor, even if the loss or damage is due to the carelessness or negligence of Landlord or its servants, agents, or employees. If any insured casualty occurs, Tenant shall have full authority, and shall take all necessary measures, to file, negotiate, compromise, or adjust any loss under its policy, subject to Landlord'[s approval which may not unreasonably be withheld. C. On Tenant's default in obtaining or delivery any such policy or policies or failure to pay the charges therefor, Landlord may secure or pay the charges for any such policy or policies and charge Tenant as additional rent therefor. D. All policies shall state that the insurance company shall not cancel or refuse to renew without at least 30 days written notice to the Landlord. E. If during the term of the Lease, higher limits of insurance than those mentioned above are appropriate, customary, and generally required for like premises utilized for similar uses, Tenant shall, upon Landlord's request, procure such increased limits insurance. Insurance required hereunder shall be in companies rated AAA or better in "Best's Insurance Guide," which shall be qualified to do business in the State of New York. Neither party shall be liable to the other for any business interruption or any loss or damage to property or injury or death of persons occurring in the Building (including all the Rental Sp), or in any manner growing out of or connected with Tenant's use and occupation thereof, the Building or the condition thereof, whether caused by the negligence or other fault of Landlord or Tenant, or of their respective agents, employees, subtenants, licensees, or assignees. The release in favor of Landlord contained herein, is in addition to, and not in substitution for, or in dimunition of the hold harmless and indemnification provisions provided in paragraph "8" of this Lease. 4 7. Water Damage Landlord shall not be liable for any damage or injury to any persons or property caused by the leak of low of water from or into any part of the Building, unless caused by its own act or omission. 8. Liability of Landlord, Tenant and Indemnity. A. Landlord and its agents shall not be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Tenant or Persons Within Tenant's Control by theft or otherwise. Landlord and its agents shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the building or from the pipes, appliances, sprinklers or plumbing works or from the roof, street or sub-surface or from any other place or by dampness or by any other cause of whatsoever nature, unless caused by or due to the active negligence of Landlord, its agents, or employees; nor shall Landlord or its agents be liable for any such damage caused by other tenants or persons in the Building or caused by operations in construction of any private, public or quasi-public work, nor shall Landlord be liable for any latent defect in the Demised Premises or in the Building. B. If at any time any windows of the Demised Premises are temporarily or permanently closed, darkened or bricked up for any reason whatsoever including Landlord's own acts, Landlord shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefor nor abatement of rent nor shall the same release Tenant form its obligations hereunder or constitute an C. Tenant agrees, irrespective of whether Tenant shall be negligent, to indemnify, defend and save harmless, Landlord and its partners, officers, directors, contractors, agents and employees from and against any and all liability (statutory or otherwise), claims, suits, demands, damages, judgments, costs, fines penalties, interest and expenses (including counsel fees and disbursements incurred in any action or proceeding), to which Landlord or any such partners, officer, director, contractor, agent or employee may be subject or which Landlord may suffer arising from, or in connection with, (I) any liability or claim for any injury to, or death of, any person or person or damage to property (including any loss of use thereof), or (ii) the use and occupancy of the Demised Premises or from any work, installation or thing whatsoever done or omitted (other than by Landlord or its 5 contractors or the agents or employees of either) in the Demised Premises during the Term and during the period of time, if any, prior to the Commencement Date that Tenant may have been given access to the Demised Premises, or (iii) any default by Tenant in the performance of Tenant's obligation of Tenant or Persons within Tenant's Control. D. Tenant shall reimburse and compensate Landlord as additional rent within five (5) days after rendition of a statement for all expenditures , costs, fees, expenses, judgments, penalties, damages, and fines sustained or incurred by Landlord (including counsel fees and disbursements incurred in connection with any action or proceeding) due to the operation of this Article, or non-performance or non-compliance with or breach or provision or condition of this Lease, or breach of any warranty or representation by Tenant made in this Lease. If in any action or proceeding naming both Landlord and Tenant, liability arising out of the negligence of Tenant is established, Tenant agrees (I) to indemnify Landlord in accordance with the provisions of this Article and (ii) to waive any right of contribution against Landlord. Reference in this Article to Landlord shall for all purposes be deemed to include the lessor of any Underlying Leases and each Mortgagee. E. Tenant agrees that its sole remedy in cases where Landlord's reasonableness in exercising its judgment or withholding its consent or approval is applicable pursuant to a specific provision of this Lease, or any rider or separate agreement relating to this Lease, if any, shall be those in the nature of an injunction, declaratory judgment, or specific performance, the rights to money damages or other remedies being hereby specified waived. Landlord shall not be liable for injury or damage to any persons or property unless due to the Landlord's act. Tenant is liable for any loss, injury or damage to any person or property caused by the act or neglect of Tenant or Tenant's employees. Tenant shall defend the Landlord from and reimburse the landlord for all liability and costs resulting from any injury or damage due to threat or neglect of Tenant or the Tenant's employees. 9. Acceptance of Rental Space Tenant has inspected the Rental Space and agrees that the Rental Space is in satisfactory condition. Tenant accepts the Rental Space "as is". 6 10. Quiet Enjoyment Landlord has the right to enter into this Lease. If Tenant complies with this Lease, the Landlord must provide Tenant with undisturbed possession of the Rental Space. 11. Taxes, Utilities, Securities and Services Tenant shall arrange for any pay for all real estate taxes, assessments and all Federal, State, or Local or Municipal levies of any kind or nature; all heat, lighting, water and other utilities; and all costs of security or other services required for the intended use of the Rental Space. Tenant shall maintain and clean the demised premises at its own cost and expense. Landlord is not liable for any inconvenience or harm caused by any stoppage or reduction of utilities and services nor shall such stoppage or reduction excuse Tenant from paying Rent. 12. Tenant's Repairs, Maintenance, and Compliance Tenant Shall: (a) Promptly comply with all laws, orders, rules and requirements of governmental authorities, insurance carriers, board of fire underwriters, or similar groups. (b) Maintain the Rental Space and all equipment, fixtures and sprinklers in it. (c)Make all necessary repairs to the Rental Space and all equipment, sprinklers and fixtures in it. (d)Maintain the Rental Space in a neat, clean, safe , and sanitary condition, free of all garbage. (e) Use all electric, plumbing and other facilities in the Rental Space safely. (f) Use no more electricity than the wiring or feeders to the Rental Space can safely carry. (g) Promptly replace all broker glass in the Rental Space. (h) Do nothing to destroy, deface, damage, or remove any part of the Rental Space. 7 (i)Keep nothing in the Rental Space which is inflammable, dangerous or explosive or which might increase the danger of fire or other casualty/ (j) Promptly notify Landlord when there are conditions which need repair. (k) Do nothing to destroy the peace and quite of Landlord, other tenants, or persons in the neighborhood. (l) Avoid littering in the building or on its grounds. Tenant shall pay any and all expenses involved in complying with the above. 13. Landlord's Repairs and Maintenance Landlord shall have no responsibility to: (a) Maintain the public areas, roof and exterior walls in good condition. (b) Make structural repairs unless these repairs are made necessary by the act of Landlord. (c) Make necessary replacements of the plumbing, cooling, heating and electrical system, except when made necessary by the act of Landlord. (d) Maintain the elevators in the Building, if any. 14. No Alterations. Tenant may not make any changes or additions to the Rental Space without Landlord's written consent which consent shall not be unreasonably withheld. Any changes or additions made without landlord's written consent shall be removed by Tenant on demand. All changes or additions made with Landlord's written consent shall become the property of Landlord when completed and paid for Tenant. They shall remain as part of the Rental Space t the end of the Term. Landlord may demand that Tenant remove any changes or additions at the end of the Term. Tenant shall promptly pay for all costs of any permitted changes or additions. Tenant shall not allow any mechanic's lien or other claim to be filed against the Building. If any lien or claim is filed against the Building, Tenant shall have it promptly removed. 8 15. Signs [This section has been intentionally deleted.] 16. Access to Rental Space Landlord shall have access to the Rental Space on reasonable notice to Tenant to (a) inspect the Rental Space and (b) show it to prospective buyers, mortgage lenders, contractors or insurers. Landlord may enter the Rental Space at any time without notice to Tenant in case of emergency. 17. Fire and Other Casualty Tenant shall notify the Landlord at once of any fire or casualty in the Rental Space. Tenant is not required to pay Rent when the Rental Space is unusable. If Tenant uses part of the Rental Space, Tenant must pay pro-rata for the usable part. If the Rental Space is partially damaged by fire or other casualty, Tenant shall repair it as soon possible. This includes the damage to the Rental Space and all fixtures installed by either Tenant or Landlord. Either party may cancel this Lease if the Rental Space is so damaged by fire or other casualty that it cannot be repaired within 90 days. If the parties cannot agree, the opinion of a contractor chose by Landlord will be binding on both parties. This lease shall end if the Rental Space is totally destroyed. Tenant shall pay Rent to the date of destruction. If the fire or other casualty is caused by the act or neglect of Tenant or Tenant's employees, Tenant shall pay for all repairs and all other damage. 18. Eminent Domain Eminent Domain is the right of a government to lawfully condemn and take private property for public use. Fair value must be paid for the property. The taking occurs either by court order or by deed to the condemning party. If any part of the Rental Space is taken by eminent domain, either party may cancel this lease on 30 days notice to the other. Tenant shall not share in 9 any payment or award to Landlord. Tenant shall have the right to file its own claim against the condemning authority, so long as landlords rights are not prejudiced. 19. Tenant's Certificate At the request of the Landlord, Tenant shall sign a certificate stating (a) this Lease has not been amended and is in effect, (b) Landlord has fully performed all of the Landlord's agreements in this Lease, (c) Tenant has no rights to the Rental Space except as stated in this Lease, (d) Tenant has paid all Rent to date, and (e) Tenant has not paid Rent for more than one month in advance. The Certificate shall also list all the property attached to the Rental Space owned by the Tenant. 20. Violation, Eviction, Re-entry and Damages Landlord reserves a right of re-entry which allows the Landlord to end this Lease and re-enter the Rental Space if Tenant violates any agreement in this Lease. This is done by eviction. Eviction is a court procedure to remove a tenant. Eviction is stayed by filing of a complaint in court and the service of a summons on a tenant to appear in court. Landlord may also evict Tenant for any one of the other grounds of good cause provided by law. After a court order of eviction and compliance with the warrant of removal, Landlord may re-enter and take back possession of the Rental Space. If the cause for eviction is non-payment of Rent, notice does not have to be given to Tenant because Landlord files a complaint. If there is any other cause to evict, Landlord must give Tenant the notice required by law before Landlord files a complaint for eviction. Tenant is liable for damages caused by Tenant's violation of any agreement, in this Lease. This includes reasonable attorney's fees and costs. After eviction Tenant shall pay the Rent for the balance of the Term or until the Landlord re-rents the Rental Space, if sooner. If the Landlord re-rents the Rental Space for less than the Tenant's Rent, Tenant shall pay the difference until the end of the Term. Tenant shall not be entitled to any excess resulting from the re-renting. Tenant shall also pay (a) all reasonable expenses incurred by the Landlord in preparing the Rental space for re-renting and (b) commissions paid to a broker for finding a new tenant. 10 21. Bankruptcy Anything elsewhere in this lease to the contrary notwithstanding, this lease may be canceled by Landlord by the sending of a written notice to Tenant within a reasonable time after the happening of any one or more of the following events: (i ) Tenant shall (a) have applied for or consented to the appointment of a receiver, trustee, liquidator, or other custodian of Tenant or any of its properties or assets, (b) unable to pay its debts generally s they become due or shall have taken any other action which could result in it becoming the subject of an insolvency or bankruptcy proceeding, (c) have made a general assignment for the benefit of creditors, (d) have commenced a voluntary case for relief as a debtor under the Untied States Bankruptcy Code or filed a petition to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute or an answer admitting the material allegations of a petition filed against it in any proceeding under such law, or (e) be adjudicated a bankrupt or insolvent, or (ii) without the acquiescence or consent of Tenant an order, judgment or decree shall have been entered by any court of competent jurisdiction (a) approving as properly filed a petition seeking relief under the Untied States Bankruptcy Code or any bankruptcy, reorganization, insolvency, adjustment of debts, dissolution or liquidation law or statute with respect to Tenant or all or a substantial part of its properties or assets or (b) appointing a receiver, trustee, liquidator or other custodian or all or a substantial part of its properties or assets, and such order, judgment or decree shall have continued unstayed and in effect for any period claiming thorough or under Tenant or by reason of any statute or order of court shall thereafter be entitled to possession of the Demised Premises but shall forthwith quit and surrender the Demised Premises. If this lease shall be assigned in accordance with its terms the provisions of this Article shall be applicable only to the party then owning Tenant's interest in this lease. 22. No Representations by Landlord Neither Landlord nor Landlord's agents have made any representations or promises with respect to the physical condition of the building, the land upon which it is erected or the demised premises, the rents, leases, leases, expenses of operation or any other matter or thing affecting or related to the premises except as herein expressly se forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this lease Tenant has inspected the building and the demised premises and is thoroughly acquainted with their condition, applicable zoning, permissible 11 uses, and occupancy requirements, and agrees to take the same "as is" and acknowledges that the taking of possession of the demised premises by Tenant shall be conclusive evidence that the said premises and the building of which the same form a part were in good and satisfactory condition at the time such possession was so taken, except as to latent defects. All understanding and agreements heretofore made between the parties hereto are merged in this contract, which alone fully and completely expresses the agreement between the Landlord and Tenant and any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it in whole or in part, unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. 23. Notices All notices given under this Lease must be in writing. Each party must accept and claim the notices given by the other. Unless otherwise provided by law, they may e given by (a) personal delivery, or (b) certified mail, return receipt requested. Notices shall be addressed to Landlord at the address written at the beginning of this Lease and to the Tenant at the Rental Space. 24. No Waiver The Landlord's failure to enforce any agreement in this Lease shall not prevent the Landlord from enforcing the agreement for any violations occurring at a later time. 25. Survival If any agreement in this Lease is contrary to law, the rest of the Lease shall remain in effect. 26. End of Term At the end of the term, Tenant shall (a) leave the Rental Space clean, (b) remove all of Tenant's property, (c) remove all signs and restore that portion of the Rental Space on which they were placed, (d) repair all damage caused by moving and (e) return the Rental Space to the Landlord in the same condition as it was at the beginning of the Term except for normal wear and tear. If Tenant leaves any property in the Rental Space, the Landlord may (a) dispose of it and charge Tenant for the cost of disposal (b) keep it as abandoned property. 12 27. Binding This Lease binds Landlord and Tenant and all parties who lawfully succeed to their rights or take their places. 28. Assignment and Subletting. The Tenant shall have the right to assign this Lease or sublet the Premises or any part thereof, to its parent or any affiliate, subsidiary or related entity or any entity into which or with which Tenant is merged or consolidated without limitation and without the consent of Landlord. Landlord shall have the right to approve any other subtenant or assignee, which approval, however, shall not release the Tenant from any liability under this Lease and shall not be unreasonably withheld or delayed. 29. Interruption of Services or use. Interruption or curtailment of any service maintained in the building or use of the premises, caused by Force majeure (as defined in Section3 1 hereof), shall not entitle the Tenant to any claim against the Landlord or to any abatement in rent, and shall not constitute a constructive or partial eviction, unless the Lessor fails to take measures as may be reasonable under the circumstances to restore the service without undue delay. 30. Broker. Each party represents to the other that no real estate commission is due to any broker or agent as a result of this transaction, and each agrees to hold the other harmless and to indemnify the other against any claims of or liabilities to any broker based on alleged dealings with the indemnifying party. 31. Force Majeure. As used in this Lease, the term "Force Majeure" shall mean and include those situations beyond Landlord's control, including by way of example and not by way of limitation, acts of God; accidents; strikes; shortages of labor, supplies or materials; or inclement weather. 32. Non Disturbance. Landlord will make a good faith attempt upon Tenant's request to obtain a non-disturbance clause from the mortgage lender upon refinancing. 33. Full Agreement. The parties have read this lease. It contains their full agreement. It may not be changed except in writing signed by Landlord and Tenant. Both parties hereby waive trial by jury of any matters whatsoever arising out of, under or by virtue of this Lease. 13 Signatures: Landlord and Tenant agree to the terms of this Lease by signing below. If a party is a corporation, this Lease is signed by its proper corporate officers and its corporate seal is affixed. Witnessed or attested by 130-35 MERRICK BOULEVARD ASSOCIATES, LP. ________________________ By: /s/ Michael Castellana -------------------------------- Landlord __________________________ WESTERN BEEF MERRICK BLVD., INC. As to Tenant By: /s/ Peter Castellana, Jr. -------------------------------- Tenant 14 GUARANTY OF WESTERN BEEF, INC. (A Delaware Corporation) FOR VALUE RECEIVED, and in consideration for, and as an inducement to Landlord making the Lease with Tenant, Western Beef, Inc. guarantees to Landlord, Landlord's successors and assigns, the full performance and observance of all the covenants, conditions and agreements, therein provided to be performed and observed by Tenant without requiring any notice of non-payment, performance or non-observance or proof or notice or demand, whereby to charge Western Beef, Inc., all of which Western Beef, Inc. hereby expressly waives and expressly agreed that the validity of this agreement and the obligations of the guarantor hereunder shall in o wise be terminated, affected or impaired by reason of the assertion by Landlord against Tenant of any of the rights or remedies reserved to Landlord pursuant to the provisions of the Lease. Western Beef, Inc. further covenants and agrees that this guaranty shall remain and continue in full force and effect as to any renewal, modification or extension of the Lease and during any period when Tenant is occupying the premises as a "statutory tenant." As a further inducement to Landlord to make the Lease and in consideration thereof, Landlord and Western Beef, Inc. covenant and agree that in any action or proceeding brought by either Landlord or Western Beef, Inc. against the other on any matters whatsoever arising out of , under or virtue of the terms of_________ or this guarantee that Landlord and Western Beef, Inc. shall and do hereby waive trial by jury. \WITNESS WESTERN BEEF, INC. ____________________________ BY: /s/ Peter Castellana, Jr. ------------------------------- GUARANTOR 47-05 Metropolitan Avenue Flushing, New York 11385 15 SCHEDULE OF RENTS FOR PERIOD JULY 1, 1990 through JUNE 30, 2000 MONTHLY RENT $13,400.00 from July 1, 1990 to June 30, 1991 $13,800.00 from July 1, 1991 to June 30, 1992 $14,200.00 from July 1, 1992 to June 30, 1993 $14,600.00 from July 1, 1993 to June 30, 1994 $15,000.00 from July 1, 1994 to June 30, 1995 $15,400.00 from July 1, 1995 to June 30, 1996 $15,800.00 from July 1, 1996 to June 30, 1997 $16,200.00 from July 1, 1997 to June 30, 1998 $16,600.00 from July 1, 1998 to June 30, 1999 $17,000.00 from July 1, 1999 to June 30, 2000 16 SCHEDULE OF RENTS FOR PERIOD JULY 1, 2000 through JUNE 30, 2015 Beginning July 1 2000 and for the next year through June 30, 2001, the Annual Base Kent shall be increased by the greater of either (a) five percent (5%) of the immediately preceding year, or (b) to the then fair market rental value of the of the Rental Space determined by a Licensed Real Estate Appraiser selected by Landlord. Thereafter and throughout the balance of this Rental period the Annual Base Rent shall be increased annually by the factor of five percent (5%) above each immediately preceding year. All rent shall continue to be paid in advance in equal monthly installments. WITNESS 130-35 MERRICK BOULEVARD ASSOCIATES ____________________________ As to Landlord By: /s/ Michael Castellana ------------------------------------ Landlord _____________________________ WESTERN BEEF MERRICK BLVD., INC. As to Tenant By: /s/ Peter Castellana, Jr. -------------------------------- Tenant 17 EX-10.8 6 PARKING LOT LEASE PARKING LOT LEASE The Landlord and the Tenant agree to lease the Rental Space for the Term and at the Rent stated as follows: (The words Landlord and Tenant include all tenants under this lease.) Landlord: CM Boulevard Associates, L.P. Address: 47-05 Metropolitan Avenue Flushing, New York 11385 Tenant: WESTERN BEEF, MERRICK BLVD, Inc. Address: 130-35 Merrick Blvd Spring Gardens, New York Rental Space: Approximately 22,760 square feet of vacant ground space constituting the entire property known as 0 Merrick Blvd, Springfield Gardens, New York, the property being more particularly described on the Queens County Assessor's Records as Section 54 Block 12696 Lot 63 Volume 2. Date of Lease: February 6, 1990 Term: 20 years, ending June 30, 2015 Rent: The Rent is payable in advance at the Offices of Landlord beginning July 1, 1990 and thereafter on the first day of each and every month in accordance with the "Schedule of Rents" annexed hereto and made a part hereof. Security: none Insurance: A. Liability - Minimum $1,000.00 - $500,000 (See P. 6A) B. Property/Rental - Minimum (See P. 6B) Use of Rental Space - as and for the operation of a Parking Lot in conjunction with Tenant's Supermarket operation at 130-135 Merrick Boulevard, Springfield Gardens, New York and for no other purpose. 1 1. Possession and Use Landlord shall give possession of the Rental Space to Tenant for the Term. Tenant shall take possession of and use the Rental Space for the purpose stated above. Tenant may not use the Rental Space for any other purpose without the written consent of the Landlord. Tenant shall not allow the Rental Space to be used for any unlawful or hazardous purpose. Tenant is satisfied that the Rental Space is zoned for the Use stated. Tenant shall obtain and maintain any necessary certificate of occupancy or other certificate permitting Tenant to use the Rental Space. Tenant shall not use the Rental Space in any manner that results in (1) an increase in the rate of fire or liability insurance or (2) cancellation of any fire or liability insurance policy on the Rental Space. Tenant shall comply with all requirements of the insurance companies insuring the Rental Space. Tenant shall not abandon the Rental Space during the Term of this Lease or permit it to become vacant for more than sixty (60) continuous days. 2. Delay in Giving of Possession [This section has been intentionally deleted.] 3. No Assignment or Subletting Tenant may not do any of the following without the Landlord's prior written consent: (a) assign this Lease (if Tenant is a corporation, the sale of a majority of its shares shall be treated as an assignment), (b) sublet all or any part of the Rental Space or (c) permit any other person or business to use the Rental Space. 4. Rent and Additional Rent [This section has been intentionally deleted.] 5. Security [This section has been intentionally deleted.] 2 6. Insurance A. Liability Tenant shall obtain, pay for, and keep in effect for the benefit of Landlord and Tenant, public liability insurance on the Rental Space. The insurance company and the broker must be acceptable to Landlord. This coverage must be in at least the minimum amounts stated above and shall include Landlord as a direct insured party. Tenant shall deliver the original policy to the Landlord with proof of payment of the first year's premiums. This shall be done not less than 15 days before the Beginning of the Term. Tenant shall deliver a renewal policy to the Landlord with proof of payment not less than 20 days before the expiration date of each policy. B. Property/Casualty/Rental Tenant shall throughout the term of this lease, for the benefit of both Landlord and Tenant as named insureds, maintain insurance against loss or damage by fire, and such other risks and hazards as are insurable under present and future standard forms of fire and extended coverage insurance policies on the Building and all structures, appurtenances, sprinklers, boilers and on Tenant's personal property, furniture, furnishings, and fixtures located in the demised premises, for their respective full insurable value with Broad Extended Occupancy endorsement in amounts at all times sufficient to prevent Landlord or Tenant from becoming a co-insurer under the terms of any such policies. Tenant shall also obtain and keep in force rental insurance against loss of rental under a rental value insurance policy covering risk of loss due to the occurrence of any of the hazards insured against under Tenant's Fire and Extended Insurance on the building, in an amount sufficient to prevent Landlord from becoming a co-insurer but in any event, in an amount sufficient to pay, for not less than one year, the rent payable under this Lease. All proceeds received by Landlord under rent insurance policies will be credited as received against the rent due. Each such policy shall provide that not less than ten days before expiration, evidence of its renewal, or a new certificate, together with evidence of payment of premiums for the renewal period or insurance policy, as the case may be, shall be delivered to Landlord. In the event of any fire or other casualty insured against by Tenant's policy, Landlord may assign to Tenant all of Landlord's right, title, and interest in and to the insurance proceeds. Tenant shall accept such proceeds as full payment for 3 any loss or damage to its property, and shall not make any claim against Landlord for any other sum therefor, even if the loss or damage is due to the carelessness or negligence of Landlord or its servants, agents, or employees. If any insured casualty occurs, Tenant shall have full authority, and shall take all necessary measures, to file, negotiate, compromise, or adjust any loss under its policy, subject to Landlord's approval which may not unreasonable be withheld. C. On Tenant's default in obtaining or delivering any such policy or policies or failure to pay the charges therefor, Landlord may secure or pay the charges for any such policy or policies and charge Tenant as additional rent therefor. D. All policies shall state that the insurance company shall not cancel or refuse to renew without at least 30 days written notice to the Landlord. E. If during the term of the Lease, higher limits of insurance than those mentioned above are appropriate, customary, and generally required for like premises utilized for similar uses, Tenant shall, upon Landlord's request, procure such increased limits insurance. Insurance required hereunder shall be in companies rated AAA or better in "Best's Insurance Guide," which shall be qualified to do business in the State of New York. Neither party shall be liable to the other for any business interruption or any loss or damage to property or injury or death of persons occurring in the Building (including all the Rental Space), or in any manner growing out of or connected with Tenant's use and occupation thereof, the Building or the condition thereof, whether caused by the negligence or other fault of Landlord or Tenant, or of their respective agents, employees, subtenants, licensees, or assignees. The release in favor of Landlord contained herein, is in addition to, and not in substitution for, or in diminution of the hold harmless and indemnification provisions provided in Paragraph "8" of this Lease. 7. Water Damage Landlord shall not be liable for any damage or injury to any persons or property caused by the leak or flow of water from or into any part of the Premises, unless caused by its own act or omission. 4 8. Liability of Landlord, Tenant and Indemnity A. Landlord and its agents shall not be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Tenant or Persons Within Tenant's Control by theft or otherwise. Landlord and its agents shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain or snow or leaks from any part of the Building or from the pipes, appliances, sprinklers or plumbing works or from the roof, street or sub-surface or from any other place or by dampness or by any other cause of whatsoever nature, unless caused by or due to the active negligence of Landlord, its agents, or employees; nor shall Landlord or its agents be liable for any latent defect in the Demised Premises or in the Building B. [This section has been intentionally deleted.] C. Tenant agrees, irrespective of whether Tenant shall be negligent, to indemnify, defend and save harmless, Landlord and its partners, officers, directors, contractors, agents and employees from and against any and all liability (statutory or otherwise), claims, suits, demands, damages, judgments, costs, fines, penalties, interest and expenses (including counsel fees and disbursements incurred in any action or proceeding), to which Landlord or any such partner, officer, director, contractor, agent or employee may be subject or which Landlord may suffer arising from, or in connection with, (i) any liability or claim for any injury to, or death of, any person or persons or damage to property (including any loss of use thereof), or (ii) the use and occupancy of the Demised Premises or from any work, installation or thing whatsoever done or omitted (other than by Landlord or its contractors or the agents or employees of either) in the Demised Premises during the Term and during the period of time, if any, prior to the Commencement Date that Tenant may have been given access to the Demised Premises, or (iii) any default by Tenant in the performance of Tenant's obligations under this Lease or any act, omission, carelessness, or negligence of Tenant or Persons Within Tenant's Control. D. Tenant shall reimburse and compensate Landlord as additional rent within five (5) days after rendition of a statement for all expenditures, costs, fees, expenses, judgments, penalties, damages, and fines sustained or incurred by Landlord (including counsel fees and disbursements incurred in connection 5 with any action or proceeding) due to the operation of this Article, or non-performance or non-compliance with or breach or failure by Tenant to observe any term, covenant, agreement, provision or condition of this Lease, or breach of any warranty or representation by Tenant made in this Lease. If in any action or proceeding naming both Landlord and Tenant, liability arising out of the negligence of Tenant is established, Tenant agrees (i) to indemnify Landlord in accordance with the provisions of this Article and (ii) to waive any right of contribution against Landlord. Reference in this Article to Landlord shall for all purposes be deemed to include the lessor of any Underlying Lease and each Mortgage. E. Tenant agrees that its sole remedy in cases where Landlord's reasonableness in exercising its judgment or withholding its consent or approval is applicable pursuant to a specific provision of this Lease, or any rider or separate agreement relating to this Lease, if any, shall be those in the nature of an injunction, declaratory judgment, or specific performance, the rights to money damages or other remedies being hereby specifically waived. Landlord shall not be liable for injury or damage to any person or property unless due to the Landlord's act. Tenant is liable for any loss, injury or damage to any person or property caused by the act or neglect of Tenant or Tenant's employees. Tenant shall defend the Landlord from and reimburse the Landlord for all liability and costs resulting from any injury or damage due to the act or neglect of Tenant or the Tenant's employees. 9. Acceptance of Rental Space Tenant has inspected the Rental Space and agrees that the Rental Space is in satisfactory condition. Tenant accepts the Rental Space "as is". 10. Quite Enjoyment Landlord has the right to enter into this Lease. If Tenant complies with this Lease, the Landlord must provide Tenant with undisturbed possession of the Rental Space. 11. Taxes, Utilities, Security and Services Tenant shall arrange for and pay for all real estate taxes, assessments and municipal levies of any kind or nature; all heat, lighting, water and other utilities; and all costs of security or other services required for the intended use of the Rental Space. 6 Tenant shall maintain and clean the demised premises at its own cost and expense. Landlord is not liable for any inconvenience or harm caused by any stoppage or reduction of utilities and services nor shall such stoppage or reduction excuse Tenant from Paying Rent. 12. Tenant's Repairs, Maintenance, and Compliance Tenant Shall: (a) Promptly comply with all laws, orders, rules, and requirements of governmental authorities, insurance carriers, board of fire underwriters, or similar groups. (b) Maintain the Rental Space and all equipment and fixtures in it. (c) Make all necessary repairs to the Rental Space and all equipment and fixtures in it. (d) Maintain the Rental Space in a neat, clean, safe, and sanitary condition, free of all garbage. (e) Use all electric, plumbing and other facilites in the Rental Space safely. (f) Use no more electricity than the wiring or feeders to the Rental Space can safely carry. (g) Do nothing to destroy, deface, damage, or remove any part of the Rental Space. (h) Keep nothing in the Rental Space which is inflammable, dangerous or explosive or which might increase the danger of fire or other casualty. (i) Promptly notify Landlord when there are conditions which need repair. (j) Do nothing to destroy the peace and quiet of Landlord, other tenants, or persons in the neighborhood. (k) Avoid littering in the Rental Space. Tenant shall pay any and all expenses involved in complying with the above. 7 13. Landlord's Repairs and Maintenance Landlord shall have no responsibility to: (a) Maintain the paving, fencing, security or public areas. (b) Make any paving, equipment or fixture repairs unless these repairs are made necessary by the act of Landlord. (c) Make necessary replacements of the pluming and electrical system, except when made necessary by the act of Landlord. 14. No Alterations Tenant may not make any changes or additions to the Rental Space without Landlord's written consent which consent shall not be unreasonable withheld. Any changes or additions made without Landlord's written consent shall be removed by Tenant on demand. All changes or additions made with Landlord's written consent shall become the property of Landlord when completed and paid for by Tenant. They shall remain as part of the Rental Space at the end of the Term. Landlord may demand that Tenant remove any changes or additions at the end of the Term. Tenant shall promptly pay for all costs of any permitted changes or additions. Tenant shall not allow any mechanic's lien or other claim to be filed against the Building. If any lien or claim is filed against the Building, Tenant shall have it promptly removed. If any permanent or temporary structures are erected upon the Premises, Tenant shall provide property or casualty insurance coverages thereon, at its sole cost and expense in amounts agreeable to and with Landlord named as a direct insured party. In such event Paragraphs 6C and D above shall be applicable thereto. 15. Signs [This section has been intentionally deleted.] 16 Access to Rental Space Landlord shall have access to the Rental Space on reasonable notice to Tenant to (a) inspect the Rental Space and (b) show it to prospective buyers, mortgage lenders, contractors or insurers. Landlord may show the Rental Space to rental applicants at reasonable hours on notice to Tenant within 6 months before the end of the Term. 8 Landlord may enter the Rental Space at any time without notice to Tenant in case of emergency. 17. Fire and Other Casualty Tenant shall notify the Landlord at once of any fire or casualty in the Rental Space. Tenant is not required to pay Rent when the Rental Space is unusable. If Tenant uses part of the Rental Space, Tenant must pay Rent pro-rata for the usable part. If the Rental Space is partially damaged by fire or other casualty, Tenant shall repair it as soon as possible. This includes the damage to the Rental Space and all fixtures installed by either Tenant or Landlord. Either party may cancel this Lease if the Rental space is so damaged by fire or other casualty that it cannot be repaired within 90 days. If the parties cannot agree, the opinion of a contractor chosen by Landlord will be binding both parties. This Lease shall end if the Rental Space is totally destroyed. Tenant shall pay Rent to the date of destruction. If the fire or other casualty is caused by the act or neglect of Tenant or Tenant's employees, Tenant shall pay for all repairs and all other damage. 18. Eminent Domain Eminent Domain is the right of a government to lawfully condemn and take private property for public use. Fair value must be paid for the property. The taking occurs either by court order or by deed to the condemning party. If any part of the Rental Space is taken by eminent domain, either party may cancel this lease on 30 days notice to the other. Tenant shall not share in any payment or award to Landlord. Tenant shall have the right to file its own claim against the condemning authority, so long as Landlord's rights are not prejudiced. 19. Tenant's Certificate At the request of the Landlord, Tenant shall sign a certificate stating that (a) this Lease has not been amended and is in effect, (b) Landlord has fully performed all of the Landlord's agreements in this Lease, (c) Tenant has no rights to the Rental Space except as stated in this Lease, (d) Tenant has paid all Rent to date, and (e) Tenant has not paid Rent for more 9 than one month in advance. The Certificate shall also list all the property attached to the Rental Space owned by the Tenant. 20. Violation, Eviction, Re-entry and Damages Landlord reserves a right of re-entry which allows the Landlord to end this Lease and re-enter the Rental Space if Tenant violates any agreement in this Lease. This is done by eviction. Eviction is a court procedure to remove a tenant. Eviction is started by the filing of a complaint in court and the service of a summons on a tenant to appear in court. Landlord may also evict Tenant for any one of the other grounds of good cause provided by law. After a court order of eviction and compliance with the warrant of removal, Landlord may re-enter and take back possession of the Rental Space. If the cause for eviction is non-payment of Rent, notice does not have to be given to Tenant before Landlord files a complaint. If there is any other cause to evict, Landlord must give Tenant the notice required by law before Landlord files a complaint for eviction. Tenant is liable for all damages caused by Tenant's violation of any agreement in this Lease. This includes reasonable attorney's fees and costs. After eviction Tenant shall pay the Rent for the balance of the Term or until the Landlord re-rents the Rental Space, if sooner. If the Landlord re-rents the Rental Space for less than Tenant's Rent, Tenant shall pay the difference until the end of the Term. Tenant shall not be entitled to any excess resulting from the re-renting. Tenant shall also pay (a) all reasonable expenses incurred by the Landlord in preparing the Rental Space for re-renting and (b) commissions paid to a broker for finding a new tenant. 21. Bankruptcy Anything elsewhere in this lease to the contrary notwithstanding, this lease may be canceled by Landlord by the sending of a written notice to Tenant within a reasonable time after the happening of any one or more of the following events: (i) Tenant shall (a) have applied for or consented to the appointment of a receiver, trustee, liquidator, or other custodian of Tenant or any of its properties or assets, (b) be unable to pay its debts generally as they become due or shall have taken any other action which could result in it becoming the subject of an insolvency or bankruptcy proceeding, (c) have made a general assignment for the benefit of the creditors, (d) have commenced a voluntary case for relief as a debtor under the United States Bankruptcy Code or filed a petition to take advantage of any 10 bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (e) be adjudicated a bankrupt or insolvent, or (ii) without the acquiescence or consent of Tenant an order, judgment or decree shall have been entered by any court of competent jurisdiction (a) approving as properly filed a petition seeking relief under the United States Bankruptcy Code or any bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute with respect to Tenant or all or a substantial part of its properties or assets or (b) appointing a receiver, trustee, liquidator or other custodian or all or a substantial part of its properties or assets, and such order, judgment or decree shall have continued unstayed and in effect for any period claiming through or under Tenant or by reason of any statute or order of court shall thereafter be entitled to possession of the Demised Premises but shall forthwith quit and surrender the Demised Premises. If this lease shall be assigned in accordance with its terms the provisions of this Article shall be applicable only to the party then owning Tenant's interest in this lease. 22. No Representations by Landlord Neither Landlord nor Landlord's agents have made any representations or promises with respect to the physical condition of the building, the land upon which it is erected or the demised premises, the rents, leases, expenses of operation or any other matter or thing affecting or related to the premises except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this lease Tenant has inspected the building and the demised premises and is thoroughly acquainted with their condition, applicable zoning, permissible uses, and occupancy requirements, and agrees to take the same "as is" and acknowledges that the taking of possession of the demised premises by Tenant shall be conclusive evidence that the said premises and the building of which the same form a part were in good and satisfactory condition at the time such possession was so taken, except as to latent defects. All understandings and agreements heretofore made between the parties hereto are merged in this contract, which alone fully and completely expresses the agreement between Landlord and Tenant and any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it in whole or in part, unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. 11 23. Notices All notices given under this Lease must be in writing. Each party must accept and claim the notices given by the other. Unless otherwise provided by law, they may be given by (a) personal delivery, or (b) certified mail, return receipt requested. Notices shall be addressed to Landlord at the address written at the beginning of this Lease and to the Tenant at the Rental Space. 24. No Waiver The Landlord's failure to enforce any agreement in this Lease shall not prevent the Landlord from enforcing the agreement for any violations occurring at a later time. 25. Survival If any agreement in this Lease is contrary to law, the rest of the Lease shall remain in effect. 26. End of Term At the end of the Term, Tenant shall (a) leave the Rental Space clean, (b) remove all of Tenant's property, (c) remove all signs and restore that portion of the Rental Space on which they were placed, (d) repair all damage caused by moving and (e) return the Rental Space to the Landlord in the same condition as it was at the beginning of the Term except for normal wear and tear. If Tenant leaves any property in the Rental Space, the Landlord may (a) dispose of it and charge Tenant for the cost of disposal (b) keep it as abandoned property. 27. Binding This Lease binds Landlord and Tenant and all parties who lawfully succeed to their rights or take their places. 28. Assignment and Subletting The Tenant shall have the right to assign this Lease or sublet the Premises or any part thereof, to its parent or any affiliate, subsidiary or related entity or any entity into which or with which Tenant is merged or consolidated without limitation and without the consent of Landlord. Landlord shall have the right to approve any other subtenant or assignee, which approval, however, shall not release 12 the Tenant from any liability under this Lease and shall not be unreasonable withheld or delayed. 29. Interruption of Services or use Interruption or curtailment of any service maintained in the building or use of the premises, caused by Force majeure (as defined in Section 31 hereof), shall not entitle the Tenant to any claim against the Landlord or to any abatement in rent, and shall not constitute a constructive or partial eviction, unless the Lessor fails to take measures as may be reasonable under the circumstances to restore the services without undue delay. 30. Broker Each party represents to the other that no real estate commission is due to any broker or agent as a result of this transaction, and each agrees to hold the other harmless and to indemnify the other against any claims of or liabilities to any broker based on alleged dealings with the indemnifying party. 31. Force Majeure As used in this Lease, the term "Force Majeure" shall mean and include those situations beyond Landlord's control, including by way of example and not by way of limitation, acts of God; accidents; strikes; shortages of labor, supplies or materials; or inclement weather. 32. Non-Disturbance Landlord will make a good faith attempt upon Tenant's request to obtain a non-disturbance clause from the mortgage lender upon refinancing. 33. Full Agreements The parties have read this lease. It contains their full agreement. It may not be changed except in writing signed by Landlord and Tenant. Both parties hereby waive trial by jury of any matters whatsoever arising out of, under or by virtue of this Lease. Signatures: Landlord and Tenant agree to the terms of this Lease by signing below. If a party is a corporation, this Lease is signed by its proper corporate officers and its corporate seal is affixed. 13 Witnessed or attested by CM BOULEVARD ASSOCIATES, LP _______________________________ By: /s/ Michael Castellana As to Landlord ----------------------------- Landlord _______________________________ WESTERN BEEF MERRICK BLVD, INC. As to Tenant By: /s/ Peter Castellana, Jr. ----------------------------- Tenant GUARANTY OF WESTERN BEEF, INC. (A Delaware Corporation) FOR VALUE RECEIVED, and in consideration for, and as an inducement to Landlord making the Lease with Tenant, Western Beef, Inc. guarantees to Landlord, Landlord's successors and assigns, the full performance and observance of all the covenants, conditions and agreements, therein provided to be performed and observed by Tenant without requiring any notice of non-payment, non-performance or non-observance or proof or notice or demand, whereby to charge Western Beef, Inc., all of which Western Beef, Inc. hereby expressly waives and expressly agreed that the validity of this agreement and the obligations of the guarantor hereunder shall in no wise be terminated, affected or impaired by reason of the assertion by Landlord against Tenant of any of the rights or remedies reserved to Landlord pursuant to the provisions of the Lease. Western Beef, Inc. further covenants and agrees that this guaranty shall remain and continue in full force and effect as to any renewal, modification or extension of the Lease and during any period when Tenant is occupying the premises as a "statutory tenant." As a further inducement to Landlord to make the Lease and in consideration thereof, Landlord and Western Beef, Inc. covenant and agree that in any action or proceeding brought by either Landlord or Western Beef, Inc. against the other on any matters whatsoever arising out of, under or virtue of the terms of the Lease or of this guarantee that Landlord and Western Beef, Inc. shall and do hereby waive trial by jury. WITNESS WESTERN BEEF, INC. ____________________________ By: /s/ Peter Castellana, Jr. ----------------------------- GUARANTOR 47-05 Metropolitan Avenue 14 factor of five percent (5%) above each immediately preceding year. All rent shall continue to be paid in advance in equal monthly installments. Witnessed or attested by CM BOULEVARD ASSOCIATES, LP _______________________________ By: /s/ Michael Castellana As to Landlord ----------------------------- Landlord _______________________________ WESTERN BEEF MERRICK BLVD, INC. As to Tenant By: /s/ Peter Castellana, Jr. ----------------------------- Tenant EX-10.9 7 STANDARD FORM OF STORE LEASE STANDARD FORM OF STORE LEASE The Real Estate Board of New York, Inc. Agreement of Lease, made as of this 6th day of July 1989, between ELMONT Q. PROPERTIES, INC., 4705 Metropolitan Avenue, Ridgewood, New York part of the first part, hereinafter referred to as OWNER, and QUAREX ELMONT, INC., 4705 Metropolitan Avenue, Ridgewood, New York party of the second part, hereinafter referred to as TENANT, Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner 1717, 1725 Dutch Broadway, Elmont, New York, and all land and buildings per survey attached in the County of Nassau, State of New York, for the term of seven (7) years (or until such term shall sooner cease and expire as hereinafter provided) to commence on the 6th day of July, 1988 and to end on the 30th day of June, 1995 both dates inclusive, at an annual rental rate of Eight Hundred Fifty-Two Thousand ($852,000.00) Dollars, and Seveny-One Thousand ($71,000.00) Dollars per month to increase in the third (3rd) year of this Lease and every year thereafter at three (3%) percent per year compounded, which Tenant agrees to pay in lawful money of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment, in equal monthly installments in advance on the first day of each month during said term, at the office of Owner or such other place as Owner may designate, without any set off or deduction whatsoever, except that Tenant shall pay the first monthly installment(s) on the execution hereof (unless this lease be a renewal). The parties hereto, for themselves, their heirs, distributees, executors, administrators, legal representatives, successors and assigns, hereby covenant as follows: Rent Occupancy 1. Tenant shall pay the rent as above and as hereinafter provided. 2. Tenant shall use and occupy demised premises for any lawful purpose. and for no other purpose. Tenant shall at all times conduct its business in a high grade and reputable manner, shall not violate Article 37 hereof, and shall keep show windows and signs in a neat and clean condition. Alterations: 3. Tenant shall make no changes in or on the demised premises of any nature without Owner's prior written consent. Subject to the prior written consent of Owner, and to the provisions of this article, Tenant at Tenant's expense, may make alterations, installations, additions or improvements which are non-structural and which do not affect utility services or plumbing and electrical lines, in or to the interior of the demised premises by using contractors or mechanics first approved by Owner. Tenant shall, before making any alterations, additions, installations or improvements, at its expense, obtain all permits, approvals and certificates required by any governmental or quasi governmental bodies and (upon completion) certificates of final approval thereof and shall deliver promptly duplicates of all such permits, approvals and certificates to Owner and Tenant agrees to carry and will cause Tenant's contractors and sub-contractors to carry such workman's compensation, general liability, personal and property damage insurance as Owner may require. If any mechanic's lien is filed against the demised premises, or the building of which the same forms a part, for work claimed to have done for, or materials furnished to, Tenant, whether or not done pursuant to this article, the same shall be discharged by Tenant within ten days thereafter, at Tenant's expense, by filing the bond required by law. All fixtures and all paneling, partitions, railings and like installations, installed in the premises at any time, either by Tenant or by Owner in Tenant's behalf, shall, upon installation, become the property of Owner and shall remain upon and be surrendered with the demised premises unless Owner, by notice to Tenant no later than twenty days prior to the date fixed as the termination of this lease, elects to relinquish Owner's rights thereto and to have them removed by Tenant, in which event, the same shall be removed from the premises by Tenant prior to the expiration of the lease, at Tenant's expense. Nothing in this article shall be construed to give Owner title to or to prevent Tenant's removal of trade fixtures, moveable office furniture and equipment, but upon removal of any such from the premises or upon removal of other installations as may be required by Owner, Tenant shall immediately and at his expense, repair and restore the premises to the condition existing prior to installation and repair any damage to the demised premises or the building due in such removal. All property permitted or required to be removed by Tenant at the end of the term remaining in the premises after Tenant's removal at the end of the term remaining in the premises after Tenant's removal shall be deemed abandoned and may, at the election of Owner, either be retained as Owner's property or may be removed from the premises by Owner at Tenant's expense. Repairs 4. Owner shall maintain and repair the public portions of the building, both exterior and interior, except that if Owner allows Tenant to erect on the outside of the building a sign or signs, or a hoist, lift or sidewalk elevator for the exclusive use of Tenant, Tenant shall maintain such exterior installations in good appearance and shall cause the same to be operated in a good and workmanlike manner and shall make all repairs thereto necessary to keep same in good order and condition, at Tenant's own cost and expense, and shall cause the same to be covered by the insurance provided for hereafter in Article 8. Tenant shall, throughout the term of this lease, take good care of the demised premises and the fixtures and appurtenances therein, and the sidewalks adjacent thereto, and at its sole cost and expense, make all non-structural repairs thereto as and when needed to preserve them in good working order and condition, reasonable wear and tear, obsolescence and damage from the elements, fire or other casualty, excepted. If the demised premises be or become infested with vermin, Tenant shall at Tenant's expense, cause the same to be exterminated from time to time to the satisfaction of Owner. Except as specifically provided in Article 9 or elsewhere in this lease, there shall be no allowance to the Tenant for the diminution of rental value and no liability on the part of Owner by reason of inconvenience, annoyance or injury to business arising from Owner, Tenant or other making or failing to make any repairs, alterations, additions or improvements in or to any portion of the building including the erection or operation of any crane, derrick or sidewalk shed, or in or to the demised premises or the fixtures, appurtenances or equipment thereof. The provisions of this article 4 with respect to the making of repairs shall not apply in the case of fire or other casualty which are dealt with in article 9 hereof. Window Cleaning: 5. Tenant shall not clean nor require, permit, suffer or allow any window in the demised premises to be cleaned from the outside in violation of Section 202 of the New York State Labor Law or any other applicable law or of the Rules of the Board of Standards and Appeals, or of any other Board or body having or asserting jurisdiction. Requirements of Law, Fire Insurance: 6. Prior to the commencement of the lease term, if Tenant is then in possession, and at all times thereafter, Tenant at Tenant's sole cost and expense, shall promptly comply with all present and future laws, orders and regulations of all state, federal, municipal and local governments, departments, commissions and boards and any direction of any public officer pursuant to law, and all orders, rules and regulations of the New York Board of Fire Underwriters or the Insurance Services Office, or any similar body which shall impose any violation, order or duty upon Owner or Tenant with respect to the demised premises, and with respect to the portion of the sidewalk adjacent to the premises, if the premises are on the street level, whether or not arising out of Tenant's use or manner of use thereof, or with respect to the building if arising out of Tenant's use or manner of use of the premises or the building (including the use permitted under the lease). Except as provided in Article 29 hereof, nothing herein shall require Tenant to make structural repairs or alterations unless Tenant has by its manner of use of the demised premises or method of operation therein, violated any such laws, ordinances, orders, rules, regulations or requirements with respect thereto. Tenant shall not do or permit any act or thing to be done in or to the demised premises which is contrary to law, or which will invalidate or be in conflict with public liability, fire or other policies of insurance at any time carried by or for the benefit of Owner. Tenant shall pay all costs, expenses, fines, penalties or damages, which may be imposed upon Owner by reason of Tenant's failure to comply with the provisions of this article. If the fire insurance rate shall, at the beginning of the lease or at any time thereafter, be higher than it otherwise would be, then Tenant shall reimburse Owner, as additional rent hereunder, for that portion of all fire insurance premiums thereafter paid by Owner which shall have been charged because of such failure by Tenant, to comply with the terms of this article. In any action or proceeding wherein Owner and Tenant are parties, a schedule or "make-up" of rate for the building or demised premises leased by a body making fire insurance rates applicable to said premises shall be conclusive evidence of the facts therein stated and of the several items and charges in the fire insurance rate then applicable to said premises. Subordination: 7. This lease is subject and subordinated to all ground or underlying leases and to all mortgages which may now or hereafter affect such leases or the real property of which demised premises are a part and to all renewals, modifications, consolidations, replacements and extensions of any such underlying leases and mortgages. This clause shall be self-operative and no further instrument of subordination shall be required by any ground or underlying lessor or by any mortgagee, affecting any lease or the real property of which the demised premises are a part. In confirmation of such subordination, Tenant shall secure promptly any certificate that Owner may request. Tenant's Liability Insurance Property Loss, Damage, Indemnity: 8. Owner or its agents shall not be liable for any damage to property of Tenant or of others entrusted to employees of the building, nor for loss of or damage to any property of Tenant by theft or otherwise, nor for any injury or damage to persons or property resulting from any cause of whatsoever nature, unless caused by or due to the negligence of Owner, its agents, servants or employees. Owner or its agents will not be liable for any such damage caused by other tenants or persons, in, upon or about said building or caused by operations in construction of any private, public or quasi public work. Tenant agrees, at Tenant's sole cost and expense, to maintain general public liability insurance in standard form in favor of Owner and Tenant against claims for bodily injury or death or property damage occurring in or upon the demised premises, effective from the date Tenant enters into possession and during the term of this lease. Such insurance shall be in an amount and with carriers acceptable to the Owner. Such policy or policies shall be delivered to the Owner. On Tenant's default in obtaining or delivering any such policy or policies or failure to pay the charges therefor, Owner may secure or pay the charges for any such policy or policies and charge the Tenant as additional rent therefor. Tenant shall indemnify and save harmless Owner against and from all liabilities, obligations, damages, penalties, claims, costs and expenses for which Owner shall not be reimbursed by insurance, including reasonable attorney's fees, paid, suffered or incurred as a result of any breach by Tenant, Tenant's agent, contractors, employees, invitees, or licensees, of any covenant on condition of this lease, or the carelessness, negligence or improper conduct of the Tenant, Tenant's agents, contractors, employees, invitees or licensees. Tenant's liability under this lease extends to the acts and omissions of any subtenant, and any agent, contractor, employee, invitee or licensee of any subtenant. In case any action or proceeding is brought against Owner by reason of any such claim, tenant, upon written notice from Owner, will, at Tenant's expense, resist or defend such action or proceeding by Counsel approved by Owner in writing, such approval not to be unreasonably withheld. Destruction, Fire and Other Casualty: 9. (a) If the demised premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give immediate notice thereof to Owner and this lease shall continue in full force and effect except as hereinafter set forth. (b) If the demised premises are partially damaged or rendered partially unusable by fire or other casualty, the damages thereto shall be repaired by and at the expense of Owner and the rent, until such repair shall be substantially completed, shall be apportioned from the day following the casualty according to the part of the premises which is usable. (c) If the demised premises are totally damaged or rendered wholly unusable by fire or other casualty, then the rent shall be proportionately paid up to the time of the casualty and thenceforth shall cease until the date when the premises shall have been repaired and restored by Owner, subject to Owner's right to elect not to restore the same as hereinafter provided. (d) If the demised premises are rendered wholly unusable or (whether or not the demised premises are damaged in whole or in part) if the building shall be so damaged that Owner shall decide to demolish it or to rebuild it, then, in any of such events, Owner may elect to terminate this lease by written notice to Tenant given within 90 days after such fire or casualty specifying a date for the expiration of the lease, which date shall not be more than 60 days after the giving of such notice, and upon the date specified in such notice the term of this lease shall expire as fully and completely as if such date were the date set forth above for the termination of this lease and Tenant shall forthwith quit, surrender and vacate the premises without prejudice however, to Owner's rights and remedies against Tenant under the lease provisions in effect prior to such termination, and any rent owing shall be paid up to such date and any payments of rent made by Tenant which were on account of any period subsequent to such date shall be returned to Tenant. Unless Owner shall serve a termination notice as provided for herein, Owner shall make the repairs and restorations under the conditions of (b) and (c) hereof, with all reasonable expedition subject to delays due to adjustment of insurance claims, labor troubles and causes beyond Owner's control. After any such casualty, Tenant shall cooperate with Owner's restoration by removing from the premises as promptly as reasonably possible, all of Tenant's salvageable inventory and movable equipment, furniture, and other property. Tenant's liability for rent shall resume five (5) days after written notice from Owner that the premises are substantially ready for Tenant's occupancy. (e) Nothing contained hereinabove shall relieve Tenant from liability that may exist as a result of damage from fire or other casualty. Notwithstanding the foregoing, each party shall look first to any insurance in its favor before making any claim against the other party for recovery for loss or damage resulting from fire or other casualty, and to the extent that such insurance is in force and collectible and to the extent permitted by law, Owner and Tenant each hereby releases and waives all right of recovery against the other or any one claiming through or under each of them by way of subrogation or otherwise. The foregoing release and waiver shall be in force only if both releasors' insurance policies contain a clause providing that such release or waiver shall not invalidate the insurance and also, provided that such a policy can be obtained without additional premiums. Tenant acknowledges that Owner will not carry insurance on Tenant's furniture and/or furnishings or any fixtures or equipment, improvements, or appurtenances removable by Tenant and agrees that Owner will not be obligated to repair any damage thereto or replace the same. (f) Tenant hereby waives the provisions of Section 227 of the Real Property Law and agrees that the provision of this article shall govern and control in lieu thereof. Eminent Domain: 10. If the whole or any part of the demised premises shall be acquired or condensed by Eminent Domain for any public or quasi public use or purpose, then and in that event, the term of this lease shall cease and terminate from the date of title vesting in such proceeding and Tenant shall have no claim for the value of any unexpired term of said lease. Assignment, Mortgage, Etc.: 11. Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors and assigns expressly covenants that it shall not assign, mortgage or encumber this agreement, nor underlet, or suffer or permit the demised premises or any part thereof to be used by others, without the prior written consent of Owner in each instance. If this lease be assigned, or if the demised premises or any part thereof be underlet or occupied by anybody other than Tenant, Owner may, after default by Tenant, collect rent from the assignee, under-tenant or occupant, and apply the net amount collected to the rent herein reserved, but no such assignment, underletting, occupancy or collection shall be deemed a waiver of the covenant, or the acceptance of the assignee, under-tenant or occupancy as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. The consent by Owner to an assignment or underletting shall not in any wise be construed to relieve Tenant from obtaining the express consent in writing of Owner to any further assignment or underletting. Electric Current:* 12. Rates and conditions in respect to submetering or rent inclusion, as the case may be, to be added in RIDER attached hereto. Tenant covenants and agrees that at all times its use of electric current shall not exceed the capacity of existing of existing feeders to the building or the risers or wiring installation and Tenant may not use any electrical equipment which, in Owner's opinion, reasonably exercised, will overload such installations or interfere with the use thereof by other tenants of the building. The change at any time of the character of electric service shall in no wise make Owner liable or responsible to Tenant, for any loss, damages or expenses which Tenant may sustain. - - ------------ * Rider to be added if necessary. Access to Premises: 13. Owner or Owner's agents shall have the right (but shall not be obligated) to enter the demised premises in any emergency at any time, and, at other reasonable times, to examine the same and to make such repairs, replacements and improvement as Owner may deem necessary and reasonably desirable to any portion of the building or which Owner may elect to perform, in the premises, following Tenant's failure to make repairs or perform any work which Tenant is obligated to perform under this lease, or for the purpose of complying with laws, regualtions and other directions of government authorities. Tenant shall permit Owner to use and maintain and replace pipes and conduits in and through the demised premises and to erect new pipes and conduits therein, provided they are within the walls. Owner may, during the progress of any work in the demised premises, take all necessary materials and equipment into said premises without the same constituting an eviction nor shall the Tenant be entitled to any abatement of rent while such work is in progress nor to any damages by reason of lost or interruption of business or otherwise. Throughout the term hereof Owner shall have the right to enter the demised premises at reasonable hours for the purpose of showing the same to prospective purchasers or mortgages of the building, and during the last six months of the term for the purpose of showing the same to prospective tenants and may, during said six months period, place upon the premises the usual notice "To Let" and "For Sale" which notices Tenant shall permit to remain thereon without molestation. If Tenant is not present to open and permit an entry into the premises, Owner or Owner's agents may enter the same whenever such entry may be necessary or permissible by master key or forcibly and provided reasonable care is exercised to safeguard Tenant's property and such entry shall not render Owner or its agents liable therefor, nor in any event shall the obligations of Tenant hereunder be affected. If during the last month of term Tenant shall have removed all or substantially all of Tenant's property therefrom, Owner may immediately enter, alter, renovate or redecorate the demised premises without limitation or abatement of rent, or incurring liability to Tenant for any compensation and such act shall have no effect on this lease or Tenant's obligations hereunder. Owner shall have the right at any time, without the same constituting an eviction and without incurring liability to Tenant therefor to change the arrangement and/or location of public entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets, or other public parts of the building and to change the name, number or designation by which the building may be known. Vault, Vault Space, Area: 14. No vaults, vault space or areas, whether or not enclosed or covered, not within the property line of the building is leased hereunder, anything contained in or indicated on any sketch, blue print or plan, or anything contained elsewhere in this lease to the contrary notwithstanding. Owner makes no representation as to the location of the property line of the building. All vaults and vault space and all such areas not within the property line of the building, which Tenant may be permitted to use and/or occupy, is to be used and/or occupied under a revocable license, and if any such license be revoked, or if the amount of such space or area be diminished or required by any federal, state or municipal authority or public utility, Owner shall not be subject to any liability nor shall Tenant be entitled to any compensation or diminution or abatement of rent, nor shall such revocation, diminution or requisition be deemed constructive or actual eviction. Any tax, fee or charge of municipal authorities for such vault or area shall be paid by Tenant. Occupancy: 15. Tenant will not at any time use or occupy the demised premises in violation of, Articles 2 or 37 hereof, or of, the certificate of occupancy issued for the building of which the demised premises are a part. Tenant has inspected the premises and accepts them as is, subject to the riders annexed hereto with respect to Owner's work, if any. In any event, Owner makes no representation as to the condition of the premises and Tenant agrees to accept the same subject to violations whether or not of record. Bankruptcy: 16. (a) Anything elsewhere in this lease to the contrary notwithstanding, this lease may be cancelled by Landlord by the sending of a written notice to Tenant within a reasonable time after the happening of any one or more of the following events: (1) the commencement of a case in bankruptcy or under the laws of any state naming Tenant as the debtor; or (2) the making by Tenant of an assignment or any other arrangement for the benefit of creditors under any state statute. Neither Tenant nor any person claiming through or under Tenant, or by reason of any statute or order of court, shall thereafter be entitled to possession of the premises demised but shall forthwith quit and surrender the premises. If this lease shall be assigned in accordance with its terms, the provisions of this Article 16 shall be applicable only to the party then owning Tenant's interest in this lease. (b) It is stipulated and agreed that in the event of the termination of this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any other provisions of this lease to the contrary, be entitled to recover from Tenant as and for liquidated damages an amount equal to the difference between the rent reserved hereunder for the unexpired portion of the term demised and the fair and reasonable rental value of the demised premises for the same period. In the computation of such damages the difference between any installment of rent becoming due hereunder after the date of termination and the fair and reasonable rental value of the demised premises for the period for which such installment was payable shall be discounted to the date of termination at the rate of four per cent (4%) per annum. If such premises or any part thereof be re-let by the Owner for the unexpired term of said lease, on any part thereof, before presentation of proof of such liquidated damages to any court, commission or tribunal, the amount of rent received upon such reletting shall be deemed to be the fair and reasonable rental value for the part or the whole of the premises, to be let during the terms of the re-letting. Nothing hereon contained shall shall limit or prejudice the right of the Owner to prove for and obtain as liquidated damages by reasons of such termination, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, such damages are to be proved, whether or not such amount be greater, equal to, or less than the amount of the difference referred to above. Default: 17. (1) if Tenant defaults in fulfillingany of the covenants of this lease other than the covenants for the payment of rent or additional rent; or if the demised premises become vacant or deserted; or if any execution or attachment shall be issued against Tenant or any of Tenant's property whereupon the demised premises shall be taken or occupied by someone other than Tenants or if this lease be rejected under Section 365 of Title II of the U.S. Code (Bankrupty Code) or if Tenant shall fail to move into or take possession of the premises within fifteen (15) days after the commencement of the terms of this lease, of which fact Owner shall be the sole judge; then, in any one or more of such events, upon Owner serving a written five (5) days notice upon Tenant specifying the nature of said default and upon the expiration of said five (5) days, if Tenant shall have failed to comply with or remedy such default, or if the said default or omission complained of shall be of a nature that the same cannot be completely cured or remedied within said five (5) day period, and if Tenant shall not have diligently commenced curing such default within such five (5) day period, and shall not thereafter with reasonable diligence and in good faith proceed to remedy or cure such default, then Owner may serve a written three (3) days notice of cancellation of this lease upon Tenant, and upon the expiration of said three (3) days, this lease and the term thereunder shall end and expire as fully and completely as if the expiration of such three (3) day period were the day herein definitely fixed for the end and expiration of this lease and the term thereof and Tenant shall then quit and surrender the demised premises to Owner but Tenant shall remain liable as hereinafter provided. (2) If the notice provided for in (1) hereof shall have been given, and the term shall expire as aforesaid; or if Tenant shall make default in the payment of the rent reserved herein or any item of additional rent herein mentioned or any part of either or in making any other payment herein required; then and in any of such events Owner may without notice, re-enter the demised premises either by force or otherwise, and dispossess Tenant by summary proceedings or otherwise, and the legal representative of Tenant or other occupant of demised premises and remove their effects and hold the premises as if this lease had not been made, and Tenant hereby waives the service of notice of intention to re-enter or to institute legal proceedings to that end. Remedies of Owner and Waiver of Redemption: 18. In case of any such default, re-entry, expiration and/or dispossess by summary roceedings or otherwise, (a) the rent, and additional rent, shall become due thereupon and be paid up to the time of such reentry, disposses and/or expiration. (b) Owner may re-let the premises or any part of parts thereof, either in the name of Owner or otherwise, for a term or terms, which may at Owner's option be less than or exceed the period which would otherwise have constituted the balance of the term of this lease and may grant concessions or free rent or charge a higher rental than that in this lease, and/or (c) Tenant or the legal representatives of Tenant shall also pay Owner as liquidated damages for the failure of Tenant to observe and perform said Tenant's covenants herein contained, any deficiency between the rent hereby reserved and/or covenanted to be paid and the net amount, if any, of the rents collected on account of the subsequent lease or leases of the demised premises for each month of the period which would otherwise have constituted the balance of the term of this lease. The failure of Owner to re-let the premises or any part of parts thereof shall not release or affect Tenant's liability for damages. In computing such liquidated damages there shall be added to the said deficiency such expenses as Owner may incur in connection with re-letting, such as legal expenses, attorneys' fees, brokerage, advertising and for keeping the demised premises in good order or for preparing the same for re-letting. Any such liquidated damages shall be paid in monthly installments by Tenant on the rent day specified in this lease. Owner, in putting the demised premises in good order or preparing the same for re-rental may, at Owner's option, make such alterations, repairs, replacements, and/or decorations in the demised premises as Owner, in Owner's sole judgment, consider advisable and necessary for the purpose of re-letting the demised premises, and the making of such alterations, repairs, replacements, and/or decorations shall not operate or be construed to release Tenant from liability. Owner shall in no event be liable in any way whatsoever, for failure to re-let the demised premises, or in the event that the demised premises are re-let, for failure to collect the rent thereof under such re-letting, and in no event shall Tenant be entitled to receive any excess, if any, of such net rent collected over the sums payable by Tenant to Owner hereunder. In the event of a breach of or threatened breach by Tenant or any of the covenants or provisions hereof, Owner shall have the right of injunction and the right to invoke any remedy allowed at law or in equity as if re-entry, summary proceedings and other remedies were not herein provided for. Mention in this case of any particular remedy, shall not preclude Owner from any other remedy, in law or in equity. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws. Fees and Expenses: 19. If Tenant shall default in the observance or performance of any term or covenant on Tenant's part to be observed or performed under or by virtue of any of the terms or provisions in any article of this lease, then, unless otherwise provided elsewhere in this lease, Owner may immediately or at any time thereafter and without notice perform the obligation of Tenant thereunder, and if Owner, in connection therewith or in connection with any default by Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs any obligations for the payment of money, including but not limited to attorney's fees, in instituting, prosecuting or defending any actions or proceedings, such sums so paid or obligations incurred with interest and costs shall be deemed to be additional rent hereunder and shall be paid by Tenant to Owner within five (5) days of rendition of any bill or statement to Tenant therefor, and if Tenant's lease shall have expired at the time of making of such expenditures or incurring of such obligations, such sums shall be recoverable by Owner as damages. No Representations by Owner: 20. Neither Owner nor Owner's agents have made any representations or promises with respect to the physical condition of the building, the land upon which it is erected or the demised premises, the rents, leases, expenses of operation, or any other matter or thing affecting or related to the premises except as herein expressly set forth and no rights, easements or licenses are required by Tenant by implication or otherwise except as expressly set forth in the provisions of this lease. Tenant has inspected the building and the demised premises and is thoroughly acquainted with their condition, and agrees to take the same "as is" and acknowledges that the taking of possession of the demised premises by Tenant shall be conclusive evidence that the said premises and the building of which the same form a part were in good and satisfactory condition at the time such possession was so taken, except as to latent defects. All understandings and agreements heretofore made between the parties hereto are merged in this contract, which alone fully and completely expresses the agreement between Owner and Tenant any any executory agreement hereafter made shall be ineffective to change, modify, discharge or affect an abandonment of it in whole or in part, unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. End of Term: 21. Upon the expiration or other termination of the term of this lease, Tenant shall quit and surrender to Owner the demised premises, broom clean, in good order and condition, ordinary wear excepted, and Tenant shall remove all of its property. Tenant's obligation to observe or perform this covenant shall survive the expiration or other termination of this lease. If the last day of the term of this lease or any renewal thereof, falls on Sunday, this lease shall expire at noon on the preceding Saturday unless it be a legal holiday in which case it shall expire at noon on the preceding business day. Quiet Enjoyment: 22. Owner covenants and agrees with Tenant that upon Tenant paying the rent and additional rent and observing and performing all the terms, covenants and conditions, on Tenant's part to be observed and performed, Tenant may peaceably and quietly enjoy the premises hereby demised, subject, nevertheless, to the terms and conditions of this lease, but not limited to, Article 33 hereof and to the ground leases, underlying leases and mortgages hereinbefore mentioned. Failure to Give Possession: 23. If Owner is unable to give possession of the demised premises on the date of the commencement of the term hereof, because of the building-over or retention of possession of any tenant, undertenant or occupants, or if the premises are located in a building being constructed, because such building has not been sufficiently completed to make the premises ready for occupancy or because of the fact that a certificate of occupancy has not been procured or for any other reason, Owner shall not be subject to any liability for failure to give possession on said date and the validity of the lease shall not be impaired under such circumstances, nor shall the same be construed in any wise to extend the term of this lease, but the rent payable hereunder shall be abated (provided Tenant is not responsible for the inability to obtain possession) until after Owner shall have given Tenant written notice that the premises are substantially ready for Tenant's occupancy. If permission is given to Tenant to enter into the possession of the demised premises or to occupy premises other than the demised premises prior to the date specified as the commencement of the term of this lease. Tenant covenants and agrees that such occupancy shall be deemed to be under all the terms, covenants, conditions and provisions of this lease, except as to the covenant to pay rent. The provisions of this article are intended to constitute "an express provision to the contrary" within the meaning of Section 223-a of the New York Real Property Law. No Waiver: 24. The failure of Owner to seek redress for violation of, or to insist upon the strict performance of any covenant or condition of this lease or of any of the Rules or Regulations set forth or hereafter adopted by Owner, shall not prevent a subsequent act which would have originally constituted a violation from having all the force and effect of an original violation. The receipt by owner of rent with knowledge of the breach of any covenant of this lease shall not be deemed a waiver of such breach and no provision of this lease shall be deemed to have been waived by Owner unless such waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement of any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Owner may accept such check or payment without prejudice to Owner's right to recover the balance of such rent or pursue any other remedy in this lease provided. No act or thing done by Owner or Owner's agents during the terms hereby demised shall be deemed in acceptance of a surrender of said premises and no agreement to accept such surrender shall be valid unless in writing signed by Owner. No employee of Owner or Owner's agent shall have any power to accept the keys of said premises prior to the termination of the lease and the delivery of keys to any such agent or employee shall not operate as a termination of the lease or a surrender of the premises. Waiver of Trial by Jury: 25. It is usually agreed by and between Owner and Tenant that the respective parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other (except for personal injury or property damage) on any matters whatsoever arising out of or in any way connected with this lease, the relationship of Owner and Tenant, Tenant's use of or occupancy of said premises, and any emergency statutory or any other statutory remedy. It is further mutually agreed that in the event Owner commences any summary proceeding for possession of the premises, Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding. Inability to Perform: 26. This lease and the obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on part of Tenant to be performed shall in no wise be affected, impaired or excused because Owner is unable to fulfill any of its obligations under the lease or to supply or is delayed in supplying any service expressly or implied to be supplied or is unable to make or is delayed in making any repair, additions, alterations or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Owner is prevented or delayed from so doing by reason of strike or labor troubles, government preemption in connection with a National Emergency or by reason of any rule, order or regulation of any department or subdivision thereof of any government agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency, or when, in the judgement of Owner, temporary interruption of such services is necessary by reason of accident, mechanical breakdown, or to make repairs, alterations or improvements. Bills and Notices: 27. Except as otherwise in this lease provided, a bill, statement, notice or communication which Owner may desire or be required to give to Tenant, shall be deemed sufficiently given or rendered if, in writing, delivered to Tenant personally or sent by registered or certified mail addressed to Tenant at the building of which the demised premises form a part or at the last known residence address or business address of Tenant or left at any of the aforesaid premises addressed to Tenant, and the time of the rendition of such bill or statement and of the giving of such notice of communication shall be deemed to be the time when the same is delivered to Tenant, mailed, or left at the premises as herein provided. Any notice by Tenant to Owner must be served by registered or certified mail addressed to Owner or at the address first hereinabove given or at such other Address as Owner shall designation by written notice. Water Charges: 28. If Tenant requires, uses or consumes water for any purpose in addition to ordinary lavatory purposes (of which fact Tenant constitutes Owner to be the sole judge) Owner may install a water meter and thereby measures Tenant's water consumption for all purposes. Tenant shall pay Owner for the cost of the meter and the cost of the installation thereof and throughout the duration of Tenant's occupancy Tenant shall keep said meter and installation equipment in good working order and repair at Tenant's own cost and expense. Tenant agrees to pay for water consumed, as shown on said meter as and when bills are rendered. Tenant covenants and agrees to pay the sewer rent, charge or any other tax, rent, levy or charge which now or hereafter is assessed, imposed or a lien upon the demised premises or the realty of which they are part pursuant to law, order or regulation made or leased in connection with the use, consumption, maintenance or supply of water, water system or sewage or sewage connection or system. The bill rendered by Owner shall be payable by Tenant as additional rent. If the building or the demised premises or any part thereof be supplied with water through a meter through which water is also supplied to other premises, Tenant shall pay to Owner as additional rent, on the first day of each month, ____ % ($ ) of the total meter charges, as Tenant's portion, independently of and in addition in any of the remedies reserved to Owner hereinabove or elsewhere in this lease. Owner may sue for and collect any monies to be paid by Tenant or paid by Owner for any of the reasons or purposes hereinabove set forth. Sprinklers: 29. Anything elsewhere in this lease to the contrary notwithstanding, if the New York Board of Fire Underwriters or the Insurance Services Office or any bureau, department or official of the federal, state or city government require or recommend the installation of a sprinkler system in that any changes, modifications, alterations, or additional sprinkler heads or other equipment be made or supplied in an existing sprinkler system by reason of Tenant's business, or the location of partitions, trade fixtures, or other contents of the demised premises, or for any other reason, or if any such sprinkler system installations, changes, modifications, alterations, additional sprinkler heads or other such equipment, become necessary to prevent the imposition of a penalty or charge against the full allowance for a sprinkler system in the fire insurance rate set by any said exchanger or by any fire insurance company, Tenant shall, at Tenant's expense, promptly make such sprinkler system installations, changes, modifications, alterations, and supply additional sprinkler heads or other equipment as required whether the work involved shall be structural or non-structural in nature. Tenant shall pay to Owner as additional rent the sum $ , on the first day of each month during the term of this lease, as Tenant's position of the contract price for sprinkler supervisory service. Heat, Cleaning: 30. As long as Tenant is not in default under any of the covenants of this lease Owner shall, if and insofar as existing facilities permit furnish heat to the demised premises, when and as required by law, on business days from 8:00 a.m. to 6:00 p.m. and on Saturdays from 8:00 a.m. to 1:00 p.m. Tenant shall at Tenant's expense, keep demised premises clean and in order, to the satisfaction to owner, and if demised premises are situated on the street floor, Tenant shall, at Tenant's own expense, make all repairs and replacements to the sidewalks and curbs adjacent thereto, and keep said sidewalks and curbs free from snow, ice, dirt and rubbish. Tenant shall pay to Owner the cost of removal of any of Tenant's refuse and rubbish from the building, bills for the same shall be rendered by Owner to Tenant at such times as Owner may elect and shall be due and payable when rendered and the amount of such bills shall be deemed to be, and be paid as additional rent. Tenant shall, however, have the option of independently contracting for the removal of such rubbish and refuse in the event that Tenant does not wish to have same done by employees of Owner. Under such circumstances, however, the removal of such refuse and rubbish by others shall be subject to such rules and regulations as, in the judgment of Owner, are necessary for the proper operation of the building. Security: 31. Deleted Captions: 32. The captions are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this lease or the intent of any provision thereof. Definitions: 33. The term "Owner" as used in this lease means only the Owner, or the mortgages in possession, for the time being of the land and building (or the Owner of a lease of the building or of the land and building) of which the demised premises form a part, so that in the event of any sale or sales of said land and building or of said lease, or in the event of a lease of said building, or of the land and building, the said Owner shall be and hereby is entirely freed and relieved of all covenants and obligations of Owner hereunder, and it shall be deemed and construed without further agreement between the parties of their successors in interest, or between the parties and the purchaser, at any such sale, or the said lessee of the building, or of the land and building, that the purchaser or the lessee of the building has assumed and agreed to carry out any and all covenants and obligations of Owner hereunder. The words "re-enter" and "re-entry" as used in this lease are not restricted to their technical legal meaning. The term "business days" as used in this lease shall exclude Saturdays (except such portion thereof as is covered by specific hours in Article 30 hereof). Sundays and all days designated as holidays by the applicable building service union employees service contract or by the applicable Operating Engineers contract with respect to H V A C service. Adjacent Excavation -- Shoring: 34. If an excavation shall be made upon land adjacent to the demised premises, or shall be authorized to be made, Tenant shall afford to the person causing or authorized to cause such excavation, license to enter upon the demised premises for the purpose of doing such work as said person shall deem necessary to preserve the wall or the building of which demised premises form a part from injury or damage and to support the same by property foundations without any claim for damages or indemnity against Owner, or diminution or abatement of rent. Rules and Regulations: 36. Tenant and Tenant's servants, employees, agents, visitors, and licensees shall observe faithfully, and comply strictly with the Rules and Regulations and such others and further reasonable Rules and Regulations as Owner or Owner's agents may from time to time adopt. Notice of any additional rules or regulations shall be given in such manner as Owner may elect. In case Tenant disputes the reasonableness of any additional Rules or Regulation hereafter made or adopted by Owner or Owner's agents, the parties hereto agree to submit the question of the reasonableness of such Rule or Regulation for decision to the New York office of the American Arbitration Association, whose determination shall be final and conclusive upon the parties hereto. The right to dispute the reasonableness of any additional Rule or Regulation upon Tenant's part shall be deemed waived unless the same shall be asserted by service of a notice, in writing upon Owner with ten (10) days after the giving of notice thereof. Nothing in this lease contained shall be construed to impose upon Owner any duty or obligation to enforce the Rules and Regulations or terms, covenants or conditions in any other lease, as against any other tenant and Owner shall not be liable to Tenant for violation of the same by any other tenant, its servants, employees, agents, visitors or licensees. Glass: 37. Owner shall replace, at the expense of Tenant, any and all plate and other glass damaged or broken from any cause whatsoever in and about the demised premises. Owner may insure, and keep insured, at Tenant's expense, all plate and other glass in the demised premises for and in the name of Owner. Bills for the premiums therefor shall be rendered by Owner to Tenant at such times as Owner may elect, and shall be due from, and payable by, Tenant when rendered, and the amount thereof shall be deemed to be, and be paid as, additional rent. Pornographic Uses Prohibited: 38. Tenant agrees that the value of the demised premises and the reputation of the Owner will be seriously injured if the premises are used for any obscene or pornographic purposes or any sort of commercial sex establisment. Tenant agrees that Tenant will not bring or permit any obscene or pornographic material on the premises, and shall not permit or conduct any obscene, nude, or semi-nude live performances on the premises, nor permit use of the premises for nude modelling, rap sessions, or as a so-called rubber goods shops, or as a sex club of any sort, or as a "massage parlor." Tenant agrees further that Tenant will not permit any of these uses by any sublessee or assignee of the premises. This Article shall directly bind any successors in interest to the Tenant. Tenant agrees that if at any time Tenant violates any of the provisions of this Article, such violation shall be deemed a breach of a substantial obligation of the terms of this lease and objectionable conduct. Pornographic material is defined for purposes of this Article as any written or pictorial matter with prurient appeal or any objects of instrument that are primarily concerned with lewd or prurient sexual activity. Obscene material is defined here as it is in Penal Law ss. 235.00. Estoppel Certificate: 39. Tenant, at any time, and from time to time, upon at least 10 days prior notice by Owner shall execute, acknowledge and deliver to Owner, and/or to any other person, firm or corporation specified by Owner, a statement certifying that this lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), stating the dates which the rent and additional rent have been paid, and stating whether or not there exists any defaults by Owner under this lease, and, if so, specifying each such default. Successors and Assigns: 40. The covenants, conditions and agreements contained in this lease shall bind and inure to the benefit of Owner and Tenant and their respective heirs, distributees, executors, administrators, successors, and except as otherwise provided in this lease, their assigns. In Witness Whereof, Owner and Tenant have respectively signed and sealed this lease as of the day and year first above written. Witness for Owner: ELMONT Q. PROPERTIES, INC. /s/ Frank Castellana Witness for Tenant: QUAREX ELMONT, INC. /s/ Peter Castellana, Jr. ACKNOWLEDGEMENTS CORPORATE OWNER STATE OF NEW YORK, ss.: County of . On this day of , 19 , before me personally came to me know, who being by me duly sworn, did depose and say that he resides in that he is the of the corporation described in and which executed the foregoing instrument, as OWNER; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that he signed his name thereto by like order. INDIVIDUAL OWNER STATE OF NEW YORK, ss.: County of On this day of , 19, before me personally came to me known and known to me to be the individual described in and who, as OWNER, executed the foregoing instrument and acknowledged to me that he executed the same. RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN ACCORDANCE WITH ARTICLE 35 1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules, stairways, corridors or halls shall not be obstructed or encumbered by any Tenant or used for any purpose other than for ingress or egress from the demised premises and for delivery of merchandise and equipment in a prompt and efficient manner using elevators and passageways designated for such delivery by Owner. There shall not be used in any space, or in the public hall of the building, either by any Tenant or by jobbers or others in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and safeguards. 2. If said premises are situated on the ground floor of the building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk and curb in front of said premises clean and free from ice, snow, etc. 3. The water and wash closets and plumbing fixtures shall not be used for any purposes other than those for which they were designed or constructed. 4. Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance in the demised premises, or permit or suffer the demised premises to be occupied or used in a manner offensive or objectionable to Owner or other occupants of the buildings by reason of noise, odors, and/or vibrations, or interfere in any way with other Tenants or those having business therein. 5. No sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted or affixed by any Tenant on any part of the outside of the demised premises or the building or on the inside of the demised premises if the name is visible from the outside of the premises without the prior written consent of Owner, except that the name of Tenant may appear on the entrance door of the premises. In the event of the violation of the foregoing by any Tenant, Owner may remove sign without any liability, and may charge the expense incurred by such removal to Tenant or Tenants violating this rule. Signs on interior doors and directory tablet shall be inscribed, painted or affixed for each Tenant by Owner at the expense of such Tenant, and shall be of a size, color and style acceptable to Owner. 6. No Tenant shall mark, paint, drill into, or in any way deface any part of the demised premises or the building of which they form a part. No boring, cutting or stringing of wires shall be permitted, except with the prior written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or other similar floor covering, so that the same shall come in direct contact with the floor of the demised premises, and, if linoleum or other similar floor covering is desired to be used an interlining of builder's deadening felt shall be first affixed to the floor, by a paste or other material, soluble in water, the use of cement or other similar adhesive material being expressly prohibited. 7. Freight, furniture, business equipment, merchandise and bulky matter of any description shall be delivered to and removed from the premises only on the freight elevators and through the service entrances and corridors, and only during hours and in a manner approved by Owner. Owner reserves the right to inspect all freight to be brought into the building and to exclude from the building all freight which violates any of these Rules and Regulations of the lease or which these Rules and Regulations are a part. 8. Owner reserves the right to exclude from the building, between the hours of 6 p.m. and 8 a.m. and at all hours on Sundays, and legal holidays all persons who do not present a pass to the building signed by Owner. Owner will furnish passes to persons for whom any Tenant requests same in writing. Each Tenant shall be responsible for all persons for whom he requests such pass and shall be liable to Owner for all acts of such persons. 9. Owner shall have the right to prohibit any advertising by any Tenant which, in Owner's opinion, tends to impair the reputation of Owner or its desirability as a building for stores or offices, and upon written notice from Owner, Tenant shall refrain from or discontinue such advertising. 10. Tenant shall not bring or permit to be brought or kept in or on the demised premises, any inflammable, combustible or explosive fluid, material, chemical or substance, or cause or permit any odors of cooking or other processes, or any unusual or other objectionable odors to permeate in or emanate from the demised premises. 11. Tenant shall not place a load on any floor of the demised premises exceeding the floor load per square foot area which it was designed to carry and which is allowed by law. Owner reserves the right to prescribe the weight and position of all safes, business machines and mechanical equipment. Such installations shall be placed and maintained by Tenant at Tenant's expense in setting sufficient in Owner's judgement to absorb and prevent vibration, noise and annoyance. GUARANTY The undersigned Guarantor guarantees to Owner, Owner's successors and assigns, the full performance and observance of all the agreements to be performed and observed by Tenant in the attached lease, including the "Rules and Regulations" as therein provided, without requiring any notice to Guarantor of nonpayment or, nonperformance, or proof, or notice of demand, to hold the undersigned responsible under this guaranty, all of which the undersigned hereby expressly waives and expressly agrees that the legality of this agreement and the agreements of the Guarantor under this agreement shall not be ended, or changed by reason of the claims to Owner against Tenant of any of the rights ore remedies given to Owners as agreed in the attached lease. The Guarantor further agrees that this guaranty shall remain and continue in full force and effect as to any renewal, change or extension of the lease. As a further inducement to Owner to make the lease Owner and Guarantor agree that in any action or proceeding brought by either Owner or the Guarantor against the other on any matters concerning the Lease or of this guaranty that Owner and the undersigned shall and do waive trial by jury. ...................................................................Guarantor RIDER ANNEXED TO AND FORMING PART OF LEASE LANDLORD: ELMONT Q. PROPERTIES, INC. TENANT: QUAREX ELMONT, INC. PREMISES: 1717, 1725 Dutch Broadway, Elmont, New York 40. This rider is made a part of the lease described above to which it is attached, and in each instance in which the provisions, or any part thereof, of this rider shall contradict or be inconsistent with the provisions, or any part thereof, of said lease as constituted without this rider, the provisions of this rider shall prevail and govern and the contradicted or inconsistent provisions of said lease shall be deemed amended accordingly. 41. In addition to the rent herein specified, and as part of the rent hereunder, the Tenant shall at all times and from time to time, keep up, maintain, preserve and keep in good order and repair at its own cost and expense, the entire demised premises, both inside and outside, including the plumbing and fixtures therein, and including maintenance and repairs of damages by the elements, and in case the Tenant shall not make such repairs of damages and provide for such maintenance and upkeep of the said premises as herein provided, the Landlord may make the same after the failure of the Tenant to commence the same within fifteen (15) days after the Landlord gives notice of the necessity thereof, and add the cost thereof to the installment of the rental next due, and the failure of the Tenant to pay the same shall be construed the same as a failure of the Tenant to pay an installment of rent. 42. As a part of the rent hereunder, the Tenant shall during the whole period of this lease, at its own cost and expense, comply with, conform to, fulfill and perform all present and future requirements of the law, and all present and future ordinances, rules, orders, regulations and requirements of all federal, state, municipal and local public authorities and all rules, orders, regulations and requirements of the Board of Fire Underwriters, and of each and all of the insurance companies insuring the said building on the premises hereby demised against loss of fire in relation to and in connection with the said demised premises, or any part thereof, notwithstanding that any such present or future laws, ordinances, rules, orders, regulations or requirements result from a change of policy excepting, however, such ordinances, rules, orders, regulations or requirements which require structural changes. In case of the failure of the Tenant to -2- comply with such present and future requirements of the law, ordinances, rules, orders, regulations and requirements, as herein provided, the Landlord may cause the same to be done and the cost thereof shall be added to the installment of the rental next due and be paid to the Landlord by the Tenant and the failure to pay an installment of rent. 43. The Tenant may make any interior and exterior alteration, addition or improvements necessary for the proper conduct of its business without Landlord's consent. Tenant may also use the land and parking area for additions or improvements. Such alterations, additions or improvements shall be made at the Tenant's own cost and expense, and shall be made in accordance with the laws, order, rules and regulations of federal, state, city and county authorities applicable thereto then in effect. The Tenant shall at its own cost and expense file plans and specifications for any such alterations, additions or improvements whenever required to do so by law and shall obtain the necessary permits therefor whenever required, and whenever plans and specifications are required to be filed in connection with the same the Tenant shall carry adequate Workmen's Compensation and General Liability Insurance. If a notice of mechanic's lien be filed against the demised premises for labor or material alleged to -3- have been furnished or to be furnished to or for the Tenant, the Tenant shall cause the same to be removed or bonded. If the Tenant shall fail to take such action as may be necessary to cause the said lien to be discharged or bonded within ten (10) days after filing of such notice and receipt of such notice the Landlord may cause the same to be discharged or bonded. Any amount paid or expense incurred by the Landlord hereunder shall be deemed to be additional rent for the demised premises and shall be added to and become part of, the rent to be paid then or next to become due. 44. Nothing herein contained shall in any wise be construed so as to entitle any persons furnishing labor or supplying materials in the construction of any improvements in or about the said premises, to any charge or lien against the fee of the premises, it being specifically understood and agreed that such person will look solely to the Tenant for payment of any moneys due therefor, nor shall anything herein contained be deemed a consent under the mechanic's lien or any other statutory provision of law, so as to entitle such person so supplying materials or furnishing labor, to have any charge against the said property. -4- 45. Tenant shall at his own cost and expense, pay for his own utility service including heat, electric, and water, sprinkler and sewer service to the demised premises. Tenant shall also pay the cost of the maintenance, repair and replacement, and service of said utility systems. 46. (a) Tenant is and shall be in control and possession of the demised premises as provided herein, and Landlord shall not in any event whatsoever be liable for any injury or damage to any property or to any person happening on or about the demised premises, nor for any injury or damage to the demised premises, nor to any property of Tenant, or of any other person contained therein. (b) Tenant shall indemnify and save harmless Landlord against and from all costs, expenses, liabilities, losses, damages, suits, fines, penalties, claims and demands of every kind and nature, including reasonable counsel fees, by or on behalf of any person, party or governmental authority, whomsoever, arising out of any accident, injury or damages which shall happen in, or about the demised premises or appurtenance, and on or under the streets, sidewalks, curbs or vaults in front of or adjacent thereto, however occurring, and for any matter or thing growing out of the condition, occupation, maintenance, alteration, repair, use or operation -5- of the demised premises, or of any part thereof, and/or of the streets, sidewalks, curbs or vaults adjacent thereto during the term. 47. Tenant shall permit Landlord or its agent, and any mortgagee or its agent, to enter the demised premises at all reasonable hours for the purpose of inspection, or of making repairs that Tenant may neglect or refuse to make in accordance with the agreements, terms, covenants and conditions hereof (but nothing herein shall imply or impose any duty upon Landlord to do any such work), and also for the purpose of showing the demised premises to persons wishing to purchase the same, and at any time within six (6) months prior to the expiration of the term to persons wishing to rent the same; and Tenant shall within six (6) months prior to the expiration of the term permit the usual notice of "To Let" and "For Sale" to be placed on the demised premises and to remain thereon without hindrance and molestation. 48. The Tenant shall indemnify the Landlord against any and all claims which may be established or made against the Landlord for damages, including the defense and cost thereof, which may result from the death of or injury to any person or persons who may be in or about the property during the same -6- term and any renewal or extension thereof and, as security for the payment of such claim, shall, at the Tenant's expense, pay for and maintain throughout said term, fire insurance on the premises in an amount of at least $2,000,000.00 and public liability insurance with limits of at least $3,000,000.00 for the death of or injury to one person and $3,000,000.00 per occurrence, and $500,000.00 property damage. The policy shall be written by a responsible company authorized to do business in the State of New York, reasonably acceptable to the Landlord, and shall be in favor of the Landlord and Tenant, as interests may appear. The original policy with due proof of payment of premiums thereon shall be delivered to the Landlord not later than ten (10) days from the date of execution of this Agreement. Tenant will deliver renewal policies together with due proof of payment of premiums thereon. In the event Tenant shall fail to provide and maintain the aforesaid insurance, Landlord shall have the right, but not the obligation, after giving Tenant ten (10) days' notice, to procure and pay for such insurance, and Tenant shall reimburse Landlord the cost thereof together with interest at the then maximum legal rate on the amount paid from the date of payment to the date of reimbursement. Failure of the Tenant to pay the premium for the insurance shall be construed the same as a failure of the Tenant to pay an installment of rent, and shall be added to the -7- installment of the rental next due and payable to the Landlord. Each policy shall provide that such policy cannot be cancelled without at least ten (10) days prior written notice to Landlord, if this clause is obtainable from the insurance carrier. 49. (a) Tenant shall pay as additional rent 100% of the real estate taxes for the premises, plot and structure wherein the demised premises are located whether by reason of increased rate or assessed valuation over the year 1988/89. Such increase shall be applicable only to the actual demised area. (b) Taxes shall be deemed to include all real estate taxes, assessments, County taxes, transit taxes or any other governmental charge of a similar nature whether general, special, ordinary or extraordinary, foreseen or unforseen, which may hereafter be levied or assessed against the realty. If, due to a change in the method of taxation, any franchise, income, profit, sales, rental, use and occupancy or other tax shall be substituted for or levied against the Landlord or any owner of the building or realty in lieu of taxes hereinabove defined upon or with respect to the building or the realty, such tax shall be included in the term "Taxes" for the purpose of this. -8- (c) Any amounts due to the Landlord under the provisions of this Article shall be paid as additional rent annually within ten (10) days after the Landlord shall have submitted a copy of the bill received from the taxing authorities and a breakdown of the actual amount charged to the Tenant, and statement to Tenant showing the amount due to Landlord. Any such tax increase for the fiscal tax year falling part within the year in which the term of this lease shall end shall be apportioned so that Tenant shall pay his aforesaid share of only that portion thereof which corresponds with the portion of said fiscal tax year which is within the term of this lease. The amount of taxes comprising Landlord's Basic Tax Liability against which Tenant's liability for additional rent for subsequent years is determined shall be the amount thereof finally determined to be legally payable by legal proceedings or otherwise. (d) The Landlord reserves the right, through available legal remedies, to contest the validity of any taxes or the amount of the assessed valuation of the realty or any part thereof for any fiscal tax year. If the Landlord shall receive any tax refund, remission or abatement in respect to the taxes for any fiscal year for which the Tenant has paid a share of the taxes, as herein provided, then Landlords shall reimburse Tenant for his proportionate share thereof, after -9- first deducting therefrom the share of Landlord's cost and expense in procuring such refund, remission or abatement proportionately due to Tenant. Tenant may, if Landlord does not pursue the above mentioned remedies, pursue them themselves. 50. If title to the fee of the whole of the leased premises shall be taken or condemned by any competent authority for any public or quasi-public use, this lease shall cease and terminate, and all rent paid or payable by the Tenant hereunder shall be apportioned as of the date of vesting of title in such condemnation proceeding, and the Tenant shall have no claim against the Landlord for the value of any unexpired term of this lease. In the event of any such condemnation, the entire award(s) shall belong to Landlord without any deduction therefrom for any estate or interest now or hereafter vested in Tenant, or any damage thereto, and Tenant hereby assigns to Landlord all of Tenant's right, title and interest now existing or hereafter arising in and to any and all such award(s) or any part thereof, provided, however, that nothing herein contained shall be construed to preclude Tenant from participating in such condemnation proceedings and prosecuting directly against the condemning authority any claim for loss of business, or -10- damage to, or the cost of removal of, trade fixtures and other personal property belonging to Tenant. 51. It is mutually agreed by and between Landlord and Tenant that the respective parties hereto shall, and they hereby do, waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of said premises and/or any claim of injury or damage, and any emergency statutory or any other statutory remedy. It is further mutually agreed that in the event Landlord commences any summary proceedings for nonpayment of rent, Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding, it being distinctly understood, however, that the noninterposition of any counterclaim shall not be deemed a waiver by Tenant of any counterclaim it may possess, nor shall the interposition of the facts as a defense which may be the basis of a counterclaim be deemed a waiver of any counterclaim. 52. Any and all alterations, trade fixtures and appliances, machinery, tools, equipment, articles or personal property, installed by the Tenant and used by the Tenant in the -11- conduct of its business shall be and shall remain the property of the Tenant and shall be removed by the Tenant upon any termination of the lease or the surrender of possession by the Tenant. Damage caused by such removal shall be repaired by Tenant and this obligation shall survive the termination of the lease. 53. The receipt of any rent, whether the same be that originally reserved or that which may become payable under any covenant herein contained, or of any portion thereof or any interest thereon, shall not operate as a waiver of the right of the Landlord to enforce the payment of additional unpaid rent or the obligations of this lease by such remedies as may be appropriate; and, also, the failure of the Landlord to enforce the same covenants and conditions on the occasion of a subsequent breach or default. 54. It is expressly understood and agreed that any and all rights and remedies granted to the Landlord under and by virtue of the terms and conditions of this lease shall be in addition to and not by way of limitation of any and all other rights and remedies given or afforded to the Landlord by reason of any statute, law, ordinance or otherwise. -12- 55. Tenant is fully familiar with the physical condition of the Demised Premises and accepts same in their "As Is" condition. 56. The Tenant may place or cause or allow to be placed any sign of any kind whatsoever, in or about the said premises, and the Tenant may keep or place or permit to be kept or placed such signs as are usual in connection with the business conducted on the premises, provided that proper permits for the erection of such sign or signs shall be procured by the Tenant at its expense, from the proper authorities, municipal or otherwise, having jurisdiction, and provided that the said sign or signs be erected and maintained in the manner provided by law and in accordance with the rules and regulations of the departments having jurisdiction, and provided further that the Tenant will save and keep harmless the Landlord of and from any and all charges or damages by reason of the erection and maintenance of such signs. 57. In the event that the Landlord shall pay any sum of money, or do any act which shall require the expenditure of any sums by reason of the failure of the Tenant to perform any of the covenants, terms or conditions herein contained, the Tenant covenants to repay such sums to the Landlord upon demand - 13 - on the next rent day, and in default thereof the sum so paid by the Landlord, together with interest thereon at the maximum legal rate of interest may be added as additional rent to the net annual rental becoming due upon the next rent day, or any subsequent rent day and shall be payable as such. Nothing contained herein shall be construed to postpone the right of the Landlord immediately upon expending such sums, to collect such sums with interest at the maximum legal rate of interest by action or otherwise. 58. Tenant represents and warrants that it has dealt with no broker in connection with the negotiation of this lease. 59. No change, amendment, modification, waiver, cancellation or discharge of this Lease, or any part thereof, shall be valid unless in writing and signed by the party or parties against whom enforcement of any such change, amendment, modification, waiver, cancellation or discharge is sought, and no surrender of the premises or the remainder of the term herein shall be valid unless accepted by the Landlord in writing. -14- 60. Landlord hereby consents to a subleasing or an assignment of the entire demised premises or any part thereof. 61. Tenant understands that Landlord has a number of leases with other tenants on the demised premises. Tenant takes subject to all leases now in effect. Landlord agrees to transfer all security deposits now held. See Rider Attached (Rent Schedule). 62. All notices, demands and requests required under this Lease shall be in writing and shall be deemed to have been properly given if sent by United States registered or certified mail, postage prepaid, addressed to the parties at the addresses first above written or to such other addresses as Landlord or Tenant, as the case may be, shall from time to time designate by notice give to the other. All notices, properly addressed, shall be deemed served on the date of mailing, as provided in this paragraph. 63. Tenant will be solely responsible for the removal of all rubbish, refuse and garbage from the demised premises and will do so at its sole cost and expense. Tenant shall keep said demised premises clean and in order. Tenant -15- shall also provide for removal of snow and ice from the premises and parking area. 64. Tenant, at any time, and from time to time, upon at least ten (10) days prior notice by Landlord, shall execute, acknowledge and deliver to Landlord, and/or to any other person, firm or corporation specified by Landlord, a statement certifying that this lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), stating the dates which the rent and additional rent have been paid, and stating whether or not there exists any defaults by Landlord under this lease, and, if so, specifying each such default. 65. This lease shall be governed by the laws of the State of New York. 66. This lease shall be acknowledged by both parties, and Tenant shall have the right to record the same with the County Clerk's office. 67. In the event of any default by Tenant in the performance of any obligation under this lease, Tenant shall -16- have a reasonable opportunity to cure same after notice, except for rental and other default items where specified time periods have been heretofore set forth in this lease. 68. (a) Provided that the Tenant shall not then be in default under any of the terms, covenants or conditions of this Agreement on the Tenant's part to be observed or performed, then, in the event that the Landlord shall desire to sell the premises, the Tenant shall have the single, non-recurring right ("Right of First Offer") to have the Landlord submit written notice ("Sale Notice") to the Tenant of the desire to sell, which Sale Notice shall be deemed an offer of the premises to the Tenant and shall be submitted to the Tenant before the Landlord enters into negotiations with any independent third party not related to or affiliated with the Landlord (but excluding, however, brokers) to sell the premises. The Sale Notice shall set forth (i) the price (the "Sale Price") at which the Landlord is then considering the sale of the Premises, indicating in the Sale Notice whether the Sale Price is "all cash" or whether the Landlord would accept purchase money financing and terms thereof and such other matters as the Landlord may deem appropriate for such Sale Notice. -17- (b) The Tenant shall have fifteen (15) days after the giving of the Sale Notice to deliver to the Landlord written notice of the Tenant's desire to enter into a contract to purchase the premises for the Sale Price and on such terms as may be contained in the Sale Notice, which notice of election to purchase shall be accompanied by a bank or certified check in the amount of ten (10%) percent of the Sale Price, to be held in escrow and applied to the downpayment agreed upon in a contract of sale. Time shall be of the essence with respect to said fifteen (15) day period and the failure of the Tenant to accept the offer for any reason whatsoever shall be deemed an irrevocable waiver of the Tenant's Right of First Offer. If the Tenant fails to accept the offer contained in the Sale Notice to the Tenant or if after accepting any such offer, the Tenant fails to execute and deliver a contract of sale submitted to the Landlord within ten (10) days after such submission, then the Landlord shall return any deposit and shall be entirely free, for a period of one hundred eighty (180) days following such rejection, to sell the premises, or any portions or portion thereof, to others, upon terms and conditions substantially equivalent to those first offered to the Tenant and at a Sale Price not less than that specified in the Sale Notice. If, by the expiration of said one hundred eighty (180) day period, the Landlord shall not -18- have executed a contract of sale for the sale of the premises upon terms and conditions no more favorable to the purchase than those contained in the Sale Notice, the Landlord shall again be obligated to offer to purchase the premises to the Tenant before offering the same to any third party, and the procedure set forth shall be repeated. (c) The provisions of Paragraph 68(a) are not violated upon a merger, consolidation or transfer to subsidiary corporations of the stock of ELMONT Q. PROPERTIES, INC. 69. Provided that the Tenant shall not then be in default under any of the terms, covenants or conditions of this agreement, the Tenant, by written notice (certified mail, return receipt requested) to Landlord, at any time during the initial term, but no later than six (6) months prior to the expiration of said initial term or any renewal periods thereafter, may renew and extend the term of the Lease for a further terms of two five (5) year periods. All the terms, covenants and conditions of the initial lease shall remain the same. The rent for the two (2) renewal periods shall be computed six (6) months prior to the renewal periods at fair market value, but in no event shall the rent be less than the rent in the last year of this Lease. -19- If the parties cannot agree as to fair market value, then the Landlord shall retain a real estate broker to determine the fair market value for the rental of the property. If the Tenant does not agree with the Landlord's real estate brokers valuation, then the Tenant shall retain a real estate broker to determine the fair market value for the rental value of the property. If the Landlord and Tenant cannot agree, then the two real estate brokers shall select a third real estate broker and the value as computed by the third real estate broker shall be binding. The expenses for the preceding shall be borne by both parties. IN WITNESS WHEREOF, Landlord and Tenant have respectfully signed and sealed this lease as of the day and year first above written. WITNESS FOR LANDLORD ELMONT Q. PROPERTIES, INC. /s/ Peter R. Admirand By: Frank Castellana, President WITNESS FOR TENANT QUAREX ELMONT, INC. By: Jules Veaner, Treasurer SUPPLEMENTAL RIDER TO LEASE LANDLORD: ELMONT Q. PROPERTIES, INC. TENANT: QUAREX ELMONT, INC. PREMISES: 1717, 1725 Dutch Broadway, Elmont, New York The printed provisions of this Lease are hereby modified and supplemented as follows. Wherever there is any conflict between this rider and the printed part of the Lease, the provisions of this rider are paramount and the Lease shall be construed accordingly. Article 7: It is agreed that as to any mortgages hereafter placed on the premises, the subordination provided for in Article 7 shall extend only to mortgages under which the mortgagee (by agreement in the mortgage or in a separate instrument) contracts in substance not to disturb Tenant's occupancy so long as Tenant performs its obligations in this lease on condition that Tenant, when requested by the mortgagee, shall execute an attornment agreement to the mortgagee should the mortgagee succeed to the rights of the Landlord under this lease. Article 9: Promptly after its receipt of any notice of any damage, Landlord will give Tenant a notice of the time within which in Landlord's judgment, the restoration of the premises can be effected. If the Landlord elects not to RIDER (RENT SCHEDULE) LEASES IN EFFECT JULY 6, 1988 TENANT TERM RENT SECURITY Sands Salvage Corp. To 3/31/91 $ 8,333.00 $ 16,666.00 Philip Carretta Month to Month $ 650.00 NONE 838 Rome Street 836 Rome Street VACANT QUAREX ELMONT, INC. CERTIFICATE The undersigned, Secretary of Quarex Elmont, Inc. a New York Corporation, hereby certifies that set forth below is a true and correct copy of the resolution duly adopted by the Board of Directors of the Corporation on , 1988, and that such resolution has not been amended or rescinded and it is in full force and effect on the date hereof. RESOLVED, that the Corporation enter into a lease with ELMONT Q. PROPERTIES, INC. for the premises known as the 1717, 1725 Dutch Broadway, Elmont, New York, pursuant to which the Company shall lease such premises for a term of seven (7) years commencing __________ __, 198_, at an annual rental of $852,000.00 per year during the first term thereof and escalating thereafter, and that the offices of the corporation and each of them are hereby authorized and directed to execute and deliver such lease on behalf of the corporation with such additional terms and conditions as they may deem necessary or desirable. IN WITNESS WHEREOF, the undersigned has made this Certificate this day of , 1989. Secretary (Seal) ELMONT Q. PROPERTIES, INC. CERTIFICATE The undersigned, Secretary of Elmont Q. Properties, Inc. a New York Corporation, hereby certifies that set forth below is a true and correct copy of the resolution duly adopted by the Board of Directors of the Corporation on , 1989, and that such resolution has not been amended or rescinded and it is in full force and effect on the date hereof. RESOLVED, that the Corporation enter into a lease with QUAREX ELMONT, INC. for the premises known as the 1717, 1725 Dutch Broadway, Elmont, New York, pursuant to which the Company shall lease such premises for a term of seven (7) years commencing ____________ , 198_, at an annual rental of $852,000.UU per year during the first term thereof and escalating thereafter, and that the offices of the corporation and each of them are hereby authorized and directed to execute and deliver such lease on behalf of the corporation with such additional terms and conditions as they may deem necessary or desirable. IN WITNESS WHEREOF, the undersigned has made this Certificate this day of , 1989. Secretary (Seal) THIS LEASE RENEWAL BY AND BETWEEN Elmont Q. Properties, Inc. and (F/K/A Quarex-Elmont) Western Beef Elmont, Inc., WITH OFFICES AT 47-05 Metropolitan Avenue, Ridgewood, New York 11385, DATED THIS 1ST DAY OF JULY, 1995. It is understood and agreed by and between the parties herein that the Lease dated July 6, 1989, by and between Elmont Q. Properties, Inc. and Western Beef Elmont, Inc., for premises at 1717 Dutch Broadway, shall be renewed and extended upon the following terms and conditions: a) The lease term shall be renewed for an additional 10 years commencing July 1, 1995 and terminating June 30, 2005. b) The rental for each and every year of the lease renewal term shall be as follows: Year 1 July 1, 1995-June 30, 1996 $1,027,209.33 per year 85,600.78 per month Year 2 July 1, 1996-June 30, 1997 1,068,297.70 per year 89,024.81 per month Year 3 July 1, 1997-June 30, 1998 1,111,029.61 per year 92,585.80 per month Year 4 July 1, 1998-June 30, 1999 1,155,470.79 per year 96,289.24 per month Year 5 July 1, 1999-June 30, 2000 1,201,689.62 per year 100,140.81 per month Year 6 July 1, 2000-June 30, 2001 1,249,757.21 per year 104,146.44 per month Year 7 July 1, 2001-June 30, 2002 1,299,747.50 per year l08,312.29 per month Year 8 July 1, 2002-June 30, 2003 1,351,737.40 per year 112,644.78 per month Year 9 July 1, 2003-June 30, 2004 1,405,806.81 per year 117,150.57 per month Year 10 July 1, 2004-June 30, 2005 1,462,039.17 per year 121,836.60 per month c) All other terms and conditions of the Lease dated July 6, 1989, by and between the parties shall remain in full force and effect and apply to the renewal term herein. ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO: By:_________________________ By:_________________________ ELMONT Q. PROPERTIES, INC. WESTERN BEEF, INC. F/K/A QUAREX ELMONT, INC. Dated: Witness: THIS LEASE RENEWAL BY AND BETWEEN Elmont Q. Properties, Inc. and (F/K/A Quarex-Elmont) Western Beef Elmont, Inc., WITH OFFICES AT 47-05 Metropolitan Avenue, Ridgewood, New York 11385, DATED THIS 1ST DAY OF JULY, 1995. It is understood and agreed by and between the parties herein that the Lease dated July 6, 1989, by and between Elmont Q. Properties, Inc. and Western Beef Elmont, Inc., for premises at 1717 Dutch Broadway, shall be renewed and extended upon the following terms and conditions: a) The lease term shall be renewed for an additional 10 years commencing July 1, 1995 and terminating June 30, 2005. b) The rental for each and every year of the lease renewal term shall be as follows: Year 1 July 1, 1995-June 30, 1996 $1,027,209.33 per year 85,600.78 per month Year 2 July 1, 1996-June 30, 1997 1,068,297.70 per year 89,024.81 per month Year 3 July 1, 1997-June 30, 1998 1,111,029.61 per year 92,585.80 per month Year 4 July 1, 1998-June 30, 1999 1,155,470.79 per year 96,289.24 per month Year 5 July 1, 1999-June 30, 2000 1,201,689.62 per year 100,140.81 per month Year 6 July 1, 2000-June 30, 2001 1,249,757.21 per year 104,146.44 per month Year 7 July 1, 2001-June 30, 2002 1,299,747.50 per year l08,312.29 per month Year 8 July 1, 2002-June 30, 2003 1,351,737.40 per year 112,644.78 per month Year 9 July 1, 2003-June 30, 2004 1,405,806.81 per year 117,150.57 per month Year 10 July 1, 2004-June 30, 2005 1,462,039.17 per year 121,836.60 per month c) All other terms and conditions of the Lease dated July 6, 1989, by and between the parties shall remain in full force and effect and apply to the renewal term herein. ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO: By:_________________________ By:_________________________ ELMONT Q. PROPERTIES, INC. WESTERN BEEF, INC. F/K/A QUAREX ELMONT, INC. Dated: Witness: EX-10.10 8 LEASE LEASE BY AND BETWEEN PETER CASTELLANA, JR. and MARIE CASTELLANA (LANDLORD) AND WESTERN BEEF -- 173RD STREET INC. (TENANT) INDEX TO LEASE LANDLORD: PETER CASTELLANA, JR. and MARIE CASTELLANA TENANT: WESTERN BEEF -- 173RD STREET INC. ARTICLE I REFERENCE PROVISIONS, LEASED PREMISES AND TERM Section 1.1 Reference Provisions Section 1.2 Term and Leased Premises Section 1.3 Acceptance of Leased Premises Section 1.4 Quiet Enjoyment ARTICLE II RENT AND OTHER CHARGES Section 2.1 Minimum Rent Section 2.2 Taxes Section 2.3 Utilities Charges and Services ARTICLE III CONSTRUCTION OF LEASED PREMISES Section 3.1 Construction of Leased Premises ARTICLE IV USE OF LEASED PREMISES Section 4.1 Use of Leased Premises Section 4.2 Additional Covenants of Tenant Section 4.3 Signs, Awnings and Canopies ARTICLE V INSURANCE REQUIRED OF TENANT Section 5.1 Insurance Required of Tenant Section 5.2 Fire Insurance Rate and Requirements Section 5.3 Waiver of Subrogation ARTICLE VI REPAIRS AND MAINTENANCE Section 6.1 Repairs and Maintenance by Tenant Section 6.2 Inspection ARTICLE VII ADDITIONS AND ALTERATIONS Section 7.1 Additions and Alterations by Landlord Section 7.2 Additions and Alterations by Tenant -i- ARTICLE VIII DAMAGE, DESTRUCTION OR CONDEMNATION OF THE LEASED PREMISES Section 8.1 Damage or Destruction Section 8.2 Condemnation ARTICLE IX FINANCING Section 9.1 Financing Section 9.2 Subordination Section 9.3 Non-Disturbance Protection ARTICLE X DEFAULT BY TENANT Section 10.1 Default Section 10.2 Landlord's Rights on Default Section 10.3 Landlord's Self--Help Section 10.4 Non--Waiver Provisions Section 10.5 Landlord's Expenses Section 10.6 Assignment of Lease on Default ARTICLE XI OTHER PROVISIONS Section 11.1 Definition and Liability of Landlord Section 11.2 Relationship of the Parties Section 11.3 Security Section 11.4 Indemnity Section 11.5 Property in Leased Premises Section 11.6 Damage to Property or Persons Section 11.7 Assignment or Subletting Section 11.8 Surrender of Premises and Holding Over Section 11.9 Liens Section 11.10 Interest Section 11.11 Lien of Landlord for Rent, Taxes and Other Sums Section 11.12 Late Payments Section 11.13 Waiver by Tenant Section 11.14 Notices Section 11.15 Broker Section 11.16 Short Form Lease Section 11.17 Entire and Binding Agreement Section 11.18 Provisions Severable Section 11.19 Captions Section 11.20 Force Majeure Section 11.21 Warranty of Title and Authority Section 11.22 No Jury Trial Section 11.23 Renewal Option Section 11.24 Miscellaneous -ii- THIS LEASE made and entered into as of the 1st day of November, 1992, by and between PETER CASTELLANA, JR. and MARIE CASTELLANA, (collectively "Landlord") and WESTERN BEEF - 173RD STREET INC., a New York corporation ("Tenant"). ARTICLE I REFERENCE PROVISIONS, LEASED PREMISES AND TERM Section 1.1. Reference Provisions. (a) LEASED PREMISES -- The building (the "Building") commonly known as 1564 Southern Boulevard, Bronx, New York. (b) TERM -- Shall be for a period of ten (10) years commencing on November 1, 1992 and ending on October 31, 2002. (c) RENEWAL OPTION - One (1) five (5) year option, to be exercised by Tenant on not less than six (6) months' written notice to Landlord (more particularly described in Section 11.23 hereof). (d) MINIMUM RENT - November 1, 1992 October 31, 1993 An amount per annum equal to EIGHTY TWO THOUSAND ONE HUNDRED and 00/100 ($82,100.00) DOLLARS ($6,841.67/month). November 1, 1993 October 31, 1994 An amount per annum equal to EIGHTY SIX THOUSAND TWO HUNDRED FIVE and 00/100 ($86,205.00) DOLLARS ($7,183.75/month). November 1, 1994 October 31, 1995 An amount per annum equal to NINETY THOUSAND FIVE HUNDRED FIFTEEN and 25/100 ($90,515.25)DOLLARS ($7,542.94/month). November 1, 1995 October 31, 1996 An amount per annum equal to NINETY FIVE THOUSAND FORTY ONE and 01/100 ($95,041.01) DOLLARS ($7,920.08/month). November 1, 1996 October 31, 1997 An amount per annum equal to NINETY NINE THOUSAND SEVEN HUNDRED NINETY THREE and 06/100 ($99,793.06) DOLLARS ($8,316.09/month). November 1, 1997 October 31, 1998 An amount per annum equal to ONE HUNDRED FOUR THOUSAND SEVEN HUNDRED EIGHTY TWO and 71/100 ($104,782.71) DOLLARS ($8,731.89/month). November 1, 1998 October 31, 1999 An amount per annum equal to ONE HUNDRED TEN THOUSAND TWENTY ONE and 84/100 ($110,021.84) DOLLARS ($9,168.49/month). November 1, 1999 October 31, 2000 An amount per annum equal to ONE HUNDRED FIFTEEN THOUSAND FIVE HUNDRED TWENTY TWO and 93/100 ($115,522.93) DOLLARS ($9,626.91/month). November 1, 2000 October 31, 2001 An amount per annum equal to ONE HUNDRED TWENTY ONE THOUSAND TWO HUNDRED NINETY NINE and 07/100 ($121,299.07) DOLLARS ($10,108.26/month). November 1, 2001 October 31, 2002 An amount per annum equal to ONE HUNDRED TWENTY SEVEN THOUSAND THREE HUNDRED SIXTY FOUR and 02/100 ($127,364.02) DOLLARS ($10,613.67/ month). RENEWAL TERM: November 1, 2002 October 31, 2003 An amount per annum equal to ONE HUNDRED THIRTY THREE THOUSAND SEVEN HUNDRED THIRTY TWO and 22/100 ($133,732.22) DOLLARS ($l1,144.35/ month). November 1, 2003 October 31, 2004 An amount per annum equal to ONE HUNDRED FORTY THOUSAND FOUR HUNDRED EIGHTEEN and 83/100($140,418.83)- DOLLARS ($11,701.57/month). November 1, 2004 October 31, 2005 An amount per annum equal to ONE HUNDRED FORTY SEVEN THOUSAND FOUR HUNDRED THIRTY NINE and 77/100 ($147,439.77) DOLLARS ($12,286.65/ month). November 1, 2005 October 31, 2006 An amount per annum equal to ONE HUNDRED FIFTY FOUR THOUSAND EIGHT HUNDRED ELEVEN and 75/100 ($154,811.75) DOLLARS ($12,900.98/month). November 1, 2006 October 31, 2007 An amount per annum equal to ONE HUNDRED SIXTY TWO THOUSAND FIVE HUNDRED FIFTY TWO and 33/100 ($162,552.33) DOLLARS ($13,546.03/month). (e) USE - The operation of a retail supermarket. The use of the Leased Premises by Tenant is and shall continue to be expressly subject to all applicable zoning ordinances and rules and regulations of any governmental instrumentality, board or bureau having jurisdiction. No other use of the Leased Premises shall be permitted without Landlord's prior written consent (which consent shall not be unreasonably withheld or delayed). (f) SECURITY -- None (g) NOTICE ADDRESS - TO LANDLORD: Mr. Peter Castellana, Jr. Mrs. Marie Castellana 47--05 Metropolitan Avenue Ridgewood, New York 11385 -2- TO TENANT: Western Beef -- 173rd Street Inc. 47-05 Metropolitan Avenue Ridgewood, New York 11385 Attn: Mr. Jules Verner (h) INTERPRETATION -- The provisions of Section 1.1 of this lease set forth some of the business terms of this lease and are a part of this lease. Nonetheless, the provisions of Section 1.1 are subject to the specific language contained elsewhere in this lease. Section 1.2. Term and Leased Premises. (a) Landlord hereby leases to Tenant and Tenant rents from Landlord those certain premises (the "Leased Premises") described in Section 1.1(a), but reserving and excepting to Landlord the right to install, maintain, use, repair and replace pipes, ductwork, conduits, utility lines and wires through hung ceiling space, column space, and partitions in or beneath the floor slab or above or below the Leased Premises or other parts of the Building. (b) The Term, as described in Section 1.1(b), shall commence on November 1, 1992 (the "Commencement Date"). The Term shall continue to and include October 31, 2002 (the "Expiration Date") (subject to Tenant's renewal option). Section 1.3. Acceptance of Leased Premises. As often as may reasonably be requested by either party, the other party shall promptly and without cost to the requesting party execute, acknowledge and deliver to the requesting party and/or its mortgagee a written acceptance or estoppel certificate with respect to the Leased Premises in form and substance acceptable to the requesting party. Section 1.4. Quiet Enjoyment. Tenant, upon paying the rents herein reserved and performing and observing all of the other terms, covenants and conditions of this lease on Tenant's part to be performed and observed, shall peaceably and quietly have, hold and enjoy the Leased Premises during the Term, subject, nevertheless, to the terms of this lease and to any encumbrances to which this lease is subordinate. -3- ARTICLE II RENT AND OTHER CHARGES Section 2.1. Minimum Fixed Rent. Tenant shall pay to Landlord without previous demand therefor and without any setoff or deduction whatsoever, the Minimum Rent provided in Section 1.1(d), payable in equal monthly installments, in advance, on the first day of each and every calendar month throughout the Term. The Minimum Rent for any fractional part of a calendar month at the beginning or end of the Term shall be a proportionate part of the Minimum Rent for a full calendar month. Section 2.2. Taxes. Tenant shall pay promptly when due or make reimbursement to Landlord for all taxes imposed upon Tenant's rent, lease and business operation, including, without limitation, all documentary stamps or similar taxes assessed upon the consideration to be received by Landlord for this lease, and upon all personal property of Tenant. Tenant shall also pay to Landlord, as additional rent, (i) all real estate taxes (as such term is hereinafter defined) assessed and levied against, or imposed upon, the Property (as hereinafter defined), and (ii) any and all expenses directly incurred by Landlord in contesting the validity of, in seeking a reduction in, or in seeking to prevent an increase in any real estate taxes, which said payment of additional rent shall be due and payable with respect to every Lease Year or part thereof during the term of this lease. Notwithstanding the fact that the aforesaid additional rent is measured by the real estate taxes, such additional rent shall be paid by Tenant as provided herein regardless of the fact that Tenant may be exempt, in whole or in part, from the payment of any real estate taxes by reason of Tenant's diplomatic status or for any other reason whatsoever. The term "real estate taxes" shall mean all taxes and assessments and other governmental charges and levies, general and special, ordinary and extraordinary, unforeseen as well as foreseen of any kind and nature (including interest on such assessments whenever the same are payable in installments), levied or assessed directly or indirectly against the land, buildings and/or improvements of which the Leased Premises form a part (as the same may be enlarged or reduced from time to time) (the "Property"), and other taxes arising out of the use and/or occupancy of the Leased Premises imposed by federal, -4- state or local governmental authority or any other taxing authority having jurisdiction over the Property, but shall exclude franchise, capital stock, income, estate or inheritance taxes personal in nature to Landlord. "Assessments" as used in this definition shall be deemed to include the costs of all road, highway and transportation improvements (including, without limitation, traffic signals and systems) installed and paid for by Landlord. The amounts due hereunder shall be collectible as additional rent without set off or deduction, and shall be paid within fifteen (15) days after written demand by Landlord. Landlord's failure during the Term to prepare and deliver any tax bills, statements or bills, or Landlord's failure to make a demand, shall not in any way or cause Landlord to forfeit or surrender its rights to collect any of the foregoing items, of additional rent which may have become due during the Term. Tenant's liability for the amounts due under this Section shall survive the expiration of the Term. In no event shall any rent adjustment hereunder result in a decrease in the Minimum Rent as the same may be increased or decreased from time to time pursuant to any other provision of this lease. Should the taxing authorities include in such real estate taxes the value of any machinery, equipment, fixtures, inventory or other personal property or assets of Tenant, then Tenant agrees to pay its share of the taxes attributable to such items in addition to, but not in duplication of, the real estate taxes referred to in this Section. If at any time during the Term, a tax or excise on rents or other tax, however described (except any franchise, estate, inheritance, capital stock, income or excess profits taxes imposed upon Landlord) is levied or assessed against Landlord by any lawful taxing authority on account of the Landlord's interest in this lease or the rents expressly reserved hereunder as a substitute in whole or in part, or in addition to, the real property taxes hereinbefore described, Tenant agrees to pay Landlord, as additional rent hereunder, its share of the amount of such tax or excise on rents. In the event any such tax or excise on rents or other tax, however described, is levied or assessed directly against Tenant by any lawful taxing authority on account of Tenant's interest in this lease or the leasehold estate hereby created or the rents to be paid by Tenant hereunder, then Tenant shall be responsible therefor and agrees to pay the same before delinquency; or should any lawful taxing authority require that any such tax or -5- excise on rents or other tax, however described, for which Tenant is responsible hereunder, other than the real property taxes levied or assessed against the Property be paid by Tenant, but collected by Landlord, for and on behalf of such taxing authority and from time to time forwarded by the Landlord to such taxing authority, then the same shall be paid by Tenant to Landlord at such times as such taxing authority shall require and be collectible by Landlord and the payment thereof enforced in the same fashion as provided for the enforcement of payment of rent hereunder and for the purpose of enforcing payment thereof shall be deemed additional rent hereunder. Section 2.3. Utilities Charges and Services. Tenant shall pay promptly, as and when the same become due and payable, all charges for electricity, gas, heat, steam, hot and/or chilled water, air-conditioning, ventilating, lighting systems, fuel and other utilities supplied to the Leased Premises by the public utility company. All electricity and gas consumed by Tenant shall be separately metered and Tenant shall be responsible for payment of such utilities directly to the public utility company. Tenant shall arrange with the utility serving the Building for installation of all necessary meters and arrange for the provision of such service. Landlord shall not be responsible for the supply to Tenant of any utilities or services whatsoever to the Leased Premises (including, but not limited to, said utilities, elevator, air--conditioning, gas, steam or cleaning) and Tenant shall obtain all such services in Tenant's name at no charge to Landlord. Tenant's use of electric current in the Leased Premises shall not at any time exceed the capacity of any of the electrical conductors and equipment in or otherwise serving the Leased Premises. Tenant shall not make or perform or permit the making or performing of, any alterations to wiring installation or other electrical facilities in or serving the Leased Premises without the prior consent of Landlord in each instance (which consent shall not be unreasonably withheld or delayed). Landlord shall not be liable in any way to Tenant for any failure or defect in the supply or character of electric energy furnished to the Leased Premises by reason of any requirement, act or omission of the public utility serving the Building with electricity or for any other reason not -6- attributable to Landlord's willful acts in default of this lease or gross negligence. Tenant shall pay to Landlord, within fifteen (15) days after rendition of a bill therefor, all charges for water consumed at the Leased Premises as shown by the water bills. In addition Tenant shall pay all sewer rents and charges imposed upon its water usage. ARTICLE III CONSTRUCTION OF LEASED PREMISES Section 3.1. Construction of Leased Premises. Tenant accepts the Leased Premises "as is" with no representations or warranties by Landlord as to the physical condition thereof. ARTICLE IV USE OF LEASED PREMISES Section 4.1. Use of Leased Premises. Tenant agrees to use the Leased Premises only for the permitted uses set forth in Section 1.1(e) and for no other purpose. Tenant covenants that during the Term, the Leased Premises shall be used only and exclusively for lawful and moral purposes, and no part of the Leased Premises or improvements thereon shall be used in any manner whatsoever for any purposes in violation of the laws, ordinances, regulations, or orders of the United States, or of the State, County, and/or City or other applicable governmental subdivisions where the Leased Premises are located. Tenant shall comply with all such laws, ordinances, regulations or orders now in effect or hereafter enacted or passed during the Term insofar as the Leased Premises and any signs of the Tenant are concerned, including, but not limited to zoning ordinances, building codes and fire codes, and shall make at Tenant's own cost and expense all additions and alterations to the Leased Premises ordered or required by such authorities, whether in order to meet the special needs of Tenant, or by reason of the occupancy of Tenant, or otherwise. Section 4.2. Additional Covenants of Tenant. Tenant's use of the Property shall be subject at all times during the Term to reasonable rules and regulations adopted by Landlord not in conflict with any of the express provisions -7- hereof governing the use of the Property and the Leased Premises. Tenant agrees to comply with all such rules and regulations upon notice to Tenant from Landlord. Tenant expressly agrees as follows: (a) The sidewalks and loading areas adjacent to the Leased Premises shall not be obstructed and shall be free from snow, ice, trash, litter, hazardous materials and any other obstructions. Garbage and refuse shall be kept in sealed containers (with food scraps and refuse kept in a self-contained, cleanable, sealed, metal container) (or such containers as may be used in the future with improved technology, provided garbage and refuse is continued to be stored and disposed of without odors emanating and without resulting in unsightly conditions). Tenant shall provide or designate a service for picking up refuse and garbage, at its sole cost and expense. Tenant shall maintain all loading areas in a clean manner. Tenant shall use a trash compactor located outside the Leased Premises. (b) No radio or television aerial or other device shall be erected on the roof or exterior walls of the Leased Premises or the building in which the Leased Premises are located without first obtaining in each instance the Landlord's consent in writing (which consent shall not be unreasonably withheld or delayed). Any aerial or device installed without such written consent shall be subject to removal at Tenant's expense without notice at any time. (c) No loud speakers, televisions, phonographs, radios, tape players or other devices shall be used in a manner so as to be heard or seen outside the Leased Premises without the prior written consent of Landlord (which consent shall not be unreasonably withheld or delayed). (d) The plumbing and sanitary facilities shall be kept in a good state of repair and operating condition, and shall not be used for any other purpose other than that for which they are constructed; no foreign substance of any kind shall be thrown therein, and the expense of any breakage, stoppage, or damage resulting from a violation of this provision shall be borne by Tenant. All grease traps, if any, shall be installed and maintained by Tenant in accordance with applicable law and in accordance with Landlord's requirements. Tenant shall furnish sufficient heat at all times so as to prevent any damage to the Leased Premises, including, but not limited to, any freezing or breaking of pipes, any mechanical -8- systems or fixtures. Tenant shall, at Tenant's sole cost and expense, obtain and maintain licenses and permits, and pay all fees and charges, in connection with the existence of any air-conditioning equipment and/or any other equipment in or upon the Leased Premises. (e) Tenant at its expense shall contract for regular termite and pest extermination services covering the Leased Premises, to keep same free of vermin. (f) Tenant shall keep and maintain the Leased Premises (including, without limitation, exterior and interior portions of all windows, doors and all other glass, including, in each case, the frames therefor) in a neat and clean condition, and Tenant will not require, permit, suffer or allow any such window or door to be cleaned in violation of the Labor Law of the State of New York or of any other law or ordinance or of any rule, order or regulation of any governmental authority having jurisdiction thereof, and, at Tenant's expense, clean and polish the inside and outside of the store fronts of the Leased Premises whenever necessary in the reasonable judgment of Landlord. (g) Tenant shall take no action (including, but not limited to, using employees, contractors, labor or materials) which would create any work stoppage, picketing, labor disruption or dispute, or any interference with the business of Landlord or any other tenant or occupant in the Building or with the rights and privileges of any customer or other person(s) lawfully in and upon the Property. If such disturbance results from Tenant's use of non--union labor, Landlord shall have the right to order Tenant to have pickets removed and, if necessary, to terminate any construction work at any time being performed in the Leased Premises, until such time as Landlord shall have given its written consent for the resumption of such work. If such disturbance results from a jurisdictional dispute between unions, Tenant shall be obligated to promptly take all legal steps to have the pickets removed. If such pickets are not removed within three (3) days, Landlord shall have the right to terminate the construction work in the Leased Premises. Tenant shall have no claim for damages of any nature against Landlord in connection with Landlord's remedies provided herein. (h) Tenant shall pay before delinquency all license or permit fees and charges of a similar nature for the conduct of any business in the Leased Premises. -9- (i) Tenant shall store and/or stock in the Leased Premises only such merchandise as Tenant is permitted to offer for sale in the Leased Premises pursuant to this lease. (j) Tenant shall not perform any act or carry on any practice which may damage, mar or deface the Property. (k) Tenant shall not place a load on any floor in the interior delivery system, if any, or in the Leased Premises, or in any area of the Building, exceeding the floor load which such floor was designed to carry, nor shall Tenant install, operate or maintain therein any heavy item or equipment except in such manner as to achieve a proper distribution of weight. (l) Tenant shall not install, operate or maintain in the Leased Premises or in any other area of the Building any electrical equipment which does not bear underwriter's approval, or which would overload the electrical system or any part thereof beyond its capacity for proper and safe operation as reasonably determined by Landlord, and unless the same is performed by a licensed electrical engineer or contractor. (m) Tenant shall not suffer, allow or permit any vibration, noise, light, odor or other effect to emanate from the Leased Premises, or from any machine or other installation therein, or otherwise suffer, allow or permit the same to constitute a nuisance or otherwise interfere with the safety, comfort or convenience of Landlord or any of the other occupants of the Building or their customers, agents or invitees or any others lawfully in or upon the Property. Upon notice by Landlord to Tenant that any of the aforesaid is occurring, Tenant agrees to forthwith remove or control the same. (n) Tenant shall not store, display, sell, or distribute any alcoholic beverages (other than beer and wine coolers) or any dangerous materials (including, without limitation, fireworks) unless specifically permitted by this lease. (o) Tenant shall not use or occupy the Leased Premises or do or permit anything to be done thereon in any manner which shall prevent Landlord and/or Tenant from obtaining at standard rates any insurance required or desired, or which would invalidate or increase the cost to Landlord of any existing insurance, or which might cause structural injury -10- to Building, or which would constitute a public or private nuisance or which would violate any present or future laws, regulations, ordinances or requirements (ordinary or extraordinary, foreseen or unforeseen) of the federal, state or municipal governments, or of any department, subdivisions, bureaus or offices thereof, or of any other governmental public or quasi--public authorities now existing or hereafter created having jurisdiction in the Leased Premises or the Property. (p) All roof penetrations required by Tenant shall be performed by a roofing contractor reasonably acceptable to Landlord. Section 4.3. Signs, Awnings and Canopies. (a) Tenant may erect and maintain, at Tenant's sole cost and expense, subject to all applicable state and local ordinances, codes, rules and regulations and Landlord's prior written approval (which approval shall not unreasonably withheld or delayed), such signs, awnings and canopies as it may deem appropriate on the Leased Premises. Tenant shall submit to Landlord detailed drawings of its signs, together with copies of all required governmental approvals, permits or licenses, for review and approval by Landlord prior to erecting said signs on the Leased Premises. (b) Tenant shall keep insured and maintain, repair, restore and replace all such signs in good condition, repair and operating order at all times. If any damage is done to Tenant's signs, Tenant shall commence to repair same within ten (10) working days or Landlord may, at its option, repair same at Tenant's expense, and the same shall be collectible from Tenant as extra and additional rent, payable upon demand. Tenant shall pay for all electricity, if any, consumed by said signs directly to the public utility company. ARTICLE V INSURANCE REQUIRED OF TENANT Section 5.1. Insurance Required of Tenant. (a) Tenant shall obtain and provide, on or before the earlier of the commencement of the Term or Tenant's entering the Leased Premises for any purpose, and keep in force at all times thereafter, the following insurance coverages with respect to the Leased Premises: -11- (i) Comprehensive General Liability Insurance, with contractual liability endorsement, relating to the Leased Premises and its appurtenances on an occurrence basis with a minimum single limit of Three Million ($3,000,000.00) Dollars for bodily or personal injury (including death) and in the amount of Five Hundred Thousand ($500,000.00) Dollars in respect of property damage. (ii) Fire and Lightning, Extended Coverage, Vandalism and Malicious Mischief and Flood (if required by Landlord, any mortgagee or governmental authority and if obtainable) Insurance in an amount adequate to cover the replacement cost of all personal property, decorations, trade fixtures, furnishings, equipment and all contents therein. (iii) Boiler or Machinery Insurance covering all pressure vessels, boilers, air--conditioning equipment, or similar equipment, if any, in, on, adjoining, above or beneath the Leased Premises, in the amount of One Million ($1,000,000.00) Dollars. (iv) Worker's Compensation Insurance covering all persons employed, directly or indirectly, in connection with any finish work performed by Tenant or any repair or alteration authorized by this lease or consented to by Landlord, and all employees and agents of Tenant with respect to whom death or bodily injury claims could be asserted against Landlord or Tenant, as required by the law of the State of New York. (v) Plate Glass Insurance. (vi) Comprehensive Automobile Liability Insurance providing third party liability insurance with One Million ($1,000,000.00) Dollars inclusive limits, covering all licensed vehicles owned or operated by or on behalf of Tenant. (b) Before undertaking any alterations, additions, improvements or construction, Tenant shall obtain at its expense a public liability insurance policy insuring Tenant and Landlord against any liability which may arise on account of such proposed alterations, additions, improvements or construction on an occurrence basis with the minimum limits set forth in this Section. (c) All of the aforesaid insurance except the Worker's Compensation Insurance required by subparagraph (a) (iv) above shall be written in the name of Landlord (and any -12- designee(s) of Landlord) and Tenant and shill be written by one or more responsible insurance companies with a general policy-holder's rating of not less than A and a financial rating of AA as rated in the most current available "Best's" insurance reports, licensed to do business in New York and authorized to issue such policy(ies) in form reasonably satisfactory to Landlord; all such insurance shall contain endorsements that: such insurance may not be cancelled or amended with respect to Landlord (or its designees) except upon thirty (30) days' prior written notice to Landlord (and any such designees) by the insurance company; Tenant shall be solely responsible for payment of premiums and Landlord (or its designees) shall not be required to pay any premium for such insurance; in the event of payment of any loss covered by such policy, Landlord (or its designees) shall be paid first by the insurance company for Landlord's loss. The minimum limits of the comprehensive general liability policy of insurance shall in no way limit or diminish Tenant's liability hereunder. Tenant shall deliver to Landlord at least fifteen (15) days prior to the time such insurance is first required to be carried by Tenant, and thereafter at least fifteen (15) days prior to the expiration of such policy, either a duplicate original or a certificate of insurance on all policies procured by Tenant in compliance with its obligations hereunder, together with evidence satisfactory to Landlord of the payment of the premiums therefor. If Tenant fails to obtain and provide any or all of the aforesaid insurance, then Landlord may, but shall not be required to, purchase such insurance on behalf of Tenant and add the cost of such insurance as additional rent payable with the next installment of Minimum Rent. Tenant's failure to keep in force the aforementioned insurance shall be regarded as a material default hereunder entitling Landlord to exercise any or all of the remedies provided in this lease in the event of Tenant's default. (d) The minimum limits of the comprehensive general liability policy of insurance shall be subject to increase at any time, and from time to time, if Landlord shall deem same reasonably necessary for adequate protection to reflect changed circumstances, reflecting without limitation (i) changes required by any mortgagee of the Property, (ii) changes indicated by the amount of plaintiffs' verdicts in personal injury actions in New York, or (iii) changes consistent with the standards required by other landlords for supermarkets in New York. Within thirty (30) days after demand therefor by Landlord, Tenant shall furnish Landlord with evidence of Tenant's compliance with such demand. -13- Section 5.2. Fire Insurance Rate and Requirements. (a) Tenant agrees that it will pay to Landlord, on demand, as additional rent, premiums for all fire insurance policies in force with respect to the Property and its contents. In addition, Tenant agrees to comply, at its own cost and expense, with any rules and regulations of the Fire Insurance Rating Organization and any similar body and any governmental authority having jurisdiction if noncompliance will result in Landlord's inability to obtain insurance coverage. If any electrical equipment is installed that overloads the lines in the Building, Tenant shall, at Tenant's own cost and expense, promptly make whatever changes are necessary to remedy such condition and to comply with all requirements of the Landlord and the Board of Fire Insurance Underwriters and any similar body and any governmental authority having jurisdiction thereof. For the purpose of this paragraph, any finding or schedule of the Fire Insurance Rating Organization having jurisdiction thereof shall be deemed to be conclusive. (b) In the event that this lease so permits and Tenant engages in the preparation of food or packaged foods or engages in the use, sale or storage of inflammable or combustible material, Tenant shall install chemical extinguishing devices (such as ansul) approved by the Fire Insurance Rating Organization (which devices, when installed, shall become Landlord's property) and shall keep such devices under service as required by such organization. A copy of such service contract shall be delivered to Landlord at least fifteen (15) days prior to the commencement of the Term, and copies of all maintenance reports shall be sent simultaneously to Landlord and Tenant (and said service contracts shall so provide). (c) If gas is used in the Leased Premises, Tenant shall install at its expense gas cut--off devices (manual and automatic). Section 5.3. Waiver of Subrogation. Neither party to this lease shall be liable for any damage by fire or other peril includable in the coverage afforded by the standard form of fire insurance policy with extended coverage endorsement attached (whether or not such coverage is in effect), no matter how caused, it being understood that the damaged party will look solely to its insurer for reimbursement. Any waiver of rights contained in this Section shall be ineffective if such -14- waiver shall be unobtainable, or result in an increase in the cost of insurance of the waiving party, unless the other party shall pay such increase within ten (10) days after notice thereof. ARTICLE VI REPAIRS AND MAINTENANCE Section 6.1. Repairs and Maintenance by Tenant. Tenant shall make and pay for all repairs to the Building, whether structural or non-structural, mechanical or non--mechanical, including (without limitation) necessary repairs to the exterior walls, the roof, the slab, foundations, load bearing members, plumbing, pipes, and conduits located outside the Leased Premises and necessary repairs to the sidewalks, parking areas (if any) and curbs, the fixtures and appurtenances in the Leased Premises and all equipment and systems serving the Building and shall replace all things which are necessary to keep the same in a good state of repair and operating order. Tenant shall also maintain, replace and keep in good repair and operating order all plumbing, sprinklering, electrical installations, ceilings, inside walls and carpeting and floor surfaces, and all air-conditioning, ventilating and heating installations (whether located within or without the Leased Premises). Tenant shall at all times keep the Leased Premises and all exterior entrances, glass and show moldings, partitions, doors, floor surfaces, fixtures, equipment and appurtenances thereof in good order, condition and repair, and in a reasonably satisfactory condition of cleanliness, including reasonably periodic painting of the interior of the Leased Premises, and Tenant shall make all other necessary repairs in and to the Property. Tenant shall, at its expense, promptly replace all broken or damaged glass or substitutes therefor, as the case may be. If (i) Tenant does not repair or restore properly as required hereunder and to the reasonable satisfaction of Landlord, or (ii) Landlord, in the exercise of its sole discretion, determines that emergency repairs are necessary, or (iii) repairs or replacements to the to the Property are made necessary by any act or omission or negligence of Tenant, its agents,employees, subtenants, assignees, concessionaires, contractors, invitees, licensees or visitors, then in any of such events Landlord may, after written notice to Tenant (except in case of emergency in which case no notice shall be required), make such repairs or replacements without liability -15- to Tenant for any loss or damage that may accrue to Tenant's merchandise, fixtures or other property or to Tenant's business by reason thereof, and upon completion thereof, or upon Landlord's obtaining or maintaining said contract Tenant shall pay Landlord's costs plus fifteen (15%) percent for overhead, upon presentation of a bill therefor, as additional rent. Said bill shall include Interest (as defined in Section 11.10) from the date such repairs were paid by Landlord to the contractor(s) making such repairs. The performance by Landlord of any such obligation shall not constitute a release or waiver of Tenant therefrom. Anything elsewhere in this lease to the contrary notwithstanding, if the Fire Insurance Exchange or any bureau, department or official of the federal, state or city government require or recommend the installation of a sprinkler system or that any changes, modifications, alterations, or additional sprinkler heads or other equipment be made or supplied to an existing sprinkler system by reason of Tenant's business, or the location of partitions, trade fixtures, or other contents of the Leased Premises, or if any such sprinkler system installations, changes, modifications, alterations, additional sprinkler heads or other such equipment, become necessary to obtain Landlord's insurance coverage or to prevent the imposition of a penalty or charge against the full allowance for a sprinkler system in the fire insurance rate set by any said Exchange or by any fire insurance company, Tenant shall, at Tenant's expense, promptly make such sprinkler system installations, changes, modifications, alterations, and supply additional sprinkler heads or other equipment as required whether the work involved shall be structural or non--structural in nature. Section 6.2. Inspection. Landlord or its representatives shall have the right to enter the Leased Premises at reasonable times and upon reasonable notice (and in emergencies at all times and without notice) during the Term. Tenant acknowledges that, in addition to Landlord's right to enter the Leased Premises as set forth herein, Landlord or its representatives, or the utility companies, may need, and shall have the right to gain, immediate access to any mechanical equipment, pipes, conduits, etc., in the Leased Premises for the purpose of inspecting, repairing, installing, altering or changing the location of any pipes valves or other building facilities or equipment. -16- ARTICLE VII ADDITIONS AND ALTERATIONS BY TENANT Section 7.1. By Landlord. In event Landlord shall hereafter determine during the Term to erect additional structures, add stories to existing buildings, enclose any open portions of the Property enlarge or reduce the Building by addition(s) thereto or by the diminution thereof, Tenant hereby consents thereto and to the performance of work necessary to effect the same and any inconvenience caused thereby. The design, materials and performance of necessary work therefor shall be in the sole unrestricted discretion of Landlord. Section 7.2. Additions and Alterations by Tenant. Upon Landlord's prior written consent (not to be unreasonably withheld or delayed), Tenant may from time to time (if Tenant shall not then be in default), at its own expense, make alterations, renovations, improvements or other installments in or to the Leased Premises or any part thereof, provided the same be performed in a good and workmanlike manner, in accordance with all applicable terms and conditions of this lease, accepted building practices and applicable laws, including, but not limited to, building codes and zoning ordinances, and so as not to weaken or impair the strength or lessen the value of the Building. No such work shall be commenced and no material shall be fabricated unless and until Tenant shall have caused plans and specifications therefor to have been prepared, at Tenant's sole cost and expense, by a licensed architect or other duly licensed and qualified person, and shall have obtained Landlord's written approval thereof, which approval shall not be unreasonably withheld or delayed. In the event Landlord's written approval is granted, and prior to commencement of all such work Tenant shall cause Landlord's requirements for bonding, insurance and other contractor requirements to be satisfied. Any work done by Tenant shall not unreasonably interfere with the use by any other tenants of their premises in the Property. Tenant shall submit to Landlord, within thirty (30) days after completion of such work, three (3) full sets of "as built" plans and specifications. Tenant shall not perform or permit to be performed any electrical work, alterations or modifications unless (i) same is performed by a licensed electrical engineer or contractor, and (ii) plans therefore have been filed with and approved by the New York City Department of Buildings and any other agency having jurisdiction. Tenant shall cause such work to be performed, at its sole expense, promptly, -17- efficiently and competently by duly qualified or licensed persons or entities, which have been approved by Landlord in writing (which approval shall not be unreasonably withheld or delayed), without interference to or disruption of the operations of any other tenants or occupants of the Property. Tenant shall have the right to make non--structural interior alterations to the Leased Premises without Landlord's prior consent. Notwithstanding the foregoing, in the event Tenant makes any non--structural interior alterations, Tenant shall be required to comply with Landlord's requirements for bonding, insurance and other contractor requirements. Tenant shall cause such work to be performed, at its sole expense, promptly, efficiently and competently by duly qualified or licensed persons or entities, which have been approved by Landlord in writing (which approval shall not be unreasonably withheld or delayed), without interference to or disruption of the operations of other tenants or occupants of the Property. Upon completion of any such work, Tenant shall promptly deliver "as-built" plans to Landlord. ARTICLE VIII DAMAGE, DESTRUCTION OR CONDEMNATION OF THE LEASED PREMISES Section 8.1. Damage or Destruction. (a) If all or any part of the Leased Premises shall be damaged or destroyed by fire or other casualty insured under the standard fire insurance policy with approved standard extended coverage endorsement applicable to the Leased Premises, Landlord shall, except as otherwise provided herein, repair and/or rebuild the same with reasonable diligence, but Landlord's obligation hereunder shall be limited to rebuilding the shell of the Leased Premises. Nothing herein above contained shall impose upon Landlord any liability or responsibility to repair, rebuild or replace any property belonging to Tenant. Unless this lease is terminated by Landlord, as hereinafter provided, Tenant shall repair the Leased Premises and shall redecorate and refixture the Leased Premises and restock the contents thereof in a manner and to at least a condition equal to that existing prior to its destruction or casualty, and the proceeds of all insurance carried by Tenant on its personal property, decorations, trade fixtures, furnishings, equipment and contents in the Leased Premises shall be held in trust by Tenant for such purposes. Tenant agrees to exercise reasonable diligence to reopen for business in the Leased Premises as soon -18- as practicable unless this lease is terminated by Landlord, as hereinafter provided. (b) Notwithstanding anything else to the contrary contained in this Section or elsewhere in this lease, Landlord, at its option, may terminate this lease on thirty (30) days notice to Tenant given within ninety (90) days after the occurrence of any of the following: (i) The Leased Premises and/or Building shall be damaged or destroyed as a result of an occurrence which is not covered by Landlord's all-risk insurance; or (ii) The Leased Premises and/or Building shall be damaged or destroyed and the cost to repair the same shall amount to more than forty (40%) percent of the cost of replacement thereof. (c) Except to the extent specifically provided for in this lease, none of the Minimum Rent and other sums payable by Tenant, nor any of Tenant's other obligations under any provisions of this lease, shall be affected by any damage to or destruction of the Leased Premises by any cause whatsoever, and Tenant hereby specifically waives all other rights it might otherwise have under any law or statute. (d) In the event of any damage or destruction as described in subparagraph (b) above, which occurs during the last two (2) years of the Term, Tenant shall have the right to terminate this lease upon thirty (30) days' written notice to Landlord given within ninety (90) days of such damage or destruction. (e) The term "cost of replacement" as used in subparagraph (b) (ii) above shall be determined by the company or companies selected by Landlord insuring Landlord against the casualty in question, or if there shall be no insurance, then as the parties hereto shall agree, or in absence of an insurance company determination or an agreement, as shall be determined by arbitration in New York according to the rules and practices of the American Arbitration Association then in effect. (f) Tenant shall give to Landlord and to all mortgagees of record prompt written notice of any damage to or destruction of any portion of the Leased Premises resulting from fire or other casualty. -19- Section 8.2. Condemnation. (a) If the entire Leased Premises shall be appropriated or taken under the power of eminent domain by any public or quasi-public authority, or conveyance shall be made in lieu thereof, this lease shall terminate and expire as of the date of such taking, and the parties shall thereupon be released from all liability hereunder which accrues after the date of such taking. (b) Anything in this lease to The contrary notwithstanding, in the event more than forty (40%) percent of the Leased Premises and/or the Property shall be appropriated or taken, or conveyance made in lieu thereof, Landlord shall have the right to cancel and terminate this lease as of the date of such taking upon giving notice to Tenant of such election within thirty (30) days after such taking. In the event of such cancellation, the parties shall thereupon be released from any further liability under this lease (except for obligations existing on the effective date of such termination). (c) If a portion of the Leased Premises is taken, or conveyance made in lieu thereof, and if This lease shall not be terminated as provided in the preceding paragraph, Then the Minimum Rent shall be ratably apportioned according to the space so taken, and Landlord shall, at its own expense, restore the remaining portion of the Leased Premises to a complete architectural unit. The cost of Landlord's obligation hereunder shall be limited to that portion of the net proceeds of the condemnation award actually received and retained by Landlord which are allocable to the Leased Premises. (d) All compensation awarded or paid upon such a total or partial taking of the Leased Premises shall belong to and be the property of Landlord without any participation by Tenant; provided, however, that Tenant may make a separate claim to The condemning authority for the unamortized value of its leasehold improvements. (e) In the event more than forty (40%) percent of the Leased Premises and/or Property shall be appropriated or taken, or conveyance made in lieu thereof, during the last two (2) years of the Term, Tenant shall have the right to terminate this lease upon thirty (30) days' written notice after such taking. -20- ARTICLE IX FINANCING Section 9.1. Financing. If any lending institution and/or any bonding authority with which Landlord or any such bonding authority has negotiated or may negotiate interim or long term financing for the Property or part thereof does not approve the credit rating of Tenant, or if such lending institution or bonding authority shall require change(s) in this lease as a condition of its approval of this lease for such financing; and if within fifteen (15) days after notice from Landlord if Tenant fails or refuses to execute with Landlord the amendment or amendments to this lease accomplishing the change(s) which are stated by Landlord to be needed in connection with approval of this lease for purposes of such financing Landlord shall have the right to cancel this lease. In the event of cancellation by Landlord hereunder, this lease shall be and become null and void and both parties shall automatically be released as of the date of Landlord's cancellation notice from any and all liability or obligation under this lease, except that Landlord shall return the security, if any, made by Tenant. Notwithstanding anything contained herein to the contrary, Tenant shall not be required to agree, and Landlord shall not have any right of cancellation for Tenant's refusal to agree, to any modification of the provisions of this lease relating to the amount of Minimum Rent reserved, the size and/or location of the Leased Premises, the duration and/or commencement date of the Term. Section 9.2. Subordination. (a) This lease shall be subject and subordinate at all times to the lien of any mortgage or other encumbrance now or hereafter placed on the real property of which the Leased Premises form a part or any part thereof without the necessity of any further instrument or act on the part of Tenant to effectuate such subordination, but Tenant covenants and agrees to execute and deliver upon demand such further instrument or instruments evidencing such subordination of this lease to any ground lease or the lien of any such mortgage or other encumbrance as shall be desired by a ground lessor or a mortgagee, or proposed lessor or mortgagee, or by any person. (b) If any mortgagee requires that this lease be prior rather than subordinate to any such mortgage, Tenant shall, promptly upon request therefor by Landlord or such mortgagee, and without charge therefor, execute a document effecting -21- and/or acknowledging such priority, which document shall contain, at the option of such mortgagee, an attornment obligation to the mortgagee as Landlord in the event of foreclosure or to any party acquiring title through such mortgagee in such event. (c) Upon request of any mortgagee of record, Tenant shall give prompt written notice in the manner provided in Section 11.14 of any default of Landlord hereunder, and Tenant shall allow such mortgagee a reasonable length of time (in any event, not less than sixty (60) days from the date of such notice) in which to cure any such default. Any such notice shall be sent to the Mortgage Loan Department of any such mortgagee at its home office address. Section 9.3 Non-Disturbance Protection. Landlord agrees to request and use its best efforts (without incurring any monetary obligations) to obtain non-disturbance protection for Tenant from any current or future mortgagee of the Property. ARTICLE X DEFAULT BY TENANT Section 10.1. Default. Tenant shall be in default hereunder if (i) Tenant fails to pay when due Minimum Rent and any other sums due under this lease and such default shall continue for more than fifteen (15) days after written notice from Landlord to Tenant; or (ii) Tenant fails to observe and perform any of the other terms, covenants and/or conditions of this lease and such default shall continue for more than thirty (30) days after written notice from Landlord to Tenant; or (iii) Tenant fails to pay when due the Minimum Rent and any other sum payable under this lease three (3) or more times in any period of twelve (12) consecutive months; or (iv) Tenant transfers its interest in this lease in violation of the provisions of Section 11.7 hereof; or (v) the interest of Tenant in the Leased Premises shall be sold under execution or other legal process; or (vi) any representation or warranty of Tenant contained in this lease shall prove to be incorrect in any material respect on the date upon which it was made. If the nature of a default under (ii) above is such that it cannot reasonably be cured within the aforesaid cure period, and work thereon shall be commenced within said period and diligently prosecuted to completion, then Landlord's rights under Section 10.2 shall be abated. The Leased Premises and all trade fixtures, equipment and inventory therein shall be conclusively -22- deemed abandoned by Tenant upon (a) twenty (20) consecutive days' absence from the Leased Premises by Tenant or its agents (unless such absence results from fire or other casualty) together with the failure to pay Minimum Rent, or (b) removal of all or a substantial portion of Tenant's trade fixtures, equipment or inventory from the Leased Premises together with a failure to pay Minimum Rent. In such event and in addition to Landlord's remedies set forth in Section 10.2 Landlord may enter the Leased Premises and may remove all such remaining trade fixtures, equipment and inventory at Tenant's expense. All such property shall, at Landlord's option, become the property of Landlord, or said property may be placed in storage at Tenant's cost and expense, or may be sold or otherwise disposed of, in which event The proceeds of such sale or other disposition shall belong to Landlord. If at any time there shall be filed by or against Tenant or any successor tenant then in possession or any guarantor of either under this lease, in any court pursuant to any statute either of the United States or of any state, a petition (i) in bankruptcy, (ii) alleging insolvency, (iii) for reorganization, (iv) for the appointment of a receiver, or (v) for an arrangement under the Bankruptcy Code, Landlord may terminate Tenant's rights under this lease by notice in writing to Tenant, and thereupon Tenant shall immediately quit and surrender the Leased Premises to Landlord, but Tenant shall continue to be liable for the payment of rent and all other sums due hereunder. In the event Landlord may not, for any reason, terminate Tenant's rights under this lease, and Tenant is in default of any of the terms, covenants or conditions of this lease, then the Trustee of the debtor may assume this lease only after he undertakes the following: 1. cures any default, or provides adequate assurance that he will promptly cure such default; 2. compensates, or provides adequate assurance that he will promptly compensate Landlord for any actual pecuniary loss resulting from such default; and 3. provides adequate assurance of future performance. Adequate assurance of future performance includes, but is not limited to, adequate assurance: 1) of the source of rent and other consideration due under the lease and 2) that assumption or assignment of the lease will not breach -23- substantially any provisions, including, but not limited to, location, use or exclusivity provisions, in any other lease, financing agreement, or master agreement relating to the Property. To assign the lease, the Trustee must assume the lease in accordance with the Bankruptcy Code and provide adequate assurance of future performance by the assignee, and must not be in default of any of the terms hereunder. Section 10.2. Landlord's Rights on Default. In the event of any default by Tenant, Landlord may (1) apply the Security specified in Section 1.1(f), if any, toward the satisfaction and cure of such a default, and/or (2) re--enter the Leased Premises and remove all persons and all or any property therefrom, by any suitable action or proceeding at law, or by force or otherwise, without being liable for any prosecution therefor or damages therefrom, and repossess and enjoy the Leased Premises, with all additions, alterations and improvements, and Landlord may, at its option, repair, alter, remodel and/or change the character of the Leased Premises as it may deem fit, and/or (3) at any time relet the Leased Premises or any part or parts thereof, as the agent of Tenant or in Landlord's own right, and/or (4) terminate this lease upon not less than three (3) days written notice to Tenant. The exercise by Landlord of any right granted in this Section shall not relieve Tenant from the obligation to make all rental payments, and to fulfill all other covenants required by this lease, at the time and in the manner provided herein, and if Landlord so desires all current and future rent and other monetary obligations due hereunder less the fair rental value of the Leased Premises shall become immediately due and payable. Tenant, throughout the remaining Term hereof, shall pay Landlord, no later than the last day of each month during the Term, the then current excess, if any, of the sum of the unpaid rentals and costs to Landlord resulting from such default by Tenant over the proceeds, if any, received by Landlord from such reletting, if any, but Landlord shall have no liability to account to Tenant for any excess. Landlord shall not be required to relet the Leased Premises nor exercise any other right granted to Landlord hereunder, nor shall Landlord be under any obligation to minimize Tenant's loss as a result of Tenant's default, except that Landlord agrees to use reasonable efforts to relet the Leased Premises. If Landlord attempts to relet the Leased Premises, Landlord shall be the sole judge as to whether or not a proposed tenant is suitable and acceptable. -24- In the event of a breach by Tenant of any of the covenants or provisions hereof, Landlord shall have, in addition to any other remedies which it may have, the right to invoke any remedy allowed at law or in equity to enforce Landlord's rights or any of them, as if re--entry and other remedies were not herein provided for Tenant agrees that no demand for rent and no re--entry for condition broken and no notice to quit possession or other notices prescribed by statute shall be necessary to enable Landlord to recover such possession, but that all right to any such demand and any such re-entry and any notice to quit possession or other statutory notices or prerequisites are hereby expressly waived by Tenant. Section 10.3. Landlord's Self-Help. In addition to Landlord's rights of self-help set forth elsewhere in this lease, if Tenant at any time fails to perform any of its obligations under this lease in a manner satisfactory to Landlord, Landlord shall have the right but not the obligation, upon giving Tenant at least five (5) days' prior written notice of its election to do so (in the event of any emergency no prior notice shall be required) to perform such obligations on behalf of and for the account of Tenant and to take all such action to perform such obligations. In such event, Landlord's costs and expenses incurred therein including, but not limited to, attorneys' fees in instituting, prosecuting or defending any action or proceeding, shall be paid for by Tenant as additional rent, forthwith, with Interest (as defined in Section 11.10). The performance by Landlord of any such obligation shall not constitute a release or waiver of Tenant therefrom. Section 10.4. Non-Waiver Provisions. The failure of either party to insist upon a strict performance of any of the terms, conditions and covenants herein shall not be deemed to be a waiver of any rights or remedies that that party may have and shall not be deemed a waiver of any subsequent breach or default in the terms, conditions and covenants herein contained except as may be expressly waived in writing. The maintenance of any action or proceeding to recover possession of the Leased Premises, or any installment or installments of rent or any other moneys that may be due or become due from Tenant to Landlord, shall not preclude Landlord from thereafter instituting and maintaining subsequent actions or proceedings for the recovery of possession of the Leased Premises or of any other moneys that may be due or become due -25- from Tenant. Any entry or re-entry by Landlord shall not be deemed to absolve or discharge Tenant from liability hereunder. Section 10.5. Landlord's Expenses. If Tenant shall at any time, be in default hereunder, Tenant will reimburse Landlord for The expenses incurred by Landlord by reason thereof, including but not limited to brokerage fees, court costs and reasonable attorney's fees. ARTICLE XI OTHER PROVISIONS Section 11.1. Definition and Liability of Landlord. The term "Landlord" as used in this lease means only the owner or mortgagee in possession for the time being of (or the managing agent of any such owner or mortgagee) so that in the event of the sale of said Property an assignment of this lease, or a demise of said Property together with any security deposit held therefore, Landlord shall be and hereby is entirely freed and relieved of all obligations of Landlord subsequently accruing and with respect to such security deposit. In addition to, and without limiting the generality of the foregoing, Tenant hereby agrees not to look to any mortgagee, mortgagee in possession or successor in title to the property for accountability for any security deposit required by Landlord, unless said sums have actually been received by said mortgagee as security for Tenant's performance under the terms of the lease. It is specifically understood and agreed that there shall be no personal liability of Landlord (nor Landlord's agent, if any) in respect to any of the covenants, conditions or provisions of this lease. In the event of a breach or default by Landlord of any of its obligations under this lease, Landlord's liability hereunder shall be limited to Landlord's equity in the Property. In no event shall Tenant make any claim against or seek to impose any personal liability upon any principal of any firm or corporation or any general or limited partner of Landlord that may hereafter be or become the landlord for the satisfaction of Tenant's remedies, or for the collection of a judgment (or other judicial process) requiring the payment of money by Landlord in the event of any default by Landlord hereunder. Tenant agrees that its sole remedies in cases where Landlord's reasonableness in exercising its judgment or -26- withholding its consent or approval is applicable pursuant to a specific provision of this lease, or any rider or separate agreement relating to this lease, if any, shall be those in the nature of an injunction, declaratory judgment, or specific performance, the rights to money damages or other remedies being hereby specifically waived. Section 11.2. Relationship of the Parties. Nothing contained in this lease shall be deemed or construed as creating the relationship of principal and agent or of partnership or joint venture between the parties hereof, it being understood and agreed that neither the method of computing rent nor any other provisions contained herein nor any acts of the parties hereto shall be deemed to create any relationship between the parties other than that of Landlord and Tenant. Section 11.3. Security Deposit. In the event Tenant has deposited any security with Landlord, said sum shall be deposited in an interest--bearing account, with interest to accrue, less one (1%) percent thereof to be retained by Landlord as an administrative fee. Landlord may use, apply on Tenant's behalf or retain during the Term the whole or any part of the security so deposited (including any interest earned thereon) to the extent required for the payment of any rent or other sums as to which Tenant may be in default hereunder or for any sum which Landlord may expend by reason of Tenant's default in respect of any of the terms of this lease, including but not limited to any deficiency or damage incurred in reletting the Leased Premises. The covenants in this Section 11.3 are personal covenants between Landlord and Tenant and not covenants running with the land, and in no event will Landlord's mortgagee(s) or any purchaser at a foreclosure sale or a sale in lieu of foreclosure be liable to Tenant for the return of the security deposit. After each application from Tenant's security deposit, Tenant shall upon demand replenish said deposit to the amount set forth herein. Provided Tenant shall comply with all the terms of this lease, any remaining security shall be returned to Tenant upon termination of this lease and after surrender of possession of the Leased Premises to Landlord, together with any accrued interest (less the administrative fee to be retained by Landlord, as provided herein). In the event of a sale of the Property or assignment of this lease by Landlord to any person other than a mortgagee, Landlord shall have the right to transfer the security to its vendee or assignee, -27- subject to Tenant's aforesaid rights upon termination, and thereupon Landlord shall be released from any liability with respect to the return of such security to Tenant, such vendee or assignee to be solely responsible to Tenant therefor. Tenant shall not assign or encumber its interest in the security deposit, and neither Landlord nor its successors and assigns shall be bound by any attempted assignment or encumbrance. Section 11.4. Indemnity. Tenant agrees to indemnify and save Landlord harmless from and against any and all claims and demands for, or in connection with, any accident, injury or damage whatsoever caused to any person or property arising directly or indirectly, out of the business conducted in or the use and/or occupancy of the Leased Premises or occurring in or on the Leased Premises or any part thereof, or arising directly or indirectly, from any act or omission of Tenant or any concessionaire or subtenant or their respective licensees, servants, agents, employees or contractors, and from and against any and all cost, expense and liabilities incurred in connection with any such claims and/or proceedings brought thereon. The comprehensive general liability coverage maintained by Tenant pursuant to this lease shall specifically insure the contractual obligations of Tenant as set forth in this Section and/or as provided in this lease. Section 11.5. Property in Leased Premises. All leasehold improvements, such as light fixtures and heating and air--conditioning equipment, and other construction which may be done by Tenant, shall when installed attach to the freehold and become and remain the property of Landlord. Notwithstanding the foregoing, all store fixtures or trade fixtures and drapes shall remain the property of Tenant, subject at all times to Landlord's lien for rent and other sums which may become due to Landlord under this lease. All Tenant's personal property of every kind or description which may at any time be in the Leased Premises shall be at Tenant's sole risk, or at the risk of those claiming under Tenant, and Landlord shall not be liable for any damage to said property or loss suffered by the business or occupation of Tenant caused by water from any source whatsoever or from the bursting, overflowing or leaking of sewer or steam pipes or from the heating or plumbing fixtures or from electric wires or from gas or odors or caused in any manner whatsoever. -28- Tenant shall pay before delinquency all taxes assessed against Tenant's fixtures, furnishings, leasehold, improvements, equipment and stock-in-trade placed in or on the Leased Premises. Any such taxes paid by Landlord shall be due and payable within ten (10) days after billings therefor are rendered to Tenant. Section 11.6. Damage to Property or Persons. Landlord shall not be liable for any loss of or damage to property of Tenant or of others located in the Leased Premises or the Property, by theft or otherwise, nor for any loss or damage whatsoever to any property which Tenant could remove at the end of the Term as provided in Section 11.8 hereof. Landlord shall not be liable for any injury or damage to persons or property or to the interior of the Leased Premises resulting from fire, explosion, falling plaster, steam, gas, electricity, water, rain, ice or snow or leaks from any part of the Leased Premises or from the pipes, appliances, or plumbing works or from the roof, street or subsurface or from any other place or by dampness or by any other cause of whatsoever nature. Landlord shall not be liable for any such injury or damage caused by other tenants or any person(s) either in the Leased Premises or elsewhere on the Property, or by occupants of property adjacent to the Property, or by the public, or by operations in the construction of any private, public or quasi-public work. Landlord shall not be responsible for damage or loss of property of Tenant kept or stored on the Leased Premises, no matter how caused. Section 11.7. Assignment or Subletting. (a) Tenant shall not assign its interest under this lease or sublet all of the Leased Premises, nor shall Tenant mortgage or hypothecate this lease or Tenant's interest in and to the Leased Premises (hereinafter collectively referred to as "Transfer"), without the prior written consent of Landlord. Consent by Landlord to any Transfer shall not constitute a waiver of the necessity for such consent to any subsequent Transfer. Any Transfer by Tenant in accordance with this Section shall be only for the purposes specified in Section 1.1(e) hereof and for no other purpose, and in no event shall any Transfer release or relieve Tenant from any obligations of this lease. (b) If the Tenant is a corporation (other than one whose shares are regularly and publicly traded on a recognized stock exchange), any change in the ownership (legal or equitable) of and/or power to vote fifty (50%) percent or more of the outstanding capital stock of Tenant, whether such change -29- of ownership is by sale, assignment, bequest, inheritance, operation of law or otherwise, shall be deemed a Transfer and shall be subject to the provisions of this Section. (c) Notwithstanding anything to the contrary contained in this lease, Tenant shall have the right to sublet a part (but not all) of the Leased Premises or to enter into license or concession agreements for part (but not all) of the Leased Premises with Landlord's prior written consent (which consent shall not be unreasonably withheld or delayed) Section 11.8. Surrender of Premises and Holding Over. At the expiration of the tenancy hereby created, Tenant shall surrender the Leased Premises in good condition, reasonable wear and tear excepted, and damage by unavoidable casualty excepted to the extent that the same is covered by Landlord's all-risk fire insurance policy, and Tenant shall surrender all keys for the Leased Premises to Landlord at the place then fixed for the payment of rent and shall inform Landlord of all combinations on locks, safes and vaults, if any, in the Leased Premises. Tenant's obligation to observe or perform this covenant shall survive the expiration or other termination of the Term. If, after notice in writing by Landlord to deliver possession, Tenant shall default in so surrendering the Leased Premises, Tenant's occupancy subsequent to such expiration, whether or not with the consent or acquiescence of Landlord, shall be deemed to be that of a tenancy at will and in no event from month to month or from year to year, and it shall be subject to all the terms, covenants, conditions of this lease applicable thereto, except that Minimum Rent shall be twice the amount payable in the last year of the Term, and no extension or renewal of this lease shall be deemed to have occurred by such holding over. Prior to the expiration or sooner termination of this lease, Tenant shall remove any and all trade fixtures, equipment and other unattached items which Tenant may have installed, stored or left in the Leased Premises or elsewhere on the Property, including but not limited to counters, shelving, showcases, chairs and unattached movable machinery purchased or provided by Tenant and which are susceptible of being moved without damage to the Building. Tenant shall repair any damage to the Leased Premises caused by its removal of such fixtures and movables. In the event Tenant does not make such repairs, Tenant shall be liable for and agrees to pay Landlord's costs and expenses in making such repairs together with a sum equal to fifteen (15%) percent of such costs and -30- expenses to cover Landlord's overhead in making such repairs for Tenant. Tenant shall not remove any plumbing or electrical fixtures or equipment, heating or air-conditioning equipment, floor coverings (including but not limited to wall to wall carpeting), walls or ceilings, all of which shall be deemed to constitute a part of the freehold and/or leasehold interest of Landlord, as set forth above, nor shall Tenant remove any fixtures or machinery that were furnished or paid for by Landlord (whether initially installed or replaced). Landlord shall have the right to inspect the Leased Premises within ninety (90) days prior to the expiration or sooner termination of this lease, and within fifteen (15) days after receipt of written notice from Landlord, Tenant shall repair any damage to any of the above-mentioned equipment or to the said floor coverings, walls or ceilings. In the event Tenant does not repair properly as required hereunder and to the reasonable satisfaction of Landlord, then Landlord may make such repairs without liability to Tenant and Tenant shall pay Landlord's costs for making such repairs upon presentation of a bill therefor, as additional rent. Said bill shall include Interest (as defined in Section 11.10) from the date such repairs were billed by the contractor(s) making such repairs. The Leased Premises shall be left in a broom-clean condition. If Tenant shall fail to remove its trade fixtures or other property as provided in this Section 11.8, such fixtures and other property not removed by Tenant shall be deemed abandoned by Tenant and at the option of Landlord shall become the property of Landlord, or at Landlord's option may be removed by Landlord at Tenant's expense plus fifteen (15%) percent as hereinabove provided, or placed in storage at Tenant's expense, or sold or otherwise disposed of, in which event the proceeds of such sale or other disposition shall belong to Landlord. Section 11.9. Liens. Tenant shall discharge any lien filed against the Property or any part thereof for work done or materials furnished with respect to the Leased Premises within ten (10) days after it receives notice of the filing of such lien. If Tenant fails to keep this covenant, in addition to any other remedies available, to Landlord under this lease or otherwise, Landlord may at its option discharge such lien, in which event Tenant agrees to pay Landlord a sum equal to the amount of the lien thus discharged plus Landlord's internal administrative costs, reasonable attorney's fees, expenses and damages thereby caused Landlord. Section 11.10. Interest. Whenever this lease refers to "Interest" same shall be computed at a rate equal to the -31- Prime Rate (as hereinafter defined) plus four (4) percentage points. If, however, payment of interest at such rate Tenant (or by the tenant then in possession having succeeded to the Tenant's interest in accordance with the terms of this lease) should be unlawful, that is, violative of usury statutes or otherwise, then "Interest" shall, as against such party, be computed at the maximum contract rate payable by such party. Such amounts shall be payable as additional rent hereunder. "Prime Rate" shall mean the rate being charged at the time in question by Chase Manhattan Bank of New York, New York for short term (90 day) unsecured loans made to its preferred customers. Section 11.11. Lien of Landlord for Rent, Taxes and Other Sums. Landlord shall have, and Tenant hereby grants a security interest in any furnishings, equipment, fixtures, inventory, accounts receivable, or other personal property of any kind belonging to Tenant, or the equity of Tenant therein, on the Leased Premises. The security interest is granted for the purpose of securing The payment of rent, other charges, assessments, penalties and damages herein covenanted to be paid by Tenant and for the purpose of securing the performance of all other obligations of Tenant hereunder. Upon Tenant's default or breach of any covenants of this lease, Landlord shall have all remedies available under the laws of the State of New York, including but not limited to the right to take possession of the above mentioned property and dispose of it by public or private sale in a commercially reasonable manner. Tenant hereby agrees to execute and deliver from time to time Financing Statements at Landlord's request for the purpose of serving notice to third parties of the security interest herein granted. Tenant shall upon demand reimburse Landlord for all filing and recording fees and taxes incurred in connection with filing and recording such Financing Statements. The statutory lien for rent is not hereby waived, the express contractual lien herein granted being in addition and supplementary thereto. Section 11.12. Late Payments. Should Tenant fail to pay when due any installment of Minimum Rent or any other sum payable to Landlord under the terms of this lease, then Interest shall accrue from and after the date which is five (5) days after the date on which such sum shall be due and payable, and such Interest shall be paid by Tenant to Landlord at the time of payment of the delinquent sum. Section 11.13. Waiver by Tenant. Tenant hereby expressly waives any and all rights of redemption conferred by -32- statute or otherwise, and, with respect to any litigation arising out of this lease, and to the extent permitted by law, Tenant waives the right to file any counterclaims or cross--claims against Landlord other than compulsory counterclaims or cross-claims. Section 11.14. Notices. Whenever notice may or shall be given to either of the parties by the other, each such notice shall be by registered or certified mail with return receipt requested, at the respective addresses of the parties as contained herein or to such other address as either party may from time to time designate in writing to the other, or, if to Tenant, such notice may also be mailed in the manner described above, or delivered by hand, at the Leased Premises. Any notice under this lease delivered by mail shall be deemed to have been given at the time it is placed in the mails with sufficient postage prepaid. Section 11.15. Broker. The parties represent and warrant to each other that no broker was involved on its behalf in negotiating or consummating this lease and each agrees to indemnify and hold the other harmless from and against any and all claims for brokerage commissions arising out of any communications or negotiations had by either with any other broker regarding the Leased Premises and/or the consummation of this lease. Section 11.16. Short Form Lease. Tenant agrees not to record this lease without the express written consent of Landlord, which consent shall not be unreasonably withheld, and further agrees to execute, acknowledge and deliver at any time after the date of this lease, at the request of Landlord, a "short form lease" suitable for recording. Section 11.17. Entire and Binding Agreement. This lease contains all of the agreements between the parties hereto, and it may not be modified in any manner other than by an agreement in writing signed by all the parties hereto or their successors in interest. The terms, covenants, and conditions contained herein shall inure to the benefit of and be binding upon Landlord and Tenant and their respective successors and assigns, except as may be otherwise expressly provided in this lease. Tenant acknowledges that neither Landlord nor any broker has made any representations to or agreements with Tenant which are not contained in this lease. -33- Section 11.18. Provisions Severable. If any term or provision of this lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term and provision of this lease shall be valid and be enforced to the fullest extent permitted by law. Section 11.19. Captions. The captions contained herein are for convenience and reference only and shall not be deemed as part of this lease or construed as in any manner limiting or amplifying the terms and provisions of this lease to which they relate. Section 11.20. Force Majeure. Each party shall be excused for the period of any delay in the performance of any obligations hereunder (other than the non-specifically abated payment of Minimum Rent and all payments of additional rent due under this lease), when prevented from so doing by cause or causes beyond that party's control which shall include, without limitation, all labor disputes, civil commotion, war, war--like operations, invasion, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, fire or other casualty, or through acts of God. Section 11.21. Warranty of Title and Authority. The persons executing this lease on behalf of Tenant hereby covenant and warrant that Tenant is a duly constituted corporation qualified to do business in the state in which the Property is located; and such persons are duly authorized by the board of directors of Tenant to execute and deliver this lease on behalf of Tenant. Section 11.22. No Jury Trial. Landlord and Tenant hereby mutually waive their rights to trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this lease, Tenant's use or occupancy of the Leased Premises, and any claim of injury or damage. Section 11.23 Renewal Option. In the event Tenant is not in default under the terms of this lease, Tenant shall have the right to renew this lease for a period of five (5) years (the "Renewal Term") upon written notice given to Landlord not -34- less than six (6) months' prior to the expiration of the original Term. Any such renewal shall be upon the terms and conditions contained in this lease, except that Tenant shall have no further right to renew. All references to the "Term" in this lease shall be deemed to include the Renewal Term where appropriate. Section 11.24. Miscellaneous. (a) All payments made by Tenant other than Minimum Rent, including but not limited to Taxes and Utilities Charges, shall constitute "additional rent" and Landlord shall have the same remedies for Tenant's failure to pay additional rent as for failure to pay Minimum Rent. (b) This lease shall be governed in all respects by the laws of the State of New York. Any suit arising out of this lease only shall be brought in the State or Federal Courts located in the State of New York. In the event of any such suit, the parties hereto consent to the personal jurisdiction of such courts and waive any defense based on improper venue. (c) Tenant shall not be entitled to exercise any right of termination or other option granted to it by This lease (if any) at any time when Tenant is in default in the performance or observance of any of the covenants, terms, provisions or conditions on its part to be performed or observed under this lease. IN WITNESS WHEREOF, Landlord and Tenant have duly executed this lease as of the day and year first above written, each acknowledging receipt of an executed copy hereof. WITNESS: LANDLORD: ___________________________ /s/ Peter Castellana, Jr. --------------------------- Peter Castellana, Jr. ___________________________ ___________________________ Marie Castellana ATTEST: TENANT: Western Beef -- l73rd Street Inc. By: /s/ Frank Castellana Tenant's Federal Employer Identification Number: -35- STATE OF NEW YORK ) ) ss.: COUNTY OF NASSAU ) On the day of October , 1992, before me personally came Peter Castellana, Jr., to me known, to be the individual described in, and who executed, the foregoing instrument, and acknowledged that he executed the same. PETER R. ADMIRAND Notary Pubic. State of New York No. 304964094 Qualified in Nassau County Commission Expires March 24,1994 STATE OF NEW YORK ) ) ss.: COUNTY OF ) On the day of , 1992, before me personally came Marie Castellana, to me known, to be the individual described in, and who executed, the foregoing instrument, and acknowledged that she executed the same. Notary Public STATE OF NEW YORK ) ) as.: COUNTY OF NASSAU ) On the 21 day of October, 1992, before me personally came Frank Castellana, to me known, who, being by me duly sworn, did depose and say that he resides at 8698 86 St., Brooklyn, NY and that he is the President of Western Beef--173rd Street Inc., the corporation described in, and which executed the foregoing instrument; that he knows the seal of the corporation; that the seal affixed to said instrument is such corporate seal: that it was so affixed by order of the Board of Directors of said corporation; and that he signed his name thereto by like order. Notary Public PETER R. ADMIRAND Notary Public. State of New York No- 304964094 Qualified in Nassau County Commission Expires March 24, 1994 -36- EX-10.11 9 LEASE This Lease made the 1st day of March 1990, between Elmont Q. Properties, Inc. Hereinafter referred to as LANDLORD, and Western Beef - East New York, Inc. hereinafter jointly, severally and collectively referred to as TENANT. Witnesseth, that the Landlord hereby leases to the Tenant, and the Tenant hereby hires and takes from the Landlord Entire Building and Parking Lot in the building known as 1213 East New York Avenue, Brooklyn, N.Y. 11212 to be used and occupied by the Tenant As a Retail Supermarket And for no other purpose, for a term to commence on March 1, 1990, and to end on 30 April 2000, unless sooner terminated as hereinafter provided, at the ANNUAL RENT of $211,557.00 ($17,629.75 per month) with a 3% Annual Increase Plus a 5 Year Option. all payable in equal monthly installments in advance on the first day of each and every calendar month during said term, except the first installment, which shall be paid upon the execution hereof. THE TENANT JOINTLY AND SEVERALLY COVENANTS: FIRST.--That the Tenant will pay the rent as above provided. SECOND.--That, throughout said term the Tenant will take good care of the demised premises, fixtures, and appurtenances, and all alterations, additions and improvements to either; make all repairs in and about the same necessary to preserve them in good order and condition, which repairs shall be, in quality and class, equal to the original work; promptly pay the expense of such repairs; suffer no waste or injury; give prompt notice to the Landlord of any fire that may occur; execute and comply with all laws, rules, orders, ordinances and regulations at an time issued or in force (except those requiring structural alterations), applicable to the demised premises or to the Tenant's occupation thereof, of the Federal, State and Local Governments, and of each and every department, bureau and official thereof, and of the New York Board of Fire Underwriters; permit at all times during usual business hours, the Landlord and representatives of the Landlord to enter the demised premises for the purpose of inspection, and to exhibit them for purposes of sale or rental; suffer the Landlord to make repairs and improvements to all parts of the building, and to comply with all orders and requirements of governmental authority applicable to said building or to any occupation thereof; suffer the Landlord to erect, use, maintain, repair and replace pipes and conduits in the demised premises and to the floors above and below; forever indemnify and save harmless the Landlord for and against any and all liability, penalties, damages, expenses and judgments arising from injury during said term to person or property of any nature, occasioned wholly or in part by any act or acts, omission or omissions of the tenant, or of the employees, guests, agents, assigns or undertenants of the Tenant and also for any matter or thing growing out of the occupation of the demised premises or of the streets, sidewalks or vaults adjacent thereto; permit, during the six months next prior to the expiration of the term the usual notice "To Let" to be placed and to remain unmolested in a conspicuous place upon the exterior of the demised premises; repair, at or before the end of the term, all injury done by the installation or removal of furniture and property; and at the end of the term, to quit and surrender the demised premises with all alterations, additions and improvements in good order and condition. THIRD.--That the Tenant will not disfigure or deface any part of the building, or suffer the same to be done, except as for as may be necessary to affix such trade fixtures as are herein consented to be the Landlord; the Tenant will not obstruct, or permit the obstruction of the street or the sidewalk adjacent thereto; will not do anything, or suffer anything to be done upon the demised premises which will increase the rate of fire insurance upon the building upon the building or any of its contents, or be liable to cause structural injury to said building; will not permit the accumulation of waste or refuse matter, and will not, without the written consent of the Landlord first obtained in each case, either sell, assign, mortgage or transfer this lease, underlet the demised premises or any part thereof, permit the same or any part thereof to be occupied by anybody other than the Tenant and the Tenant's employees, make any alterations in the demised premises, use the demised premises or any part thereof for any purpose other than the one first above stipulated, or for any purpose deemed extra hazardous on account of fire risk, nor in violation of any law or ordinance. That the Tenant will not obstruct or permit the obstruction of the light, halls, stairway or entrances to the building, and will not erect or inscribe any sign, signals or advertisements unless and until the style and location thereof have been approved by the Landlord; and if any be erected or inscribed without such approval, the Landlord may remove the same. No water cooler, air conditioning unit or system or other apparatus shall be installed or used without the prior written consent of Landlord. IT IS MUTUALLY CONVENANTED AND AGREED, THAT FOURTH.--If the demised premises shall be partially damaged by fire or other cause without the fault or neglect of Tenant, Tenant's servants, employees, agents, visitors or licenses, the damages shall be repaired by and at the expense of the Landlord and the rent until such repairs shall be made shall be apportioned according to the part of the demised premises which is usable by Tenant. But if such partial damage is due to the fault or neglect of Tenant, Tenant's servants, employees, agents, visitors or licensees, without prejudice to any other rights and remedies of Landlord and without prejudice to the rights of subrogation of Landlord's insurer, the damages shall be repaired by Landlord but there shall be no apportionment or abatement of rent. No penalty shall accrue for reasonable delay which may arise by reason of adjustment or insurance of the part of Landlord and/or Tenant, and for reasonable delay on account of "labor troubles", or any other cause beyond Landlord's control. If the demised premises are totally damaged or are rendered wholly untenantable by fire or other cause, and if Landlord shall decide not to restore or not to rebuild the same, or if the building shall be so damaged that Landlord shall decide to demolish it or to rebuild it, then or in any of such events Landlord may, within ninety (90) days after such fire or other cause, give Tenant a notice in writing of such decision, which notice shall be given as in Paragraph twelve hereof provided, and thereupon the term of this lease shall expire by lapse of time upon the third day after such notice is given, and tenant shall vacate the demised premises and surrender the same to Landlord. If Tenant shall not be in default under this lease then, upon the termination of this lease under the conditions provided for in the sentence immediately preceding, Tenant's liability for rent shall cease as of the day following the casualty. Tenant hereby expressly waives the provisions of Section 227 of the Real Property Law and agrees that the foregoing provisions of the Article shall govern and control in lieu thereof. If the damage or destruction be due to the fault or neglect of Tenant the debris shall be removed by, and at the expense of, Tenant. FIFTH.--If the whole or any part of the premises hereby demised shall be taken or condemned by any competent authority for any public use or purpose then the term hereby granted shall case from the time when possession of the part so taken shall be required for such public purpose and without apportionment of award, the Tenant hereby assigning to the Landlord all right and claim to any such award, the current rent, however, in such cases to be apportioned. SIXTH.--If, before the commencement of the term, the Tenant be adjudicated a bankrupt, or make a "general assignment," or take the benefit of any insolvent act, or if a Receiver or Trustee by appointed for the tenant's property, or if this lease or the estate of the Tenant hereunder be transferred or pass or to devolve upon any other person or corporation, or if the Tenant shall default in the performance of an agreement by the Tenant contained in any other lease to the Tenant by the Landlord or by any corporation of which an officer of the Landlord is a Director, this lease shall thereby, at the option of the Landlord, be terminated and in that case, neither the Tenant nor anybody claiming under the Tenant shall be entitled to go into possession of the demised premise. If after the commencement of the term, any of the events mentioned above in the subdivision shall occur, or if Tenant shall make default in fulfilling any of the covenants of this lease, other than the covenants for the payment of rent or "additional rent" or if the demised premises become vacant or deserted, the Landlord may give to the Tenant ten day's notice of intention to end the term of this lease, and thereupon at the expiration of said ten day's (if said condition which was the basis of said notice shall continue to exist) the term under this lease shall expire as fully and completely as if that day were the date herein definitely fixed for the expiration of the term and the Tenant will then quit and surrender the demised premises to the Landlord, but the Tenant shall remain liable as hereinafter provided. If the Tenant shall make default in the payment of the rent reserved hereunder, or any item of "additional rent" herein mentioned, or any part of either or in making any other payment herein provided for, or if the notice last above provided for shall have been given and if the condition which was the basis said notice shall exist at the expiration of said ten day's period, the Landlord may immediately, or at any time thereafter, re-enter the demised premises and remove all persons and all or any property therefrom, either by summary dispossess proceedings, or by any suitable action or proceeding at law, or by force or otherwise, without being liable to indictment, prosecution or damages therefor, and re-possess and enjoy said premises together with all additions, alterations and improvements. In any such case or in the event that this lease by "terminated" before the commencement of the term, as above provided, the Landlord may either re-let the demised premises or any part or parts thereof for the Landlord's own account, or may, at the Landlord's option, re-let the demised premises or any part or parts thereof as the agent of the Tenant, and receive the rents therefore, applying the same first to the payment of such expenses as the Landlord may have incurred, and then to the fulfillment of the covenants of the Tenant herein, and the balance, if any, at the expiration of the term first above provided for, shall be paid to the Tenant, Landlord may rent the premises for a term extending beyond the term hereby granted without releasing Tenant from any liability. In the event that the term of this lease shall expire as above in this subdivision "Sixth" provided, or terminate by summary proceedings or otherwise, and if the Landlord shall not re-let the demised premises for the Landlord's own account, then, whether or not the premises be re-let, the Tenant shall remain liable for, and Tenant hereby agrees to pay to the Landlord, until the time when this leas would have expired but for such termination or expiration, the equivalent, of the amount of all of the rent and "additional rent" reserved herein, less the avails of reletting, if any, and the same shall be due and payable by the Tenant to the Landlord on the several rent days above specified, that is, upon each of such rent days the Tenant shall pay to the Landlord the amount of deficiency then existing. The Tenant hereby expressly waives any and all right of redemption in case the Tenant shall be dispossessed by judgment or warrant of any court or judge, and the tenant waives and will waive all right to trial by jury in any summary proceedings hereafter instituted by the Landlord against the Tenant waives and will waive all right to trial by jury in any summary proceedings hereafter instituted by the Landlord against the Tenant in respect to the demised premises. The words "re-enter" and "re-entry" as used in this lease are not restricted to their technical legal meaning. In the event of a breach or threatened breach by the Tenant of any of the covenants, or provisions hereof, the Landlord shall have the right of injunction and the right to invoke any remedy allowed at law or in equity, as if re-entry, summary proceedings and other remedies were not herein provided for. SEVENTH.--If the tenant shall make default in the performance of any covenant herein contained, the Landlord may immediately, or at any time thereafter, without notice, perform the same for the account of the Tenant If a notice of mechanic's lien be filed against the demised premises or against premises or which the demise premises are part, for, or purporting to be for, labor or material alleged to have been furnished, or to be furnished to be or for the Tenant at the demised premises, and if the Tenant shall fail to take such action as shall cause such lien to be discharged within fifteen days after the filing of such notice, the Landlord may pay the amount of such lien or discharge the same by deposit or by bonding proceedings, and in the event of such deposit or bonding proceedings, the Landlord may pay any judgement recovered on such claim. Any amount paid or expense incurred by the Landlord as in this subdivision of this lease provided, an any amount as to which the Tenant shall at an time be in default for or in respect to the use of water, electric current or sprinkler supervisory service, and any expense incurred or sum of money paid by the Landlord by reason of the failure of the Tenant to comply with any provision hereof, or in defending any such action, shall be deemed to be "additional rent" for the demised premises, and shall be due and payable by the Tenant to the Landlord on the first day of the next following month, or at the option of the Landlord, on the first day of any succeeding month. The receipt by the Landlord of any installment of the regular stipulated rent hereunder or any of said "additional rent" shall not be a waiver of any other "additional rent" then due. EIGHTH.--The failure of the Landlord to insist, in any one or more instances upon a strict performance of any of the covenants of this lease, or to exercise any option herein contained, shall not be construed as a waiver or a relinquishment for the future of such covenant or option, but the same shall continue and remain in full force and effect. The receipt by the Landlord of rent, with knowledge of the breach of any covenant hereof, shall not be deemed a waiver of such breach and no waiver by the Landlord of any provision hereof shall be deemed to have been made unless expressed in writing and signed by the Landlord. Even though the Landlord shall consent to an assignment hereof no further assignment shall be made without express consent in writing by the Landlord. NINTH.--If this lease be assigned, or if the demised premises or any part thereof be underlet or occupied by anybody other than the Tenant the Landlord may collect rent from the assignee, under-tenant or occupant, and apply the net amount collected to the rent herein reserved, and no such collection shall be deemed a waiver of the covenant herein against assignment and under-letting, or the acceptance of the assignee, under-tenant or occupant as tenant, or a release of the Tenant from the further performance by the Tenant of the covenants herein contained on the part of the Tenant. TENTH.--This lease shall be subject and subordinate at all times, to the lien of the mortgages now on the demised premises, and to all advances made or hereafter to be made upon the security thereof, and subject and subordinate to the lien of any mortgage or mortgages which at any time may be made a line upon the premises. The Tenant will execute and deliver such further instrument or instruments subordinating this lease to the lien of any such mortgage or mortgages as shall be desired by any mortgagee or proposed mortgagee. The Tenant hereby appoints the Landlord the attorney-in-fact of the Tenant, irrevocable, to execute and deliver any such instrument or instruments for the Tenant. ELEVENTH.--All improvements made by the Tenant to or upon the demised premises, except said trade fixtures, shall when made, at once be deemed to be attached to the freehold, and become the property of the Landlord, and at the end or other expiration of the term, shall be surrendered in the Landlord in as good order and condition as they were when installed, reasonable wear and damages by the elements excepted. TWELFTH.--Any notice or demand which under the terms of this lease or under any statute must or may be given or made by the parties hereto shall be in writing and shall be given or made by mailing the saem by certified or registered mail addressed to the respective parties at the addresses set forth in this lease. THIRTEENTH.--The Landlord shall not be liable for any failure of water supply or electrical current, sprinkler damage, or failure of sprinkler service, nor for injury or damage to person or property caused by the elements or by other tenants or persons in said building or resulting from steam, gas, electricity, water, rain or snow, which may leak or flow from any part of said buildings, or from the pipes, appliances or plumbing works of the same, or from the street or sub-surface, or from any other place, n or for interference with light or other incorporeal heerditaments by anybody other than the Landlord, or caused by operations by or for a governmental authority in construction of any public or quasi-public work, neither shall the Landlord be liable for any latent defect in the building. FOURTEENTH.--No diminution or abatement of rent, or other compensation shall be claimed or allowed for inconvenience or discomfort arising form the making of repairs or improvements to the building or to its appliances, nor for any space taken to comply with any law, ordinance or order of a governmental authority. In respect to the various "services," if any, herein expressly or impliedly agreed to be furnished by the Landlord to the Tenant, it is agreed that there shall be no diminution or abatement of the rent, or any other compensation, for interruption or curtailment of such "service" when such interruption or curtailment shall be due to accident, alterations or repairs desirable or necessary to be made or to inability or difficulty in securing supplies or labor for the maintenance of such "service" or to some other cause, not gross negligence on the part of the Landlord. No such interruption or curtailment of any such "service" shall be deemed a constructive eviction. The Landlord shall not be required to furnish, and the Tenant shall not be entitled to receive, any of such "services" during any period wherein the Tenant shall be in default in respect to the payment of rent. Neither shall there by any abatement or diminution of rent because of making of repairs, improvements or decorations to the demised premises after the date above fixed for the commencement of the term, it being understood that rent shall, in any event, commence to run at such date so above fixed. FIFTEENTH.--The Landlord may prescribe and regulate the placing of safes, machinery, quantities of merchandise and other things. The Landlord may also prescribe and regulate which elevator and entrances shall be used by the Tenant's employees and for the Tenant's shipping. Th Landlord may make such other and further rules and regulations as, in the Landlord's judgment, may from time to time be needul for the safety, care or cleanliness of the building, and for the preservation of good order therin. The Tenant and the emplyoees and agents of the Tenant will observe and conform to all such rules and regulations. SIXTEENTH.--In the event that na excavation shall be made for building or other purposes upon land adjacent to the demised premises or shall be contemplated to be made, the Tenant shall afford to the person or persons causing or to cause such excavation, license to enter upon the demised premises for the purpose of doing such work as said person or persons shall deem to be necessary to perserve the walls, sturcture or structures upon the demised premises from injury dn to support the same by proper foundations. SEVENTEENTH.--No vaults or space not within the property line of the building are lease hereunder. Landlord makes no representation as to the location of the property line of the building. Such vaults or space as Tenant may be permitted to sue or occupy are to be used or occupied under a revocable license and if such license be revoked by the Landlord as to the use of part or all of the vaults or space Landlord shall not be subject to any liability; Tenant shall not be entitled to any compensation or reduction in rent nor shall this be deemed constructive or actual eviction. Any tax, fee or charge of municipal or other authorities for such vaults or space shall be paid by the Tenant for the period of the Tenant's use or occupancy thereof. EIGHTEENTH.--That during seven months prior to the expiration of the term hereby granted, applicants shall be admitted at all reasonable hours of the day to view the premises until rented; and the Landlord and the Landlord's agents shall be permitted at any time during the term to visit and examine them at any reasonable hour of the day, and workmen may enter at any time, when authorized by the Landlord or the Landlord's agents, to make or facilitate repairs in any part of the building; and if the said Tenant shall not be personally present to open and permit an entry into said promises at any time, when for any reason an entry therein shall be necessary or permissible hereunder, the landlord or the Landlord's agents may forcibly enter the same without rendering the Landlord or such agents liable to any claim or cause of action for damages by reason thereof (if during such entry the Landlord shall accord reasonable care to the Tenant's property) and without in any manner affecting the obligations and covenants of this lease; it is, however, expressly understood that the right and authority hereby reserved, does not impose, nor does the Landlord assume, by reason thereof, any responsibility or liability whatsoever for the care of supervision of said premises, or any of the pipes, fixtures, appliances or appurtenances therein contained or therewith in any manner connected. NINETEENTH.--The Landlord has made no representations or promises in respect to said building or to the demised premises except those contained herein, and those, if any, contained in some written communication to the Tenant, signed by the Landlord. This instrument may not be changed, modified, discharged or terminated orally. TWENTIETH.--If the Tenant shall at any time be in default hereunder, and if the Landlord shall institute an action or summary proceeding against the Tenant based upon such default, then the Tenant will reimburse the Landlord for the expense of attorneys' fees and disbursements thereby incurred by the Landlord, so far as the same are reasonable in amount. Also so long as the Tenant shall be a tenant hereunder the amount of such expenses shall be deemed to be "additional rent" hereunder and as the Tenant shall be a Tenant to the Landlord on the first day of the month following the incurring of such respective expenses. TWENTY-FIRST.--Landlord shall not be liable for failure to give possession of the premises upon commencement date by reason of the fact that premises are not ready for occupancy, or due to a prior Tenant wrongfully holding over or any other person wrongfully in possession or for any other reason; in such event the rent shall not commence until possession is given or is available, but the term herein shall not be extended. THE TENANT FURTHER COVENANTS: IF A FIRST FLOOR TWENTY-SECOND.--If the demised premises or any part thereof consist of a store, or of a first floor, or of any part thereof, the Tenant will keep the sidewalk and curb in front thereof clean at all times and free from snow and ice, and will keep insured in favor of the Landlord, all plate glass therein and furnish the Landlord with policies of insurance covering the same. INCREASED FIRE INSURANCE RATE TWENTY-THIRD.--If by reason of the conduct upon the demised premises of a business not herein permitted, or if by reason of the improper or careless conduct of any business upon or use of the demised premises, the fire insurance rate shall at any time be higher than it otherwise would be, then the Tenant will reimburse the Landlord, as additional rent hereunder, for that part of all fire insurance premiums hereafter paid out by the Landlord which shall have been charged because of the conduct of such business not so permitted, or because of the improper or careless conduct of any business upon or use of the demised premises, and will make such reimbursement upon the first day of the month following such outlay by the Landlord; but this covenant shall not apply to a premium for any period beyond the expiration date of this lease, first above specified. In any action or proceeding wherein the Landlord and the Tenant are parties, a schedule or "make up" of rate for the building on the demised premises, purporting to have been issued by New York Fire Insurance Exchange, or other body making fire insurance rates for the demised premises, shall be prima facie evidence of the facts therein stated and of the several items and charges included in the fire insurance rate then applicable to the demised premises. WATER RENT SEWER TWENTY-FOURTH.--If a separate water meter be installed for the demised premises, or any part thereof, the Tenant will keep the same in repair and pay the charges made by the municipality or water supply company for or in respect to the consumption of water, as and when bills therefor are rendered. If the demised premises, or any part thereof, be supplied with water through a meter which supplies other premises, the Tenant will pay to the Landlord, as and when bills are rendered therefor, the Tenant's proportionate part of all charges which the municipality or water supply company shall made for all water consumed through said meter, as indicated by said meter. Such proportionate part shall be fixed by apportioning the respective charge according to floor area against all of the rentable floor area in the building (exclusive of the basement) which shall have been occupied during the period of the respective charges, taking into account the period that each part of such area was occupied. Tenant agrees to pay as additional rent the Tenant's proportionate part, determined as aforesaid, of the sewer rent or charge imposed or assessed upon the building of which the premises are a part. ELECTRIC CURRENT TWENTY-FIFTH.--That the Tenant will purchase from the Landlord, if the Landlord shall so desire, all electric current that the Tenant requires at the demised premises and will pay the Landlord for the same, as the amount of consumption shall be indicated by the meter furnished therefor. The price for said current shall be the same as that charged for consumption similar to that of the Tenant by the company supplying electricity in the same community. Payments shall be due as and when bills shall be rendered. The Tenant shall comply with like rules, regulations and contract provisions as those prescribed by said company for a consumption similar to that of the Tenant. SPRINKLER SYSTEM TWENTY-SIXTH.--If there now is or shall be installed in said building a "sprinkler system" the Tenant agrees to keep the appliances thereto in the demised premises in repair and good working condition, and if the New York Board of Fire Underwriters or the New York Fire Insurance Exchange or any bureau, department of official of the State or local government requires or recommends that any changes, modifications, alterations or additional sprinkler heads or other equipment be made or supplied by reason of the Tenant's business, or the location of partitions, trade fixtures, or other contents of the demised premises, or if such changes, modifications, alterations, additional sprinkler heads or other equipment in the demised premises are necessary to prevent the imposition of a penalty or charge against the full allowance for a sprinkler system in the fire insurance rate as fixed by said Exchange, or by any Fire Insurance Company, the Tenant will at the Tenant's own expense, promptly made and supply such changes, modifications, alterations, additional sprinkler heads or other equipment. As additional rent hereunder the Tenant will pay to the Landlord, annually in advance, throughout the term $ toward the contract price for sprinkler supervisory service. SECURITY TWENTY-SEVENTH.--The sum of Dollars is deposited by the Tenant herein with the Landlord herein as security for the faithful performance of all the covenants and conditions of the lease by the said Tenant. If the Tenant faithfully performs all the covenants and conditions on his part to be performed, then the sum deposited shall be returned to said Tenant. NUISANCE TWENTY-EIGHTH.--This lease is granted and accepted on the especially understood and agreed condition that the Tenant will conduct his business ins such a manner, both as regards noise and kindred nuisances, as will in no wise interfere with, annoy, or disturb any other tenants, in the conduct of their several businesses, or the Landlord in the management of the building; under penalty of forfeiture of this lease and consequential damages. BROKERS COMMISSIONS TWENTY-NINTH.--The Landlord hereby recognizes as the broker who negotiated and consummated this lease with the Tenant herein, and agrees that if, as, and when the Tenant exercises the option, if any, contained herein to renew this lease, or fails to exercise the option, if any, contained therein to cancel this lease, the Landlord will pay to said broker a further commission in accordance with the rules and commission rates of the Real Estate Board in the community. A sale, transfer, or other disposition of the Landlord's interest in said lease shall not operate to defeat the Landlord's obligation to pay the said commission to the said broker. The Tenant herein hereby represents to the Landlord that the said broker is the sole and only broker who negotiated and consummated this lease with the Tenant. WINDOW CLEANING THIRTIETH.--The Tenant agrees that it will not require, permit, suffer, nor allow the cleaning of any windows, or windows, in the demised premises from the outside (within the meaning of Section 202 of the Labor Law) unless the equipment and safety devices required by law, ordinance, regulation or rule, including, without limitation, Section 202 of the New York Labor Law, are provided and used, and unless the rules, or any supplemental rules of the Industrial Board of the State of New York are fully completed with; and the Tenant hereby agrees to indemnify the Landlord, Owner, Agent, Manager and/or Superintendent, as a result of the Tenant's requiring, permitting, suffering, or allowing any window, or windows in the demised premises to be cleaned from the outside in violation of the requirements of the aforesaid laws, ordinances, regulations and/or rules. VALIDITY THIRTY-FIRST.--The invalidity or unenforceability of any provision of this lease shall in no way affect the validity or enforceability of any other provision hereof. EXECUTION & DELIVERY OF LEASE THIRTY-SECOND.--In order to avoid delay, this lease has been prepared and submitted to the Tenant for signature with the understanding that it shall not bind the Landlord unless and until it is executed and delivered by the Landlord. EXTERIOR OF PREMISES THIRTY-THIRD.--The Tenant will keep clean and polished all metal, trim, marble and stonework which are a part of the exterior of the premises, using such materials and methods as the Landlord may direct, and if the Tenant shall fail to comply with the provisions of this paragraph, the Landlord may cause such work to be done at the expense of the Tenant. PLATE GLASS THIRTY-FOURTH.--The Landlord shall replace at the expense of the Tenant any and all broken glass in the skylights, doors and walls in and about the demised premises. The Landlord may insure and keep insured all plate glass in the skylights, doors and walls in the demised premises, for and in the name of the Landlord and bills for the premiums therefor shall be rendered by the Landlord to the Tenant at such times as the Landlord may elect, and shall be due from and payable by the Tenant when rendered, and the amount thereof shall be deemed to be, and shall be paid as, additional rent. WAR EMERGENCY THIRTY-FIFTH.--This lease and the obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on part of Tenant to be performed shall in nowise be affected, impaired or excused because Landlord is unable to supply or is delayed in supplying any service expressly or impliedly to be supplied or is unable to make, or is delayed in making any repairs, additions, alterations or decorations or is unable to supply or is delayed in supplying any equipment or fixtures if Landlord is prevented or delayed from so doing by reason of governmental preemption in connection with a National Emergency declared by the President of the United States or in connection with any rule, order or regulation of any department or subdivision thereof of any government agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency. THE LANDLORD COVENANTS QUIET POSSESSION FIRST.--That if and so long as the Tenant pays the rent and "additional rent" reserved hereby, and performs and observes the covenants and provisions hereof, the Tenant shall quietly enjoy the demised premises, subject, however, to the terms of this lease, and to the mortgages above mentioned, provided however, that this covenant shall be conditioned upon the retention of title to the premises by Landlord. ELEVATOR HEAT SECOND.--Subject to the provisions of Paragraph "Fourteenth" above the Landlord will furnish the following respective services: (a) Elevator service, if the building shall contain an elevator or elevators, on all days except Sundays and holidays, from A.M. to P.M. on Saturdays from A.M. to P.M.: (b) Heat, during the same hours on the same days in the cold season in each year. THIS IS A TRIPLE NET LEASE. And it is mutually understood and agreed that the covenants and agreements contained in the within lease shall be binding upon the parties hereto and upon their respective successors, heirs, executors and administrators. In Witness Whereof, the Landlord and Tenant have respectively signed and sealed these presents th day and year first above written. /s/ Peter Castellana, Jr Landlord IN PRESENCE OF: /s/ Frank Castellana Tenant EX-10.12 10 STORE LEASE STORE LEASE BETWEEN ANT REALTY CORP., Landlord and WESTERN BEEF, ROCKAWAY BLVD., INC., Tenant THE VINCENT A. DeIORIO LAW FIRM 2975 Westchester Avenue Purchase, NY 10577 (914) 696-5555 STORE LEASE The Landlord and the Tenant agree to lease the Rental Space for the Term and at the Rent stated as follows: (The words Landlord and Tenant include all landlords and all tenants under this lease.) Landlord: ANT Realty Corp. Address: 47-05 Metropolitan Avenue Flushing, New York 11385 Tenant: WESTERN BEEF, ROCKAWAY BLVD., Inc. Address: 145-35 Rockaway Blvd. Queens, New York Rental Space: Approximately 4,500 square feet of ground floor space constituting the entire underroof area, in the Building at: 145-35 Rockaway Blvd., Queens, New York, together with all abutting parking areas, the property being more particularly described on the Queens County Assessor's Records as Block 12049 Lot 114, the total lot consisting of approximately 25,000 square feet. Date of Lease: January 30, 1997 Term: 20 years, ending January 31, 2017 with option to extend for five (5) years. See Exhibit "B" attached. Rent: The Rent is payable in advance at the Offices of Landlord beginning February 1, 1997 and thereafter on the first day of each and every month in accordance with the "Schedule of Rents" annexed hereto and made a part hereof. Security: none Insurance: A. Liability - Minimum $5,000,000-$20,000,000 (See para. 6A) B. Property/Rental (See para. 6B) Use of Rental Space - as and for the operation of a Supermarket and no other purpose. 1 1. Possession and Use Landlord shall give possession of the Rental Space to Tenant for the Term. Tenant shall take possession of and use the Rental Space for the purpose stated above. Tenant may not use the Rental Space for any other purpose without the written consent of the Landlord. Tenant shall not allow the Rental Space to be used for any unlawful or hazardous purpose. Tenant is satisfied that the Rental Space is zoned for the Use stated. Tenant shall obtain and maintain any necessary certificate of occupancy or other certificate permitting Tenant to use the Rental Space. Tenant shall not use the Rental Space in any manner that results in (1) an increase in the rate of fire or liability insurance or (2) cancellation of any fire or liability insurance policy on the Rental Space. Tenant shall comply with all requirements of the insurance companies insuring the Rental Space. Tenant shall not abandon the Rental Space during the Term of this Lease or permit it to become vacant for more than sixty (60) continuous days. 2. Delay in Giving of Possession [This section has been intentionally deleted.] 3. No Assignment or Subletting Tenant may not do any of the following without the Landlord's prior written consent: (a) assign this Lease (if Tenant is a corporation, the sale of a majority of its shares shall be treated as an assignment), (b) sublet all or any part of the Rental Space or (c) permit any other person or business to use the Rental Space. The foregoing notwithstanding, Tenant shall have the right to grant license or concession agreements, utilizing a portion of the premises, without need for obtaining Landlord's consent, provided that the aggregate total usage or utilization by Licensees and/or Concessionaires does not exceed 1000 square: 4. Rent and Additional Rent [This section has been intentionally deleted] 5. Security [This section has been intentionally deleted] 2 6. Insurance A. Liability Tenant shall obtain, pay for, and keep in effect for the benefit of Landlord and Tenant, public liability insurance on the Rental Space. The insurance company and the broker must be acceptable to Landlord. This coverage must be in at least the minimum amounts stated above and shall include Landlord as a direct insured party. Tenant shall deliver the original policy to the Landlord with proof of payment of the initial premium. This shall be done not less than 15 days before the Beginning of the Term. Tenant shall deliver a renewal policy to the Landlord with proof of payment not less than 20 days before the expiration date of each policy. B. Property/Casualty/Rental Tenant shall throughout the term of this lease, for the benefit of both Landlord and Tenant as named insureds, maintain insurance against loss or damage by fire, and such other risks and hazards as are insurable under present and future standard forms of fire and extended coverage insurance policies on the Building and all structures, appurtenances, sprinklers, boilers and on Tenant's personal property, furniture, furnishings, and fixtures located in the demised premises, for their respective full insurable value with Broad Extended Occupancy Endorsement in amounts at all times sufficient to prevent Landlord or Tenant from becoming a co-insurer under the terms of any such policies. Tenant shall also obtain and keep in force rental insurance against loss of rental under a rental value insurance policy covering risk of loss due to the occurrence of any of the hazards insured against under Tenant's Fire and Extended Insurance on the building, in an amount sufficient to prevent Landlord from becoming a co-insurer but in any event, in an amount sufficient to pay, for not less than one year, the rent payable under this Lease. All proceeds received by Landlord under rent insurance policies will be credited as received against the rent due. Each such policy shall provide that not less than ten days before expiration, evidence of its renewal, or a new certificate, together with evidence of payment of premiums for the renewal period or insurance policy, as the case may be, shall be delivered to Landlord. In the event of any fire or other casualty insured against by Tenant's policy, Landlord may assign to Tenant all of Landlord's right, title, and interest in and to the insurance proceeds. Tenant shall accept such proceeds as full payment for any loss or damage to its property, and shall not make any claim against Landlord for any other sum therefor, even if the loss or damage is due to the carelessness or negligence of Landlord or its servants, agents, or employees. If any insured casualty occurs, Tenant shall have full authority, and shall take all necessary measures, to file, negotiate, compromise, or adjust any loss under its policy, subject to Landlord's approval which may not unreasonably be withheld. 3 C. On Tenant's default in obtaining or delivering any such policy or policies or failure to pay the charges therefor, Landlord may secure or pay the charges for any such policy or policies and charge Tenant as additional rent therefor after giving Tenant Notice of Default and an opportunity to cure same within ten (10) days from Notice of such default. However, no such Notice of Default or cure period shall apply if such insurance coverage has lapsed or is in jeopardy of lapsing. D. All policies shall state that the insurance company shall not cancel or refuse to renew without at least 30 days written notice to the Landlord. E. If during the term of the Lease, higher limits of insurance than those mentioned above are appropriate, customary, and generally required for like premises utilized for similar uses, Tenant shall, upon Landlord's request, procure such increased limits insurance. Insurance required hereunder shall be in companies rated AAA or better in "Best's Insurance Guide," which shall be qualified to do business in the State of New York. Neither party shall be liable to the other for any business interruption or any loss or damage to property or injury or death of persons occurring in the Building (including all the Rental Space), or in any manner growing out of or connected with Tenant's use and occupation thereof, the Building or the condition thereof, whether caused by the negligence or other fault of Landlord or Tenant, or of their respective agents, employees, subtenants, licensees, or assignees. The release in favor of Landlord contained herein, is in addition to, and not in substitution for, or in diminution of the hold harmless and indemnification provisions provided in Paragraph "8" of this Lease. 7. Water Damage Landlord shall not be liable for any damage or injury to any persons or property caused by the leak or flow of water from or into any part of the Building, unless caused by its own act or omission. 8. Liability of Landlord, Tenant and Indemnity. A. Landlord and its agents shall not be liable for any damage to property of Tenant or of others entrusted to employees of the Building, nor for the loss of or damage to any property of Tenant or Persons Within Tenant's Control by theft or otherwise. Landlord and its agents shall not be liable for any injury or damage to persons or property resulting from fire, explosion, falling plaster' steam, gas, electricity, water, rain or snow or leaks from any part of the Building or from the pipes appliances, sprinklers or plumbing works or from the roof, street or sub-surface or from any other place or by dampness or by any other cause of whatsoever nature, unless caused by or due to the active negligence of Landlord, its agents, or employees; nor shall Landlord or its agents be liable for any such damage caused by other tenants or persons in the 4 Building or caused by operations in construction of any private, public or quasi-public work; nor shall Landlord be liable for any latent defect in the Demised Premises or in the Building. B. If at any time any windows of the Demises Premises are temporarily or permanently closed, darkened or bricked up for any reason whatsoever including Landlord's own acts, Landlord shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefor nor abatement of rent nor shall the same release Tenant from its obligations hereunder or constitute an eviction. C. Tenant agrees, irrespective of whether Tenant shall be negligent, to indemnify, defend and save harmless, Landlord and its partners, officers, directors, contractors, agents and employees from and against any and all liability (statutory or otherwise), claims, suits, demands, damages, judgments, costs, fines, penalties, interest and expenses (including counsel fees and disbursements incurred in any action or proceeding), to which Landlord or any such partner, officer, director, contractor, agent or employee may be subject or which Landlord may suffer arising from, or in connection with, (i) any liability or claim for any injury to, or death of, any person or persons or damage to property (including any loss of use thereof), or (ii) the use and occupancy of the Demised Premises or from any work, installation or thing whatsoever done or omitted (other than by Landlord or its contractors or the agents or employees of either) in the Demised Premises during the Term and during the period of time, if any, prior to the Commencement Date that Tenant may have been given access to the Demised Premises, or (iii) any default by Tenant in the performance of Tenant's obligations under this Lease or any act, omission, carelessness, or negligence of Tenant or Persons Within Tenant's Control. D. Tenant shall reimburse and compensate Landlord as additional rent within five (5) days after rendition of a statement for all expenditures, costs, fees, expenses, judgments, penalties, damages, and fines sustained or incurred by Landlord (including counsel fees and disbursements incurred in connection with any action or proceeding) due to the operation of this Article, or non-performance or non-compliance with or breach or failure by Tenant to observe any term, covenant, agreement, provision or condition of this Lease, or breach of any warranty or representation by Tenant made in this Lease. If in any action or proceeding naming both Landlord and Tenant, liability arising out of the negligence of Tenant is established, Tenant agrees (i) to indemnify Landlord in accordance with the provisions of this Article and (ii) to waive any right of contribution against Landlord. Reference in this Article to Landlord shall for all purposes be deemed to include the lessor of any Underlying Lease and each Mortgagee. E. Tenant agrees that its sole remedy in cases where Landlord's reasonableness in exercising its judgment or withholding its consent or approval is applicable pursuant to a specific provision of this Lease, or any rider or separate agreement relating to this Lease, if any, shall be those in the nature of an injunction, declaratory judgment, or specific performance, the rights to money damages or other remedies being hereby specifically waived. Landlord shall not be liable for injury or damage to any person or property unless due to the Landlord's act. Tenant is liable for any loss, injury or damage to any person or property caused by the act or neglect of Tenant or Tenant's employees. Tenant shall defend the Landlord 5 from and reimburse the Landlord for all liability and costs resulting from any injury or damage due to the act or neglect of Tenant or the Tenant's employees. 9. Acceptance of Rental Space Tenant has inspected the Rental Space and agrees that the Rental Space is in satisfactory condition. Tenant accepts the Rental Space "as is". 10. Quiet Enjoyment Landlord has the right to enter into this Lease. If Tenant complies with this Lease, the Landlord must provide Tenant with undisturbed possession of the Rental Space. 11. Taxes, Utilities, Security and Services Tenant shall arrange for and pay for all real estate taxes, assessments and all Federal, State, or Local or Municipal levies of any kind or nature; all heat, lighting, water and other utilities; and all costs of security or other services required for the intended use of the Rental Space. Tenant shall maintain and clean the demised premises at its own cost and expense. Landlord is not liable for any inconvenience or harm caused by any stoppage or reduction of utilities and services nor shall such stoppage or reduction excuse Tenant from paying Rent. 12. Tenant's Repairs, Maintenance, and Compliance Tenant Shall: (a) Promptly comply with all laws, orders, rules and requirements of governmental authorities, insurance carriers, board of fire underwriters, or similar groups. (b) Maintain the Rental Space and all equipment, fixtures and sprinklers in it. (c) Make all necessary repairs to the Rental Space and all equipment, sprinklers and fixtures in it. (d) Maintain the Rental Space in a neat, clean, safe, and sanitary condition, free of all garbage. (e) Use all electric, plumbing and other facilities in the Rental Space safely in accordance with applicable Law, Codes, Rules, Regulations and/or Fire Underwriter requirements. 6 (f) Use no more electricity than the wiring or feeders to the Rental Space can safely carry. (g) Promptly replace all broken glass in the Rental Space. (h) Do nothing to destroy, deface, damage, or remove any part of the Rental Space. (i) Keep nothing in the Rental Space which is inflammable, dangerous or explosive or might increase the danger of fire or other casualty. (j) Use its best efforts to promptly notify Landlord when there are conditions which need repair. (k) Do nothing to destroy the peace and quiet of Landlord, other tenants, or persons in the neighborhood. (l) Avoid littering in the building or on its grounds Tenant shall pay any and all expenses involved in complying with the above. 13. Landlord's Repairs and Maintenance Landlord shall have no responsibility to: (a) Maintain the public areas, roof and exterior walls in good condition. (b) Make any structural repairs unless these repairs are made necessary by the act of Landlord. (c) Make necessary replacements of the plumbing, cooling, heating and electrical system, except when made necessary by the act of Landlord. (d) Maintain the elevators in the Building, if any. 14. No Alterations Tenant may not make any changes or additions to the Rental Space without Landlord's written consent which consent shall not be unreasonably withheld. Any changes or additions made without Landlord's written consent shall be removed by Tenant on demand. All construction, improvements, changes or additions made with Landlord's written consent shall be paid for by Tenant and shall remain as part of the Rental Space at the end of the Term as the property of the Landlord all to be in good order and repair, reasonable wear and tear excepted. Also, Landlord may demand that Tenant remove any changes or additions at the end of the Term. Tenant shall promptly pay for all costs of any permitted changes or additions. Tenant 7 shall not allow any mechanic's lien or other claim to be filed against the Building. If any lien or claim is filed against the Building, Tenant shall have it promptly removed by payment or provision of an appropriate Lien Discharge Bond and Order of a Court of competent jurisdiction. 15. Signs [This section has been intentionally deleted.] 16. Access to Rental Space Landlord shall have access to the Rental Space on reasonable notice to Tenant to (a) inspect the Rental Space and (b) show it to prospective buyers, mortgage lenders, contractors or insurers. Landlord may show the Rental Space to rental applicants at reasonable hours on notice to Tenant within 6 months before the end of the Term. Landlord may enter the Rental Space at any time without notice to Tenant in case of emergency. 17. Fire and Other Casualty Tenant shall notify the Landlord at once of any fire or casualty in the Rental Space. If the Rental Space is partially damaged by fire or other casualty, Tenant shall repair it as soon as possible. This includes the damage to the Rental Space and all fixtures installed by either Tenant or Landlord. If the fire or other casualty is caused by the act or neglect of Tenant or Tenant's employees, Tenant shall pay for all repairs and all other damage. 18. Eminent Domain Eminent Domain is the right of a government to lawfully condemn and take private property for public use. Fair value must be paid for the property. The taking occurs either by court order or by deed to the condemning party. If any part of the Rental Space is taken by eminent domain, either party may cancel this lease on 30 days notice to the other. Tenant shall 8 eminent domain, either party may cancel this lease on 30 days notice to the other. Tenant shall not share in any payment or award to Landlord. Tenant shall have the right to file its own claim against the condemning authority, so long as Landlord's rights to its claim and any Award are not prejudiced. 19. Tenant's Certificate At the request of the Landlord, Tenant shall sign a certificate stating that (a) this Lease has not been amended and is in effect, (b) Landlord has fully performed all of the Landlord's agreements in this Lease, (c) Tenant has no rights to the Rental Space except as stated in this Lease, (d) Tenant has paid all Rent to date, and (e) Tenant has not paid Rent for more than one month in advance. The Certificate shall also list all the property attached to the Rental Space owned by the Tenant. 20. Violation, Eviction, Re-entry and Damages Landlord reserves a right of re-entry which allows the Landlord to end this Lease and re-enter the Rental Space if Tenant violates any agreement in this Lease. This is done by eviction. Eviction is a court procedure to remove a tenant. Eviction is started by the filing of a complaint in court and the service of a summons on a tenant to appear in court. Landlord may also evict Tenant for any one of the other grounds of good cause provided by law. After a court order of eviction and compliance with the warrant of removal, Landlord may re-enter and take back possession of the Rental Space. If the cause for eviction is non-payment of Rent, notice does not have to be given to Tenant before Landlord files a complaint. If there is any other cause to evict, Landlord must give Tenant the notice required by law before Landlord files a complaint for eviction. Tenant is liable for all damages caused by Tenant's violation of any agreement in this Lease. This includes reasonable attorney's fees and costs. After eviction Tenant shall pay the Rent for the balance of the Term or until the Landlord re-rents the Rental Space, if sooner. If the Landlord re-rents the Rental Space for less than Tenant's Rent, Tenant shall pay the difference until the end of the Term. Tenant shall not be entitled to any excess resulting from the re-renting. Tenant shall also pay (a) all reasonable expenses incurred by the Landlord in preparing the Rental space for re-renting and (b) commissions paid to a broker for finding a new tenant. 21. Bankruptcy Anything elsewhere in this lease to the contrary notwithstanding, this lease may be canceled by Landlord by the sending of a written notice to Tenant within a reasonable time after the happening of any one or more of the following events: (i) Tenant shall (a) have applied for or consented to the appointment of a receiver, trustee, liquidator, or other custodian of Tenant or any of its properties or assets, (b) be unable to pay its debts generally as they become due or shall have taken any other action which could result in it becoming the subject of an insolvency or 9 bankruptcy proceeding, (c) have made a general assignment for the benefit of creditors, (d) have commenced a voluntary case for relief as a debtor under the United States Bankruptcy Code or filed a petition to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or (e) be adjudicated a bankrupt or insolvent, or (ii) without the acquiescence or consent of Tenant an order, judgment or decree shall have been entered by any court of competent jurisdiction (a) approving as properly filed a petition seeking relief under the United States Bankruptcy Code or any bankruptcy, reorganization, insolvency, readjustment of debts, dissolution or liquidation law or statute with respect to Tenant or all or a substantial part of its properties or assets or (b) appointing a receiver, trustee, liquidator or other custodian or all or a substantial part of its properties or assets, and such order, judgment or decree shall have continued unstayed and in effect for any period claiming through or under Tenant or by reason of any statute or order of court shall thereafter be entitled to possession of the Demised Premises but shall forthwith quit and surrender the Demised Premises. If this lease shall be assigned in accordance with its terms the provisions of this Article shall be applicable only to the party then owning Tenant's interest in this lease. 22. No Representations by Landlord Neither Landlord nor Landlord's agents have made any representations or promises with respect to the physical condition of the building, the land upon which it is erected or the demised premises, the rents, leases, expenses of operation or any other mater or thing affecting or related to the premises except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this lease Tenant has inspected the building and the demised premises and is thoroughly acquainted with their condition, applicable zoning, permissible uses, and occupancy requirements, and agrees to take the same "as is" and acknowledges that the taking of possession of the demised premises by Tenant shall be conclusive evidence that the said premises and the building of which the same form a part were in good and satisfactory condition at the time such possession was so taken, except as to latent defects. All understandings and agreements heretofore made between the parties hereto are merged in this contract, which alone fully and completely expresses the agreement between Landlord and Tenant and any executory agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of it in whole or in part, unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. 23. Notices All notices given under this Lease must be in writing. Each party must accept and claim the notices given by the other. Unless otherwise provided by law, they may be given by (a) personal delivery, or (b) certified mail, return receipt requested. Notices shall be addressed to Landlord at the address written at the beginning of this Lease and to the Tenant at the Rental Space. 10 24. No Waiver The Landlord's failure to enforce any agreement in this Lease shall not prevent the Landlord from enforcing the agreement for any violations occurring at a later time. 25. Survival If any agreement in this Lease is contrary to law, the rest of the Lease shall remain in effect. 26. End of Term At the end of the term, Tenant shall (a) leave the Rental Space clean, (b) remove all of Tenant's property, (c) remove all signs and restore that portion of the Rental Space on which they were placed, (d) repair all damage caused by moving and (e) return the Rental Space to the Landlord in the same condition as it was at the beginning of the Term except for normal wear and tear. If Tenant leaves any property in the Rental Space, the Landlord may (a) dispose of it and charge Tenant for the cost of disposal (b) keep it as abandoned property. 27. Binding This Lease binds Landlord and Tenant and all parties who lawfully succeed to their rights or take their places. 28. Assignment and Subletting. The Tenant shall have the right to assign this Lease or sublet the Premises or any part thereof, to its parent or any affiliate, subsidiary or related entity or any entity into which or with which Tenant is merged or consolidated without limitation and without the consent of Landlord. Landlord shall have the right to approve any other subtenant or assignee, which approval, however, shall not release the Tenant from any liability under this Lease and shall not be unreasonably withheld or delayed. 29. Interruption of Services or use. Interruption or curtailment of any service maintained in the building or use of the premises, caused by Force majeure (as defined in Section 31 hereof), shall not entitle the Tenant to any claim against the Landlord or to any abatement in rent, and shall not constitute a constructive or partial eviction, unless the Lessor fails to take measures as may be reasonable under the circumstances to restore the service without undue delay. 30. Broker. Each party represents to the other that no real estate commission is due to any broker or agent as a result of this transaction, and each agrees to hold the other harmless and to 11 indemnify the other against any claims of or liabilities to any broker based on alleged dealings with the indemnifying party. 31. Force Majeure. As used in this Lease, the term "Force Majeure" shall mean and include those situations beyond Landlord's control, including by example and not by way of limitations, acts of God; accidents, strikes, shortages of labor, supplies or materials; or inclement weather. 32. Non-Disturbance. Landlord will make a good faith attempt upon Tenant's request to obtain a non-disturbance clause from the mortgage lender upon refinancing. 33. Full Agreements The parties have read this lease. It contains their full agreement. It may not be changed except with writing signed by Landlord and Tenant. Both parties hereby waive trial by jury of any matters whatsoever arising out of, under or by virtue of this Lease. Signatures: Landlord and Tenant agree to the terms of the Lease by signing below. If a party is a corporation, this Lease is signed by its proper corporate officers and its corporate seal is affixed. Witnessed or attest by ANT REALTY CORP. /s/ Santino Montalbano by: /s/ Peter Castellana, Jr. - - ------------------------ ---------------------------- Landlord WESTERN BEEF ROCKAWAY BLVD., INC. by: /s/ Chris Darrow - - ------------------------ ---------------------------- As to Tenant Tenant GUARANTY OF WESTERN BEEF, INC. (A Delaware Corporation) FOR VALUE RECEIVED, and in consideration for, and as an inducement to Landlord making the Lease with Tenant, Western Beef, Inc. guarantees to Landlord, Landlord's successors and assigns, the full performance and observance of all the covenants, conditions and agreements, therein provided to be performed and observed by Tenant without requiring any notice of non-payment, non-performance or non-observance or proof or notice or demand, whereby to charge Western Beef, Inc. all of which Western Beef, Inc. hereby expressly waives and expressly agreed that the validity of this agreement and the obligations of the guarantor hereunder shall in no wise be terminated, affected or impaired by reason of the assertion by Landlord against Tenant any of the rights or remedies reserved to Landlord pursuant to the provisions of the Lease. Western Beef, Inc. further covenants and agrees that this guaranty shall remain and continue in full force and effect as to any renewal, modification or extension of the Lease and during the period when Tenant is occupying the premises as a "statutory tenant." As a further inducement to Landlord to make the Lease and in consideration thereof, Landlord and Western Beef, Inc. covenant and agree that in any action or proceeding brought by either Landlord or Western Beef, Inc. against the other on any matters whatsoever arising out of, under or virtue of the terms of the Lease or of this guarantee that Landlord and Western Beef, Inc. shall and do hereby waive trial by jury. WITNESS WESTERN BEEF, INC. by: /s/ Chris Darrow - - ---------------------- ---------------------------- GUARANTOR 47-05 Metropolitan Avenue Flushing, New York SCHEDULE OF RENTS FOR LEASE DATED JANUARY 30, 1997, BY AND BETWEEN ANT REALTY, INC., AS LANDLORD AND WESTERN BEEF ROCKAWAY BLVD., INC., AS TENANT The base monthly rental rate for the demised premises shall be as set forth below and shall be payable the first day of each month: 1. 2/97 - 1/98 $4,000.00 Per Month 2. 2/98 - 1/99 $4,000.00 Per Month 3. 2/99 - 1/2000 $5,625.00 Per Month 4. 2/2000 - 1/2001 $5,798.97 Per Month 5. 2/2001 - 1/2002 $5,978.32 Per Month 6. 2/2002 - 1/2003 $6,163.22 Per Month 7. 2/2003 - 1/2004 $6,353.83 Per Month 8. 2/2004 - 1/2005 $6,550.34 Per Month 9. 2/2005 - 1/2006 $6,752.93 Per Month 10. 2/2006 - 1/2007 $6,961.78 Per Month 11. 2/2007 - 1/2008 $7,177.09 Per Month 12. 2/2008 - 1/2009 $7,399.07 Per Month 13. 2/2009 - 1/2010 $7,627.90 Per Month 14. 2/2010 - 1/2011 $7,863.82 Per Month 15. 2/2011 - 1/2012 $8,107.03 Per Month 16. 2/2012 - 1/2013 $8,357.79 Per Month 17. 2/2013 - 1/2014 $8,616.25 Per Month 18. 2/2014 - 1/2015 $8,882.73 Per Month 19. 2/2015 - 1/2016 $9,157.45 Per Month 20. 2/2016 - 1/20l7 $9,441.67 Per Month [Annexed hereto as Exhibit A is the Appraisal Report of Property Appraisal Services, January 30, 1997] Witnessed or attested by ANT REALTY CORP. by: - - -------------------------------- --------------------------------- As to Landlord Landlord WESTERN BEEF ROCKAWAY BLVD., INC. by: /s/ Chris Darrow - - -------------------------------- --------------------------------- As to Landlord Landlord EX-10.13 11 LEASE Agreement of Lease, made as this 23rd day of January 19, 1992, between 61 2nd Street Associates, a New York limited partnership, having its place of business at 4705 Metropolitan Avenue, Ridgewood, New York, Party of the first part, hereinafter referred to as OWNER, and with offices at Quarex Inc., a New York corporation having its place of business at 4705 Metropolitan Avenue, Ridgewood, New York, party of the second part, hereinafter referred to as TENANT, Witnesseth: Owner hereby leases to Tenant and Tenant hereby hires from Owner CPI (5% to 10%) per year in the building known as 61 2nd Street. Mineola, New York in the County of Nassau, City of New York, for the term of five (5) years, (or until such term shall sooner cease and expire as hereinafter provided) to commence on the 1st day of February nineteen hundred and ninety-two, and to the end on the 31st day of January nineteen hundred and ninety-seven both dates inclusive, at an annual rental rate of THREE HUNDRED AND FIFTY THOUSAND ($350,000.00) PER ANNUM (TWENTY NINE THOUSAND ONE HUNDRED SIXTY-SIX AND 67/100 ($29,166.67) DOLLARS PER MONTH which Tenant agrees to pay in lawful money of the United States which shall be legal tender in payment of all debts and dues, public and private, at the time of payment, in equal monthly installments in advance on the first day of each month during said term, at the office of Owner or such other place as Owner may designate, without any set off or deduction whatsoever, except that Tenant shall pay the first 1 monthly installment on the execution hereof (unless this lease be a renewal). In the event that, at the commencement of the term of this lease, or thereafter, Tenant shall be in default in the payment of rent to Owner pursuant to the terms of another lease with Owner or with Owner's predecessor in interest, Owner may at Owner's option and without notice to Tenant add the amount of such arrears to any monthly installment of rent payable hereunder and the same shall be payable to Owner as additional rent. The parties hereto, for themselves, their heirs, distributees, executors, administrators, legal representatives, successors and assigns, hereby covenant as follows: Occupancy: 1. Tenant shall pay the rent as above and as hereinafter provided. Use: 2. Tenant shall use and occupy demised premises for warehouse supermarket for the sale of food and related products provided such use is in accordance with the Certificate of Occupancy for the building, if any, and for no so other purpose. Alterations: 3. Tenant shall make no changes in or to the demised premises of any nature without Owner's pilot written consent. Subject to the prior written consent of Owner, and to the provisions of this article, Tenant a t Tenant's expense, may make alterations, installations, additions or improvements which are non-structural and which do not affect utility services or plumbing and electrical lines, in or to the interior of the demised premises using contractors or mechanics first approved by Owner. Tenant shall, at its expense, before making any alterations, additions, installations or improvements obtain all permits, approval and certificates required by any governmental or quasi-governmental bodies and (upon completion) certificates of final approval thereof and shall deliver promptly duplicates of all such permits, approvals and certificates to Owner. Tenant agrees to carry and will cause tenant's contractors and sub-contractors to carry such workman's compensation, general liability, personal and property damage insurance as Owner may require. If any mechanic's lien is filled against the demised premises, or the building of which the same forms a part, for work claimed to have been done (or, for materials furnished to, Tenant, whether or not done pursuant to this article, the same shall be discharged by Tenant within thirty days thereafter, at Tenant's expense, by filling the bond resulted by law or otherwise. All fixtures and all paneling, partitions, railings and like installations, installed in the premises at any time, either by tenant or by Owner on Tenant's behalf, shall, upon installation, become the property of Owner and shall remain upon and be surrendered with the demised premises unless Owner, by notice to Tenant no later than twenty days prior to the date fixed as the termination of this lease, elects to relinquish Owner's right thereto and to have them removed by Tenant, in which event the same shall be removed from the demised premises by Tenant prior to the expiration of the lease, at Tenant's expense. Nothing in this Article shall be construed to give Owner title to or to prevent Tenant's removal of trade fixtures, moveable office furniture and equipment, but upon removal of any such from the premises or upon removal of other Installations as may be required by Owner, Tenant shall immediately at ___ expense, repair and restore the premises to the condition existing prior to installation and repair any damage to the demised premises or the building due to such removal. All property permitted or required to be moved, by Tenant at the end of the term remaining in the premises after Tenant's removal shall be deemed abandoned and may, at the election of Owner, either be retained as Owner's property or removed from the premises by Owner, at Tenant's expense. 4. Owner shall maintain and repair the exterior of and the public portions of the building. Tenant shall, throughout the term of this lease, take good care of the demised premises including the bathrooms and lavatory facilities (of the demised Premises encompass the entire floor of the building) and the winnows and window frames and, the fixtures and appurtenances therein and Tenant's sole cost and expense promptly make all repairs thereto and to ___ building, whether structural or non-structural in nature, caused by or resulting from the carelessness, omission, neglect or improper conduct of Tenant, Tenant's servants, employees, invitees, or licensees, and whether or not arising from such Tenant conduct or omission, when require by other provisions of this lease, including Article 6. Tenant shall also repair all damage to the building and demised premises caused by the moving of Tenant's fixtures, furniture or equipment. All the aforesaid repairs shall be of quality or class equal to the original work or construction. If Tenant fails, after ten days notice, to proceed with due diligence to make repairs required to be made by Tenant, the same may be made by the Owner at the expense of Tenant, and the expenses thereof incurred by Owner shall be collectible, as additional rent, after rendition of a bill or statement therefor. If the demised premises be or become infested with vermin, Tenant shall, at its expense, cause the same to be exterminated. Tenant shall give Owner prompt notice of any defective condition in any plumbing, heating system or electrical lines located in the demised premises and following such notice, Owner shall remedy the condition with due diligence, but at the expense of Tenant, if repairs are necessitated by damage or injury attributable to Tenant, Tenant's servants, agents, employees, invitees or licensees as aforesaid. Except as specifically provided in Article 9 or elsewhere in this lease, there shall be no allowance to the Tenant for a diminution of rental value and no liability on the part of Owner by reason of inconvenience, annoyance or injury to business arising from Owner, Tenant or others making or failing to make any repairs, alternations, additions or improvements in or to any position of the building or the demised premises or in and to the fixtures, appurtenances or equipment thereof. The provisions of this Article 4 with respect to the making of repairs shall not apply in the case of fire or other casualty with regard to which Article 9 hereof shall apply. Window Cleaning: 5. Tenant will not clean nor require, permit, suffer or allow any window in the demised premises to be cleaned from the outside in violation of Section 202 of the New York State Labor Law or any other applicable law or of the Rules of the Board of Standards and Appeals, or of any other Board or body having or asserting jurisdiction. Requirements of Law, Fire Insurance, Floor Leads: 6. Prior to the commencement of the lease term, if Tenant is then in possession, and at all times thereafter, Tenant shall, at Tenant's sole cost and expense, promptly comply with all present and future laws, orders and regulations of all state, federal, municipal and local governments, departments, commissions and boards and any direction of any public officer pursuant to law, and all orders, rules and regulations of the New York Board of Fire Underwriters, or the Insurance Services Office, or any similar body which shall impose any violation, order or duty upon Owner or Tenant with respect to the demised premises whether or not arising out of Tenant's use or manner of use thereof, or, with respect to the building, if arising out of Tenant's use or manner of use of the demised premises or the building (including the use permitted under the by its manner of use of the demised premises or method of operation therein, violated any such laws, ordinances, orders, rules, regulations or requirements with respect thereto. Tenant shall not do or permit any act or thing to be done in or to the demised premises which is contrary to law, or which will invalidate or be in conflict with public liability, fire or other policies of insurance at any time carried by or for the benefit of Owner. Tenant shall not keep anything in the demised premises except as now or hereafter permitted by the Fire Department, Board of Fire Underwriters, Fire Insurance Rating Organization and other authority having jurisdiction, and then only in such manner and such quantity so as not to increase the rate for fire insurance applicable to the building, nor use the premises in a manner which will increase the Insurance rate for the building or any property located therein over that in effect prior to the commencement of Tenant's occupancy. If by reason of failure to comply with the foregoing the fire insurance rate shall, at the beginning of this lease or at any time thereafter, be higher than it otherwise would be, then Tenant shall reimburse Owner, as additional rent hereunder, for that position of all fire insurance premiums thereafter paid by Owner which shall have been charged because of such failure by Tenant. In any action or proceeding wherein Owner and Tenant are parties, a schedule or :make-up" or rate for the building or demised premises issued by a body making fire insurance rates therein state and of the several items and charges in the fire insurance rates then applicable to said premises. Tenant shall not place a load upon any floor of the demised premises exceeding the floor load per square foot area which it was designed to carry and which is allowed by law. Owner reserves the right to prescribe the weight and position of all sales, business machines and mechanical equipment. Such Installations shall be placed and maintained by Tenant, at Tenant's expense, in settings sufficient, in Owner's judgement, to absorb and prevent vibration, noise and annoyance. Subordination: 7. This lease is subject and subordinate to all ground or underlying leases and to all mortgages which may now or hereafter affect such leases or the real property of which demises premises are a part and to all renewals, modifications, consolidations, replacements and extensions of any such underlying leases and mortgages. This clause shall be self-operative and no further instrument or subordination shall be required by any ground or underlying lessor or by any mortgagee, affecting any lease or the real property of which the demised premises are a part. In confirmation of such subordination, Tenant shall executive promptly any certificate that Owner may request. Property -- Loss, Damage, Reimbursement, Indemnity: 8. Owner or its agents shall not be liable for any damage to property of Tenant or of others entrusted to employees of the building, nor for loss of or damage to any property of Tenant by theft or otherwise, nor for any injury or damage to persons or property resulting from any cause of whatsoever nature, unless caused by or due to the negligence of Owner, its agents, servants or employees; Owner or its agents shall not be liable for any damage caused by other tenants or persons in, upon or about said building or caused by operations in connection of any private, public or quasi public work. If at any time any windows of the demised premises are temporarily closed, darkened or bricked up (or permanently closed, darkened or bricked up, if required by law) for any reasons whatsoever including, but not limited to Owner's own acts, Owner shall not be liable for any damage Tenant may sustain thereby and Tenant shall not be entitled to any compensation therefor nor abatement or diminution of rent nor shall the same release Tenant from its obligations hereunder nor constitute an eviction. Tenant shall indemnify and save harmless Owner against and from all liabilities, obligations, damages, penalties, claims, costs, and expenses for which Owner shall not be reimbursed by insurance, including reasonable attorney's fees, paid, suffered or incurred as a result of any breach by Tenant, Tenant's agents, contractors, employees, invitees or licensees. Tenant's liability under this lease extends to the acts and omissions of any sub-tenant. In case any action or proceeding is brought against Owner by reason of any such claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist or defend such action or proceeding by counsel approved by Owner in writing, such approval not to be unreasonably withheld. Destruction, Fire and Other Casualty: 9. (a) If the demised premises or any part thereof shall be damaged by fire or other casualty, Tenant shall give immediate notice thereof to Owner and this lease shall continue in full force and effect except as hereinafter set forth. (b) If the demised premises are partially damaged or rendered partly unusable by fire or other casualty, the damages thereto shall be repaired by and at the expense of Owner and the rent, until such repair shall be substantially completed, shall be apportioned from the day following the casualty according to the part of the premises which is usable. (c)If the demised premises are totally damaged or rendered wholly unusable by fire or other casualty, then the rent shall be proportionately paid up to the time of the casualty and thenceforth shall cease until the date when the premises shall have been repaid and restored by Owner, subject to Owner's right to elect not to restore the same as hereinafter provided. (d)If the demised premises are rendered wholly unusable or (whether or not the demised premises are damaged in whole or in part) if the building shall be so damaged that Owner shall decide to demolish it or to rebuild it, then, in any of such events, Owner may elect to terminate this lease by written notice to Tenant, given with 90 days after such fire or casualty, specifying a date for the expiration of the lease, which date shall not be more than 60 days after the giving of such notice, an upon the date specified in such notice the term of this lease shall expire as fully and completely as if such date were the date set forth above for the termination of this lease and Tenant shall forthwith quit, surrender and vacate the premises without prejudice however, to Owner's rights and remedies against Tenant under the lease provisions in effect prior to such remedies against Tenant under the lease provisions in effect prior to such termination, and any rent owing shall be paid up to such date and any payments of rent made by Tenant which were on account of any period subsequent to such date shall be returned to Tenant. Unless Owner shall serve a termination notice as provided herein, Owner shall make the repairs and restorations under the conditions of (b) and (c) hereof with all reasonable expedition, subject to delays due to adjustment of insurance claims, labor troubled and causes beyond owner's control. After any such casualty, Tenant shall cooperate with Owner's restoration by removing from the premises as promptly as reasonably possible, all of tenant's salvageable inventory and moveable equipment, furniture, and other property. Tenant's liability for rent shall resume five (5) days after written notice from Owner that the premises are substantially ready for Tenant's occupancy. (e)Nothing contained hereinabove shall relieve Tenant from liability that may exist as a result of damage from fire or other casualty. Notwithstanding the foregoing, each party shall look first to any insurance in its favor before making any claim against the other party for recovery for loss or damage resulting from fire or other casualty, and to the extent that such insurance is in force and collectible and to the extent permitted by law, Owner and Tenant each hereby releases and waives all right of recovery against the other or any one claiming through or under each of them by way of subrogation or otherwise. The foregoing release and waiver shall be shall be in force only if both ...... insurance policies contain a clause providing that such a release or waiver shall not invalidate the insurance. If, and to the extent, that such waiver can be obtained only by the payment of additional premiums, then the party benefitting from the waiver shall pay such premises within ten days after written demand or shall be deemed to have agreed that the party obtaining insurance coverage shall be free of any further obligation under the provisions hereof with respect to waiver or subrogation. Tenant acknowledges that Owner will not carry insurance on Tenant's furniture and or furnishings or any fixtures or equipment, improvements, or appurtenances removable by Tenant and agrees that Owner will not be obligated to repair any damage thereto or replace the same. (f)Tenant hereby waives the provisions of Section 227 of the Real Property Law and agrees that the provisions of this article shall govern and control in lieu thereof. Eminent Domain: 10.If the whole or any part of the demised premises shall be acquired or condemned by Eminent Domain for any public or quasi public use or purpose, then and in that event, the term of this lease shall cease and terminate from the date of title vesting in such proceeding and Tenant shall have no claim for the value of any unexpired term of said lease. Assignment, Mortgage, Etc.: 11.Tenant, for itself, its heirs, distributees, executors, administrators, legal representatives, successors and assigns, expressly covenants that it shall not assign, mortgage or encumber this agreement, nor underlet, or suffer or permit the demised premises or any part thereof to be used by others, without the prior written consent of Owner in each instance. Transfer of the majority of the stock of a corporate Tenant shall be deemed an assignment. If this lease be assigned., of if the demised premises or any part thereof be underlet or occupied by anybody other than Tenant, Owner may, after default by Tenant, collect rent from the assignee, under-tenant or occupant, and apply the net amount collected to the rent herein reserved, but no such assignment, underletting, occupancy or collection shall be deemed a waiver of this covenant, or the acceptance of the assignee, under-tenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of covenants on the part of Tenant herein contained. The consent by Owner to an assignment or underletting shall not in any wise be construed to relieve Tenant from obtaining the express consent in writing of Owner to any further assignment or underletting. Electric Current: 12.Rates and conditions in respect to submetering or rent inclusion, as the case may be, to be added in RIDER attached hereto. Tenant covenants and agrees that at all times its use of electric current shall not exceed the capacity of existing leeders to the building or the risers or wiring installation and Tenant may not use any electrical equipment which, in Owner's opinion, reasonably exercised, will overload such installations or interfere with the use thereof by other tenants of the building. The change at any time of the character of electric service shall in no wise make Owner liable or responsible to Tenant, for any loss, damages or expenses which Tenant may sustain. Access to Premises: 13. Owner or Owner's agents shall have the right (but shall not be obligated) to enter the demised premises in any emergency at any time, and, at other reasonable times, to examine the same and to make such repairs, replacements and improvements as Owner may deem necessary and reasonably desirable to any portion of the building or which Owner may elect to perform in the premises after Tenant's failure to make repairs or perform any work of complying with laws, regulations and other directions of governmental authorities. Tenant shall permit Owner to use and maintain and replace pipes and conduits in and through the demised premises and to erect new pipes and conduits therein provided, wherever possible, they are within walls or otherwise concealed. Owner may, during the progress of any work in the demised premises, take all necessary materials and equipment into said premises without the same constituting an eviction nor shall the Tenant be entitled to any abatement of rent while such work is in progress nor to any damages by reason of loss or interruption of business or otherwise. Throughout the term hereof Owner shall have the right to enter the demised premises at reasonable hours for the purpose of showing the same to prospective purchasers or mortgagees of the building, and during the last six months of the term for the purpose of showing the same to prospective tenants and may, during said six months period, place upon the premises the usual notices "To Let" and "For Sale" which notices Tenant shall permit to remain thereon without molestation. If Tenant is not present to open and permit an entry into the premises, Owner or Owner's agents may enter the same whenever such entity may be necessary or permissible by master key or forcibly provided reasonable care is exercised to safeguard Tenant's property, such entry shall not render Owner or its agents liable therefor, nor in any event shall the obligations of Tenant hereunder be affected. If during the last month of the term Tenant shall have removed all or substantially all of Tenant's property therefrom. Owner may immediately enter, alter, renovate or redecorate the demised premises without limitation or abatement of rent, or Incurring liability to Tenant for any compensation and such act shall have no effect on this lease or Tenant's obligations hereunder. [Text not continuous: see note above] 14. No vaults, vault space or area, whether or not enclosed or covered not within the property line of the building is leased hereunder, anything contained in or indicated on any sketch, blue print or plan, or anything contained elsewhere in this lease to the contrary notwithstanding. Owner makes no representation as to the location of the property line of the building. All vaults and vault space and all such areas not within the property line of the building, which Tenant may be permitted to use and/or occupy, is to be used and/or occupied under a revocable license, and if any such license be revoked, or if the amount of such space or area be diminished or required by any federal, state or municipal authority or public utility, Owner shall not be subject to any liability nor shall Tenant be entitled to any compensation or diminution or abatement of rent, nor shall such revocation, diminution or requisition be deemed constructive of actual eviction. Any tax, fee or charge of municipal authorities for such vault or area shall be paid by Tenant, if used by Tenant, whether or not specifically leased hereunder. Occupancy: 15. Tenant will not at any time use or occupy the demised premises in violation of the certificate of occupancy issued for the building of which the demised premises are a part. Tenant has inspected the premises and accepts them as is, subject to the riders annexed hereto with respect to Owner's work, of any. In any event, Owner makes no representation as to the condition of the premises and Tenant agrees to accept the same subject to violations, whether or not of record. If any governmental license or permit shall be required for the proper and lawful conduct of Tenant's business, Tenant shall be responsible for and shall procure and maintain such license or permit. Bankruptcy: 16.(a) Anything elsewhere in this lease to the contrary notwithstanding, this lease may be cancelled by Owner by sending of a written notice to Tenant within a reasonable time after the happening of any one or more of the following events: (1) the commencement of a case in bankruptcy or under the laws of any state naming Tenant as the debtor; or (2)the making by Tenant of an assignment or any other arrangement for the benefit of creditors under any state statute. Neither Tenant nor any person claiming through or under Tenant, or by reason of any statute or order of court, shall thereafter be entitled to possession of the premises demised but shall forthwith quit and surrender the premises. If this lease shall be assigned in accordance with its terms, the provisions of this Article 16 shall be applicable only to the party then owning Tenant's interest in this lease. (b)It is stipulated and agreed that in the event of the termination of this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any other provisions of this lease to the contrary, be entitled to recover from Tenant as and for liquidated damages an amount equal to the difference between the rental reserved hereunder for the unexpired portion of the term demised and the fair and reasonable rental value of the demised premises for the same period. In the computation of such damages the difference between any installment of rent becoming due hereunder after the date of termination and the fair an reasonable rental value of the demised premises for the period for which such installment was payable shall be discounted to the date of termination at the rate of four percent (4%) per annum. If such premises or any part thereof be relet by the Owner for the unexpired term of said lease, or any part thereof, before presentation of proof of such liquidate damages ..... any court, commission or tribunal, the amount of rent reserved upon such reletting shall be deemed to be the fair and reasonable rental value for the part or the whole of the premises so re-let during the term of the re-letting. Nothing herein contained shall limit or prejudice the right of the Owner to prove for and obtain as liquidate damages by reason of such termination, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, such damages are to be provided, whether or not such amount be greater, equal to, or less than the amount of the difference referred to above. Default: 17. (1) If Tenant defaults in fulfilling any of the covenants of this lease other than the covenants for the payment of rent or additional rent; or if the demised premises becomes vacant or deserted "or if this lease be rejected under ss. 235 of Title 11 of the U.S. Code (bankruptcy code);" or if any execution or attachment shall be issued against Tenant or any of Tenant's property whereupon the demised premises shall be taken or occupied by someone other than Tenant; of if Tenant shall make default with respect to any other lease between Owner and Tenant; or if Tenant shall have failed, after five (5) days written notice, to redeposit with Owner any portion of the security deposited hereunder [thereunder?] which Owner has applied to the payment of any rent and additional rent due and payable hereunder or failed to move into or take possession of the premises within fifteen (15) days after the commencement of the term of this lease, of which fact Owner shall be the sole judge; when in any one or more of such events, upon Owner serving a written five (5) days notice upon Tenant specifying the nature of said default and upon the expiration of said five (5) days, if Tenant shall have failed to comply with or remedy such default, of if the said default or omission complained of shall be of a nature that the same cannot be completely cured or remedied within said five (5) day period, and if Tenant shall not have diligently commenced during such default within such five (5) day period, and shall not thereafter with reasonable diligence and in good faith, proceed to remedy or cure such default, then Owner may serve a written three (3) day's notice of cancellation of this lease upon Tenant, and upon the expiration of said three (3) days this lease and the term hereunder shall end and expire as fully and completely as if the expiration of such three (3) day period were the day herein definitely fixed for the end and expiration of this lease and the term thereof and Tenant shall then quit and surrender the demised premises to Owner but Tenant shall remain liable as hereinafter provided. (2) If the notice provided for in (1) hereof shall have been given, and the term shall expire as aforesaid; or if Tenant shall make default in the payment of the rent reserved herein or any item of additional rent herein mentioned or any part of either or in making any other payment herein required; then and in any of such events Owner may without notice, re-enter the demised premises either by force or otherwise, and dispossess Tenant by summary proceedings or otherwise, and the legal representative of Tenant or other occupant of demised premises and remove their effects and hold the premises as if this lease had not been made, and tenant hereby waives the service of notice of intention to re-enter or to institute legal proceedings to that end. If Tenant shall make default hereunder prior to the date fixed as the commencement of any renewal or extension of this lease, Owner may cancel and terminate such renewal or extension agreement by written notice. Remedies of Owner and Waiver of Redemption: 18. In case of any such default, re-entry, expiration and/or disposes by summary proceedings or otherwise, (a) the rent, and additional rent, shall become due thereupon and be paid up to the time of such re-entry, dispossess and/or expiration, (b)Owner may re-let the premises or any part or parts thereof, either in the name of Owner or otherwise, for a term or terms, which may at Owner's option be less than or exceed the period which would otherwise have constituted the balance of the term of this lease and may grant concessions or free rent or charge a higher rental than that in the lease, (c)Tenant or the legal representatives of Tenant shall also pay Owner as liquidated damages for the failure of Tenant to observe and perform said Tenant's covenants herein constrained, any deficiency between the rent hereby reserved and or covenanted to be paid and the net amount, if any, of the rents collected on account of the subsequent lease or leases of the demised premised for each month of the period which would otherwise have constituted the balance of the term of this lease. The failure of Owner to re-let the premises or any part or parts thereof shall not release or affect Tenant's liability for damages. In computing such liquidated damages there shall be added to the said deficiency such expenses as Owner may incur in connection with re-letting, such as legal expenses, attorneys' fees, brokerage, advertising and for keeping the demised premises in good order or for preparing the same for re-letting. Any such liquidated damages shall be paid in monthly installments by Tenant on the rent day specified in this lease and any suit brought to collect the amount of the deficiency for any month shall not prejudice in any way the rights off Owner to collect the deficiency for any subsequent month by a similar proceeding. Owner, in putting the demised premises in good order or preparing the same for re-rental may, at Owner's option, make such alterations, repairs, replacements, and/or decorations in the demised premises as Owner, in Owners sole judgement, considers advisable and necessary for the purpose of re-letting the demised premises, and the making of such alterations, repairs, replacements, and/or decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Owner shall in no event be liable in any way whatsoever for failure to re-let the demised premises, or in the event that the demised premises are re-let, for failure to collect the rent thereof under such re-letting, and in no event shall Tenant be entitled to receive any excess, if any , of such net rents collected over the sums payable by Tenant to Owner hereunder, in the event of a breach or threatened breach by Tenant of any of the covenants or provisions hereof, Owner shall have the right of injunction and the right to invoke any remedy allowed at law or in equity as if re-entry, summary proceedings and other remedies were not herein provided for. Mention in this lease of any particular remedy, shall not preclude Owner from any other remedy, in law or in equity. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws. Fees and Expenses: 19. If Tenant shall default in the observance or performance of any term or covenant by Tenant's part to be observed or performed under or by virtue of any of the terms or provisions in any article of this lease, then, unless otherwise provided elsewhere in this lease. Owner may immediately or at any time thereafter an without notice perform the obligation of Tenant thereunder. If Owner, in connection with the foregoing or in connection with any default by Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs any obligations for the payment of money, including but not limited to attorney's fees, in instituting, prosecuting or defending any action or proceeds, then Tenant will reimburse Owner for such sums so paid or obligations incurred with interest and costs. The foregoing expenses incurred by reason of Tenant's default shall be deemed to be additional rent hereunder and shall be paid by Tenant to Owner within five (5) days of rendition of any bill or statement to Tenant therefor. If Tenant's lease tem shall have expired at the time or making of such expenditures or incurring of such obligations, such sums shall be recoverable by Owner as damages. Building Alterations and Management: 20. Owner shall have the right at any time without the same constituting an eviction and without incurring liability to Tenant therefor to change the arrangement and or location of public entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets or other public parts of the building and to change the name, number or designation by which the building may be known. There shall be no allowance to Tenant for diminution of rental value and no liability on the part of Owner by reason of inconvenience, annoyance or injury to business arising from Owner or other Tenant making any repairs in the building or any such alterations, additions and improvements. Furthermore, Tenant shall not have any claim against Owner by reason of Owner's imposition of any controls of the manner of access to the building by Tenant's social or business visitors as the Owner may deem necessary for the security of the building and its occupants. No Representations by Owner: 21. Neither Owner nor Owner's agents have made any representations or promises with respect to the physical condition of the building, the land upon which it is erected or the demised premises, the rents, leases, expenses of operations or any other matter or thing affecting or related to the demised premises or the building except as herein expressly set forth and no rights, easements or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in the provisions of this lease. Tenant has inspected the building and the demised premises and is thoroughly acquainted with their condition and agrees to take the same "as is" on the date possessions is tendered and acknowledges that the taking of possession of the demised premises by Tenant shall be conclusive evidence that the said premises and the building of which the same form a part were in good and satisfactory condition at the time such possession was so taken, except as to latent defects. All understandings and agreements heretofore made between the parties hereto are merged in this contract, which alone fully and completely expresses the agreement between Owner and Tenant and any executory agreement hereafter made shall be ineffective to modify, discharge or effect an abandonment of it in whole or in part unless such executory agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought. End of Term: 22. Upon the expiration or other termination of the term of this lease, Tenant shall quit and surrender to Owner the demised premises, broom clean, in good order and condition, ordinary wear and damages which Tenant is not required to repair as provided elsewhere in this lease excepted, and Tenant shall remove all its property from the demised premises. Tenant's obligation to observe or perform this covenant shall survive the expiration or other termination of this lease. If the last day of the term of this Lease or any renewal thereof, falls on Sunday, this lease shall expire at noon on the preceding Saturday unless it be a legal holiday in which case it shall expire at noon on the preceding business day. Quiet Enjoyment: 23. Owner covenants and agrees with Tenant that upon Tenant paying the rent and additional rent and observing and performing all the terms, covenants and conditions, on Tenant's part to be observed and performed, Tenant may peaceably and quietly enjoy the premises hereby demised, subject, nevertheless, to the terms and conditions of this lease including, but not limited to, Article 34 hereof and to the ground leases, underlying leases and mortgages hereinbefore mentioned. Failure to Give Possession: 24. If Owner is unable to give possession of the demised premises on the date of the commencement of the term hereof, because of the holding over or retention of possession of any tenant, undertenant or occupants or if the demised premises are located in a building being constructed, because such building has not been sufficiently completed to make the premises ready for occupancy or because of the fact that a certificate of occupancy has not been procured or if Owner has not completed any work required to be performed by Owner, or for any other reason. Owner shall not be subject to any liability for failure to give possession on said date and the validity of the lease shall not be impaired under such circumstances, nor shall the same be construed in any wise to extend the term of this lease, but the rent payable hereunder shall be abated (provided Tenant is not responsible for Owner's inability to obtain possession or complete any work required) until after Owner shall have given Tenant notice that the premises are substantially ready for Tenant's occupancy. If permission is given to Tenant to enter into the possession of the demised premises or to occupy premises other than the demised premises prior to the date specified as the commencement of the term of this lease, Tenant covenants and agrees that such occupancy shall be deemed to be under all the terms, covenants, conditions and provisions of this lease, except as to the covenant to pay rent. The provisions of this article are intended to constitute "an express provision to the contrary" within the meaning of Section 223-a of the New York Real Property Law. No Waivers: 25. The failure of Owner to seek redress for violation of, or to insist upon the strict performance of any covenant or condition of this lease or of any of the Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent as subsequent act which would have originally constituted a violation from having all the force and effect of an original violation. The receipt by Owner of rent with knowledge of the breach of any covenant of this lease shall not be deemed a waiver of such breach and no provision of this lease shall be deemed to have been waived by Owner unless such waiver be in writing signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement of any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Owner may accept such check or payment without prejudice to Owner's right to recover the balance of such rent or pursue any other remedy in this lease provided. All checks tendered to Owner as and for the rent of the demised premises shall be deemed payments for the account of Tenant. Acceptance by Owner of rent from anyone other than Tenant shall not be deemed to operate as an attornment to Owner by the payor of such rent or a s a consent by Owner to an assignment or subletting by Tenant of the demised premises to such payor, or as a modification of the provisions of this lease. No act or thing done by Owner or Owner's agents during the term hereby demised shall be deemed an acceptance of a surrender of said premises and no agreement to accept such surrender shall be valid unless in writing signed by Owner. No employee of Owner or Owner's agent shall have any power to accept the keys of said premises prior to the termination of the lease and the delivery of keys to any such agent or employee shall not operate as a termination of the lease or a surrender of the premises. Waiver of Trial by Jury: 26. It is mutually agreed by and between Owner and Tenant that the respective parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other except for personal injury or property damage) on any matters whatsoever arising out of or in any way connected with this lease, the relationship of Owner and Tenant, Tenant's use of or occupancy of said premises, and any emergency statutory remedy. It is further mutually agreed that in the event Owner commences any summary proceeding for possession of the premises. Tenant will not interpose any counterclaim of whatever nature or description in any such proceeding. Inability to Perform: 27. This Lease and the obligation of Tenant to pay rent hereunder and perform all of the other covenants and agreements hereunder on part of Tenant to be performed shall in no wise be affected, impaired or excused because Owner is delayed in supplying any service expressly or impliedly to be supplied or is unable to make, or is delayed in making any repair, additions, alterations or decorations or is unable to supply or is delayed in supplying any equipment or fixtures of Owner is prevented or delayed from so doing by reason of strike or labor troubles or any cause whatsoever beyond Owner's sole control including, but not limited to, government preemption in connection with a National Emergency or by reason of any rule order or regulation of any department or subdivision thereof of any government agency or by reason of the conditions of supply and demand which have been or are affected by war or other emergency. Bills and Notices: 28. Except as otherwise in this lease provided, a bill, statement, notice or communication which Owner may desire or be required to give to Tenant, shall be deemed sufficiently given or rendered if, in writing, delivered to Tenant personally or sent by registered or certified mail addressed to Tenant at the building of which the demised premises form a part or at the last known residence address or business address of Tenant or left at any of the aforesaid premises addressed to Tenant, and the time of the rendition of such bill or statement and of the giving of such notice or communication shall be deemed to be the time when the same is delivered to Tenant, mailed, or left at the premises as herein provided. Any notice by Tenant to Owner must be served by registered or certified mail addressed to Owner at the address first hereinabove given or at such other address as Owner shall designate by written notice. Water Charges: 29. If Tenant requires, uses or consumes water for any purpose in addition to ordinary lavatory purposes (of which fact Tenant constitutes Owner to be the sole judge) Owner may install a water meter and thereby measure Tenant's water consumption for all purposes. Tenant shall pay Owner for the cost of the meter and the cost of the installation, thereof and throughout the duration of Tenant's occupancy Tenant shall keep said meter and installation equipment in good working order and repair at Tenant's own cost and expense in default of which Owner may cause such meter and equipment to be replaced or repaired and collect the cost thereof from Tenant, as additional rent. Tenant covenants and agrees to pay, as additional rent, the sewer rent, charge or any other tax, rent, levy or charge which now or hereafter is assessed, imposed or a lien upon the demised premises or the realty of which they are part pursuant to law, order or regulation made or issued in connection with the use, consumption, maintenance or supply of water, water system or sewage or sewage connection or system. If the building or the demised premises or any part thereof is supplied with water through a meter through which water is also supplied to other premises Tenant shall pay to Owner, as additional rent, on the first day of each month, _______ % ($________) of the total meter charges as Tenant's portion. Independently of an in addition to any of the remedies reserved to Owner hereinabove or elsewhere in this lease, Owner may sue for and collect any monies to be paid by Tenant or paid by Owner for any of the reasons or purposes hereinafter set forth. Sprinklers: 30. Anything elsewhere in this lease to the contrary notwithstanding, if the New York Board of Fire Underwriters or the New York Fire Insurance Exchange or any bureau, department or official of the federal, state, or city government recommend or require the installation of a sprinkler system or that any changes, modifications, alterations, or additional sprinkler heads or other equipment be made or supplied in an existing sprinkler system by reason of Tenant's business, or the location of partitions, trade fixtures, or other contents of the demised premises, or for any other reasons, or if any such sprinkler system installati9ons, modifications, alterations, additional sprinkler heads or other such equipment, become necessary to prevent the imposition of a penalty or change against he full allowance for a sprinkler system in the first insurance rate set by any said Exchange or by any fir insurance company, Tenant shall, at Tenant's expense, promptly make such sprinkler system installations, changes, modifications, alternations, and supply additional sprinkler heads or other equipment as required whether the work involved shall be structural or non-structural in nature, Tenant shall pay to Owner as additional rent the sum of $___________, on the first day of each month during the term of this lease, as Tenant's portion of the contract price for sprinkler supervisory service. Elevators, Heat, Cleaning: 31. As long as Tenant is not in default under any of the covenants of this lease Owner shall: (a) provide necessary passenger elevator facilities on business days from 8 a.m. to 6 p.m. and on Saturdays from 8. a.m. to 1 p.m.; (b) If freight elevator service is provided, same shall be provided only on regular business days Monday through Friday inclusive, and on those days only between the hours of 9 a.m. and 12 noon and between 1 p.m. and 5 p.m.; (c) Furnish heat, water and other services supplied by owner to the demised premises, when and as required by law, on business days from 8 a.m. to 6 p.m. and on Saturdays from 8. a.m. to 1 p.m.; (d) Clean the public halls and public portions of the building which are used in common by all tenants. Tenant shall, at Tenant's expense, keep the demised premises, including the windows, clean and in order, to the satisfaction of Owner, and for that purpose shall employ the person or persons, or corporation approved by Owner. Tenant shall pay to Owner the cost of removal of any of Tenant's refuse and rubbish from the building. Bills for the same shall be rendered by Owner to Tenant at such time as Owner may elect and shall be due and payable hereunder, and the amount of such bills shall be deemed to be, and be paid as, additional rent. Tenant shall,, however, have the option of independently contracting for the removal of such rubbish and refuse in the event that Tenant does not wish to have same done by employees of Owner. Under such circumstances, however, the removal of such refuse and rubbish by others shall be subject to such rules and regulations as, in the judgement of Owner, are necessary for the proper operation of the building. Owner reserves the right to stop service of the heating, elevator, plumbing and electric systems, when necessary, by reason of accident, or emergency, or for repairs, alterations, replacements or improvements in the judgement of Owner desirable or necessary to be made, until said repairs, alterations, replacements or improvements, in the judgement of Owner desirable or necessary to be made, until such repairs, alterations, replacements or improvements shall have been completed. If the building of which the demised premises are a part supplies an annually operated elevator service, Owner may proceed with alterations necessary to substitute automatic control elevator service upon ten (10) day written notice to Tenant without in any way affecting the obligations of Tenant hereunder, provided that the same shall be done with the minimum amount of inconvenience to Tenant, and Owner pursues with due diligence the completion of the alterations. Captions: 32. The Captions are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope of this lease nor the intent of any provision thereof. Definitions: 33. The term "Owner" as used in this lease means only the owner of the fee or the leasehold of the building, or the mortgagee in possession , for the time being of the land and building (or the owner of a lease of the building or of the land and building) of which the demised premises form a part, so that in the event of any sale or sales of said land and building or of said lease, or in the event of a lease of said building, or of the land and building, the said Owner shall be and hereby is entirely freed and relieved of all covenants and obligations of Owner hereunder, and it shall be deemed and construed without further agreement between the parties or their successors in interest, or between the parties and the purchaser, at any such sale, or the said lessee of the building, or of the land and building, that the purchaser or the lessees of the building has assumed and agreed to carry out any and all covenants and obligations of Owner hereunder. The words" re-enter" and "re-entry" as used in this lease are not restricted to their technical legal meaning. The term "rent" includes the annual rental rate whether so-expressed or expressed in monthly installments, and "additional rent" "Additional rent" means all sums which shall be due to the Owner from Tenant under this lease, in addition to the annual rental rate. The term "business days" as used in this lease, shall exclude Saturdays (except such portion thereof as is covered by specific hours in Article 31 hereof), Sundays and all days observed by the State or Federal Government as legal holidays and those designated as holidays by the applicable building service union employees service contract or by the applicable Operating Engineers contract with respect to HVAC service. Adjacent Excavation 35.If an excavation shall be made upon land adjacent to the demised premises, or shall be authorized to be made, Tenant shall afford to the person causing or authorized to cause such excavation, license to enter upon the demised premises for the purpose of doing such work as said person shall deem necessary to preserve the wall or the building of which demised premised form a part from injury or damage and to support the same by proper foundations without any claim for damages or indemnity against Owner, or diminution or abatement of rent. Rules and Regulations 36.Tenant and Tenant's servants, employees, agents, visitors, and licensees shall observe faithfully, and comply strictly with, the Rules and Regulations annexed hereto and such other further reasonable Rules and Regulations as Owner or Owner's agents may from time to time adopt. Notice of any additional rules or regulations shall be given in such manner as Owner may elect. In case Tenant disputes the reasonableness of any additional Rule or Regulation hereafter made or adopted by Owner or Owner's agents, the parties hereto agree to submit the question of the reasonableness of such Rule or Regulation for decision to the New York office of the American Arbitration Association, whose determination shall be final and conclusive upon the parties hereto. The right to dispute the reasonableness of any additional Rule or Regulation upon Tenant's part shall be deemed waived unless the same shall be asserted by service of a notice, in writing upon Owner within ten (10) days after the giving of notice thereof. Nothing in this lease contained shall be construed to impose upon Owner any duty or obligation to enforce the Rules and Regulations or terms, covenants or conditions in any other lease, as against any other tenant and Owner shall not be liable to Tenant for violation of the same by any other tenant, its servants, employees, agents, visitors or licensees. Glass: 36.Owner shall replace, at the expense of the Tenant, any and all plate and other glass damaged or broken from any cause whatsoever in and about the demised premises. Owner may insure, and keep insured, at Tenant's expense, all plate and other glass in the demised premises for and in the name of Owner. Bills for the premiums therefor shall be rendered by Owner to Tenant at such times as Owner may elect, and shall be due from, and payable by, Tenant when rendered, and the amount thereof shall be deemed to be, and be paid, as additional rent. Estoppel Certificate: 37.Tenant, at any time, and from time to time, upon at least 10 days' prior notice by Owner, shall execute, acknowledge and deliver to Owner, and/or to any other person, firm or corporation specified by Owner, a statement certifying that this Lease is unmodified in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified and stating the modifications), stating the dates to which rent and additional rent have been paid, and stating whether or not there exists any default by Owner under this Lease, and, if so, specifying each such default. Directory Board Listing: 38.If, at the request of and as accommodation to Tenant, Owner shall place upon the directory board in the lobby of the building, one or more names of persons other than the Tenant, such directory board listing shall not be construed as the consent by Owner to an assignment or subletting by Tenant to such person or persons. Successors and Assigns: 39. The covenants, conditions and agreements contained in this lease shall bind and inure to the benefit of Owner and Tenant and their respective heirs, distributees, executors, administrators, successors, and except as otherwise provided in this lease, their assigns. In Witness Thereof, Owner and Tenant have respectively signed and sealed this lease as of the day and year first above written: Witness for Owner: Witness for Tenant: By: 61 2nd Street Associates /s/ Peter Castellana, Jr By: Quarex Inc. Frank Castellana CORPORATE TENANT STATE OF NEW YORK, County of _______________ On this ______ day of ______________, 19 _______, before me personally came ___________________ to me known, who being by me duly sworn, did depose and say that he resides in that he is the _________________ of - - ------------------------------------------------------------------------------ the corporation described in and which executed the foregoing instrument, , as TENANT; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and he signed his name thereto by like order - - ------------------------------------------------------------------------------ INDIVIDUAL TENANT, STATE OF NEW YORK County of ____________ On this ______ day of ______________, 19 _______, before me personally came ___________________ to me known and known to me to be the individual described in and who, as TENANT, executed the foregoing instrument and acknowledged to me that he executed the same - - ------------------------------------------------------------------------------- IMPORTANT -- PLEASE READ RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN ACCORDANCE WITH ARTICLE 36. 1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules, stairways, corridors or halls shall not be obstructed or encumbered by any Tenant or used for any purpose other than for ingress or egress from the demised premises and for delivery of merchandise and equipment in a prompt and efficient manner using elevators and passageways designed for such delivery by Owner. There shall not be used in any space, or in the public hall of the building, either by any Tenant or by jobbers or others in the delivery or receipt of merchandise, any hand trucks, except those equipped with rubber tires and sideguards. If said premises are situated on the ground floor of the building, Tenant shall further, at Tenant's expense, keep the sidewalk and curb in front of said premises clean and free from ice, snow, dirt and rubbish. 2. The water and wash closets and plumbing fixtures shall not be used for any purposes other than those for which they were designed or constructed an no sweepings, rubbish, rags, acids or other substances shall bee deposited therein, and the expense of any breakage, stoppage, or damage resulting from the violation of this rule shall be borne by the Tenant, who, or whose clerks, agents, employees or visitors, shall have caused it. 3. No carpet, rug or other article shall be hung or shaken out of any window of the building; and no Tenant shall sweep or throw or permit to be swept or thrown from the demised premises any dirt or other substances into any of the corridors or halls, elevators, or out of the doors or windows or stairways of the building and Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance in the demised premises, or permit or suffer the demised premises to be occupied or used in a manner offensive or objectionable to Owner or other occupants of the buildings by reason of noise, odors, and/or vibrations, or interfere in any way, with other Tenants or those having business therein, nor shall any animals or birds be kept in or about the building. Smoking or carrying lighted cigars or cigarettes in the elevators of the building is prohibited. 4. No awnings or other projects shall be attached to thee outside walls of the building without the prior written consent of Owner. 5. No sign, advertisement,, notice or other lettering shall be exhibited, inscribed, painted or affixed by any Tenant on any part of the outside of the demised premises if the same is visible from the outside of the premises without the prior written consent of Owner, except that the name of Tenant may appear on the entrance door of the premises. In the event of the violation of the foregoing by any Tenant, Owner may remove same without any liability and may charge the expense incurred by such removal to Tenant or Tenants violating this rule. Interior signs on doors and director tablet shall be inscribed, painted or affixed for each Tenant by Owner at the expense of such Tenant, and shall be of a size, color and style acceptable to Owner. 6. No Tenant shall mark, paint, drill into, or in any way deface any part of the demised premises or the building of which they form a part. No boring, cutting or stringing of wires shall be permitted, except with the prior written consent of Owner, and as Owner may direct. No Tenant shall lay linoleum, or other similar floor covering so that the same shall come in direct contact with the floor of the demised premises, and, if linoleum or other similar floor covering is desired to be used an interlining of builder's deadening felt shall first be affixed to the floor, by a paste or other material, soluble in water, the use of cement or similar adhesive material being expressly prohibited. 7. No additional locks or bolts of any kind shall be placed upon any of the doors or windows by any Tenant, nor shall any changes be made in existing locks or mechanism thereof. Each Tenant must, upon the termination of his Tenancy, restore to Owner all keys of stores, offices and toilet rooms, either furnished to, or otherwise procured by, such Tenant, and in the event of the loss of any keys, so furnished, each Tenant shall pay to Owner the cost thereof. 8. Freight, furniture, business equipment, merchandise and bulky matter of any description shall be delivered to and removed from the premises only on the freight elevators and through the service entrances and corridors, and only during hours and in a manner approved by Owner. Owner reserves the right to inspect all freight to be brought into the building and to exclude from the building all freight which violates any of these Rules and Regulations of the lease of which these Rules and Regulations are a part. 9. No Tenant shall obtain for use upon the demised premises ice, drinking water, towel and other similar services, or accept barbering or bootblacking services in the demised premises, except from persons authorized by Owner, and at hours and under regulations fixed by Owner. Canvassing, soliciting and peddling in the building is prohibited and each Tenant shall cooperate to prevent the same. 10.Owner reserves the right to exclude from the building between the hours of 6 p.m. and 8 p.m. on business days, after 1 p.m. on Saturdays, and at all hours on Sundays and legal holidays all persons who do not present a pass to the building signed by Owner. Owner will furnish passes to persons for whom any Tenant requests same in writing. Each Tenant shall be responsible for all persons for whom he requests such pass and shall be liable to Owner for all acts of such persons. Notwithstanding the foregoing, Owner shall not be required to allow Tenant or any person to enter or remain in the building, except on business days from 8:00 a.m. to 6:00 p.m. and on Saturdays from 8:00 a.m. to 1:00 p.m. 11.Owner shall have the right to prohibit any advertising by any Tenant which in Owner's opinion, tends to impair the reputation of the building or its desirability as a loft building, and upon written notice from Owner, Tenant shall refrain from or discontinue such advertising. 12.Tenant shall not bring or permit to be brought or kept in or on the demised premises, any inflammable, combustible or explosive fluid, material, chemical or substance, or cause or permit any odors of cooking or other processes, or any unusual or other objectionable odors to permeate in or emanate from the demised premises. 13. Tenant shall not used the demised premises in a manner which disturbs or interferes with other Tenants in the beneficial use of their premises. Address: Premises: TO - - -------------------------------------------------------------------------------- STANDARD FORM OF LOFT LEASE The Real Estate Board of New York, Inc. (C)Copyright 1982. All Rights Reserved. Reproduction in whole or in part prohibited. Dated: Rent Per Year: Rent Per Month: Term From: To: Drawn by: Checked by: [......] by: Approved by: AMENDMENT TO LEASE Between 61 2nd Street Associates ("Landlord") and Western Beef Mineola, Inc. ("Tenant") b Premises: 61 2nd Street Mineola, New York This Amendment is made and entered into this 1st day of February, 1997 ("Effective Date") between 61 2nd Street Associates, as Landlord and Western Beef Mineola, Inc. ("Western"), as Tenant. WHEREAS, on January 23, 1992, Landlord and Quarex, Inc. ("Quarex") entered into a certain Lease Agreement ("Lease") for the building known as 61 2nd Street, Mineola, New York. WHEREAS, on January 30, 1997, Quarex, as Assignor, Western, as Assignee and Western Beef, Inc. as Guarantor, with the approval of Landlord, entered into a certain Assignment and Assumption of Lease whereby Quarex assigned to Western all of Quarex's rights, title and interest in the lease. WHEREAS, 61 2nd Street Associates, as Landlord, and Western Beef, Inc., as Tenant, desire to amend the Lease as follows: 1. The Parties restate Paragraph 67 as follows: "Provided the Tenant is not in default under any provisions of this Lease, the Parties agree to extend the Lease Term for and additional fifteen (15) year period to wit: February 1, 1997 through January 31, 2012." Commencing February 1, 1997, through January 31, 1998, the annual base rent shall be $466,698.44 ($37,224.87 per month). Thereafter the annual base rent shall be as provided in Paragraph 42, below. 2. The Parties restate Paragraph 42 as follows: "For the purposes of this Lease, "Lease Year" shall be deemed to be the period from February 1st through January 31st. Commencing February 1, 1998, and each year thereafter, such annual base rent shall be adjusted in accordance with the provisions of this Article. The annual base rent for each Lease Year shall be increased by five (5%) percent of the prior Lease Year's rent. (Annexed hereto and made a part hereof as Schedule "A" is the base rent schedule for the term hereunder.) Such percentage increase shall be multiplied by the then current annual base rent to determine the amount required to be paid by the Tenant as additional rent for the then current Lease Year. The Landlord shall give the Tenant a written statement of the calculation of the amount of any increase so determined prior to the end of a Lease Year. For each Lease Year, the annual base rent and increase thereto shall be due and payable to the Landlord in twelve (12) equal monthly installments beginning February 1st of each Lease Year (however in the event increased to the annual base such accrued by unpaid additional rent for any such month(s) subsequent to February 1st shall be due with the next rent payment as herein provided). Adjustments hereunder shall survive the termination of this Lease. 3. All other terms and conditions of the Lease, its Assignment and Guaranty shall remain in full force and effect for term hereunder. The Parties have signed this Lease Amendment as of the date and year first written above. LANDLORD 61 2nd STREET ASSOCIATES By: MICHAEL CASTELLANA -------------------------- TENANT WESTERN BEEF MINEOLA, INC. By: PETER CASTELLANA, JR -------------------------- GUARANTOR WESTERN BEEF, INC. (A Delaware Corporation) By: PETER CASTELLANA, JR -------------------------- SCHEDULE A BASE RENT SCHEDULE MONTHLY YEARLY YEAR RENT RENT ---- ---- ---- 02/01/1998-01/31/1999 39,086.11 469,033.36 02/01/1999-01/31/2000 41,040.42 492,485.03 02/01/2000-01/31/2001 43,092.44 517,109.28 02/01/2001-01/31/2002 45,247.06 542,964.74 02/01/2002-01/31/2003 47,509.41 570,112.98 02/01/2003-01/31/2004 49,884.88 598,618.63 02/01/2004-01/31/2005 52,379.13 628,549.56 02/01/2005-01/31/2006 54,998.08 659,977.04 02/01/2006-01/31/2007 57,747.99 692,975.89 02/01/2007-01/31/2008 60,635.39 727,624.69 02/01/2008-01/31/2009 63,667.15 764,005.92 02/01/2009-01/31/2010 66,850.51 802,206.22 02/01/2010-01/31/2011 70,193.04 842,316.53 02/01/2011-01/31/2012 73,702.69 884,432.35 ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT made this 30th day of January, 1997 by and between QUAREX, INC., 47-05 Metropolitan Avenue, Ridgewood, New York ("QUAREX"/"ASSIGNOR"), and WESTERN BEEF MINEOLA, INC., 47-05 Metropolitan Avenue, Ridgewood, New York ("WESTERN"/ASSIGNEE"); LEASE ASSIGNED The Lease which is assigned herein is identified as follows: -Landlord - 61 2nd STREET ASSOCIATES -Tenant - QUAREX, INC. -Date - January 23, 1992 The Premises, the building commonly known as 61 2nd Street, Mineola, New York. CONSIDERATION ASSIGNOR has received Ten and 00/100 ($10.00) Dollars and other good and valuable consideration for this Assignment. ASSIGNMENT ASSIGNOR, QUAREX, assigns to WESTERN, as ASSIGNEE, all of QUAREX'S right, title and interest in the Lease. ASSUMPTION WESTERN as ASSIGNEE agrees to pay the monthly rent promptly and perform all of the terms and conditions of the Lease as of the date of this Assignment, as if fully substituted as the original Tenant in said Lease. BENEFIT TO LANDLORD WESTERN also agrees that the obligations assumed herein shall be for the benefit of the Landlord named in the Lease, as well as the Assignor. CONTINUING LIABILITY OF QUAREX It is understood that this Assignment to and Assumption by WESTERN of said Lease is not intended to, nor will it act in any fashion or fashion as a release by the Landlord of the responsibility and obligations of QUAREX, as expressed in said Lease. GUARANTY OF WESTERN BEEF, INC. (A Delaware Corporation) FOR VALUE RECEIVED, and in consideration for, and as an inducement to Landlord making the lease with Tenant, Western Beef, Inc. guarantees to Landlord, Landlord's successors and assigns, the full performance and observance of all the covenants, conditions and agreements, therein provided to be performed and observed by Tenant without requiring any notice of non-payment, non-performance or non-observance or proof or notice or demand, whereby to charge Western Beef, Inc., all of which Western Beef, Inc. hereby expressly waives and expressly agreed that the validity of this agreement and the obligations of the guarantor hereunder shall in no wise be terminated, affected or impaired by reason of the assertion by Landlord against Tenant of any of the rights or remedies reserved to Landlord pursuant to the provisions of the Lease. Western Beef, Inc. further covenants and agrees that this guaranty shall remain and continue in full force and effect as to any renewal, modification or extension of the Lease and during any period when Tenant is occupying the premises as a "statutory tenant." As a further inducement to Landlord to make the Lease and in consideration thereof, Landlord and Western Beef, Inc. covenant and agree that in any action or proceeding brought by either Landlord or Western Beef, Inc. against the other on any matters whatsoever arising out of, under or by virtue of the terms of the Lease or of this guarantee that Landlord and Western Beef, Inc. shall and do hereby waive trial by jury. SUCCESSORS This Assignment shall be binding on all parties who lawfully succeed to its rights. IN WITNESS WHEREOF, the parties have hereunto set their hands and seals as of the date first above written. WITNESS QUAREX, INC. By: /s/ Frank Castellana - - ---------------------- --------------------------- WESTERN BEEF MINEOLA, INC. By: /s/ Peter Castellana, Jr. - - ---------------------- --------------------------- APPROVAL OF LANDLORD: Landlord hereby approves of the foregoing Assignment. WITNESS 61 2nd STREET ASSOCIATES By: /s/ Michael Castellana - - ---------------------- --------------------------- GUARANTOR WITNESS WESTERN BEEF, INC. /s/ Santino Montalbano By: /s/ Peter Castellana, Jr. - - ---------------------- --------------------------- EX-10.14 12 LEASE AGREEMENT LEASE AGREEMENT ORDER NO. OL LESSEE CITY STATE COUNTY ZIP WESTERN BEEF, INC. RIDGEWOOD, NY QUEENS 11385 STREET NAME AND TITLE 47-05 METROPOLITAN AVE. MR. BOB LUDLOW, CHIEF FINANCIAL OFFICER TERMS AND CONDITIONS OF LEASE 1. LEASED PROPERTY: Subject to the following terms and conditions, Amplicon Inc., ("Lessor") hereby leases to and/or grants to Lessee the right to use certain Hardware and Software as described on the attached Lease Schedule(s) annexed hereto and made a part hereof (hereafter "Leased Property"). Lessee agrees to hire and take and agrees to accept the right to use that certain Leased Property, and such other Leased Property described on supplemental Schedule(s) that the parties from time to time may annex to this Lease. 2. TERM: This Lease, with respect to any Schedule, shall become effective upon acceptance by Lessor and the term for any Schedule(s) shall commence on the day that the Manufacturer/Vendor/Licensor certifies that the Leased Property has been delivered to and is usable by Lessee ("Commencement Date"), Lessee agrees that its remedies, should it find fault with any of the Leased Property, shall be and are solely against the Manufacturer/Vendor/Licensor. This Lease shall give Lessee the right to use the Hardware at the location(s) and Software on the serial number specific Central Processing Unit ("CPU"), or replacement CPU, or site specific location, delineated on the Schedule(s). The initial base term of the Lease, with respect to any Schedule(s), shall be as indicated on the respective Schedule(s) and shall be calculated from the first day of the calendar month following the Commencement Date ("Initial Base Lease Term"). The Initial Base Lease Term shall be extended for an additional one-year period at the rate delineated on the respective Schedule(s) unless Lessee provides to Lessor written notice of Lessee's election not to extend the Initial Base Lease Term at least one hundred eighty (180) days prior to its expiration. Notwithstanding the provisions of Section 20 below, such written notice may be delivered to Lessor by hand or by mail and shall not be effective unless it is actually received by Lessor at least one hundred eighty (180) days prior to expiration of the Initial Base Lease Term. At the expiration of the Initial Base Lease Term (or, if extended, the expiration of the extended Term), Lessee shall do one of the following: (A) purchase all of the Leased Property for a mutually agreeable purchase price; (B) extend the Schedule(s) for a period of one (1) additional year at the rate delineated on the respective Schedule(s); or (C) enter into a new lease with Lessor to lease property which replaces the Leased Property and which has a cost greater than or equal to the original cost of the Leased Property. With respect to options (A) and (C); Lessor and Lessee shall each have absolute discretion regarding their agreement or lack of agreement to the terms of either such arrangement. If the parties have not agreed to either option (A) or option (C) by the expiration of the initial or extended Base Lease Term, then option (B) shall prevail. At the end of the extension provided by Option (B), this Lease shall continue subject to termination by either Lessor or Lessee at the end of any calendar month, provided at least one hundred twenty (120) days prior written notice of such termination is delivered to the other party. Each Schedule shall be deemed to incorporate therein these specific terms and conditions and shall have an independent Initial Base Lease Term and extension period(s). 3. RENTALS: The monthly rent payable shall be the amount shown on each Schedule(s). Lessee shall pay to Lessor the monthly rent, in advance, for each month or any part thereof that this Lease, with respect to said Schedule(s), is in effect. The first such payment shall be made on the first day of the calendar month following the Commencement Date. A prorata portion of the monthly rental charges based on a daily rental of one-thirtieth (1/30th) of the monthly rental calculated from the Commencement Date to the end of the calendar month, shall be due and payable at the Commencement Date. Installments of rent which are not paid within ten (10) days of their due date shall bear interest at a "Delinquency Rate" equal to five percent (5%) of each installment of rent. For delinquent installments of rent which remain unpaid at the end of each month, interest shall continue to accrue and compound at a delinquency rate equal to five percent (5%) of the cumulative unpaid balance. All rent shall be paid at the place of business of Lessor shown above or such other place as Lessor may designate by written notice to Lessee. Except as otherwise provided in this Lease, Lessee's obligation to pay rent shall be absolute and unconditional under all circumstances, notwithstanding: (i) any setoff, counterclaim, recoupment, defense or other right which Lessee may have against Lessor for any reason whatsoever, (ii) any defect in the title, right to use, condition, operation, fitness for use, damage or destruction of or to the Leased Property or any interruptions or cessations in use or possession thereof for any reason whatsoever, (iii) any insolvency, bankruptcy, reorganization or similar proceedings instituted by or against Lessee. Unless otherwise delineated on the Lease Schedule, any Deposit shall be returned to Lessee if Lessor does not accept the transaction. Otherwise, upon acceptance by Lessor, any Deposit shall be treated as a transaction fee to be retained by Lessor and is not to be applied to rental or other payments due and owing under the Lease. Lessee hereby waives, to the extent permitted by applicable law, any and all right which it may now, or at any time hereafter, have to cancel, terminate, or surrender this lease except in accordance with the express terms hereof. 4. ADDITIONS AND MODIFICATIONS: Without the prior consent of Lessor, which consent shall be conditioned upon delivery of documentation of a form and substance required by Lessor, Lessee shall make no addition, modification, alteration, or attachment with respect to any of the Leased Property. All additions, modifications, alterations and attachments placed upon the Leased Property shall become part of the Leased Property and shall be the property of Lessor. If not purchased, leased or financed by Lessor, Lessee shall, upon written consent of Lessor and at Lessee's sole expense, have the Hardware Manufacturer remove said items and restore the hardware to its original condition. Software, as described on any Schedule(s); shall also include all updates, revisions, new versions, enhancements, modifications, derivative works, maintenance fixes, translations, adaptations, and copies of the foregoing or of the original version of the Software, and references to the Software shall also be interpreted as references to any portion or parts thereof. Lessor, at its sole option, may provide financing for any Additions and Modifications to Leased Property required by Lessee during the Lease term subject to the then prevailing interest rates and the Lessee's credit standing. Lessee shall not move the Leased Property from the location set forth in the Schedule(s) without Lessor's prior written approval and then only to another location within the continental United States and upon such terms and conditions as Lessor may then stipulate. 5. NO WARRANTIES: Lessor not being the manufacturer, developer, publisher, distributor, or licensor of the Leased Property, MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS, QUALITY, DESIGN, CONDITION, CAPACITY, SUITABILITY, MERCHANTABILITY OR PERFORMANCE OF THE LEASED PROPERTY OR OF THE MATERIAL OR WORKMANSHIP THEREOF, IT BEING AGREED THAT THE LEASED PROPERTY IS LEASED "AS IS" AND THAT ALL SUCH RISKS, AS BETWEEN LESSOR AND LESSEE ARE TO BE BORNE BY LESSEE AT ITS SOLE RISK AND EXPENSE. LESSEE REPRESENTS THAT ALL OF THE LEASED PROPERTY ARE OF A SIZE, DESIGN, AND CAPACITY SELECTED BY IT, AND THAT IT IS SATISFIED THAT THE SAME IS SUITABLE FOR LESSEE'S PURPOSES. This provision shall survive termination of the respective Lease Term and of this Lease, Lessor, at its sole option, may supply items of Leased Property, either new or used, that meet the specification of items of Leased Property delineated on the Schedule(s). 6. USE, OPERATION AND MAINTENANCE: Lessee, at its expense will provide a suitable place for the installation, operation and maintenance of all Leased Property with all such facilities fully complying with the installation and operational specifications outlined in pertinent Manufacturer's/Vendor's/Licensor's manuals. Lessee, without expense to Lessor, will enter into and keep in force during the entire term of this Lease the best standard Manufacturer's/Vendor's/Licensor's Maintenance Agreement in form and substance approved by Lessor which will cause Manufacturer's/Vendor's/Licensor's to make all of the necessary repairs, adjustments, and replacements in accordance with such Agreement and entitle Lessee (through Lessor, if necessary) to obtain enhancements, updates and changes available under the License or Maintenance Agreement. Lessee will provide full free access to the Leased Property for maintenance purposes. Lessee shall not do anything, or fail to do anything, to impair the Manufacturer's/Vendor's/Licensor's warranty with respect to any Leased Property such as (but not limited to) using a version of software, other than the version specified by the License to be used, making unauthorized modifications of the Leased Property, failing to follow Manufacturer's/Vendor's/Licensor's operations or maintenance instructions, or abusing, misusing or allowing negligent acts to be caused by Lessee or those to whom Lessee gives access to the Leased Property. Lessee will comply with all laws, rules, regulations or orders of any governmental agency with respect to the Leased Property or to the use, operation, maintenance or storage thereof. 7. RISK OF LOSS: During the period the Leased Property is in transit or in the possession of Lessee, Lessee shall assume all responsibility for loss or damage and shall hold Lessor harmless against the same. In the event that, during the term of the Lease or until the Leased Property shall have been returned, if any of the Leased Property shall be confiscated, taken, requisitioned, lost, stolen, destroyed or irreparably damaged for any cause whatsoever (such occurrences hereinafter called "Casualty Occurrences"), Lessee shall immediately and fully inform Lessor. In the case of Software, the erasure, inoperability or other incapacity of the Software triggered by a preprogrammed termination or limiting design or routine embedded in the Software shall also be deemed a "Casualty Occurrence." Following a Casualty Occurrence, on the next succeeding rent payment date, Lessee shall pay to Lessor, in addition to all past due rentals and other amounts then late and outstanding, an amount equal to the Casualty Value as determined by the attached Casualty Schedule as of the date of the Casualty Occurrence. Upon the making of such payment by Lessee, the rental for such Schedule(s) shall cease to accrue as of the date of such payment and the term of the Lease as to such Schedule(s) shall terminate. Insurance proceeds received by Lessor as the result of a Casualty Occurrence with respect to any Schedule(s) shall be applied in reduction of Lessee's obligation to pay the Casualty Value. The Casualty Value as of any rent payment date (or as of any other date on which Casualty Value is payable) shall be an amount equal to that percentage of the Purchase Price or License Fee as is set forth in the Casualty Schedule attached hereto, opposite the number of such rent payment date or such other date. Except as hereinabove in this paragraph provided, Lessee shall not be released from its obligations hereunder in the event of, and shall bear the risk of, any Casualty Occurrence to any of the Leased Property. The Purchase Price or License Fee of any Leased Property shall be the invoice price/fee therefor, including any applicable sales, use or other taxes then payable, and normal delivery charges. 8. INDEMNITY AND INSURANCE: Lessor shall have no responsibility or liability to Lessee, its successors or assigns, or to any other person, with respect to any or all liabilities, and Lessee hereby assumes liability for, and hereby agrees, at its own cost and expense, to indemnify, protect, defend, save and keep harmless Lessor, its agents, employees, officers, directors, successors and assigns, from and against, any and all liabilities, obligations, losses, damages, injuries, claims (including without limitation, claims based upon strict liability); demands, penalties, actions, costs and expenses, including legal expenses, of every kind or nature arising out of the use, condition (including but not limited to, latent and other defects, whether or not discoverable by Lessee or Lessor), operation, ownership, selection, delivery, leasing or return of any item of Leased Property (including without limitation, any claim for patent, trademark or copyright infringement), regardless of where, how and by whom operated, or any failure on the part of Lessee to perform or comply with any conditions of this Lease or for any interruption of service, loss of business or consequential damages. The indemnities and assumptions of liabilities and obligations herein provided for shall continue in full force and effect notwithstanding the expiration or other termination of this Lease. Lessee, at its expense, shall procure and maintain in full force and effect at all times that this Lease is in force and effect such public liability (including, without limitation, contractual liability insurance), property damage liability, fire with extended coverage, theft, and other insurance in such form and amounts and with such companies as shall be satisfactory to Lessor. Lessor shall be named as an additional insured and loss payee on all policies which shall provide that no cancellation thereof shall be effective without thirty (30) days prior written notice to Lessor and shall not be invalidated as to Lessor by any act, omission, or neglect of Lessee. THIS LEASE CAN ONLY BE MODIFIED BY WRITTEN ADDENDUM DULY SIGNED BY PERSONS AUTHORIZED TO SIGN AGREEMENTS ON BEHALF OF LESSEE AND BY A DULY AUTHORIZED OFFICER OF AMPLICON, INC. LESSEE /S/ Peter Castellana, Jr. LESSOR ------------------------- -------------------------- Authorized Signature Authorized Signature By execution hereof, the signer hereby certifies that he has read this Lease, INCLUDING THE REVERSE SIDE HEREOF, and that he is duly authorized to execute this Lease on behalf of Lessee. Until this document (or an identical couterpart thereof) has been signed by a duly authorized officer of Amplicon, Inc. it shall constitute an offer by Lessee to enter into this Lease Agreement on the terms stated herein with Lessor. OFFER ACCEPTANCE LESSEE WESTERN BEEF, INC. AMPLICON, INC. By/Title /s/ Peter Castellana, Jr. Name Peter Castellana, Jr., President Date _____________________________ By:_____________________Date_______ 9. TAXES: Lessee shall pay directly, all License fees, registration fees, assessments and taxes which may now or hereafter be imposed upon the ownership, sale (if authorized), possession or use of the Leased Property, excepting only those based on Lessor's income, and shall keep the Leased Property free and clear of all levies, liens or encumbrances arising therefrom. ALL REQUIRED PERSONAL PROPERTY TAX RETURNS RELATING TO THE LEASED PROPERTY SHALL BE FILED BY LESSEE UNLESS OTHERWISE PROVIDED IN WRITING. Lessor shall not be responsible for contesting any valuation or tax imposed on the Leased Property, but may do so strictly as an accommodation to Lessee and shall not be liable or accountable to Lessee therefor. 10. OWNERSHIP: Title to any Hardware shall at all times remain in Lessor. To the extent that any Software License allows title to Software to pass to Licensee, such title shall vest and remain in Lessor. To the extent that such vesting requires a specific written conveyance, Lessee hereby conveys to Lessor any title it has or may hereafter acquire in the Software and relinquishes any subsequent claim of title in the Software, including any rights to purchase the Software and/or to retain rights to use the same beyond this Lease. If any provision of this paragraph requires for its effectiveness Licensor's prior written consent because the License limits transfers, encumbrance, or assignment of the Software, then Lessee shall assist Lessor, if so requested, in obtaining such consent. Lessee will at all times protect and defend, at its own cost and expense, the title and/or License rights of Lessor from and against all claims, liens and legal processes and keep all Leased Property free and clear from all such claims, liens and processes. The Leased Property is and shall remain personal property of Lessor. Upon the expiration and termination of this Lease with respect to a particular Schedule(s), the Lessee at its expense shall return said items of Leased Property unencumbered to Lessor at such place within the continental limits of the United States as Lessor shall designate. 11. EFFECTS OF TERMINATION OR EXPIRATION OF LEASE TERM: Immediately upon expiration or termination of each and every Lease Term as defined under this Lease, Lessee shall discontinue its use of the Leased Property. In the case of Software, Lessee shall destroy all intangible items constituting such Software, and shall deliver to Lessor all tangible items constituting such Software. At Lessor's request, Lessee shall also certify in a form acceptable to Lessor that: (i) all such tangible Software has been delivered; (ii) that all intangible records thereof have been destroyed; (iii) that Lessee has not retained such Software in any form; (iv) that Lessee will not use such Software after termination; and (v) that Lessee grants Lessor the right (which shall survive termination) to inspect all of Lessee's locations to insure compliance with the provisions of this paragraph. TERMINATION OF ANY LEASE TERM (FOR WHATEVER CAUSE) SHALL NOT ABSOLVE USER FROM PAYMENT OF ACCRUED PERIODIC PAYMENTS OR FROM COMPLIANCE WITH THE USE AND DISCLOSURE RESTRICTIONS OF THIS LEASE, OR FROM ITS OBLIGATIONS TO INDEMNIFY LESSOR. All representations and warranties contained in this Lease, or in any document or certificate delivered pursuant hereto or in connection herewith, shall survive the expiration or other termination of the respective Lease Term and of this Lease. 12. PERFORMANCE OF LESSEE'S OBLIGATIONS BY LESSOR: If Lessee fails to perform any of its obligations under this Lease, Lessor may, at its option, perform the same for the account of Lessee without thereby waiving Lessee's default, and any amount paid, expense (including reasonable attorney's fees), penalty or other liability incurred by Lessor in such performance shall be payable by Lessee to Lessor upon demand, with interest thereon at the delinquency rate set forth in Paragraph 3, above. 13. RIGHT OF INSPECTION: In addition to its rights of entry and inspection stated elsewhere in this Lease, Lessor may from time to time during reasonable business hours enter upon any premises where any of the Leased Property may be located for the purpose of confirming the existence, condition, and proper maintenance of the Leased Property. 14. DEFAULT: An Event of Default shall occur if: (a) Lessee fails to pay within ten (10) days after the due date, any installment of rent; (b) Lessee fails to perform or observe any covenant, condition, or obligation to be performed or observed by it under this Lease, and such failure continues uncured for fifteen (15) days after written notice thereof to Lessee by Lessor; (c) Lessee ceases doing business as a going concern, makes an assignment for the benefit of creditors, admits in writing its insolvency, files a voluntary petition in bankruptcy, is adjudicated bankrupt or insolvent, files a petition seeking for itself any reorganization, liquidation, dissolution, or similar arrangement under any present or future statute, law, regulation, or files an answer admitting the material allegations of a petition filed against it in any such proceeding, consents to or acquiesces in the appointment of a trustee, receiver, or liquidator of it or of all or a substantial part of its assets, or if its principals take any action looking to its dissolution or liquidation; (d) within sixty (60) days after the commencement of proceedings against Lessee seeking reorganization, liquidation, dissolution, or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed, or if within sixty (60) days after the appointment without Lessee's consent or acquiescence of any trustee, receiver, or liquidator of it or of all or any substantial part of its assets, such appointment shall not be vacated, or (e) Lessee attempts to remove, transfer, sell, sublicense, encumber, part with possession, or sublet the Leased Property; or (f) Lessee attempts to assign or transfer this Lease or its interest hereunder without Lessor's express prior written consent, or Lessee's credit worthiness materially deteriorates as judged solely in Lessor, whether through sale, assignment, buyout, bankruptcy or change of ownership of any type, form or manner, or undergoes a Change-in-Control. A Change-in-Control shall be deemed an assignment for purposes of this section. A Change-in-Control means a transaction or a series of related transactions which, after giving effect thereto, causes the holders of ownership interests in the Lessee prior to such transaction or transactions to beneficially own less than 75% of Lessee after such transaction or transactions have been consummated. 15. REMEDIES: If an event of default shall occur, Lessor may exercise at its sole option, but not specifically limited thereto, any one or more of the following remedies: (a) terminate this Lease and Lessee's rights hereunder, (b) proceed, by appropriate court action to enforce performance by Lessee of the applicable covenants of this Lease or to recover damages for the breach thereof, (c) by notice in writing to Lessee, recover all amounts due on or before the date Lessor declared this Lease to be in default, plus as liquidated damages for loss of a bargain and not as a penalty, accelerate, and declare to be immediately due and payable, all rentals and other sums payable hereunder, without any presentment, demand, protest or further notice (all of which hereby are expressly waived by Lessee), whereupon the same shall be and become immediately due and payable, and (d) personally, or by its agents, take immediate possession of the Leased Property, or any part thereof, from Lessee and for such purpose, enter upon Lessor's premises where any of the Leased Property is located with or without notice or process of law and free from all claims by Lessee. In the case of Software, it is acknowledged and agreed that the unauthorized use, disclosure, or transfer of the Software could cause Lessor incalculable, irreparable, and serious harm. Therefore, if Lessee is found to be using (in whatever manner) any portion of the Software, after the applicable Lease Term, or after an event of default hereunder, or if Licensor terminates a License or Lessee's right to use the Software thereunder for an alleged breach of the License's use, disclosure, or transfer restrictions, then liquidated damages shall be payable immediately to Lessor in an amount three (3) times the license fee(s) paid to the Licensor with respect to the Software being used. The exercise of any of the foregoing remedies by Lessor shall not constitute a termination of this Lease unless Lessor so notifies Lessee in writing. In the event Lessor repossesses the Hardware, Lessor may lease the Hardware or sell the Hardware, in such manner, and at such times and upon such terms as Lessee may determine. In the event that Lessor leases the Hardware, any rentals received by Lessor for the remaining lease term (as defined in this Lease) shall be applied to the payment of: (i) all costs and expenses (including reasonable attorney's fees) incurred by Lessor, and (ii) the rentals for the remainder of the term and all other sums then remaining unpaid under the Lease. The remaining balance of such rentals, if any, shall be applied to reimburse Lessee for any sums previously paid by Lessee as liquidated damages. All rentals received by Lessor for the period commencing after the remaining Lease Term shall be retained by Lessor. Lessee shall remain liable to Lessor to the extent that the aggregate amount of the sums referred to in clauses (i) and (ii) above shall exceed the aggregate rentals received by Lessor under such leases for the respective remaining lease term applicable to the Hardware are covered by such leases. In the event that Lessor shall sell the Hardware, the proceeds thereof shall be applied to the sum of (i) all costs and expenses (including reasonable attorney's fees) incurred by Lessor in disposing of such Hardware, (ii) the rentals accrued under this Lease, but unpaid up to the time of such disposition, (iii) any and all other sums (other than rentals) then owing to Lessor by Lessee hereunder, and (iv) the Casualty Value of such Hardware determined as of the date of such disposition in accordance with the Casualty Schedule, attached hereto. The remaining balance of such proceeds, if any, shall be applied first to reimburse Lessee for any sums previously paid by Lessee as liquidated damages, and any remaining amounts shall be retained by Lessor. Lessee shall remain liable to Lessor to the extent that the aggregate amount of the sums referred to in clauses (i) through (iv) above shall exceed the aggregate proceeds received by Lessor in connection with the disposition of the Leased Property. Lessor's remedies, as discussed in this Lease shall not be deemed exclusive. Waiver of any defaults or breach of this Lease shall not be construed as a waiver of subsequent or continuing defaults or breaches. 16. QUIET ENJOYMENT: The Lessor covenants that if, and so long as the Lessee keeps and performs each and every covenant, condition and agreement to be performed or observed by it hereunder, the Lessee shall quietly enjoy the Leased Property hereunder without hindrance or molestation by the Lessor or any other person lawfully claiming the same. 17. ATTORNEY'S FEES AND VENUE OF LITIGATION: If any party to this Lease brings any action to enforce any of the terms of this Lease or to recover for a breach of this Lease, then the prevailing party shall be entitled to recover all attorneys' fees and costs of suit from the other party. The Lessee agrees that all litigation arising out of this Lease or any breach thereof shall be filed and conducted in the California Superior Court for the County of Orange, unless the Lessor or its Assignee selects an alternative venue of litigation. 18. TRANSPORTATION; INSTALLATION/DEINSTALLATION: All transportation, rigging and drayage charges on delivery or redelivery of the Leased Property to and from Lessee shall be paid by Lessee. All installation and deinstallation charges including packing materials and any fees and charges for maintenance certification or recertification by the Manufacturer/Vendor/Licensor shall be paid by Lessee. 19. FURTHER ASSURANCES; OFFER AND ACCEPTANCE; LESSEE'S FINANCIAL INFORMATION: Lessee's signing of this document shall constitute an offer to Lessor to enter into the Lease. In consideration of Lessor's time and effort in reviewing and acting on the offer, Lessee agrees that its offer shall be irrevocable for a period of twenty (20) business days after the date it is submitted to Lessor. Lessor's signing of this Lease shall constitute acceptance of Lessee's offer to enter into the Lease. Upon acceptance by Lessor, Lessee shall execute and deliver such instruments and assurances as Lessor deems necessary or desirable for confirmation, assignment and assurance of performance by Lessee of its obligation hereunder or for perfection of this Lease, including but not limited to the filing of this Lease or the filing of Uniform Commercial Code Financing Statements (which Lessee agrees may be executed by Lessor on Lessee's behalf). Lessee further authorizes Lessor to insert in each Lease Schedule and in other appropriate documentation the serial number(s) and other identifying data of the Leased Property, and to insert applicable lease dates and assignment dates as necessary to complete such supplemental documentation. Lessee shall also provide Lessor with all credit information reasonably requested by Lessor, including but not limited to comparative audited financial statements for the most current year and interim reporting period. Lessee's failure to provide such information to Lessor shall be an event of default under Section 14 of this Lease. Lessor shall have the right at its sole discretion for any purpose whatsoever for a reasonable period of time as solely determined by Lessor, after such financial information has been submitted to Lessor, to terminate this Lease by giving written notice of such termination to Lessee. In the event of such termination, all obligations of Lessor set forth herein shall be cancelled; otherwise Lessor shall confirm its acceptance in writing to Lessee. 20. NOTICES: Unless otherwise specifically provided herein, all notices to Lessor shall be delivered in person to an officer of the Lessor, or shall be sent certified mail return receipt requested to Lessor, at its address shown above or at any later address last known to the sender; all notices to Lessee shall be in writing, and shall be delivered by mail [Illegible] or at any later address last known to the sender. 21. AGREMENTS: This is the complete agreement by and between the parties hereto. NO ORAL OR WRITTEN AGREEMENT GUARANTY, PROMISE, CONDITION, REPRESENTATION, OR WARRANTY SHALL BE BINDING UNLESS MADE A PART OF THIS LEASE BY DULY EXECUTED ADDENDUM. All agreements, representations, and warranties contained in this Lease, or in any document or certificate delivered pursuant hereto or in connection herewith, shall survive the expiration or other termination of this Lease. Any provision of this Lease which may be determined by competent authority to be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, Lessee hereby waives any provision of law which renders any provision hereof prohibited or unenforceable in any respect. THIS LEASE SHALL BE CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA. Time is of the essence of this Lease. 22. ASSIGNMENT: WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR, LESSEE SHALL NOT ASSIGN THIS LEASE OR ITS INTEREST HEREUNDER IN ANY FORM OR MANNER INCLUDING, BUT NOT LIMITED TO, AN ASSIGNMENT DUE TO A SALE, MERGER, LIQUIDATION, SUB-LEASE, LEVERAGED BUYOUT, CHANGE OF OWNERSHIP OR CHANGE-IN-CONTROL. THE LESSOR MAY SELL AND ASSIGN ITS RIGHT, TITLE, INTEREST, OR ANY OTHER RIGHTS IT MAY HAVE AS AN OWNER AND LESSOR OF THE LEASED PROPERTY TO AN ASSIGNEE ("ASSIGNEE"). LESSEE HEREBY CONSENTS TO SUCH ASSIGNMENT AND FURTHER AGREES AS FOLLOWS: (1) THAT ASSIGNEE DOES NOT ASSUME ANY OF THE OBLIGATIONS OF LESSOR HEREUNDER; (2) TO PAY ALL MONIES UNDER THE LEASE DIRECTLY TO ASSIGNEE UNCONDITIONALLY WITHOUT OFFSET AND LESSEE FURTHER AGREES THAT SUCH MONIES SHALL BE PAYABLE NOTWITHSTANDING ANY DEFENSE OR COUNTERCLAIM WHATSOEVER, WHETHER BY REASON OF BREACH OF THE LEASE, THE EXERCISE OF ANY RIGHT HEREUNDER, OR OTHERWISE, WHICH IT MAY OR MIGHT NOW OR HEREAFTER HAVE AS AGAINST THE LESSOR (THE LESSEE RESERVING ITS RIGHT TO HAVE RECOURSE DIRECTLY AGAINST LESSOR ON ACCOUNT OF ANY SUCH DEFENSE OR COUNTERCLAIM); AND (3) THAT SUBJECT TO AND WITHOUT IMPAIRMENT OF THE LESSEE'S LEASEHOLD RIGHTS IN AND TO THE LEASED PROPERTY COVERED HEREUNDER, LESSEE SHALL HOLD SAID LEASED PROPERTY AND THE POSSESSION THEREOF FOR THE ASSIGNEE TO THE EXTENT OF THE ASSIGNEE'S RIGHTS THEREIN. EX-10.15 13 ASSIGNMENT OF RENTS AND LEASES ASSIGNMENT OF RENTS AND LEASES WESTERN BEEF-STEINWAY STREET. INC., a New York corporation, Assignor, to METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation, Assignee. March 19, 1996 Location of Premises: Address: 36- 12/32 Steinway Street and 38- 15/23 Northern Boulevard City and State of New York County and Borough of Queens Section: 4 Block: 665 Lot: 5,7,31,34 & 38 Prepared by, recording requested by, and when recorded, return to: Dorothea S. Costrini HUNTER, MACLEAN, EXLEY & DUNN, P.C. 200 East Saint Julian Street Savannah, Georgia 31401 MetLife Capital Financial Corporation Loan No. 5901796-001 THIS ASSIGNMENT, made as of March 19, 1996, by Western Beef-Steinway Street, Inc., a New York corporation, with a mailing address of 47-05 Metropolitan Avenue, Ridgewood, New York 11385 (hereinafter called "Assignor"), in favor of METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation, with a mailing address of Real Estate Department, 10900 Northeast Fourth Street, Suite 500, Bellevue, Washington 98004 (hereinafter called "METLIFE"). WITNESSETH: Assignor, for good and valuable consideration, the receipt of which is hereby acknowledged, does hereby absolutely and unconditionally grant, bargain, sell, transfer, assign, convey, set over and deliver unto METLIFE all right, title and interest of Assignor in. to and under all written and oral leases and rental agreements of the real estate described in Exhibit A attached hereto and incorporated herein ("Property"), whether now in existence or hereafter entered into, and all guaranties, amendments, extensions, renewals and subleases of said leases and any of them, all of which are hereinafter called the "Leases," all rents, income and profits which may now or hereafter be or become due or owing under the Leases, and any of them, or on account of the use of the Property, any award hereafter made in any bankruptcy. insolvency or reorganization proceeding in any state or federal court involving any of the tenants of the Leases, and any and all payments made by such tenants in lieu of rent. This Assignment is made for the purpose of securing: A. The payment of the indebtedness (including any extensions or renewals thereof) evidenced by a certain Amended and Restated Note ("Note") of Assignor of even date herewith in the principal sum of Three Million Dollars ($3,000,000) and secured by a certain Amended and Restated Mortgage ("Mortgage") of even date herewith encumbering the Property: and B. The payment of all other sums with interest thereon becoming due and payable to METLIFE under the provisions of the Mortgage and any other instrument constituting security for the Note; and C. The performance and discharge of each and every term, covenant and condition contained in the Note. Mortgage and any other instrument constituting security for the Note. Assignor represents, warrants, covenants and agrees with METLIFE as follows: 1. The sole ownership of the entire lessors interest in the Leases is or shall be vested in Assignor, and Assignor has not, and shall not, perform any acts or execute any other instruments which might prevent METLIFE from filly exercising its rights under any of the terms, covenants and conditions of this Assignment. 2. The Leases are and shall be valid and enforceable in accordance with their terms and have not been altered, modified, amended, terminated, canceled, renewed or surrendered nor have any of the terms and conditions thereof been waived in any manner whatsoever except as approved in writing by METLIFE. 3; Assignor shall not materially alter the term or the amount of rent payable or the term of any Lease without notice to METLIFE and METLIFE's consent. 4. To the best of Assignor's knowledge, there are no defaults now existing under any of the Leases, and there exists no state of facts which, with the giving of notice or lapse of time or both, would constitute a default under any of the Leases. 5. Assignor shall give prompt notice to METLIFE of any notice received by Assignor claiming that a default has occurred under any of the Leases on the part of Assignor. together with a complete copy of any such notice. 6. Each of the Leases shall remain in full force and effect irrespective of any merger of the interest of lessor and any lessee under any of the Leases. 7. Assignor will not permit any Lease to become subordinate to any lien other than the lien of the Mortgage. 8. All existing Leases are described on Exhibit B attached hereto and incorporated herein. Assignor has delivered to Assignee true and correct copies of all existing Leases and all amendments and modifications thereto. The parties further agree as follows: This Assignment is an absolute, present assignment from Assignor to METLIFE, effective immediately, and is not merely an assignment for security purposes. Notwithstanding the foregoing, until a notice is sent to the Assignor in writing that an Event of Default (as defined in the Note and/or Mortgage) has occurred under the terms and conditions of the Note or any other instrument constituting additional security for the Note (which notice is hereafter called a "Notice"). Assignor is panted a license to receive, collect and enjoy the rents, income and profits accruing from the Property. If an Event of Default (as defined in the Note and Mortgage) shall occur, METLIFE may, at its option, after service of a Notice, receive and collect all such rents, income and profits as they become due, from the Property. METLIFE shall thereafter continue to receive and collect all such rents, income and profits, until METLIFE shall otherwise agree in writing. All sums received by Assignor after service of such Notice shall be deemed received in trust and shall be immediately turned over to METLIFE. Assignor hereby irrevocably appoints METLIFE its true and lawful attorney-in-fact with power of substitution and with fill power for METLIFE in its own name and capacity or in the name and capacity of Assignor, from and after service of Notice, to demand, collect, receive and give complete acquittances for any and rents, income and profits accruing from the Property, either in its own name or in the name of Assignor or otherwise, which METLIFE may deem necessary or desirable in order to collect and Enforce the payment of the rents, income and profits and to demand, correct, receive, endorse, and deposit all checks, drafts, money orders or notes given in payment of such rents. Such appointment is coupled with an interest and is irrevocable. METLIFE shall not be liable for or prejudiced by any loss of any note, checks, drafts, etc., unless such loss is due to the gross negligence or willful misconduct of METLIFE. METLIFE shall apply the rents received from Assignor's lessees, to accrued interest and principal under the Note. If no Event of Default remains uncured, amounts received in excess of the aggregate monthly payment due under the Note shall be remitted to Assignor in a timely manner. Nothing contained herein shall be construed to constitute METLIFE as a mortgagee-in-possession in absence of its physically taking possession of the Property. Assignor also hereby irrevocably appoints METLIFE as its true and lawful attorney-in-fact to appear in any state or federal bankruptcy, insolvency, or reorganization proceeding in any state or federal court involving any of the tenants of the Leases. Lessees of the Property are hereby expressly authorized and directed, from and after service of a Notice to pay any and all amounts due Assignor pursuant to the Leases to METLIFE or such nominee as METLIFE may designate in writing delivered to and received by such lessees who are expressly relieved of any and all duty, liability or obligation to Assignor in respect of all payments so made. If an Event of Default shall occur, METLIFE is hereby vested with full power from and after service of a Notice to use all measures, legal and equitable, deemed by it necessary or proper to enforce this Assignment and to collect the rents, income and profits assigned hereunder, including the right of METLIFE or its designee, to enter upon the Property, or any part thereof, and take possession of all or any part of the Property together with all personal property, fixtures, documents, books, records, papers and accounts of Assignor relating thereto, and may exclude the Assignor, its agents and servants, wholly therefrom. Assignor hereby grants full power and authority to METLIFE to exercise all rights, privileges and powers herein panted at any and all times after service of a Notice, with fill power to use and 2 apply all of the rents and other income herein assigned to the payment of the costs of managing and operating the Property and of any indebtedness or liability of Assignor to METLIFE, including but not limited to the payment of taxes, special assessments, insurance premiums, damage claims, the costs of maintaining, repairing, rebuilding and restoring the improvements on the Property or of making the same rentable, reasonable attorneys' fees incurred in connection with the enforcement of this Assignment and of principal and interest payments due from Assignor to METLIFE on the Note and the Mortgage, all in such order as METLIFE may determine. METLIFE shall be under no obligation to exercise or prosecute any of the rights or claims assigned to it hereunder or to perform or carry out any of the obligations of the lessor under any of the Leases and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Assignor in the leases. It is farther understood that this Assignment shall not operate to place responsibility for the control, care, management or repair of the Property, or parts thereof, upon METLIFE, nor shall it operate to make METLIFE liable for the performance of any of the terms and conditions of any of the Leases, or for any waste of the Property by any lessee under any of the Leases or any other person, or for any dangerous or defective condition of the Property or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger. Waiver of or acquiescence by METLIFE in any default by the Assignor, or failure of the METLIFE to insist upon strict performance by the Assignor of any covenants, conditions or agreements in this Assignment, shall not constitute a waiver of any subsequent or other default or failure, whether similar or dissimilar. The rights and remedies of METLIFE under this Assignment are cumulative and are not in lieu of. but are in addition to any other rights or remedies which METLIFE shall have under the Note or any other instrument constituting security for the Note, or at law or in equity. If any term of this Assignment, or the application thereof to any person or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this Assignment, or the application of such term to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term of this Assignment shall be valid and enforceable to the fullest extent permitted by law. Any and all notices, elections, demands, or requests permitted or required to be made under this Assignment, including without limitation a Notice, shall be given in accordance with Section 18 of the Mortgage. Assignor hereby authorizes METLIFE to give written notice of this Assignment, which may include a copy hereof, at any time to any tenant under any of the Leases. The terms "Assignor" and "METLIFE" shall be construed to include the legal representatives, successors and assigns thereof. The gender and number used in this Assignment are used as a reference term only and shall apply with the same effect whether the parties are of the masculine or feminine gender, corporate or other form, and the singular shall likewise include the plural. This Assignment may not be amended, modified or changed nor shall any waiver of any provisions hereof be effective, except only by an instrument in writing and sighed by the party against whom enforcement of any waiver, amendment, change, modification or discharge is sought. Notwithstanding anything contained herein to the contrary, in no event shall this Assignment be deemed to reduce the indebtedness evidenced by the Note by an amount in excess of the actual amount of cash received by METLIFE under the Leases, whether before, during or after the occurrence of an Event of Default, and Assignor acknowledges that in no event shall the indebtedness secured hereby be reduced by the value from time to time of the rents, income mid profits of or from the Property. In addition, METLIFE reserves the right, at any time, whether before or after the occurrence of an Event of Default, to recharacterize this Assignment as merely constituting security for the indebtedness of Assignor to METLIFE, which recharacterization shall be made by written notice delivered to Assignor. METLIFE's receipt of any rents, issues, and profits pursuant to this Assignment after the institution of foreclosure proceedings, either by court action or by the private power of sale contained in any Mortgage now or hereafter securing the Note, shall not cure an Event of Default, as defined in the Note, or affect such proceedings or sale. 3 This Assignment shall be construed and enforced under the laws of the State of New York (excluding choice-of-law principles). IN WITNESS WHEREOF, the said Assignor has caused this instrument to be signed and sealed as of the date first above written. ASSIGNOR: WESTERN BEEF-STEINWAY STREET, INC. a New York corporation By: /s/ Peter Castellana, Jr. -------------------------------- Peter Castellana, Jr., President Attest: /s/ Robert C. Ludlow ------------------------------- Title: Vice President ---------------------------- [SEAL] Exhibits Exhibit A - Legal Description Exhibit B - List of Leases 4 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) ACKNOWLEDGEMENT ON THE 19th day of March, l996, before me personally came Peter Castellana. Jr., to me known, who, being by me duly sworn did say that he resides at 9 Colonial Drive, Upper Brookville, NY; that he is the President of Western Beef-Steinway Street, Inc., the corporation described in and which executed the above instrument; that he knows the seal of said corporation, that the seal affixed to said instrument is said corporate seal; that it was so affixed by order of the Board of Directors of said corporation; and that he signed his name thereto by like order, as the free act and deed of such corporation for the uses and purposes set forth therein. /s/ Gary Pollard -------------------- My commission expires: GARY POLLARD NOTARY PUBLIC, State of New York No. 31-4827321 Qualified in New York City Commission expires 4/30/1996 [SEAL] 5 EXHIBIT A PARCEL A (LOT 5 IN BLOCK 665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bonded and described as follows: BEGINNING at a point on the southeasterly side of 38th Street, (60 feet wide) distant 162.80 feet northeasterly from the corner formed by the intersection of the southeasterly side of 38th Street with the northwesterly side of Northern Blvd., 100 feet wide, RUNNING THENCE northeasterly along the southeasterly side of 38th Street, 75.02 feet; THENCE southeasterly at right angles to the southeasterly side of 38th Street, 54.35 feet; THENCE still southeasterly on a line forming an interior angle of 221 degrees 57 minutes 20 seconds with the preceding course 118.56 feet to the northwesterly side of Northern Blvd.; THENCE southwesterly along the northwesterly side of Northern Blvd., 75.37 feet; THENCE northwesterly at right angles to the northwesterly side of Northern Blvd., 90.22 feet; THENCE still northwesterly on a line forming an interior angle of 221 degrees 57 minutes 20 seconds with the preceding course, 25.03 feet to the southeasterly side of 38th Street at the point or place of BEGINNING. PARCEL B (LOT 7 IN BLOCK 2665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the southeasterly side of 38th Street (60 feet wide) distant 237.82 feet (Actual) (237.80 feet Deed) northeasterly from the corner formed by the intersection of the southeasterly side of 38th Street with the northwesterly aide of Northern Blvd., 100 feet wide; RUNNING THENCE northeasterly along the southeasterly side of 38th Street, 39.73 feet; THENCE southeasterly on a line forming an exterior angle of 89 degrees 44 minutes 02 seconds with the southeasterly side of 38th Street, 94.78 feet THENCE southwesterly and parallel with Steinway Street, 15.07 feet; THENCE southeasterly at right angles to Steinway Street, 90 feet to the northwesterly side of Steinway Street; THENCE southwesterly along the northwesterly side of Steinway Street, 57.33 feet to the corner formed by the intersection of the northwesterly side of Steinway Street with the northwesterly side of Northern Blvd.; THENCE southwesterly along the northwesterly side of Northern Blvd., 63.08 feet; THENCE northwesterly at right angles to the northwesterly side of Northern Blvd., 118.56 feet; THENCE still northwesterly at right angles to the southeasterly side of 38th Street and on a line forming an interior angle of 221 degrees 57 minutes 30 seconds with the preceding curse, 54.35 feet to the southeasterly side of 38th Street at the point or place of BEGINNING. PARCEL C (LOT 31 IN BLOCK 2665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the westerly side of Steinway Street, formerly known as Steinway Avenue and also formerly known as 10th Avenue, distant 100 feet southerly from the corner formed by the intersection of the southerly side of Thirty-sixth Avenue, formerly known as Washington Avenue with the westerly side of Steinway Street; RUNNING THENCE westerly parallel with Thirty-sixth Avenue and part of the distance through a party wall, 100 feet; THENCE southerly parallel with Steinway Street, 75 feet; THENCE easterly parallel with Thirty-sixth Avenue, 100 feet to the westerly side of Steinway Street; THENCE northerly along the westerly side of Steinway Street, 75 feet to the point or place of BEGINNING. PARCEL D (LOT 34 IN BLOCK 665): ALL that certain piece or parcel of land, situate, lying and being in the First Ward of the Borough of Queens, (formerly Long Island City) County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the northwesterly side of Steinway Street, distant 175 feet southwesterly from the corner formed by the intersection of the northwesterly side of Steinway Street with the southwesterly side of 36th Avenue, 75 feet wide; RUNNING THENCE southwesterly along the northwesterly side Steinway Street, 50 feet; THENCE northwesterly at right angles to Steinway Street, 106.48 feet; THENCE northeasterly and parallel with the northwesterly side of Steinway Street, 50 feet; THENCE southeasterly and at right angles to the Steinway Sweet, 106.48 feet to the northwesterly side of Steinway Street, at the point or place of BEGINNING. PARCEL E (LOT 38 IN BLOCK 665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the northwesterly side of Tenth Avenue, formerly Steinway Avenue, distant 57.33 feet northeasterly from the corner formed by the intersection of the northwesterly side of Tenth Avenue with the northerly side of Jackson Avenue; RUNNING THENCE northeasterly along said side of Tenth Avenue, 150 feet; THENCE northwesterly and at right angles to Tenth Avenue, 106.48 feet to the center line of Harold Avenue, which is now closed; THENCE southerly along said center line of Harold Avenue, 42.11 feet; THENCE southwesterly parallel with Tenth Avenue, 111.26 feet; THENCE southeasterly and at right angles to Tenth Avenue, 90 feet to the point or place of BEGINNING. For conveyancing only, if intended to be conveyed. Together with all right, title and interest of, in and to any streets and roads abutting the above described premises, to the center line thereof. Title No. NY951153 SCHEDULE A (CONT) SAID PARCELS A, B, C, D AND E ALSO BEING BOUNDED AND DESCRIBED AS FOLLOWS: OVERALL DESCRIPTION All that certain plot, piece or parcel of land, with the buildings and improvements thereon erected, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at the corner formed by the intersection of the westerly side of Steinway Street with the northwesterly side of Northern Boulevard (100 feet wide); RUNNING THENCE northerly along the westerly side of Steinway Street, 332.37 feet, to a point; THENCE westerly parallel with the southerly side of 36th Avenue (75 feet wide) through a party wall, 100 feet to a point; THENCE southerly parallel with the westerly side of Steinway Street 74.88 feet to a point; THENCE westerly along a line drawn at right angles to last mentioned course 6.48 feet to a point; THENCE southerly parallel with the westerly side of Steinway Street 50 feet to a point; THENCE southeasterly along the center line of former Harold Avenue, and along a line forming an angle on the northeast of 156 degrees 57 minutes 18 seconds 42.11 feet to a point; THENCE southerly parallel with the westerly side of Steinway Street 96.19 feet to a point: THENCE westerly along a line forming an angle on the northeast of 89 degrees 44 minutes 02 seconds with the easterly side of 38th Street (60 feet wide), 94.78 feet to the easterly side of 38th Street; THENCE southerly along the easterly side of 38th Street 114.75 feet to a point: THENCE easterly at right angles to the easterly side of 38th Street 25.03 feet to a point; THENCE southeasterly along a line drawn at right angles to the northwesterly side of Northern Boulevard, 90.22 feet to the northwesterly side of Northern Boulevard; THENCE northeasterly along the northwesterly side of Northern Boulevard 138.45 feet to the corner formed by the intersection of the westerly side of Steinway Street with the northwesterly side of Northern Boulevard, at the point or place of BEGINNING. Loan No: 5901796-001 EXHIBIT B (36 - 12/32 Steinway Street and 38 15/23 Northern Boulevard, Queens, New York) List of Leases: TENANT: DATE AMENDED North Star Auto Center, Inc. May 1, 1993 [NOT DATED] EX-10.16 14 AMENDED AND RESTATED MORTGAGE AMENDED AND RESTATED MORTGAGE WESTERN BEEF-STEINWAY STREET, INC., a New York corporation, Borrower, to METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation, Lender March 19, 1996 Location of Premises: Address: 36 - 12/32 Steinway Street and 38 - 15/23 Northern Boulevard City of New York Queens County, New York Section: 4 Block: 665 Lot: 5,7,31,34 & 38 NOTICE: THE DEBT SECURED HEREBY IS SUBJECT TO CALL IN FULL OR THE TERMS THEREOF BEING MODIFIED IN THE EVENT OF SALE OR CONVEYANCE OF THE PROPERTY HEREIN CONVEYED. THE REAL PROPERTY IS NOT PRINCIPALLY IMPROVED OR TO BE IMPROVED BY ONE OR MORE STRUCTURES CONTAINING IN THE AGGREGATE NOT MORE THAN SIX RESIDENTIAL DWELLING UNITS. EACH DWELLING UNIT HAVING ITS OWN SEPARATE COOKING FACILITIES. Prepared by, recording requested by, and when recorded, return to: Dorothea S. Costrini HUNTER, MACLEAN, EXLEY & DUNN. P.C. 200 East Saint Julian Street Savannah, Georgia 31401 MetLife Capital Financial Corporation Loan No. 5901796-001 THIS AMENDED AND RESTATED MORTGAGE is made and given as of March 19, 1996, by WESTERN BEEF-STEINWAY STREET, INC., a New York corporation ("Borrower"), whose address is 47-05 Metropolitan Avenue, Ridgewood, New York 11383, to METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation ("Lender"), whose address is 10900 Northeast Fourth Street. Suite 300, Bellevue, Washington 98004, with reference to the recitals hereinafter set forth. RECITALS: A. Borrower has this date acquired or simultaneously with the execution hereof is acquiring certain real property in Queens, New York, more particularly described in Exhibit A (the "Property"). B. The Property is encumbered by a certain Amended and Restated Mortgage (the "Mortgage") dated November 24, 1993, recorded December 10, 1993, in Reel 3734, Page 129, in the Office of the Registrar for Queens County, New York, from Lacher/Koeppel Realty Corp., a New York corporation ("Lacher"), to Chrysler Credit Corporation, a Delaware corporation ("Chrysler"), securing a loan from Chrysler to Lacher in the principal amount of $3,500,000, as evidenced by a certain Amended and Restated Promissory Note (the "Note") dated November 24, 1993, from Lacher to Chrysler. C. Chrysler has assigned the Note and the Mortgage to Lender. Prior to such assignment, the principal indebtedness evidenced and secured by the Note and the Mortgage was reduced to THREE MILLION DOLLARS ($3,000,000). Borrower has accepted and assumed all obligations of Lacher under the Mortgage. D. Borrower and Lender have agreed to amend and restate the Note pursuant to an Amended and Restated Promissory Note of even date herewith. As used herein, the "Note" shall refer to the Note as so amended and restated. E. Borrower and Lender desire that the Mortgage should be amended and restated as set forth below. NOW, THEREFORE, in consideration of the above premises and of other good and valuable consideration, the receipt and adequacy whereof are hereby acknowledged. Borrower and Lender covenant and agree as follows: I. Mortgages in Full Force. Except as is expressly set forth herein, the Mortgage shall remain in full force and effect. II. Ratification. The Mortgage, as amended and restated below, hereby ratified and confirmed in all respect by Borrower. III. Recordation. Borrower shall promptly cause this Agreement to be recorded in such manner and in such places as may be required by any present or future law in order to provide notice of and fully protect the lien of THE Mortgage, and the interests of the Lender in the Property. Borrower shall pay all filing, registration, and recording fees, and all expenses incidental to the preparation, execution and acknowledgement of this Agreement, and all federal, state, county and municipal taxes (not including income taxes of Lender), duties, imposts, assessments, and charges arising out of or in connection with the filing, registration, recording, execution and delivery of this Agreement, and Borrower shall hold harmless and indemnify Lender against any liability incurred by reason of the imposition of any taxes on the issuance, making, filing, registration, or recording of this Agreement. IV. No Offsets, etc. Borrower, represents and warrants to Lender that, as of the date hereof, (a) there are no offsets, counterclaims or defenses against this Agreement, the Mortgage, or the Note, (b) except as set forth herein the Mortgage has not been amended or modified in any manner whatsoever, and (c) Borrower has full power, authority and legal right to execute this Agreement and to keep and observe all of the terms of this Agreement and the Mortgage on Borrower's part to be observed or performed. Borrower hereby certifies that this instrument secures the same indebtedness secured by the Mortgage and secures no further other indebtedness or obligation. V. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns hereunder. Anything contained in the provisions of this Agreement to the contrary notwithstanding. Borrower shall not be entitled to assign any of its rights under the provisions of this Agreement without first obtaining Lender's express written consent thereto. VI. Applicable Law. This Agreement shall be given effect and construed by application of the law of the State of New York applicable to contracts made and to be performed therein (excluding its choice-of-law rules). VII. Effectiveness. This Agreement shall become effective upon and only upon its execution and delivery by each party hereto. VIII.Waiver. Lender shall not be deemed to have waived the exercise of any right which it holds hereunder or under the Notes unless such waiver is made expressly and in writing (and no delay or omission by Lender in exercising any such right shall be deemed to be a waiver of its future exercise). No such waiver made as to any instance involving the exercise of any such right shall be deemed a waiver as to any other such instance, or any other such right. IX. Time of Essence. Time shall be of the essence of this Agreement. X. Headings. The headings of the Sections, subsections, Paragraphs and subparagraphs hereof are provided herein for and only for convenience of reference and shall not be considered in construing their contents. XI. Amendment and Restatement. The Mortgage is hereby modified. Amended, and restated to read as follows: AMENDED AND RESTATED MORTGAGE THIS MORTGAGE (herein "Instrument"), made as of March 19,1996, among the Mortgagor, Western Beef-Steinway Street, Inc., a New York corporation, whose address is 47-05 Metropolitan Avenue, Ridgewood, New York 11385 (herein "Borrower"), in favor of the Mortgagee, METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation, whose address is Real Estate Department, 10900 Northeast Fourth Street, Suite 500, Bellevue. Washington 98004 (herein "METLIFE"). WITNESSETH: THAT, WHEREAS, Borrower is justly indebted to METLIFE in the sum of Three Million Dollars ($3,000,000), as evidenced by a certain Note (as hereinafter defined.) NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged. Borrower irrevocably conveys, warrants, and mortgages to METLIFE with POWER OF SALE all of Borrowers right, title and interest, now owned or hereafter acquired, including any reversion or remainder interest in the real property located in the City of New York, County of Queens, State of New York, and more particularly described on Exhibit A attached hereto and incorporated herein including all heretofore or hereafter vacated alleys and streets abutting the property, and all easements, rights, appurtenances, tenements, hereditaments, rents, royalties, mineral, oil and gas rights and profits, water, water rights, and water stock appurtenant to the property (collectively "Premises"); TOGETHER with all of Borrower's estate, right title and interest, now owned or hereafter acquired, in: 2 (a) all buildings, structures, improvements, parking areas, landscaping, equipment, fixtures and articles of property now or hereafter erected on, attached to, or used or adapted for use in the operation of the Premises; including but without being limited to, all heating, air conditioning and incinerating apparatus and equipment; all boilers, engines, motors, dynamos, generating equipment, piping and plumbing fixtures, water heaters, ranges, cooking apparatus and mechanical kitchen equipment, refrigerators, freezers, cooling, ventilating, sprinkling and vacuum cleaning systems, fire extinguishing apparatus, gas and electric fixtures, carpeting, floor coverings, underpadding, elevators, escalators, partitions, mantels, built-in mirrors, window shades, blinds, draperies, screens, storm sash, awnings, signs, furnishings of public spaces, halls and lobbies, and shrubbery and plants, and including also all interest of any owner of the Premises in any of such items hereafter at any time acquired under conditional sale contract, chattel mortgage or other title retaining or security instrument all of which property mentioned in this clause (a) shall be deemed part of the realty covered by this Instrument and not severable wholly or in part without material injury to the freehold of the Premises (all of the foregoing together with replacements and additions thereto are referred to herein as "Improvements"); and (b) all compensation, awards, damages, rights of action and proceeds, including interest thereon and/or the proceeds of any policies of insurance therefor, arising out of or relating to a (i) taking or damaging of the Premises or Improvements thereon by reason of any public or private improvement, condemnation proceeding (including change of grade), sale or transfer in lieu of condemnation, or fire, earthquake or other casualty, or (ii) any injury to or decrease in the value of the Premises or the Improvements for any reason whatsoever; (c) return premiums or other payments upon any insurance any time provided for the benefit of or naming METLIFE, and refunds or rebates of taxes or assessments on the Premises; (d) all the right, title and interest of Borrower in, to and under all written and oral leases and rental agreements (including extensions, renewals and subleases; all of the foregoing shall be referred to collectively herein as the "Leases") now or hereafter affecting the Premises including, without limitation, all rents, issues, profits and other revenues and income therefrom and from the renting, leasing or bailment of Improvements and equipment, all guaranties of tenants' performance under the Leases, and all rights and claims of any kind that Borrower may have against any tenant under the Leases or in connection with the termination or rejection of the Leases in a bankruptcy or insolvency proceeding (e) plans, specifications, contracts and agreements relating to the design or construction of the Improvements; Borrower's rights under any payment, performance, or other bond in connection with the design or construction of the Improvements; all landscaping and construction materials, supplies, and equipment used or to be used or consumed in connection with construction of the Improvements, whether stored on the Premises or at some other location; and contracts, agreements, and purchase orders with contractors, subcontractors, suppliers, and materialmen incidental to the design or construction of the Improvements; (f) all contracts, accounts, rights, claims or causes of action pertaining to or affecting the Premises or the Improvements, including, without limitation, all options or contracts to acquire other property for use in connection with operation or development of the Premises or Improvements, management contracts, service or supply contracts, deposits, bank accounts, general intangibles (including without limitation trademarks, trade names and symbols), permits, licenses, franchises and certificates, and all commitments or agreements, now or hereafter in existence, intended by the obligor thereof to provide Borrower with proceeds to satisfy the loan evidenced hereby or improve the Premises or Improvements, and the right to receive all proceeds due under such commitments or agreements including refundable deposits and fees: (g) all books, records, surveys, reports and other documents related to the Premises, the Improvements, the Leases, or other items of collateral described herein; and (h) all additions, accessions, replacements, substitutions, proceeds and products of the real and personal property, tangible and intangible, described herein. 3 All of the foregoing described collateral is exclusive of any furniture, furnishings or trade fixtures owned and supplied by Borrower and separately financed or by tenants of the Premises. The Premises, the Improvements the Leases and all of the rest of the foregoing property are herein referred to as the "Property." TO HAVE AND TO HOLD the Property and all parts, rights, members and appurtenances thereof to the use, benefit and behoof of METLIFE and its successors and assigns in fee simple forever. TO SECURE TO METLIFE (a) the repayment of the indebtedness evidenced by Borrower's note dated of even date herewith in the principal sum of Three Million Dollars ($3,000,000), with interest thereon as set forth in the note, and all renewals, extensions and modifications thereof (herein "Note"); (b) [INTENTIONALLY DELETED] (c) the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Instrument or to fulfill any of Borrower's obligations hereunder or under the other Loan Documents (as defined below); (d) the performance of the covenants and agreements of Borrower contained herein or in the other Loan Documents; and (e) the repayment of all sums now or hereafter owing to METLIFE by Borrower pursuant to any instrument which recites that it is secured hereby. The indebtedness and obligations described in clauses (a)-(e) above are collectively referred to herein as the "Indebtedness." The Note, this Instrument, and all other documents evidencing, securing or guaranteeing the Indebtedness (except any Certificate and Indemnity Agreement Regarding Hazardous Substances), as the same may be modified or amended from time to time, are referred to herein as the "Loan Documents." The terms of the Note secured hereby may provide that the interest rate or payment terms or balance due may be indexed, adjusted, renewed, or renegotiated from time to time, and this Instrument shall continue to secure the Note notwithstanding any such indexing, adjustment, renewal or renegotiation. Borrower represents and warrants that Borrower has good, marketable and insurable title to, and has the right to mortgage an indefeasible fee simple estate in, the Premises. Improvements, rents, and leases, and the right to convey the other Property, that the Property is unencumbered except as disclosed in writing to and approved by METLIFE prior to the date hereof, and that Borrower will warrant and forever defend the title to the Property against all claims and demands, subject only to the permitted exceptions set forth in Schedule I attached hereto. Borrower represents, warrants, covenants and agrees for the benefit of METLIFE as follows: 1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when due the principal of and interest on the Indebtedness, any prepayment and other charges provided in the Loan Documents and all other sums secured by this Instrument. 2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the occurrence of an Event of Default (hereinafter defined), and at METLIFE's sole option at any time thereafter, Borrower shall pay in addition to each monthly payment on the Note, one-twelfth of the annual real estate taxes, insurance premiums, assessments, water and sewer rates, pound rents and other charges (herein "Impositions") payable with respect to the Property (as estimated by METLIFE in its sole discretion), to be held by METLIFE without interest to Borrower, for the payment of such obligations. If the amount of such additional payments held by METLIFE ("Funds") at the time of the annual accounting thereof shall exceed the amount deemed necessary by METLIFE to provide for the payment of Impositions as they fall due, such excess shall be at Borrower's option, either repaid to Borrower or credited to Borrower on the next monthly installment or installments of Funds due. If at any time the amount of the Funds held by METLIFE shall be less than the amount deemed necessary by METLIFE to pay Impositions as they fall due, Borrower shall pay to METLIFE any amount necessary to make up the deficiency within thirty (30) days after notice from METLIFE to Borrower requesting payment thereof. Upon Borrower's breach of any covenant or agreement of Borrower in this Instrument, METLIFE may apply, in any amount and in any order as METLIFE shall determine in METLIFE's sole discretion, any Funds held by METLIFE at the time of application (i) to pay impositions which are now or will hereafter become due, or (ii) as a credit 4 against sums secured by this Instrument. Upon payment in full of all sums secured by this Instrument, METLIFE shall refund to Borrower any Funds held by METLIFE. 3. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise, each complete installment payment received by METLIFE from Borrower under the Note or this Instrument shall be applied by METLIFE first in payment of amounts payable to METLIFE by Borrower under Section 2 hereof, then to interest payable on the Note, then to principal of the Note, and then to interest and principal on any other sums advanced by METLIFE pursuant to the terms of this Instrument, in such order as METLIFE, at METLIFE's sole discretion, shall determine. Upon the occurrence of an Event of Default, METLIFE may apply, in any amount and in any order as METLIFE shall determine in METLIFE's sole discretion, any payments received by METLIFE under the Note or this Instrument. Any partial payment received by METLIFE shall, at METLIFE's option, be held in a non-interest bearing account until METLIFE receives funds sufficient to equal a complete installment payment. 4. CHARGES, LIENS. Borrower shall pay all Impositions attributable to the Property in the manner provided under Section 2 hereof or, if not paid in such manner, by Borrower making payment, when due, directly to the payee thereof, or in such other manner as METLIFE may designate in writing. If requested by METLIFE, Borrower shall promptly furnish to METLIFE all notices of Impositions which become due, and in the event Borrower shall make payment directly, Borrower shall promptly finish to METLIFE receipts evidencing such payments. Borrower shall promptly discharge any lien which has, or may have, priority over or equality with, the lien of this Instrument, and Borrower shall pay, when due, the claims of all persons supplying labor or materials to or in connection with the Property. Without METLIFE's prior written permission, Borrower shall not allow any lien inferior to this Instrument to be perfected against the Property. If any lien inferior to this Instrument is filed against the Property without METLIFE's prior written permission and without the consent of Borrower, Borrower shall, within thirty (30) days after receiving notice of the filing of such lien, cause such lien to be released of record of bonded over within sixty (60) days of its filing and deliver evidence of such release or bonding to METLIFE (provided, however, that Borrower shall have up to thirty (30) additional days to secure the release or approval of a bond if Borrower shall have instituted appropriate legal proceedings therefor promptly and diligently pursued the same). 5. INSURANCE. Borrower shall obtain and maintain the following types of insurance upon and relating to the Property: (a) "All Risk" property and fire insurance (with extended coverage endorsement including malicious mischief and vandalism) in an amount not less than the full replacement value of the Property (with a deductible not to exceed $5,000 and with co-insurance limited to a maximum of 10% of the amount of the policy), naming METLIFE under a lenders loss payee endorsement (form 438BFU or equivalent) and including agreed amount, inflation guard, replacement cost and waiver of subrogation endorsements: (b) Comprehensive general liability insurance in an amount not less than $2,000,000.00 insuring against personal injury, death and property damage and naming METLIFE as additional insured; (c) Business interruption insurance covering loss of rental or other income (including all expenses payable by tenants) for up to six (6) months; and (d) Such other types of insurance or endorsements to existing insurance as may be reasonably required from time to time by METLIFE. Upon the reasonable request of METLIFE, Borrower shall increase the coverages under any of the insurance policies required to be maintained hereunder or otherwise modify such policies in accordance with METLIFE's request. All of the insurance policies required hereunder shall be issued by corporate insurers licensed to do business, in the state in which the Property is located and rated A:X or better by A.M. Best Company, and shall be in form acceptable to METLIFE. If and to the extent that the Property is located within an area that has been or is hereafter designated or identified as an area having special flood hazards by the Department of Housing and Urban Development or such other official as shall from time to time be authorized by federal or state law to make such designation pursuant 5 to any national or state program of flood insurance. Borrower shall carry flood insurance with respect to the Property in amounts not less than the maximum limit of coverage then available with respect to the Property or the amount of the Indebtedness, whichever is less. Certificates of all insurance required to be maintained hereunder shall be delivered to METLIFE, along with evidence of payment in full of all premiums required thereunder, contemporaneously with Borrower's execution of this Instrument. All such certificates shall be in form reasonably acceptable to METLIFE and shall require the insurance company to give to METLIFE at least thirty (30) days' prior written notice before canceling the policy for any reason or materially amending it. Certificates evidencing all renewal and substitute policies of insurance shall be delivered to METLIFE, along with evidence of the payment in full of all premiums required thereunder, at least fifteen (15) days before termination of the policies being renewed or substituted. If any loss shall occur at any time when an Event of Default shall have occurred and be continuing. METLIFE shall be entitled to the benefit of all insurance policies held or maintained by Borrower, to the same extent as if same had been made payable to METLIFE, and upon foreclosure hereunder, METLIFE shall become the owner thereof. METLIFE shall have the right, but not the obligation, to make premium payments, at Borrower's expense, to prevent any cancellation, endorsement, alteration or reissuance of any policy of insurance maintained by Borrower, and such payments shall be accepted by the insurer to prevent same. If any act or occurrence of any kind or nature (including any casualty for which insurance was not obtained or obtainable) shall result in damage to or destruction of the Property (such event being called a "Loss"). Borrower will give prompt written notice thereof to METLIFE. All insurance proceeds paid or payable in connection with any Loss shall be paid to METLIFE. If (i) no Event of Default has occurred and is continuing hereunder, (ii) Borrower provides evidence reasonably satisfactory to METLIFE of its ability to pay all amounts becoming due under the Note during the pendency of any restoration or repairs to or replacement of the Property, (iii) the available insurance proceeds are, in METLIFE's reasonable judgment, sufficient to fully and completely restore, repair or replace the Property, and (iv) Borrower provides evidence satisfactory to METLIFE that none of the tenants of the Property except North Star Auto Center, Inc., will terminate its lease agreements as a result of either the Loss or the repairs to or replacement of the Property. Borrower shall have the right to apply all insurance proceeds received in connection with such Loss either (a) to restore, repair, replace and rebuild the Property as nearly as possible to its value, condition and character immediately prior to such Loss, or (b) to the payment of the Indebtedness in such order as METLIFE may elect. If an Event of Default has occurred and is continuing hereunder at the time of such Loss, if METLIFE determines that Borrower will be unable to pay all amounts becoming due under the Note during the pendency of any restoration or repairs to or replacement of the Property, if the available insurance proceeds are insufficient, in METLIFE's judgment, to fully and completely restore. repair or replace the Property or if METLIFE believes that one or more tenants of the Property will terminate their lease agreements other than North Star Auto Center. Inc., as a result of either the Loss or the repairs to or replacement of the Property, then all of the insurance proceeds payable with respect to such Loss will be applied to the payment of the Indebtedness, or if so instructed by METLIFE. Borrower will promptly, at Borrower's sole cost and expense and regardless of whether sufficient insurance proceeds shall be available, commence to restore, repair, replace and rebuild the Property as nearly as possible to its value, condition, character immediately prior to such Loss. Borrower shall diligently prosecute any restoration, repairs or replacement of the Property undertaken by or on behalf of Borrower pursuant to this Section 5. All such work shall be conducted pursuant to written contracts approved by METLIFE in writing, which approval shall not be unreasonably withheld or delayed. Notwithstanding anything contained herein to the contrary, in the event the insurance proceeds received by METLIFE following any Loss are insufficient in METLIFE's judgment to fully and completely restore, repair or replace the Property, and if Borrower has complied with all of the other conditions described in this Section 5. Borrower may elect to restore, repair or replace the Property if it first deposits with METLIFE such additional sums as METLIFE determines are necessary in order to fully and completely restore, repair or replace the Property. In the event any insurance proceeds remain following the restoration, repair or replacement of the Property, such proceeds shall be applied to the Indebtedness in such order as METLIFE may elect. 6. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a) shall not commit waste or permit impairment or deterioration of the Property, (b) shall not abandon the Property, (c) shall restore or repair promptly and in a good and workmanlike manner all or any part of the Property to the equivalent of its original condition, or such other condition as METLIFE may approve in writing, in the event of any damage, injury or loss thereto, whether or not insurance proceeds are available to cover in whole or in part the costs of such restoration or repair but subject 6 to METLIFE's making insurance proceeds available, (d) shall keep the Property, including all improvements, fixtures, equipment, machinery and appliances thereon, in good repair and shall replace fixtures, equipment, machinery and appliances on the Property when necessary to keep such items in good repair, (e) shall comply with all laws, ordinances, regulations and requirements of any governmental body applicable to the Property, (f) if all or part of the Property is for rent or lease, then METLIFE, at its option after the occurrence of an Event of Default, may require Borrower to provide for professional management of the Property by a property manager satisfactory to METLIFE pursuant to a contract approved by METLIFE in writing, unless such requirement shall be waived by METLIFE in writing, (g) shall generally operate and maintain the Property in a manner to ensure maximum rentals, and (h) shall give notice in writing to METLIFE of and, unless otherwise directed in writing by METLIFE, appear in and defend any action or proceeding purporting to affect the Property, the security of this Instrument or the rights or powers of METLIFE hereunder. Neither Borrower nor any tenant or other person. without the written approval of METLIFE. shall remove, demolish or alter any improvement now existing or hereafter erected on the Property or any fixture, equipment, machinery or appliance in or on the Property except when incident to the replacement of fixtures, equipment, machinery and appliances with items of like kind. Non-structural alterations shall not require the consent of METLIFE. Borrower represents, warrants and covenants that the Property is and shall be in compliance with the Americans with Disabilities Act of 1990 and all of the regulations promulgated thereunder, as the same may be amended from time to time. 7. USE OF PROPERTY. Unless required by applicable law or unless METLIFE has otherwise agreed in writing, Borrower shall not allow changes in the use for which all or any part of the Property was intended at the time this Instrument was executed. Borrower shall not, without METLIFE's prior written consent, (i) initiate or acquiesce in a change in the zoning classification (including any variance under any existing zoning ordinance applicable to the Property), (ii) permit the use of the Property to become a non-conforming use under applicable zoning ordinances, (iii) file any subdivision or panel map affecting the Property, or (iv) amend, modify or consent to any easement or covenants, conditions and restrictions pertaining to the Property. 8. PROTECTION OF METLIFE'S SECURITY. If Borrower fails to perform any of the covenants and agreements contained in this Instrument, or if any action or proceeding is commenced which affects the Property or title thereto or the interest of METLIFE therein, including, but not limited to, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent then METLIFE at METLIFE's option may make such appearances, disburse such sums and take such action as METLIFE deems necessary, in its sole discretion, to protect METLIFE's interest, including, but not limited to, (i) disbursement of attorneys' fees, (ii) entry upon the Property to make repairs, and (iii) procurement of satisfactory insurance as provided in Section 5 hereof. Any amounts disbursed by METLIFE pursuant to this Section 8, with interest thereon, shall become additional Indebtedness of Borrower secured by this Instrument. Unless Borrower and METLIFE agree to other terms of payment. such amounts shall be immediately due and payable and shall bear interest from the date of disbursement at the highest rate which may be collected from Borrower under applicable law or, at METLIFE's option, the rate stated in the Note. Borrower hereby covenants and agrees that METLIFE shall be subrogated to the lien of any mortgage or other lien discharged, in whole or in part, by the Indebtedness. Nothing contained in this Section 8 shall require METLIFE to incur any expense or take any action hereunder. 9. INSPECTION. METLIFE may make or cause to be made reasonable entries upon the Property to inspect the interior and exterior thereof. 10. FINANCIAL DATA. Borrower will finish to METLIFE, and will cause any guarantor of the Indebtedness to finish METLIFE on request within ninety (90) days after the close of its fiscal year (i) annual balance sheet and profit and loss statements prepared in accordance with generally accepted accounting principles and practices consistently applied and, if METLIFE so requires, accompanied by the annual audit report of an independent certified public accountant reasonably acceptable to METLIFE, (ii) an annual operating statement, together with a complete rent roll and other supporting data reflecting all material information with respect to the operation of the Property and Improvements, and (iii) all other financial information and reports that METLIFE may from time to time 7 reasonably request including, if METLIFE so requires, income tax returns of Borrower and any guarantor of any portion of the Indebtedness, and financial statements of any tenants designated by METLIFE. METLIFE acknowledges that the financial statement of North Star Auto Center. Inc., may be unavailable. 11. CONDEMNATION. If the Property, or any part thereof, shall be condemned for any reason, including without limitation fire or earthquake damage, or otherwise taken for public or quasi-public use under the power of eminent domain, or be transferred in lieu thereof, all damages or other amounts awarded for the taking of, or injury to, the Property shall be paid to METLIFE who shall have the right, in its sole and absolute discretion, to apply the amounts so received against (a) the costs and expenses of METLIFE, including reasonable attorneys' fees incurred in connection with collection of such amounts, and (b) the balance against the Indebtedness; provided, however, that if (i) no Event of Default shall have occurred and be continuing hereunder, (ii) Borrower provides evidence satisfactory to METLIFE of its ability to pay all amounts becoming due under the Note during the pendency of any restoration or repairs to or replacement of the Property, (iii) METLIFE determines, in its reasonable discretion, that the proceeds of such award are sufficient to restore, repair, replace and rebuild the Property as nearly as possible to its value, condition and character immediately prior to such taking (or, if the proceeds of such award are insufficient for such purpose, if Borrower provides additional sums to METLIFE's satisfaction so that the aggregate of such sums and the proceeds of such award will be sufficient for such purpose), and (iv) Borrower provides evidence reasonably satisfactory to METLIFE that none of the tenants of the Property (other than North Star Auto Center. Inc.) will terminate their lease agreements as a result of either the condemnation or taking or the repairs to or replacement of the Property, the proceeds of such award, together with additional sums provided by Borrower, shall be placed in a separate account for the benefit of METLIFE and Borrower to be used to restore, repair, replace and rebuild the Property as nearly as possible to its value, condition and character immediately prior to such taking. All work to be performed in connection therewith shall be pursuant to a written contract therefor, which contract shall be subject to the prior approval of METLIFE, which approval shall not be unreasonably withheld or delayed. To the extent that any funds remain after the Property has been so restored and repaired, the same shall be applied against the Indebtedness in such order as METLIFE may elect. To enforce its rights hereunder, METLIFE shall be entitled to participate in and control any condemnation proceedings and to be represented therein by counsel of its own choice, and Borrower will deliver, or cause to be delivered to METLIFE such instruments as may be requested by it from time to time to permit such participation. In the event METLIFE, as a result of any such judgment decree or award, believes that the payment or performance of any of the Indebtedness is impaired, METLIFE may declare all of the Indebtedness immediately due and payable. 12. BORROWER AND LIEN NOT RELEASED. From time to time, METLIFE may, at option, without giving notice to or obtaining the consent of Borrower, Borrower's successors or assigns or of any junior lienholder or guarantors, without liability on METLIFE's part and notwithstanding Borrower's breach of, any covenant or agreement of Borrower in this Instrument, extend the time for payment of the Indebtedness or any part thereof, reduce the payments thereon, release anyone liable on any of the Indebtedness, accept an extension or modification or renewal note or notes therefor, modify the terms and time of payment of the Indebtedness, release from the lien of this Instrument any part of the Property, take or release other or additional security, reconvey any part of the Property, consent to any map or plan of the Property, consent to the granting of any easement, join in any extension or subordination agreement and agree in writing with Borrower to modify the rate of interest or period of amortization of the Note or change the amount of the monthly installments payable thereunder. Any actions taken by METLIFE pursuant to the terms of this Section 12 shall not affect the obligation of Borrower or Borrower's successors or assigns to pay the sums secured by this instrument and to observe the covenants of Borrower contained herein, shall not affect the guaranty of any person, corporation, partnership or other entity for payment of the Indebtedness, and shall not affect the lien or priority of the lien hereof on the Property. Borrower shall pay METLIFE a service charge, together with such title insurance premiums and attorneys' fees as may be incurred at METLIFE's option, for any such action if taken at Borrower's request. 13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by METLIFE in exercising any right or remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of any other right or remedy. The acceptance by METLIFE of payment of any sum secured by this Instrument after the due date of such payment shall not be a waiver of METLIFE's right to either require prompt payment when due of all other sums so secured or to declare a default for failure to make prompt payment of such other sums. 8 The procurement of insurance or the payment of taxes or other liens or charges by METLIFE shall not be a waiver of METLIFE's right to accelerate the maturity of the Indebtedness secured by this Instrument, nor shall METLIFE's receipt of any awards, proceeds or damages under Sections 5 and 11 hereof operate to cure or waive Borrower's default in payment of sums secured by this Instrument. 14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is intended to be a security agreement pursuant to the Uniform Commercial Code for any of the items specified above as pan of the Property which, under applicable law, may be subject to a security interest pursuant to the Uniform Commercial Code, and Borrower hereby grants and conveys to METLIFE a first and prior security interest in all of the Property that constitutes personalty, whether now owned or hereafter acquired. In addition, Borrower agrees to execute and deliver to METLIFE, upon METLIFE's request, any financing statements, as well as extensions, renewals and amendments thereof, and reproductions of this Instrument in such form as METLIFE may require to perfect a security interest with respect to the foregoing items. Borrower shall pay all costs of filing such financing statements and any extensions, renewals, amendments and releases thereof, and shall pay all costs and expenses of any record searches for financing statements METLIFE may require. Without the prior written consent of METLIFE, Borrower shall not create or suffer to be created pursuant to the Uniform Commercial Code any other security interest in said items, including replacements and additions thereto. Upon Borrower's breach of any covenant or agreement of Borrower contained in this Instrument, including the covenants to pay when due all sums secured by this Instrument METLIFE shall have the remedies of a secured party under the Uniform Commercial Code, and METLIFE may also invoke the remedies provided in Section 26 of this Instrument as to such items. In exercising any of said remedies METLIFE may proceed against the items of real property and any items of personal property specified above separately or together and in any order whatsoever, without in any way affecting the availability of METLIFE's remedies under the Uniform Commercial Code or of the remedies provided in Section 26 of this Instrument. Within ten (10) days following any request therefor by METLIFE, Borrower shall prepare and deliver to METLIFE a written inventory specifically listing all of the personal property covered by the security interest herein granted, which inventory shall be certified by Borrower as being true, correct, and complete. 15. LEASES OF THE PROPERTY. Borrower shall comply with and observe Borrower's material obligations as landlord prior to the expiration of any applicable period of grace contained therein under all Leases of the Property or any part thereof. (As used in this Instrument an obligation is "material" if the failure to perform it would give the tenant a right to withhold or abate rent or to terminate its Lease.) All Leases now or hereafter entered into will be in form and substance subject to the approval of METLIFE. All Leases of the Property shall specifically provide that such Leases are subordinate to this Instrument; that the tenant attorns to METLIFE, such attornment to be effective upon METLIFE's acquisition of title to the Property; that the tenant agrees to execute such further evidences of attornment as METLIFE may from time to time request; that the attornment of the tenant shall not be terminated by foreclosure. Borrower shall not, without METLIFE's written consent, request or consent to the subordination of any Lease of all or any part of the Property to any lien subordinate to this Instrument. If Borrower becomes aware that any tenant proposes to do, or is doing, any act or thing which may give rise to any right of set-off against rent Borrower shall (i) take such steps as shall be reasonably calculated to prevent the accrual of any right to a set-off against rent, (ii) immediately notify METLIFE thereof in writing and of the amount of said set-off's, and (iii) within ten 10) days after such accrual, reimburse the tenant who shall have acquired such right to set-off or take such other steps as shall effectively discharge such setoff and as shall assure that rents thereafter due shall continue to be payable without set-off or deduction, subject to Borrower's right to contest any such deduction or set-off by appropriate proceedings. Upon METLIFE's receipt of notice of the occurrence of any default or violation by Borrower of any of its obligations under the Leases, METLIFE shall have the immediate right, but not the duty or obligation, without prior written notice to Borrower or to any third party, to enter upon the Property and to take such actions as METLIFE may deem necessary to cure the default or violation by Borrower under the Leases. The costs incurred by METLIFE in taking any such actions pursuant to this paragraph shall become part of the Indebtedness, shall bear interest at the rate provided in the Note, and shall be payable by Borrower to METLIFE on demand. METLIFE shall have no liability to Borrower or to any third party for any actions taken by METLIFE or not taken pursuant to this paragraph. 16. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is distinct and cumulative to all other rights or remedies under this Instrument or afforded by law or equity, and may be exercised concurrently, independently, or successively, in any order whatsoever. 9 17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER; ASSUMPTION. METLIFE may, at its option, declare all sums secured by this Instrument to be immediately due and payable, and METLIFE may invoke any remedies permitted by Section 26 of this Instrument, if title to the Property is changed without the prior written consent of METLIFE, which consent shall be at METLIFE's sole discretion. Any transfer of any interest in the Property or in the income therefrom, by sale, lease (except for leases to tenants in the ordinary course of managing income property which are approved by METLIFE pursuant to Section 15 of this Instrument), contract, mortgage, deed of trust, further encumbrance or otherwise (including any such transfers as security for additional financing of the Property), except transfers and changes in ownership by devise or descent, shall be considered a change of title. METLIFE shall have the right to condition its consent to any proposed sale or transfer described in this Section 17 upon, among other things, METLIFE's approval of the transferee's creditworthiness and management ability and the transferee's execution, prior to the sale or transfer, of a written assumption agreement containing such terms as METLIFE may require, including, if required by METLIFE, the imposition of an assumption fee of one percent (1%) of the then outstanding balance of the Indebtedness. Consent by METLIFE to one transfer of the Property shall not constitute consent to subsequent transfers or waiver of the provisions of this Section 17. No transfer by Borrower shall relieve Borrower of liability for payment of the Indebtedness. The foregoing notwithstanding, Borrower shall have a one-time right, without further consent, to transfer the Property to an entity in which Borrower owns a controlling interest. Borrower shall give METLIFE thirty (30) days prior written notice of its intent to effect such a transfer. In lieu of the aforementioned one percent (l%) fee, Borrower shall pay to METLIFE a transfer fee of $5,000. In case of any transfer by Borrower, Borrower shall reimburse METLIFE for its attorneys' fees, recording costs, title charges, and other third-party costs. 18. NOTICE. Except for any notice required under applicable law to be given in another manner, any and all notices, elections, demands, or requests permitted or required to be made under this Instrument or under the Note shall be in writing, signed by the party giving such notice, election, demand or request, and shall be sent by registered, certified, or Express United States mail, postage prepaid, or by Federal Express or similar service requiring a receipt, to the other party at the address stated above, or to such other party and at such other address within the United States of America as any party may designate in writing as provided herein. The date of receipt of such notice, election, demand or request shall be the earliest of (i) the date of actual receipt, (ii) three (3) days after the date of mailing by registered or certified mail, (iii) one (1) day after the date of mailing by Express Mail or the delivery (for redelivery to Federal Express or another similar service requiring a receipt, or (iv) the date of personal delivery (or refusal upon presentation for delivery). 19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS; CAPTIONS. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective heirs, successors and assigns of METLIFE and Borrower, subject to the provisions of Section 17 hereof. If Borrower is comprised of more than one person or entity, whether as individuals, partners, partnerships or corporations, each such person or entity shall be jointly and severally liable for Borrower's obligations hereunder. In exercising any rights hereunder or taking any actions provided for herein, METLIFE may act through its employees, agents or independent contractors as authorized by METLIFE. The captions and headings of the sections of this Instrument are for convenience only and are not to be used to interpret or define the provisions hereof. 20. WAIVER OF STATUTE OF LIMITATIONS. [DELETED.] 21. WAIVER OF MARSHALLING. Notwithstanding the existence of any other security interests in the Property held by METLIFE or by any other party, METLIFE shall have the right to determine the order in which any or all of the Property shall be subjected to the remedies provided herein. METLIFE shall have the right to determine the order in which any or all portions of the Indebtedness secured hereby are satisfied from the proceeds realized upon the exercise of the remedies provided herein. Borrower, any party who consents to this Instrument and any party who now or hereafter acquires a security interest in the Property and who has actual or constructive notice hereof hereby waives any and all right to require the marshalling of assets in connection with the exercise of any of the remedies permitted by applicable law or provided herein. 10 22. HAZARDOUS WASTE. (a) Borrower has furnished to METLIFE a Phase I Environmental Site Assessment dated January 2, 1996, prepared by AquaTerra Environmental Sciences Corp., supplemented by a letter dated March 13, 1996, and an Environmental Questionnaire dated March 5, 1996 (collectively, the "Report"). Except as disclosed to METLIFE in the Report, Borrower has received no notification of any kind suggesting that the Property or any adjacent property is or may be contaminated with any hazardous waste or materials or is or may be required to be cleaned up in accordance with any applicable law or regulation; and Borrower further represents and warrants that, except as previously disclosed to METLIFE in writing, to the best of its knowledge as of the date hereof after due and diligent inquiry, there are no hazardous waste or materials located in, on or under the Property or any adjacent property, or incorporated in any Improvements, nor has the Property or any adjacent property ever been used as a landfill or a waste disposal site, or a manufacturing, handling, storage, distribution or disposal facility for hazardous waste or materials. As used herein, the term "hazardous waste or materials" includes any substance or material defined in or designated as hazardous or toxic wastes, hazardous or toxic material, a hazardous, toxic or radioactive substance, or other similar term, by any federal, state or local statute, regulation or ordinance now or hereafter in effect. Borrower shall promptly comply with all statutes, regulations and ordinances, and with all orders, decrees or judgments of governmental authorities or courts having jurisdiction, relating to the use, collection, treatment, disposal, storage, control, removal or cleanup of hazardous waste or materials in, on or under the Property or any adjacent property, or incorporated in any Improvements, at Borrower's expense. In the event that METLIFE at any time believes that the property is not free of all hazardous waste or materials or that Borrower has violated any applicable environmental law with respect to the Property, then immediately upon request by METLIFE, Borrower shall obtain and furnish to METLIFE, at Borrower's sole cost and expense, an environmental audit and inspection of the Property from an expert satisfactory to METLIFE. In the event that Borrower fails to immediately obtain such audit or inspection, METLIFE or its agents may perform or obtain such audit or inspection at Borrower's sole cost and expense. METLIFE may, but is not obligated to, enter upon the Property and take such actions and incur such costs and expenses to effect such compliance as it deems advisable to protect its interest in the Property; and whether or not Borrower has actual knowledge of the existence of hazardous waste or materials on the Property or any adjacent property as of the date hereof. Borrower shall reimburse METLIFE as provided in Section 23 below for the full amount of all costs and expenses incurred by METLIFE prior to METLIFE acquiring title to the Property through foreclosure or acceptance of a deed in lieu of foreclosure, in connection with such compliance activities. Neither this provision nor any of the other Loan Documents shall operate to put METLIFE in the position of an owner of the Property prior to any acquisition of the Property by METLIFE. The rights granted to METLIFE herein and in the other Loan Documents are granted solely for the protection of METLIFE's lien and security interest covering the Property, and do not grant to METLIFE the right to control Borrower's actions, decisions or policies regarding hazardous waste or materials. (b) The parties acknowledge that the Report revealed the presence on the Property of certain friable asbestos, consisting of (i) 5 square feet and 5 linear feet of pipe insulation, (ii) 100 square feet of boiler insulation, (both (i) and (ii) being at 36-20 Steinway Street in the south basement), and (iii) ceiling tiles containing friable asbestos (at 38-15 Northern Boulevard). In addition, certain other suspected non-friable asbestos vinyl floor tiles at 38-15 Northern Boulevard and 36-20 Steinway Street were identified. The friable asbestos pipe insulation, boiler insulation, and ceiling tiles shall be removed before October 1, 1996. The non-friable suspected asbestos-containing floor tiles need not be removed at this time; however, an "operations and maintenance" program as recommended in Appendix E of the report shall be established by Borrower promptly and shall be followed. 23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay within ten (10) days after written demand from METLIFE all sums advanced by METLIFE and all costs and expenses incurred by METLIFE in taking any actions pursuant to the Loan Documents including attorneys' fees and disbursements, accountants' fees, appraisal and inspection fees and the cost for title reports and guaranties, together with interest thereon at the rate applicable under the Note after an Event of Default from the date such costs were advanced or incurred. All such costs and expenses incurred by METLIFE, and advances made, shall constitute advances under this Instrument to protect the Property and shall be secured by and have the same priority as the lien of this Instrument. If Borrower fails to pay any such advances, costs and expenses and interest thereon, METLIFE may apply any undisbursed loan proceeds to pay the same, and, without foreclosing the lien of this Instrument, may at its option commence an independent action against 11 Borrower for the recovery of the costs, expenses and/or advances, with interest, together with costs of suit, costs of title reports and guaranty of title, disbursements of counsel and reasonable attorneys' fees incurred therein or in any appeal therefrom. 24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and valuable consideration, the receipt of which is hereby acknowledged, to secure the Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell, transfer, assign, convey, set over and deliver unto METLIFE all right, title and interest of Borrower in, to and under the Leases of the Property, whether now in existence or hereafter entered into, and all guaranties, amendments, extensions and renewals of said Leases and any of them, and all rents, income and profits which may now or hereafter be or become due or owing under the Leases, and any of them, or on account of the use of the Property. Borrower represents, warrants, covenants and agrees with METLIFE as follows: (a) The sole ownership of the entire lessor's interest in the Leases is vested in Borrower, and Borrower has not, and shall not, perform any acts or execute any other instruments which might prevent METLIFE from fully exercising its rights with respect to the Leases under any of the terms, covenants and conditions of this Instrument. (b) The Leases are and shall be valid and enforceable in accordance with their terms and have not been and shall not be altered, modified, amended, terminated, canceled, renewed or surrendered except as approved in writing by METLIFE. The terms and conditions of the Leases have not been and shall not be waived in any manner whatsoever except as approved in writing by METLIFE. (c) Borrower shall not materially alter the term or the amount of rent payable under any Lease without prior written notice to METLIFE and METLIFE's consent, which shall not be unreasonably withheld. (d) To the best of Borrower's knowledge there are no defaults now existing under any of the Leases and there exists no state of facts which, with the giving of notice or lapse of time or both, would constitute a default under any of the Leases. (e) Borrower shall give prompt written notice to METLIFE of any notice received by Borrower claiming that a default has occurred under any of the Leases on the part of Borrower, together with a complete copy of any such notice. (f) Each of the Leases shall remain in full force and effect irrespective of any merger of the interest of lessor and any lessee under any of the leases. (g) Borrower will not permit any Lease to become subordinate to any lien other than the lien of this Instrument. This assignment is absolute, is effective immediately, and is irrevocable by Borrower so long as the Indebtedness remains outstanding. Notwithstanding the foregoing, until a Notice is sent to Borrower in writing that an Event of Default has occurred (which notice is hereafter called a "Notice"). Borrower may receive, collect and enjoy the rents, income and profits accruing from the Property. Upon the occurrence of an Event of Default hereunder METLIFE may, at its option, after service of a Notice, receive and collect all such rents, income and profits from the Property as they become due. METLIFE shall thereafter continue to receive and collect all such rents, income and profits, until METLIFE shall otherwise agree in writing. Borrower hereby irrevocably appoints METLIFE its true and lawful attorney with power of substitution and with full power for METLIFE in its own name and capacity or in the name and capacity of Borrower, from and after service of a Notice, to demand, collect receive and give complete acquittances for any and all rents, income and profits accruing from the Property, either in its own name or in the name of Borrower or otherwise, which METLIFE may deem 12 necessary or desirable in order to collect and enforce the payment of the rents, income and profits of and from the Property, and to demand, collect, receive, endorse, and deposit all checks, drafts, money orders, or notes given in payment of such rents. METLIFE shall not be liable to or prejudiced by any loss of any note, checks drafts, etc., unless such loss is due to the gross negligence or willful misconduct of METLIFE. METLIFE shall apply the rents received from Borrower's lessees, to accrued interest and principal due under the Note. If not Event of Default remains uncured, amounts received in excess of the aggregate monthly payment due under the Note shall be remitted to Borrower in a timely manner. Nothing contained herein shall be construed to constitute METLIFE as a mortgage-in-possession in the absence of its physically taking possession of the Premises. Lessees of the Property are hereby expressly authorized and directed, following receipt of a Notice from METLIFE, to pay any and all amounts due Borrower pursuant to the Leases to METLIFE or such nominee as METLIFE may designate in a writing delivered to and received by such lessees, and the lessees of the Property are expressly relieved of any and all duty, liability or obligation to Borrower in respect of all payments so made. Upon the occurrence of any Event of Default, from and after service of a Notice, METLIFE is hereby vested with full power to use all measures, legal and equitable, deemed by it to be necessary or proper to enforce this Section 24 and to collect the rents, income and profits assigned hereunder, including the right of METLIFE or its designee, to enter upon the Property, or any part thereof, and take possession of all or any part of the Property together with all personal property, fixtures, documents, books, records, papers and accounts of Borrower relating thereto, and METLIFE may exclude Borrower, its agents and servants, wholly therefrom. Borrower hereby grants full power and authority to METLIFE to exercise all rights, privileges and powers herein granted at any and all times after service of a Notice, with full power to use and apply all of the rents and other income herein assigned to the payment of the costs of managing and operating the Property and of any indebtedness or liability of Borrower to METLIFE, including but not limited to the payment of taxes, special assessments, insurance premiums, damage claims, the costs of maintaining, repairing, rebuilding and restoring the improvements on the Property or of making the same rentable, reasonable attorneys' fees incurred in connection with the enforcement of this Instrument, and of principal and interest payments due from Borrower to METLIFE on the Note and this Instrument, all in such order as METLIFE may determine. METLIFE shall be under no obligation to exercise or prosecute any of the rights or claims assigned to it hereunder or to perform or carry out any of the obligations of the lessor under any of the Leases and does not assume any of the liabilities in connection with or arising or growing out of the covenants and agreements of Borrower in the Leases. It is further understood that the assignment set forth in this Section 24 shall not operate to place responsibility for the control, care, management or repair of the Property, or parts thereof, upon METLIFE, nor shall it operate to make METLIFE liable for the performance of any of the terms and conditions of any of the Leases, or for any waste of the Property by any lessee under any of the Leases, or any other person, or for any dangerous or defective condition of the Property or for any negligence in the management upkeep, repair or control of the Property resulting in loss or injury or death to any lessee, licensee, employee or stranger. 25. DEFAULT. The following shall each constitute an event of default ("Event of Default"): (a) Failure of or refusal by Borrower to pay any portion of the sums secured by this Instrument when due, and such failure or refusal shall continue for a period often (10) days after written notice is given to Borrower by METLIFE specifying such failure; or (b) Failure of Borrower within the time required by this Instrument to make any payment for taxes, insurance or for reserves for such payments, or any other payment necessary to prevent filing of or discharge of any lien, and such failure shall continue for a period of ten (10) days after written notice is given to Borrower by METLIFE specifying such failure; or (c) Failure by Borrower to observe or perform any obligations of Borrower to METLIFE on or with respect to any transactions, debts, undertakings or agreements other than the transaction evidenced by the Note, following the giving of any notice required thereunder and/or the expiration of any applicable period of grace provided therein; or 13 (d) Failure of Borrower to make any payment or perform any obligation under any superior liens or encumbrances on the Property, within the time required thereunder, or commencement of any suit or other action to foreclose any superior liens or encumbrances; or (e)Failure by Borrower to observe or perform any of its material obligations under any of the Leases, which failure is not cured within applicable period of grace provided therein; or (f) The Property is transferred or any agreement to transfer any part or interest in the Property in any manner whatsoever is made or entered into without the prior written consent of METLIFE, except as specifically allowed under this Instrument, including without limitation creating or allowing any liens on the Property or leasing any portion of the Property; or (g) Filing by Borrower of a voluntary petition in bankruptcy or filing by Borrower of any petition or answer seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, or similar relief for itself under any present or future federal, state or other statute, law or regulation relating to bankruptcy, insolvency or other relief for debtors, or the seeking, consenting to, or acquiescing by Borrower in the appointment of any trustee, receiver, custodian, conservator or liquidator for Borrower, any part of the Property, or any of the income or rents of the Property, or the making by Borrower of any general assignment for the benefit of creditors, or the inability of or failure by Borrower to pay its debts generally as they become due, or the insolvency on a balance sheet basis or business failure of Borrower, or the making or suffering of a preference within the meaning of federal bankruptcy law or the making of a fraudulent transfer under applicable federal or state law, or concealment by Borrower of any of its property in fraud of creditors, or the imposition of a lien upon any of the property of Borrower which is not discharged in the manner permitted by Section 4 of this Instrument, or the giving of notice by Borrower to any governmental body of insolvency or suspension of operations; or (h) Filing of a petition against Borrower seeking any reorganization, arrangement, composition, readjustment, liquidation, or similar relief under any present or future federal, state or other law or regulation relating to bankruptcy, insolvency or other relief for debts, or the appointment of any trustee, receiver, custodian, conservator or liquidator of Borrower, of any part of the Property or of any of the income or rents of the Property; unless such petition shall be dismissed within ninety (90) days after such filing, but in any event prior to the entry of an order, judgment or decree approving such petition; or (i) The institution of any proceeding for the dissolution or termination of Borrower voluntarily, involuntarily, or by operation of law (provided, however, that as to an involuntary proceeding, Borrower shall have ninety (90) days to secure dismissal thereof); or (j) A material adverse change occurs in the assets, liabilities or net worth of Borrower or any of the guarantors of the indebtedness evidenced by the Note from the assets, liabilities or net worth of Borrower or any of the guarantors of the indebtedness evidenced by the Note previously disclosed to METLIFE; or (k) Any warranty, representation or statement finished to METLIFE by or on behalf of Borrower under the Note, this Instrument, any of the other Loan Documents or the Certificate and Indemnity Agreement Regarding Hazardous Substances, shall prove to have been false or misleading in any material respect or (l) Failure of Borrower to observe or perform any other covenant or condition contained herein and such default shall continue for thirty (30) days after notice is given to Borrower specifying the nature of the failure (or, if the default cannot be cured within such period, within such cure period Borrower fails within such time to commence and pursue curative action with reasonable diligence or fails at any time after the expiration of such cure period to continue with diligence all necessary curative actions); provided, however, that no notice of default and no opportunity to cure shall be required with respect to defaults under Section 17 14 or Section 22 hereof or if during the prior twelve (12) months METLIFE has already sent two (2) notices to Borrower concerning default in performance of the same obligation; or (m) Failure of Borrower to observe or perform any other obligation under any other Loan Document or the Certificate and Indemnity Regarding Hazardous Substances when such observance or performance is due, and such failure shall continue beyond the applicable cure period set forth in such Loan Document (or thirty (30) days, if no cure period is specified), or if the default cannot be cured within such applicable cure period. Borrower fails within such time to commence and pursue curative action with reasonable diligence or fails at any time after expiration of such applicable cure period to continue with reasonable diligence all necessary curative actions. No notice of default and no opportunity to cure shall be required if during the prior twelve (12) months METLIFE has already sent a notice to Borrower concerning default in performance of the same obligation: or (n) Borrower's abandonment of the Property; or (o) Any of the foregoing events occur with respect to any tenant of the Property (excluding North Star Auto Center or any successor lessee of the 38-15 Northern Boulevard portion of the Property), with respect to any guarantor of any of Borrower's obligations in connection with the Indebtedness or with respect to any guarantor of any tenant's obligations relating to the Property, or such guarantor dies or becomes incompetent. 26. RIGHTS AND REMEDIES ON DEFAULT. 26.1 Remedies. Upon the occurrence of any Event of Default and at any time thereafter, METLIFE may exercise any one or more of the following rights and remedies: (a) METLIFE may declare all sums secured by this Instrument immediately due and payable, including any prepayment premium which Borrower would be required to pay. (b) METLIFE shall have the right to foreclose this Instrument in accordance with applicable law by judicial proceedings, or to foreclose this Instrument under the power of sale herein granted pursuant to sections 1401 through 1461 of the New York Real Property Law (Actions & Proceedings), after publishing, posting, and serving notice as required by section 1402 of said law. METLIFE may bid and purchase at such sale. If at the time of the sale METLIFE shall deem it best for any reason to postpone or continue said sale for one or more days it may do so, in which event notice of such postponement or continuance shall be made in such manner as the METLIFE may deem sufficient under section 1406 of the New York Real Property Law (Actions & Proceedings). METLIFE's costs and expenses of sale shall be an additional indebtedness secured hereby. (c) In the event of any foreclosure, to the extent permitted by applicable law, METLIFE will be entitled to a judgment which will provide that if the foreclosure sale proceeds are insufficient to satisfy the judgment, execution may issue for any amount by which the unpaid balance of the obligations secured by this Instrument exceeds the net sale proceeds payable to METLIFE. (d) With respect to all or any part of the Property that constitutes personalty, METLIFE shall have all rights and remedies of secured party under the Uniform Commercial Code. (e) METLIFE shall have the right to have a receiver appointed to take possession of any or all of the Property, with the power to protect and preserve the Property, to operate the Property preceding foreclosure or sale, to collect all the rents and revenues from the Property and apply the proceeds, over and above cost of the receivership, against the sums due under this Instrument, and to exercise all of the rights with respect to the Property described in Section 24 above. The receiver may serve without bond if permitted by law. METLIFE's right to the appointment of a receiver shall exist whether or not apparent value of the Property exceeds the sums due under this Instrument by a substantial amount. 15 (f) In the event Borrower remains in possession of the Property after the Property is sold as provided above or METLIFE otherwise becomes entitled to possession of the Property upon default of Borrower, Borrower shall become a tenant at will of METLIFE or the purchaser of the Property and shall pay a reasonable rental for use of the Property while in Borrower's possession. (g) METLIFE shall have any other right or remedy provided in this Instrument, the Note, or any other Loan Document or instrument delivered by Borrower in connection therewith, or available at law, in equity or otherwise. (h) METLIFE shall have all the rights and remedies set forth in Sections 23 and 24. 26.2 Sale of the Property. In exercising its rights and remedies, METLIFE may, at METLIFE's sole discretion, cause all or any part of the Property to be sold as a whole or in parcels, and certain portions of the Property may be sold without selling other portions. METLIFE may bid at any public sale on all or any portion of the Property. 26.3 Notice of Sale. METLIFE shall give Borrower reasonable notice of the time and place of any public sale of any personal property or of the time after which any private sale or other intended disposition of the personal property is to be made. Reasonable notice shall mean notice given in accordance with applicable law, including notices given in the manner and at the times required for notices in a nonjudicial foreclosure. 26.4 Waiver; Election of Remedies. A waiver by either party of a breach of a provision of this Instrument shall not constitute a waiver of or prejudice the party's right otherwise to demand strict compliance with that provision or any other provision. Election by METLIFE to pursue any remedy shall not exclude pursuit of any other remedy, and all remedies of METLIFE under this Instrument are cumulative and not exclusive. An election to make expenditures or take action to perform an obligation of Borrower shall not affect METLIFE's right to declare a default and exercise its remedies under this Instrument. 27. SATISFACTION OF MORTGAGE. Upon payment of all sums secured by this Instrument, METLIFE shall execute a satisfaction (or, at the option of Borrower, an assignment) of this Instrument and shall surrender this Instrument and all notes evidencing Indebtedness secured by this Instrument to the person or persons legally entitled thereto. Such person or persons shall pay METLIFE's costs incurred in connection with satisfaction of this Instrument. 28. [INTENTIONALLY DELETED] 29. IMPOSITION OF TAX BY STATE. 29.1 State Taxes Covered. The following constitute state taxes to which this Section applies: (a) A specific tax upon mortgages or upon all or any part of the indebtedness secured by a mortgage. (b) A specific tax on a mortgagor which the taxpayer is authorized or required to deduct from payments on the indebtedness secured by a mortgage. (c) A tax on a mortgage chargeable against the mortgagee or the holder of the note secured. (d) A specific tax on all or any portion of the indebtedness or on payments of principal and interest made by a Mortgagor. 16 29.2 Remedies. If any state tax to which this Section applies is enacted subsequent to the date of this Instrument, this shall have the same effect as an Event of Default and METLIFE may exercise any or all of the remedies available to it unless the following conditions are met: (a) Borrower may lawfully pay the tax or charge imposed by state tax, and (b) Borrower pays the tax or charge within thirty- (30) days after notice from METLIFE that the tax law has been enacted. 30. ATTORNEYS' FEES. In the event suit or action is instituted to enforce or interpret any of the terms of this Instrument (including without limitation efforts to modify or vacate any automatic stay or injunction, the prevailing party shall be entitled to recover all expenses reasonably incurred at, before and after trial and on appeal whether or not taxable as costs, or in any bankruptcy proceeding including, without limitation, attorneys' fees, witness fees (expert and otherwise), deposition costs, copying charges and other expenses. Whether or not any court action is involved, all reasonable expenses, including but not limited to the costs of searching records, obtaining title reports, surveyor reports, and title insurance, incurred by METLIFE that are necessary at any time in METLIFE's opinion for the protection of its interest or enforcement of its rights shall become a part of the Indebtedness payable on demand and shall bear interest from the date of expenditure until repaid at the interest rate as provided in the Note. The term "attorneys' fees" as used in the Loan Documents shall be deemed to mean such fees as are reasonable and are actually incurred. 31. GOVERNING LAW; SEVERABILITY. This Instrument shall be governed by the law of the State of New York applicable to contracts made and to be performed therein (excluding choice-of-law principles). In the event that any provision or clause of this Instrument or the Note conflicts with applicable law, such conflict shall not affect other provisions of this Instrument or the Note which can be given effect without the conflicting provision, and to this end the provisions of this Instrument and the Note are declared to be severable. 32. TIME OF ESSENCE. Time is of the essence of this Instrument. 33. CHANGES IN WRITING. This Instrument and any of its terms may only be changed, waived, discharged or terminated by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any agreement subsequently made by Borrower or METLIFE relating to this Instrument shall be superior to the rights of the holder of any intervening lien or encumbrance. 34. NO OFFSET. Borrower's obligation to make payments and perform all obligations, covenants and warranties under this Instrument and under the Note shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation any setoff, counterclaim, abatement, suspension, recoupment, deduction, defense or other right that Borrower or any guarantor may have or claim against METLIFE or any entity participating in making the loan secured hereby. The foregoing provisions of this section, however, do not constitute a waiver of any claim or demand which Borrower or any guarantor may have in damages or otherwise against METLIFE or any other person, or preclude Borrower from maintaining a separate action thereon or from maintaining or bringing a mandatory counterclaim; provided, however, that Borrower waives any right it may have at law or in equity to consolidate such separate action with any action or proceeding brought by METLIFE. 35. AUTHORIZATION TO INSERT. [DELETED.] 36. MAXIMUM INTEREST CHARGES. Notwithstanding anything contained herein or in any of the Loan Documents to the contrary, in no event shall METLIFE be entitled to receive interest on the loan secured by this Instrument (the "Loan") in amounts which, when added to all of the other interest charged, paid to or received by METLIFE on the Loan, causes the rate of interest on the Loan to exceed the highest lawful rate. Borrower and METLIFE intend to comply with the applicable law governing the highest lawful rate and the maximum amount of interest payable on or in connection with the Loan. If the applicable law is ever judicially interpreted so as to render usurious any amount called for under the Loan Documents, or contracted for, charged, taken, reserved or received with 17 respect to the Loan, or if acceleration of the final maturity date of the Loan or if any prepayment by Borrower results in Borrower having paid or demand having been made on Borrower to pay, any interest in excess of the amount permitted by applicable law, then all excess amounts theretofore collected by METLIFE shall be credited on the principal balance of the Note (or, if the Note has been or would thereby be paid in full, such excess amounts shall be refunded to Borrower), and the provisions of the Note, this Instrument and any demand on Borrower shall immediately be deemed reformed and the amounts thereafter collectible thereunder and hereunder shall be reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for thereunder and hereunder. The right to accelerate the final maturity date of the Loan does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and METLIFE does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to METLIFE for the use, forbearance or detention of the Loan shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread through the full term of the Loan until payment in full so that the rate or amount of interest on account of the Loan does not exceed the applicable usury ceiling. By execution of this Instrument, Borrower acknowledges that it believes the Loan to be nonusurious and agrees that if, at any time, Borrower should have reason to believe that the Loan is in fact usurious, it will give METLIFE written notice of its belief and the reasons why Borrower believes the Loan to be usurious, and Borrower agrees that METLIFE shall have ninety (90) days following its receipt of such written notice in which to make appropriate refund or other adjustment in order to correct such condition if it in fact exists. 37. NEW YORK REAL PROPERTY LAW 254. The clauses and covenants contained herein which are construed by section 254 of the New York Real Property Law shall be construed as provided in that section, except as otherwise provided in this Instrument. The additional clauses and covenants contained herein shall afford rights supplemental to and not exclusive of the rights conferred by the clauses and covenants construed by such section 254 and shall not impair, modify, alter or defeat such rights notwithstanding that such additional clauses and covenants may relate to the same subject matter or provide for different or additional rights in the same or similar contingencies as the clauses and covenants construed by section 254. The rights of METLIFE arising under the clauses and covenants contained in this Instrument shall be separate, distinct and cumulative, and none of them shall be in exclusion of any other provision, anything herein or otherwise to the contrary notwithstanding. 38. LIEN LAW COVENANT. Pursuant to section 13 of the Lien Law of New York, Borrower shall receive the advances secured hereby and shall hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the cost of any improvement and shall apply such advances first to the payment of the cost of any such improvement on the Property before using any part of the same for any other purpose. IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT. 18 IN WITNESS WHEREOF, Borrower and METLIFE have executed this Instrument or have caused the same to be executed by their representatives thereunto duly authorized. BORROWER WESTERN BEEF-STEINWAY STREET, INC., A New York corporation By: /s/ [SIGNATURE] Title: /s/ [SIGNATURE] Attest: /s/ [SIGNATURE] Title: /s/ [SIGNATURE] [SEAL] LENDER: METLIFE CAPITAL FINANCIAL CORPORATION, A Delaware corporation By: /s/ [SIGNATURE] Title: /s/ [SIGNATURE] Exhibits: Exhibit A - Description of Property Schedule 1 - Permitted Exceptions 19 STATE OF NEW YORK ) ) COUNTY OF NEW YORK ) ACKNOWLEDGEMENT ON THE 19th day of March, 1996, before me personally came Peter Castellana to me known, who being by me duly sworn did say that he resides at 9 Colonial Drive, Upper Bronxville; that he is the President of Western Beef-Steinway Street. Inc., a New York corporation, the corporation described in and which executed the above instrument; that he knows the seal of said corporation, that the seal affixed to said instrument is said corporate seal; that it was so affixed by order of the Board of Directors of said corporation; and that he signed his name thereto by like order, as the free act and deed of such corporation for the uses and purposes set forth therein. /s/ SIGNATURE Notary Public My commission expires: [SEAL] Gary Pollard NOTARY PUBLIC, STATE OF NEW YORK No. 31-4827331 Qualified in New York County Commission Expires April 30, 1996 STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) ACKNOWLEDGEMENT On this 13th day of March 1996, before me, a Notary Public in and for the State of Washington, personally appeared Peter ???????? who resides at ???????, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person who executed this instrument, on oath stated that she was authorized to execute this instrument, and acknowledged it as the ?????? of METLIFE CAPITAL FINANCIAL CORPORATION to be the free and voluntary act and deed of said corporation for the uses and purposes mentioned in this instrument. IN WITNESS WHREOF, I have hereunto set my hand and official seal the day and year first above written. /S/ [SIGNATURE] /s/ [SIGNATURE] (Print Name) NOTARY PUBLIC in and for the State of Washington, residing at {ILLEGIBLE] My appointment expires 10/20/99 [SEAL] BEVERLY G. EWING STATE OF WASHINGTON NOTARY PUBLIC COMMISSION EXPIRES 10-23-99 21 EXHIBIT A PARCEL A (LOT 5 IN BLOCK 665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the southeasterly side of 38th Street, (60 feet wide) distant 162.80 feet northeasterly from the corner formed by the intersection of the southeasterly side of 38th Street with the northwesterly side of Northern Blvd., 100 feet wide; RUNNING THENCE northeasterly along the southeasterly side of 38th Street, 75.02 feet; THENCE southeasterly at right angles to the southeasterly Side of 38th Street, 54.35 feet; THENCE still southeasterly on a line forming an interior angle of 221 degrees 57 minutes 20 seconds with the preceding course 118.56 feet to the northwesterly side of Northern Blvd.; THENCE southwesterly along the northwesterly side of Northern Blvd., 75.37 feet; THENCE northwesterly at right angles to the northwesterly side of Northern Blvd., 90.22 feet; THENCE still northwesterly on a line forming an interior angle of 221 degrees 57 minutes 20 seconds with the preceding course, 25.03 feet to the southeasterly side of 38th Street at the point or place of BEGINNING. PARCEL B (LOT 7 IN BLOCK 2665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the southeasterly side of 38th Street (60 feet wide) distant 237.82 feet (Actual) (237.80 feet Deed) northeasterly from the corner formed by the intersection of the southeasterly side of 38th Street with the northwesterly side of Northern Blvd., 100 feet wide; RUNNING THENCE northeasterly along the southeasterly side of 38th Street, 39.73 feet; THENCE southeasterly on a line forming an exterior angle of 89 degrees 44 minutes 02 seconds with the southeasterly side of 38th Street, 94.78 feet; THENCE southwesterly and parallel with Steinway Street, 15.07 feet; THENCE southeasterly at right angles to Steinway Street, 90 feet to the northwesterly side of Steinway Street; THENCE southwesterly along the northwesterly side of Steinway Street, 57.33 feet to the corner formed by the intersection of the northwesterly side of Steinway Street with the northwesterly side of Northern Blvd.; THENCE southwesterly along the northwesterly side of Northern Blvd., 63.08 feet; THENCE northwesterly at right angles to the northwesterly side of Northern Blvd., 118,56 feet; THENCE still northwesterly at right angles to the southeasterly side of 38th Street and on a line forming in angle of 221 degrees 57 minutes 30 seconds with the preceding curse, 54.35 feet to the southeasterly side of 38th Street at the point or place of BEGINNING. PARCEL C (LOT 31 IN BLOCK 2665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the westerly side of Steinway Street, formerly known as Steinway Avenue and also formerly known as 10th Avenue, distant 100 feet southerly from the corner formed by the intersection of the southerly side of Thirty-sixth Avenue, formerly known as Washington Avenue with the westerly side of Steinway Street; RUNNING THENCE westerly parallel with Thirty-sixth Avenue and part of the distance through a party wall; 100 feet; THENCE southerly parallel with Steinway Street, 75 feet; THENCE easterly parallel with Thirty-sixth Avenue, 100 feet to the westerly side of Steinway Street; THENCE northerly along the westerly side of Steinway Street, 75 feet to the point or place of BEGINNING. PARCEL D (LOT 34 IN BLOCK 665): ALL that certain piece or parcel of land, situate, lying and being in the First Ward of the Borough of Queens, (formerly Long Island City) County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the northwesterly side of Steinway Street, distant 175 feet southwesterly from the corner formed by the intersection of the northwesterly side of Steinway Street with the southwesterly side of 36th Avenue, 75 feet wide; RUNNING THENCE southwesterly along the northwesterly side Steinway Street, 50 feet; THENCE northwesterly at right angles to Steinway Street, 106.48 feet; THENCE northeasterly and parallel with the northwesterly side of Steinway Street, 50 feet; THENCE southeasterly and at right angles to the Steinway Sweet, 106.48 feet to the northwesterly side of Steinway Street, at the point or place of BEGINNING. PARCEL E (LOT 38 IN BLOCK 665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the northwesterly side of Tenth Avenue, formerly Steinway Avenue, distant 57.33 feet northeasterly from the corner formed by the intersection of the northwesterly side of Tenth Avenue with the northerly side of Jackson Avenue; RUNNING THENCE northeasterly along said side of Tenth Avenue, 150 feet; THENCE northwesterly and at right angles to Tenth Avenue, 106.48 feet to the center line of Harold Avenue, which is now closed; THENCE southerly along said center line of Harold Avenue, 42.11 feet; THENCE southwesterly parallel with Tenth Avenue, 111.26 feet; THENCE southeasterly and at right angles to Tenth Avenue, 90 feet to the point or place of BEGINNING. For conveyancing only, if intended to be conveyed. Together with all right, title and interest of, in and to any streets and roads abutting the above described premises, to the center line thereof. Title No. NY951153 SCHEDULE A (CONT) SAID PARCELS A, B, C, D AND E ALSO BEING BOUNDED AND DESCRIBED AS FOLLOWS: OVERALL DESCRIPTION All chat certain plot, piece or parcel of land, with the buildings and improvements thereon erected, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at the corner formed by the intersection of the westerly side of Steinway Street with the northwesterly side of Northern Boulevard (100 feet wide); RUNNING THENCE northerly along the westerly side of Steinway Street, 332.37 feet, to a point; THENCE westerly parallel with the southerly side of 36th Avenue (75 feet wide) through a party wall, 100 feet to a point; THENCE southerly parallel with the westerly side of Steinway Street 74.88 feet to a point; THENCE westerly along a line drawn at right angles to last mentioned course 6.48 feet to a point; THENCE southerly parallel with the westerly side of Steinway Street 50 feet to a point; THENCE southeasterly along the center line of former Harold Avenue, and along a line forming an angle on the northeast of 156 degrees 57 minutes 18 seconds 42.11 feet to a point; THENCE southerly parallel with the westerly side of Steinway Street 96.19 feet to a point; THENCE westerly along a line forming an angle on the northeast of 89 degrees 44 minutes 02 seconds with the easterly side of 38th Street (60 feet wide), 94.78 feet to the easterly side of 38th Street; THENCE southerly along the easterly side of 38th Street 114.75 feet to a point; THENCE easterly as right angles to the easterly side of 38th Street 25.03 feet to a point; THENCE southeasterly along a line drawn at right angles to the northwesterly side of Northern Boulevard, 90.22 feet to the northwesterly side of Northern Boulevard; THENCE northeasterly along the northwesterly side of Northern Boulevard 138.45 feet to the corner formed by the intersection of the westerly side of Steinway Street with the northwesterly side of Northern Boulevard, at the point or place of BEGINNING. Loan No: 5901796-001 SCHEDULE I (36 - 12/32 Steinway Sweet and 38 - 15/23 Northern Boulevard, Queens, New York) Permitted Exceptions: [NOT APPLICABLE] EX-10.17 15 AMENDED AND RESTATED PROMISSORY NOTE Loan No. 5901796-001 AMENDED AND RESTATED PROMISSORY NOTE (36-12/32 Steinway Street and 38-15/23 Northern Boulevard, Queens, New York) THIS AMENDED AND RESTATED PROMISSORY NOTE is made and given as of March 19, 1996, by WESTERN BEEF-STEINWAY STREET, INC., a New York corporation ("Borrower") to METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation ("Lender") with reference to the recitals hereinafter set forth. RECITALS: A. Borrower has this date acquired or simultaneously with the execution hereof is acquiring certain real property in Queens, New York, more particularly described in Exhibit A (the "Property"). B. The Property is encumbered by a certain Amended and Restated Mortgage (the "Existing Mortgage") dated November 24, 1993, from Lacher/Koeppel Realty Corp., a New York corporation ("Lacher"), to Chrysler Credit Corporation, a Delaware corporation ("Chrysler"), securing a loan from Chrysler to Lacher in the principal amount of $3,500,000, as evidenced by a certain Amended and Restated Promissory Note (the "Note") dated November 24, 1993, from Lacher to Chrysler. C. Chrysler has assigned the Note and the Existing Mortgage to Lender. Prior to such assignment, the principal indebtedness evidenced and secured by the Note and the Existing Mortgage was reduced to THREE MILLION DOLLARS ($3,000,000). Borrower has accepted and assumed all obligations of Lacher under the Note and the Existing Mortgage. D. Pursuant to an agreement of even date herewith between Borrower and Lender, the Existing Mortgage has been amended and restated. E. Borrower and Lender desire that the Note should be amended and restated to reduce the interest rate, to change the maturity date, and in certain other respects. NOW, THEREFORE, in consideration of the above premises and of other good and valuable consideration, the receipt and adequacy whereof are hereby acknowledged, Borrower and Lender covenant and agree as follows: I. Note in Full Force. The Note shall remain in full force and effect as restated herein. The Note as amended and restated herein (the "Amended Note"), supersedes and replaces the Note as it existed previously. II. Ratification. The Note, as amended and restated below, is hereby ratified and confirmed in all respects by Borrower. III. Successors and Assigns. This Agreement shall be binding upon and shall insure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns hereunder. IV. Applicable Law. This Agreement shall be given effect and construed by application of the Law of the State of New York applicable to contracts made and to be performed therein (excluding its choice-of-law rules). V. Effectiveness. Upon effectiveness, the Note shall cease to have a separate existence and shall be evidenced only by this instrument. This Agreement shall become effective upon and only upon its execution and delivery by each party hereto. VI. Waiver. Lender shall not be deemed to have waived the exercise of any right which it holds hereunder or under the Note unless such waiver is made expressly and in writing (and no delay or omission by Lender in exercising any such right shall be deemed to be a waiver of its future exercise). No such waiver made as to any instance involving the exercise of any such right shall be deemed a waiver as to any other such instance, or any other such right. VII. Time of Essence. Time shall be of the essence of this Agreement. VIII. Headings. The headings of the Sections, subsections, Paragraphs and subparagraphs hereof are provided herein for and only for convenience of reference and shall not be considered in construing their contents. IX. Amendment and Restatement. All of the terms and provisions of the Note are hereby modified, amended, and restated to read as follows: AMENDED AND RESTATED TEXT PROMISSORY NOTE $3,000,000.00 March 19, 1996 FOR VALUE RECEIVED, Western Beef-Steinway Street, Inc., a Delaware corporation ("BORROWER"), promises to pay to the order of MetLife Capital Financial Corporation ("METLIFE") at METLIFE's office at 10900 Northeast Fourth Street, Suite 500, Bellevue, Washington 98004, attention: Real Estate Department, or at such other address as the holder hereof may from time to time designate in writing, the principal sum of Three Million and no hundredths Dollars ($3,000,000.00) together with interest from the date the proceeds of the loan (the "Loan") evidenced by this Promissory Note (this "Note") are initially disbursed until maturity on the principal balance from time to time remaining unpaid hereon at the rate of eight and twenty-five hundredths percent (8.25%) per annum (computed on the basis of a 360-day year of twelve (12) consecutive thirty (30)-day months) in installments as follows: (i) interest only in advance at the rate of $687.50 per day shall be due and payable on the date the proceeds of the Loan are initially disbursed to or for the benefit of BORROWER (including, without limitation, disbursement into an escrow for the benefit of BORROWER) for the period beginning on the date of such disbursement and ending on the last day of the month during which such disbursement occurs: and (ii) one hundred nineteen (119) installments of principal and interest in the amount of $25,561.97 each shall be payable commencing on the first day of the second month following the month in which the proceeds of the loan evidenced by this Note are initially disbursed and continuing on the first day of each and every succeeding month until the first day of the one hundred twentieth (120th) month thereafter at which time all then unpaid principal and interest hereon shall be due and payable. If any payment shall not be paid when due and shall remain unpaid for ten (10) days, BORROWER shall pay an additional charge equal to five percent (5.00%) of the delinquent payment or the highest additional charge permitted by law, whichever is less. Upon not less than thirty (30) days' advance written notice to METLIFE at any time after the fourth (4th) anniversary of the due date of the first monthly principal and interest payment due under this Note, and upon payment of a prepayment premium as set forth below (the "Prepayment Premium"), BORROWER shall have the right to prepay all, but not less than all, of the outstanding balance of this Note on any regularly scheduled principal and interest payment date. The Prepayment Premium shall be determined by (i) calculating the decrease (expressed in basis points) in the current weekly average yield of ten (10)-year U.S. Treasury Notes (as published in Federal Reserve Statistical Release H.15[519]) (the "Index") from Friday December 8, 1995, to the Friday immediately preceding the week in which the prepayment is made, (ii) dividing the decrease by 100, (iii) multiplying the result by the following described applicable premium factor (the "Premium Factor"), and (iv) multiplying the product by the principal balance to be prepaid. If the Index is unchanged or has increased from Friday, December 8, 1995, to the immediately preceding 2 the prepayment date, no Prepayment Premium shall be due. The Premium Factor shall be the amount shown on the following chart for the month in which prepayment occurs: No. Mos. Premium Remaining (Years) Factor 120-109 (10) .070 108-97 (9) .065 96-85 (8) .060 84-73 (7) .054 72-61 (6) .048 60-49 (5) .042 48-37 (4) .036 36-25 (3) .029 24-13 (2) .022 12-1 (1) .013 If the Federal Reserve Board ceases to publish Statistical Release H.15 [519], then the decrease in the weekly average yield of ten (10)-year U.S. Treasury Notes will be determined from another source designated by METLIFE. Except as set forth in the following paragraph, prepayment prior to the fourth (4th) anniversary of the due date of the first monthly principal and interest payment due under this Note will not be permitted. In addition, but only in the event of either the sale or merger of BORROWER or the sale of the Property (as hereinafter defined), upon not less than thirty (30) days advance written notice to METLIFE and upon payment of the Prepayment Premium and an early prepayment fee ("Early Prepayment Fee") described below. BORROWER shall have the right to prepay all, but not less than all, of the outstanding balance under this Note on any regularly scheduled principal and interest payment date prior to the fourth (4th) anniversary of the due date of the first monthly principal and interest payment due hereunder. The Early Prepayment Fee shall be determined by multiplying the principal face amount of this Note by the following described applicable "Fee Factor". The Fee Factor shall be the amount shown on the following chart for the month in which the early prepayment occurs: No. Mos. Remaining (Years) Fee Factor 120-109 (10) .040 108-97 (9) .030 96-85 (8) .020 84-73 (7) .020 The Early Prepayment Fee will not apply after April 30, 2000. If METLIFE at any time accelerates this Note after an Event of Default (defined below), then BORROWER shall be obligated to pay the Prepayment Premium in accordance with the foregoing schedule. The Prepayment Premium shall not be payable with respect to condemnation awards or insurance proceeds from fire or other casualty which METLIFE applies to prepayment nor with respect to BORROWER's prepayment of the Note in full during the last six (6) months of the term of this Note unless an Event of Default has occurred. BORROWER expressly acknowledges that the Prepayment Premium and the Early Prepayment Fee are not penalties but are intended solely to compensate METLIFE for the loss of its bargain and the reimbursement of internal expenses and administrative fees and expenses incurred by METLIFE. BORROWER shall be liable on this Note and on all the representations, warranties, indemnities and covenants in the Amended and Restated Mortgage ("Mortgage") of even date herewith covering the property (the 3 "Property") securing this Note and all other documents executed or delivered in connection herewith (the "Loan Documents"). Each of the following shall constitute an Event of Default ("Event of Default") hereunder and under the Mortgage: (a) Failure of BORROWER to make any payment of principal, interest, or Prepayment Premium upon this Note when due, and such failure or refusal shall continue for a period of ten (10) days after written notice is given to BORROWER by METLIFE specifying such failure, or (b) Failure of BORROWER within the time required by the Mortgage to pay any sum secured thereby other than the Note or to make any payment for taxes, insurance or for reserves for such payments, or any other payment necessary to prevent filing of or discharge of any lien, and such failure shall continue for a period of ten (10) days after written notice is given to BORROWER by METLIFE specifying such failure: or (c) Failure by BORROWER to observe or perform any obligations of BORROWER to METLIFE on or with respect to any transactions, debts, undertakings or agreements other than the transaction evidenced by this Note following the giving of any notice required thereby and/or the expiration of any period of grace provided thereunder; or (d) Failure of BORROWER to make any payment or perform any obligation under any superior liens or encumbrances on the Property, within the time required thereunder, or commencement of any suit or other action to foreclose any superior liens or encumbrances; or (e) Failure by BORROWER to observe or perform any of its material obligations (as defined in the mortgage) under any of the lease agreements covering the Property which is not cured within the applicable grace period set forth in such leases; or (f) The Property is transferred or any agreement to transfer any part or interest in the Property in any manner whatsoever is made or entered into without the prior written consent of METLIFE, except as specifically allowed under the Mortgage, including without limitation creating or allowing any liens on the Property or leasing any portion of the Property: or (g) Filing by BORROWER of a voluntary petition in bankruptcy or filing by BORROWER of any petition or answer seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, or similar relief for itself under any present or future federal, state or other statute, law or regulation relating to bankruptcy, insolvency or other relief for debtors, or the seeking, consenting to, or acquiescing by BORROWER in the appointment of any trustee, receiver, custodian, conservator or liquidator for BORROWER, any part of the Property, or any of the income or rents of the Property, or the making by BORROWER of any general assignment for the benefit of creditors, or the inability of or failure by BORROWER to pay its debts generally as they become due, or the insolvency on a balance sheet basis or business failure of BORROWER, or the making or suffering of a preference within the meaning of federal bankruptcy law or the making of a fraudulent transfer under applicable federal or state law, or concealment by BORROWER of any of its property in fraud of creditors, or the imposition of a lien upon any of the property of BORROWER which is not discharged in the manner permitted by the Mortgage. or the giving of notice by BORROWER to any governmental body of insolvency or suspension of operations: or (h) Filing of a petition against BORROWER seeking any reorganization, arrangement, composition, readjustment, liquidation, or similar relief under any present or future federal, state or other law or regulation relating to bankruptcy, insolvency or other relief for debts, or the appointment of any trustee, receiver, custodian, conservator or liquidator of BORROWER, of any part of the Property or of any of the income or rents of the Property, unless such petition shall be dismissed within ninety (90) days after such filing, but in any event prior to the entry of an order, judgment or decree approving such petition; or 4 (i) The institution of any proceeding for the dissolution or termination of BORROWER voluntarily, involuntarily, or by operation of law (provided, however, that as to an involuntary proceeding, BORROWER shall have ninety (90) days to secure dismissal thereof); or (j) A material adverse change occurs in the assets, liabilities or net worth of BORROWER from the assets, liabilities or net worth of BORROWER or any of the guarantors of the indebtedness evidenced by this Note previously disclosed to METLIFE; or (k) Any warranty, representation or statement furnished to METLIFE by or on behalf of BORROWER under this Note, the Mortgage, or any of the Loan Documents shall prove to have been false or misleading in any material respect; or (l) Failure of BORROWER to observe or perform any other covenant or condition contained in the Mortgage and such default shall continue for thirty (30) days after notice is given to BORROWER specifying the nature of the failure, or if the default cannot be cured within such cure period. BORROWER fails within such time to commence and pursue curative action with reasonable diligence or fails at any time after expiration of such cure period to continue with reasonable diligence all necessary curative actions. No notice of default and no opportunity to cure shall be required with respect to defaults under Section 17 or Section 22 of the Mortgage or if during the prior twelve (12) months METLIFE has already sent two (2) notices to BORROWER concerning default in performance of the same obligation; or (m) Failure of BORROWER to observe or perform any other obligation under any other Loan Document when such observance or performance is due, and such failure shall continue beyond the applicable cure period set forth in such Loan Document (or thirty (30) days, if no cure period is specified), or if the default cannot be cured within such applicable cure period. BORROWER fails within such time to commence and pursue curative action with reasonable diligence or fails at any time after expiration of such applicable cure period to continue with reasonable diligence all necessary curative actions. No notice of default and no opportunity to cure shall be required if during the prior twelve (12) months METLIFE has already sent two (2) notices to BORROWER concerning default in performance of the same obligation; or (n) BORROWER's abandonment of the Property; or (o) Any of the foregoing events occur with respect to any tenant of the Property (excluding North Star Auto Center or any successor lessee of the 38-15 Northern Boulevard portion of the Property), with respect to any guarantor of any of BORROWER's obligations in connection with the indebtedness evidenced by this Note or with respect to any guarantor of any tenant's obligations relating to the Property, or such guarantor dies or becomes incompetent. Upon the occurrence of any of the foregoing events of default, METLIFE shall have the option to declare the entire amount of principal and interest due under this Note immediately due and payable without notice or demand, and METLIFE may exercise any of its rights under this Note and any document executed or delivered herewith. After acceleration or maturity, BORROWER shall pay interest on the outstanding principal balance of this Note at the rate of five percent (5.00%) per annum above Chase Manhattan Bank's prime interest rate in effect from time to time, or fifteen percent (15.00%) per annum, whichever is higher, provided that such interest rate shall not exceed the maximum interest rate permitted by law. All payments of the principal and interest on this Note shall be made in coin or currency of the United States of America which at the time shall be the legal tender for the payment of public and private debts. If this Note is placed in the hands of an attorney for collection, BORROWER agrees to pay reasonable attorneys' fees and costs incurred by METLIFE in connection therewith, and in the event suit or action is instituted to enforce or interpret this Note (including without limitation efforts to modify or vacate any automatic stay or injunction), the prevailing party shall be entitled to recover all expenses reasonably incurred at, before or after trial and on appeal. 5 whether or not taxable as costs, or in any bankruptcy proceeding, or in connection with post-judgment collection efforts, including, without limitation, attorneys' fees, witness fees (expert and otherwise), deposition costs, copying charges and other expenses. This Note shall be governed and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed therein (excluding choice-of-law principles). BORROWER hereby irrevocably submits to the jurisdiction of any state or federal court sitting in the City of New York or the Eastern District of New York in any action or proceeding brought to enforce or otherwise arising out of or relating to this Note, and hereby waives any objection to venue in any such court and any claim that such forum is an inconvenient forum. This Note is given in a commercial transaction for business purposes. This Note may be declared due prior to its expressed maturity date, all in the events, on the terms, and in the manner provided for in the Mortgage. BORROWER and all sureties, endorsers, guarantors and other parties now or hereafter liable for the payment of this Note, in whole or in part, hereby severally (i) waive demand, notice of demand, presentment for payment, notice of nonpayment, notice of default, protest, notice of protest, notice of intent to accelerate, notice of acceleration and all other notices, and further waive diligence in collecting this Note or in enforcing any of the security for this Note; (ii) agree to any substitution, subordination, exchange or release of any security for this Note or the release of any party primarily or secondarily liable for the payment of this Note; (iii) agree that METLIFE shall not be required to first institute suit or exhaust its remedies hereon against BORROWER or others liable or to become liable for the payment of this Note or to enforce its rights against any security for the payment of this Note; and (iv) consent to any extension of time for the payment of this Note, or any installment hereof, made by agreement by METLIFE with any person now or hereafter liable for the payment of this Note, even if BORROWER is not a party to such agreement. All agreements between BORROWER and METLIFE. whether now existing or hereafter arising and whether written or oral, are hereby limited so that in no contingency, whether by reason of demand or acceleration of the final maturity of this Note or otherwise, shall the interest contracted for, charged, received, paid or agreed to be paid to METLIFE exceed the maximum amount permissible under the applicable law. If, from any circumstance whatsoever, interest would otherwise be payable to METLIFE in excess of the maximum amount permissible under applicable law, the interest payable to METLIFE shall be reduced to the maximum amount permissible under applicable law; and if from any circumstance METLIFE shall ever receive anything of value deemed interest by applicable law in excess of the maximum amount permissible under applicable law, an amount equal to the excessive interest shall be applied to the outstanding principal balance hereof, or if such excessive amount of interest exceeds the unpaid balance of principal hereof such excess shall be refunded to BORROWER. All interest paid or agreed to be paid to METLIFE shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full period (including any renewal or extension) until payment in full of the principal so that the interest hereon for such full period shall not exceed the maximum amount permissible under applicable law. METLIFE expressly disavows any intent to contract for, charge or receive interest in an amount which exceeds the maximum amount permissible under applicable law. This paragraph shall control all agreements between BORROWER and METLIFE. IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT. 6 IN WITNESS WHEREOF. BORROWER has executed or caused this Note to be executed by its duly authorized officers under seal as of the year and day first written above. BORROWER: WESTERN BEEF-STEINWAY STREET, INC., a New York corporation By: /s/ Peter Castellana, Jr. Title: President Attest: /s/ Robert C. Ludlow Title: Vice President [SEAL] ACCEPTED: METLIFE CAPITAL FINANCIAL CORPORATION By:___________________________________ Title: ________________________________ 7 EXHIBIT A PARCEL A (LOT 5 IN BLOCK 665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the southeasterly side of 38th Street, (60 feet wide) distant 162.80 feet northeasterly from the corner formed by the intersection of the southeasterly side of 38th Street with the northwesterly side of Northern Blvd., 100 feet wide; RUNNING THENCE northeasterly along the southeasterly side of 38th Street, 75.02 feet; THENCE southeasterly at right angles to the southeasterly side of 38th Street, 54.35 feet; THENCE still southeasterly on a line forming an interior angle of 221 degrees 57 minutes 20 seconds with the preceding course 118.56 feet to the northwesterly side of Northern Blvd.; THENCE southwesterly along the northwesterly side of Northern Blvd., 75.37 feet; THENCE northwesterly at right angles to the northwesterly side of Northern Blvd., 90.22 feet; THENCE still northwesterly on a line forming an interior angle of 221 degrees 57 minutes 20 seconds with the preceding course, 25.03 feet to the southeasterly side of 38th Street at the point or place of BEGINNING. PARCEL B (LOT 7 IN BLOCK 2665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded awl described as follows: BEGINNING at a point on the southeasterly aide of 38th Street (60 feet wide) distant 237.82 feet (Actual) (237.80 feet Deed) northeasterly from the corner formed by the intersection of the southeasterly side of 38th Street with the northwesterly side of Northern Blvd., 100 feet wide; RUNNING THENCE northeasterly along the southeasterly side of 38th Street, 39.73 feet; THENCE southeasterly on a line forming an exterior angle of 89 degrees 44 minutes 02 seconds with the southeasterly side of 38th Street, 94.78 feet; THENCE southwesterly and parallel with Steinway Street, 15.07 feet; THENCE southeasterly at right angles to Steinway Street, 90 feet to the northwesterly side of Steinway Street; THENCE southwesterly along the northwesterly side of Steinway Street, 57.33 feet to the corner formed by the intersection of the northwesterly aide of Steinway Street with the northwesterly side of Northern Blvd.; THENCE southwesterly along the northwesterly side of Northern Blvd., 63.08 feet; THENCE northwesterly at right angles to the northwesterly side of Northern Blvd., 118.56 feet; THENCE still northwesterly at right angles to the southeasterly aide of 38th Street and on a line forming an interior angle of 221 degrees 57 minutes 30 seconds with the preceding curse, 54.35 feet to the southeasterly side of 38th Street at the point or place of BEGINNING. PARCEL C (LOT 31 IN BLOCK 2665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the westerly side of Steinway Street, formerly known as Steinway Avenue and also formerly known as 10th Avenue, distant 100 feet southerly from the corner formed by the intersection of the southerly side of Thirty-sixth Avenue, formerly known as Washington Avenue with the westerly side of Steinway Street; RUNNING THENCE westerly parallel with Thirty-sixth Avenue and part of the distance through a party wall, 100 feet; THENCE southerly parallel with Steinway Street, 75 feet; THENCE easterly parallel with Thirty-sixth Avenue, 100 feet to the westerly side of Steinway Street; THENCE northerly along the westerly side of Steinway Street, 75 feet to the point or place of BEGINNING. PARCEL D (LOT 34 IN BLOCK 665): ALL that certain piece or parcel of land, situate, lying and being in the First Ward of the Borough of Queens, (formerly Long Island City) County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the northwesterly side of Steinway Street, distant 175 feet southwesterly from the corner formed by the intersection of the northwesterly side of Steinway Street with the southwesterly side of 36th Avenue, 75 feet wide; RUNNING THENCE southwesterly along the northwesterly side Steinway Street, 50 feet; THENCE northwesterly at right angles to Steinway Street, 106.48 feet; THENCE northeasterly and parallel with the northwesterly side of Steinway Street, 50 feet; THENCE southeasterly and at right angles to the Steinway Street, 106.48 feet to the northwesterly side of Steinway Street, at the point or place of BEGINNING. PARCEL E (LOT 38 IN BLOCK 665): ALL that certain plot, piece or parcel of land, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the northwesterly side of Tenth Avenue, formerly Steinway Avenue, distant 57.33 feet northeasterly from the corner formed by the intersection of the northwesterly side of Tenth Avenue with the northerly side of Jackson Avenue; RUNNING THENCE northeasterly along said side of Tenth Avenue, 150 feet; THENCE northwesterly and at right angles to Tenth Avenue, 106.48 feet to the center line of Harold Avenue, which is now closed; THENCE southerly along said center line of Harold Avenue, 42.11 feet; THENCE southwesterly parallel with Tenth Avenue, 111.26 feet; THENCE southeasterly and at right angles to Tenth Avenue, 90 feet to the point or place of BEGINNING. For conveyancing only, if intended to be conveyed. Together with all right, title and interest of, in and to any streets and roads abutting the above described premises, to the center line thereof. Title No. NY951153 SCHEDULE A (CONT) SAID PARCELS A, B, C, D AND E ALSO BEING BOUNDED AND DESCRIBED AS FOLLOWS: OVERALL DESCRIPTION All that certain plot, piece or parcel of land, with the buildings and improvements thereon erected, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at the corner formed by the intersection of the westerly side of Steinway Street with the northwesterly side of Northern Boulevard (100 feet wide); RUNNING THENCE northerly along the westerly side of Steinway Street, 332.37 feet, to a point; THENCE westerly parallel with the southerly side of 36th Avenue (75 feet wide) through a party wall, 100 feet to a point; THENCE southerly parallel with the westerly side of Steinway Street 74.88 feet to a point; THENCE westerly along a line drawn at right angles to last mentioned course 6.48 feet to a point; THENCE southerly parallel with the westerly side of Steinway Street 50 feet to a point; THENCE southeasterly along the center line of former Harold Avenue, and along a line forming an angle on the northeast of 156 degrees 57 minutes 18 seconds 42.11 feet to a point; THENCE southerly parallel with the westerly side of Steinway Street 96.19 feet to a point; THENCE westerly along a line forming an angle on the northeast of 89 degrees 44 minutes 02 seconds with the easterly side of 38th Street (60 feet wide), 94.78 feet to the easterly side of 38th Street; THENCE southerly along the easterly side of 38th Street 114.75 feet to a point; THENCE easterly at right angles to the easterly side of 38th Street 25.03 feet to a point; THENCE southeasterly along a line drawn at right angles to the northwesterly side of Northern Boulevard, 90.22 feet to the northwesterly side of Northern Boulevard; THENCE northeasterly along the northwesterly side of Northern Boulevard 138.45 feet to the corner formed by the intersection of the westerly side of Steinway Street with the northwesterly side of Northern Boulevard, at the point or place of BEGINNING. EX-10.18 16 INDENTURE THIS INDENTURE, made the 17th day of September, nineteen hundred and ninety-three BETWEEN ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION A savings and loan association organized and existing under the laws of the United States of America, having an office and principal place of business at One Astoria Federal Plaza, Lake Success, New York 11042 part of the first part, and RUNBAR PACKING, INC. A domestic corporation, having its office and principal place of business at 4-44 College Point Boulevard, Flushing, New York party of the second part, WITNESSETH, that the party of the first part, in consideration of ten dollars and other valuable consideration paid by the party of the second part, does hereby grant and release unto the party of the second part, the heirs or successors and assigns of the party of the second part forever, ALL that certain plot, piece or parcel of land, with the buildings and improvements thereon erected, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the Westerly side of College Point Boulevard (Lawrence Street) distant 100.00.feet Southerly from the corner formed by the intersection of the Southerly side of Maple Avenue with the said Westerly side of College Point Boulevard; RUNNING THENCE Westerly at right angles to the Westerly side of College Point Boulevard a distance of 200.00 feet to a point; RUNNING THENCE Southerly at right angles to Maple Avenue a distance of 83 feet 10 7/8 inches to the land now or formerly of the Flushing North Shore and Central Railroad Company; RUNNING THENCE along said land the following (2) courses and distance: 1. Southeasterly forming an interior angle of 128 degrees 00 minutes 02 seconds with the last mentioned line a distance of 14 feet, 11--1/4 inches. 2. again Southeasterly forming an interior angle of 186 degrees 32 minutes 08 seconds with the last mentioned line a distance of 138 feet 3--1/6 inches to a point; RUNNING THENCE Easterly at right angles with the westerly side of College Point Boulevard a distance of 91 feet 3--1/8 inches to the said Westerly side of College Point Boulevard; RUNNING THENCE Northerly along the Westerly side of College Point Boulevard 191 feet 7--3/4 inches to the point or place of BEGINNING. This conveyance is made in the regular course of business actually conducted by the party of the first part. The premises known as and by 44-12/22A College Point Boulevard Flushing, New York TOGHETHER with all right, title and interest, if any, of the party of the first part in and to any streets and roads abutting the above described premises to the center lines thereof; TOGETHER with the appurtenances and all the estate and rights of the party of the first part in and to said premises; TO HAVE AND TO HOLD the premises herein granted unto the party of the second part, the heirs or successors and assigns of the party of the second part forever. AND the party of the first part, in compliance with Section 13 of the Lien Law, covenants that the party of the first part will receive the consideration for this conveyance and will hold the right to receive such consideration as a trust fund to be applied first for the purpose of paying the cost of the improvement and will apply the same first to the payment of the cost of the improvement before using any part of the total of the same for any other purpose. The word "party" shall be construed as if it read "parties" whenever the sense of this indenture so requires. IN WITNESS WHEREOF, the party of the first part has duly executed this deed the day and year first above written. IN PRESENCE OF: ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION By: /s/ [PETER MELLERUP] Peter Mellerup 1st Assistant Vice-President EX-10.19 17 NOTE NOTE Loan No. 70-080337-5-3 Date September 17th, 1993 New York, New York US $1,000,000.00 1. PROMISE TO PAY AMOUNT BORROWED AND FULFILL OTHER PAYMENT OBLIGATIONS In return for a loan that I have received, I (meaning a natural person or an organization, including a corporation, partnership, proprietorship, association, estate, or trust, or any other entity or party who signs this Note) RANBAR PACKING, INC. A Domestic Corporation having its offices and principal places of business at 47-95 Metropolitan Avenue, Ridgewood, New York, 11385 promise and agree to pay to the Lender, ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION, a savings and loan association organized and existing under the laws of the United States of America, or order, or to any other holder of this Note (both called "Note Holder"), ONE MILLION and 00/100 ($1,000,000.00) DOLLARS, with interest, together with any late charges, prepayment charges, any amounts that Note Holder spends to protect the value of, and the Note Holder's rights in, the Property described in the Mortgage I am giving Note Holder to secure this Note, and all other payments and obligations stated in this Note or in such Mortgage. All payments on this note shall be paid in the legal currency of the United States of America. 2. INTEREST - (SEE RIDER) 3. PAYMENTS OF PRINCIPAL AND INTEREST - (SEE RIDER) 4. ADDITIONAL MONTHLY PAYMENTS FOR TAXES, INSURANCE AND OTHER CHARGES At the time I sign this Note, I will deposit with Note Holder such sums as it may require to pay taxes, assessments, sewer rentals, water rates, premiums for hazard insurance, mortgage insurance (if Note Holder required mortgage insurance as a condition of making the Loan) and flood insurance (if eligible under the National Flood Insurance program), and such other charges, hazards and risk as Note Holder may specify (together called the "Charges"), plus not less than an additional one-twelfth (1/12th) of the estimated amount of each such Charge. I will make new deposits of one-twelfth (1/12th) of the yearly amount of each such Charge as estimated by Note Holder together with my monthly payments or principal and interest, so that there will always be enough money to pay each Charge at lease one month before it is due. The amount required for each Charge is established independently of any other Charge. Estimates may allow for possible future increases in the Charges. These deposits will be called the "Funds". Whenever Note Holder decides that the Funds will be too small to pay one or more of the Charges one month before the due date, I will pay whatever additional amount is necessary in one or more payments to and as Note Holder may require. Tax or similar searches may be made at reasonable intervals at my expense. I will not be paid any interest or earnings of the Funds. I will be in default (see Section "8") if I do not make these payments promptly when they are due. If I am in default and Note holder becomes the owner of my property or sells it at a public sale, it may use the balance of the Funds to pay Charges or reduce what I owe Note Holder. When I have paid what I owe Note Holder in full, the balance, if any, of the Funds will be refunded to me or any subsequent owner of the Property without any assignment of such Funds. Note Holder is not responsible for any loss or penalties if I fail to furnish on time the necessary bills for these Charges. 5. NOTE HOLDER'S APPLICATION OF PAYMENTS Unless the law applicable to the Note Holder and to this Note specifically requires otherwise, Note Holder will apply each of my payments under this Note: (A) First, to pay the amounts due to Note Holder for Charges under Section "4" of this Note; (B) Next, to pay any interest then due to the Note Holder under any of the provisions of this Note; and (C) Next, to pay principal then due under this Note. Any installment payment I make shall be applied by the Note Holder to the longest outstanding installment date. 6. BORROWER'S OBLIGATION TO PAY CHARGES AND SATISFY CLAIMS I will pay each Charge described in Section "4" and promptly pay or satisfy any fine, claim, demand or charge that may be imposed on the Property, that is not paid by Note Holder from the Funds described in Section "4", by making payments when due directly to the "persons" (meaning any person, organization, governmental authority, or other party) entitled to them. I will promptly show Note Holder receipts for these payments if requested. If I do not pay these Charges, Note Holder may, but need not do so, and I will repay Note Holder immediately with interest at the highest rate of the law allows, but not less than the rate stated in this Note, or Note Holder may add these amounts to the amount remaining unpaid on this Note as if they were part of my original debt. 7. BORROWERS PAYMENTS BEFORE THEY ARE DUE ("PREPAYMENTS") - (SEE RIDER) 8. FAILURE TO PAY OR KEEP PROMISE (A.) Late Payment Charge - I agree (i) to pay immediately, without demand, to the Note Holder, in the event that the Note Holder has not received and accepted the full amount of any of my monthly payments of interest, principal and Charges by the 16th day of the month in which it is due, and without regard to whether or not such payment is actually subsequently received or the date as of which such payment is credited, and without regard to whether or not the Note Holder may have elected to require that I pay immediately the entire amount remaining unpaid under this Note and under the Mortgage protecting the Note Holder an amount equal to the equivalent of five cents (5 cents) for each dollar of the monthly payment of interest, principal, (ii) that is impractical or extremely difficult to fix the Note Holder's actual damage in the event that any installment shall not be paid when due; and (iii) that such amount shall be presumed to be the minimum amount of damages for such late payment. This paragraph and the amount which it provides shall not limit the Note Holder's right, under this Note, the Mortgage securing it, or otherwise, to compel prompt performance hereunder. (B.) Immediate Payment in Full - I will be in default and the Note Holder may accelerate the normal maturity of this Note and require that I pay immediately the entire amount remaining unpaid under this Note and under the Mortgage protecting the Note Holder (this requirement will be called "Immediate Payment In Full") and invoke any remedies permitted by law or by this Note or the Mortgage protecting this Note: (1) If I fail to pay on or before the last day of the month in which it is due, any of the monthly payments as provided in Sections "3", "4" or any other Section of this Note or the Mortgage, or fail to pay any Charge or other fine, claim, demand or charge as provided in Section "6" for thirty (30) days after it became due; (2) If I fail to keep any promise or agreement made in this Note or the Mortgage protecting the Note Holder;(3) in any of the events provided for in the Mortgage protecting the Note Holder. In this regard, and among other things, the Mortgage provides (Section "19"), in substance, that Note Holder has the right to accelerate the normal maturity of this Note and require Immediate Payment In Full if I sell, transfer or convey all or any part of the Property, or any right, title or interest therein, including any beneficial interests in borrower if the borrower is not a natural person, or if any other person or entity becomes an owner thereof (commonly) called a "DUE-ON-SALE" clause). (C.) Increase in Yearly Interest Rate - If Note Holder requires Immediate Payment in Full, I agree to pay interest at the higher yearly interest rate set forth in Section "2" from the date that I defaulted or failed to keep any promise or agreement in this Note or in the Mortgage protecting this Note. (D.) Prior Forbearance; Costs, Expenses and Fees - The Note Holder may exercise this option to accelerate and require that I pay immediately the entire amount remaining unpaid under this Note and under the Mortgage protecting the Note Holder during any default regardless of any prior forbearance. If suit is brought to collect this Note, the Note Holder shall be entitled to collect all reasonable costs, expenses and attorney's fees. Furthermore, if I am in default, I promise to pay all costs of collection including reasonable attorney fees, whether or not a law suit is commenced as part of the collection process. My obligation to pay lawyer's fees and collection and court costs will survive my default or the termination of this Note, the Mortgage or any other document I sign in connection with this Loan, or the repayment of the Loan. 9. MEMBERSHIP REQUIREMENTS Note Holder's I hereby promise and agree to abide by the terms and provisions of Note Holder's charter and by-laws as they are now and as they may at any time in the future be revised, altered or amended. 10. WAIVERS I waive my rights to require the Note Holder to: (A) demand payment of the amounts due ("presentment"); (B) give notice that the amounts due have not been paid ("notice of dishonor"); (C) obtain and give notice of an official certification of nonpayment ("protest" and "notice of protest"). Anyone else (i) who agrees to keep the promises made in this Note, or (ii) who agrees to make payments to the Note Holder if I fail to keep my promise under this Note, or (iii) who signs this Note to transfer it to someone else (known as "guarantors, sureties, and indorsers"), also waives these rights. The makers, sureties, guarantors and endorses or this Note, jointly and severally, do each hereby waive notice of a consent to any and all extensions of this Note or any part thereof and any modification of the terms thereof. 11. THIS NOTE SECURED BY A MORTGAGE In addition to the rights and protection given to the Note Holder under this Note, I have signed a long-term Mortgage at the same time as this Note, giving certain rights to the Note Holder, and protecting it from possible losses which might result if I do not keep the promises which I make in this Note. I understand that such Mortgage creates a continuing lien, claim or charge on my Property described in such Mortgage until all of the principal, interest and any other sums payable under this Note or the Mortgage shall be fully paid, and shall serve as security for the repayment of principal, interest and any other sums payable under this Note or said Mortgage, including every extension, renewal or modification of this Note. I agree that all of the terms in the Mortgage are mad a part of this Note. 12. RESPONSIBILITY Every person who signs this Note is fully and personally obligated to pay the full amount owed and to keep all of the promises and agreements made in this Note. Any guarantor, surety or endorser of this Note is also obligated to do these things. The Note Holder may enforce its rights under this Note against each of us individually or against all of us together. This means that any one of us may be required to pay all of the amounts owed under this Note. This Note shall bind me, the successors and assigns, my executors, my administrators and my estate. Any person who takes over my rights or obligations under this Note will have all of my rights and must keep all of my promises made in this Note and the Mortgage securing this Note. Any person who takes over the rights or obligations of a guarantor, surety or endorser of this Note is also obligated to keep all of the promises made in this Note and the Mortgage securing this Note. I, and all other parties who are or hereafter may become secondarily liable for the payment of the obligation evidenced by this Note, do hereby agree to remain liable to the Note Holder, its successors and assigns, in the event that any extension of the time for repayment is given to, or any modification of the terms of this Note is made with me or my successors in interest. 13. CHANGES, CONTINUATION OR RIGHTS This Note, or any of its provisions, may only be changed, altered, modified, waived or terminated by written agreement signed by the Note Holder. Even if Note Holder does not exercise or enforce any of its rights under this Note or under the law, it will still have all those rights and may exercise and enforce them in the future. Note Holder can accept late payments or partial payments, even though marked "Payment in Full" without losing any rights. Note Holder reserves all rights against all parties, including but not limited to all parties now or hereafter secondarily liable. 14. CAPTIONS The captions and titles of this Note are for convenience only. They may not be used to interpret or define the terms of this Note. 15. LOAN CHARGES In the event that an appropriate authority determines that this loan is subject to a law which set maximum loan charges and such law is construed and interpreted to apply to this loan so that the interest or other loan charges collected or to be collected with this loan would exceed the permitted limits, then: (A) any such loan charge shall be reduced by the amount necessary to reduce the charge to the the permitted limit; and (B) any sums already collected from me which exceed permitted limits will be refunded to me. The Note Holder may choose to make this refund by reducing the principal I owe under this Note, which will be treated as a partial prepayment (without penalty), or by making a direct payment to me. Any such application or refund shall not cure or waive any default. 16. NOTICES Any notice that must be given to me under this Note or the Mortgage securing this Note will be given by delivering it to me or by mailing it addressed to me at the Property Address. A notice will be mailed to me at a different address if I give the Note Holder a written notice of my different address. A notice which is mailed shall be deemed given when it is deposited in the United States mail, postage prepaid, addressed to me at my address as it appears in the records of the Note Holder at the time the notice is given. 17. GOVERNING LAW; SEVERABILITY This Note is governed by federal law and the law that applies in the place where the Property I have mortgage to Note Holder to protect this Note is located. However, I understand and agree that, anything in this Note or in any other document to the contrary notwithstanding, the Loan evidenced by this Note is made pursuant to, and shall be governed by, federal law, including the rules and regulations promulgated thereunder, and particularly the federal laws, rules and regulations for federal savings and loan associates. I further understand and agree that such federal laws, rules and regulations shall apply and have priority over any state or local laws, rules and regulations. In any paragraph, clause or provision of this Note or the Mortgage securing this Note shall be construed or interpreted by an appropriate authority to be void, invalid or unenforceable, then such paragraph, clause or provision shall be deemed separable from the remaining paragraphs, clauses or provisions and such decision shall affect only those paragraphs, clauses or provisions so construed or interpreted and shall not affect the validity or enforceability of the remaining paragraphs, clauses or provisions of this Note or the Mortgage securing this Note. 18. NOTE HOLDER'S RIGHT TO ASSIGN Note Holder has the right to assign this Note and the Mortgage protecting this Note and Note Holder's right, title and interest under this Note and such Mortgage, in whole or in part, without notice and without my consent. 19. MATURITY DATE Anything to the contrary, notwithstanding, if, on October 1st, 2003, I still owe amounts on the Loan or under this Note, I will pay those amounts in full on that date. Signed and sealed in the presence of: RANBAR PACKING, INC. L.S. ----------------------------------- By: /s/ Peter Castellana, Jr. L.S. - - ----------------------------------- ------------------------------ Witness Peter Castellana, Jr. Vice President L.S. -------------------------------- L.S. --------------------------------- STATE OF NEW YORK, COUNTY OF NASSAU, S.S. On September 17th, 1993 before me personally came Peter Castellana, Jr. / / to me known to be the individual(s) described in, and who executed the foregoing instrument, and acknowledged to me that executed the same. /X/ to me known, who, being by me duly sworn, did depose and say that he - - -- resides at 47-05 Metropolitan Avenue, Ridgewood, New York, 11385 that he is the VICE PRESIDENT of RANBAR PACKING, INC. the corporation described in and which executed the foregoing instrument: that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by the authority of the board of directors of said corporation, and that he signed his name thereto by like authority, ------------------------------------------ [Notary] [ASTORIA FEDERAL SAVINGS LOGO] RIDER TO NOTE 2. INTEREST I will pay interest on the unpaid principal at a rate of nine percent (9.00%) per year, beginning with the date I sign this Note until such amount and any other sums I may owe under this Note, are paid in full; EXCEPT THAT, in the event that I do not pay the Loan on the due date or at maturity, whether by acceleration as a result of my default of failure to keep any promise or agreement I make in this Note or the Mortgage, or otherwise, I will pay interest at a rate of five (5) percent per year in excess of the above stated rate from the date that I am in default or fail to keep any such promise or agreement, but in no event in excess of the maximum legal default rate of interest permitted under any law specifically applicable to Note Holder and this Note. I will be charged and must pay interest on the amount or principal outstanding until the day it is paid. Among other things, this means that I will be charged and will pay interest on any principal I prepay (either partial or in full) to and including the date of such payment. 3. PAYMENTS OF PRINCIPAL AND INTEREST At the time I sign this Note I will pay interest only, in advance, to the end of the month. I will pay principal and interest by making payments every month, in the amount of Twelve Thousand Six Hundred Sixty Seven and 58/100 DOLLARS (US $12,667.58) on the first (1st) day of the second calendar month next following the month that I sign the Note. I will make these payments every month until I have paid all of the principal and interest and any other charges described in this Note or the Mortgage protecting the Note Holder. I will make by monthly payments at One Astoria Federal Plaza, Lake Success, New York 11042, or at a different place if required by the Note Holder. In addition to the regular monthly payments of principal and interest, I will pay additional principal of Fifty Thousand and No/100 Dollars (US $50,000.00) on or before September 17, 1994, and a further principal payment of Fifty Thousand and No/100 Dollars (US $50,000.00) on or before September 17,1995. These additional payments shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequently monthly installments or change the amount of such installments. No prepayment penalty shall be due in connection with these required additional payments of principal. 7. BORROWER'S PAYMENTS BEFORE THEY ARE DUE ("PREPAYMENTS") Subject to the provisions of this paragraph, I may pay all or any part of the principal amount due in advance at any time, which is called a "prepayment". If I make a full or partial prepayment at any time on or before the first (1st) anniversary of the date of this Note, I will pay a prepayment charge of a sum equal to three percent (3.00%) of the amount prepaid; if I make a full or partial prepayment at any time after the first (1st) anniversary of this Note and on or before the second (2nd) anniversary of this Note, I will pay a prepayment charge equal to two percent (2.00%) of the amount prepaid; if I make a prepayment at any time after the second (2nd) anniversary of this Note and on or before the third (3rd) anniversary of this Note, I will pay a prepayment charge equal to one percent (1.00%) of the amount prepaid. There is no prepayment charge on amounts prepaid after the third (3rd) anniversary of this Note. RANBAR PACKING, INC. BY: /s/ Peter Castellana, Jr. --------------------------- Peter Castellana, Jr. Vice President EX-10.20 18 CONTRACT OF SALE CONTRACT OF SALE WARNING: NO REPRESENTATION IS MADE THAT THIS FORM OF CONTRACT FOR THE SALE AND PURCHASE OF REAL ESTATE COMPLIES WITH SECTION 5-702 OF THE GENERAL OBLIGATIONS LAW ("PLAIN ENGLISH"). CONTRACT OF SALE MADE AS OF THE 29TH day of June between ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION a savings and loan association existing under the laws of the United States of America having an office and place of business at 1 Marcus Avenue, Lake Success, New York 11042 hereinafter called "SELLER", who agrees to Sell; and RANBAR PACKING, INC. a domestic corporation, having its office and principal place of business at 44-44 College Point Boulevard, Flushing, New York 11355, TIN 11-2294858, hereinafter called "PURCHASER" who agrees to buy the property, including all buildings and improvements thereon (the "PREMISES"), more fully described on a separate page marked "Schedule A," and also known as 44-12/22A College Point Blvd., Flushing, NY, Block 5066, Lots 678 and 693, together with SELLER'S interest, if any, in streets and unpaid awards as set forth in Paragraph 9. PERSONAL PROPERTY: None Excluded from this sale are: Furniture and household furnishings. 1. The purchse price is $ 1,200,000.00 Payable as follows: On signing of this contract, by check subject to collection $ 120,000.00 By allowance for the principal amount still unpaid on EXISTING MORTGAGES(S): $ - By a Purchase Money Note and Mortgage $ - Balance at Closing $ 1,080,000.00 EXISTING MORTGAGE(S): 2. [Intentionally deleted] ACCEPTANCE FUNDS: 3. All money payable under this contract unless otherwise specified, shall be either: a. Cash, but not over one thousand ($1,000.00) Dollars, b. Good certified check of PURCHASER, or official check of any bank, savings bank, trust company, or savings and loan association having a banking office in the State of New York, payable to the order of SELLER, (intentionally deleted) c. Money other than the purchase price, payable to SELLER at CLOSING, may be by check of PURCHASER up to the amount of FIVE HUNDRED and 00/100----------------($ 500.00 ) dollars, or d. As otherwise agreed to in writing by SELLER or SELLER'S attorney. "SUBJECT TO" PROVISIONS: 4. The PREMISES are to be transferred subject to: a. Laws and governmental regulations that affect the use and maintenance of the PREMISES, provided that they are not violated by the buildings and improvements erected on the PREMISES. b. Consents for the erection of any structures on, under or above any streets on which the PREMISES abut. c. Encroachments of stoops, areas, cellar steps, trim and cornices, if any, upon any street or highway. d. Terms and conditions contained in the rider(s) annexed hereto and made a part hereof. TITLE COMPANY APPROVAL: 5. SELLER shall give and PURCHASER shall accept such title as any major New York Title Company, a member of the American Land Title Association will be willing to approve and insure in accordance with their standard form of title policy, subject only to the matters provided for in this contract. CLOSING DEFINED AND FORM OF DEED: 6. "CLOSING" means the settlement of the obligations of SELLER and PURCHASER to each other under this contract, including the payment of the purchase price to SELLER, and the delivery to PURCHASER of a Bargain & Sale with Covenants -or- a Referee's deed in proper statutory form for recording so as to transfer full ownership (fee simple title) to the PREMISES, free of all encumbrances except as herein stated. The deed will contain a covenant by SELLER as required by Section 13 of the Lien law. If SELLER is a corporation, it will deliver to PURCHASER at the time of CLOSING (a) a resolution of its Board of Directors authorizing the sale and delivery of the deed, and (b) a certificate by the Secretary or Assistant Secretary of the corporation certifying such resolution and setting forth facts showing that the transfer is in conformity with the requirements of Section 909 of the Business Corporation Law. The deed in such case shall contain a recital sufficient to establish compliance with that section. CLOSING DATE AND PLACE: 7. CLOSING will take place at the office of ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION, 5 Dakota Drive (Suite #304), New Hyde Park, NY 11042 at 10:00 AM o'clock on 10 days after receipt of mortgage commitment. 19 BROKER: 8. PURCHASER hereby states that PURCHASER has not dealt with any broker in connection with this sale other than See Rider and SELLER agrees to pay the broker the commission earned thereby (pursuant to separate agreement). STREETS AND ASSIGNMENT OF UNPAID AWARDS: 9. This sale includes all of SELLER'S ownership and rights, if any, in any land lying in the bed of any street or highway, opened or proposed, in front of or adjoining the PREMISES to the center line thereof. It also includes any right of SELLER to any unpaid award by reason of any taking by condemnation and/or for any damage to the PREMISES by reason of change of grade of any street or highway. SELLER will deliver at no additional cost to PURCHASER, at CLOSING, or thereafter, on demand, any documents which PURCHASER may require to collect the award and damages. MORTGAGEE'S CERTIFICATE OR LETTER AS TO EXISTING MORTGAGE(S): 10. (Intentionally deleted) Compliance With State and Municipal Department Violations and Orders: 11. a. SELLER will comply with all notes or notices of violations of law or municipal ordinances, orders or requirements noted in or issued by any governmental department having authority as to lands, housing, buildings, fire, health and labor conditions affecting the PREMISES at the date hereof. The PREMISES shall be transferred free of them at CLOSING and this provision shall survive CLOSING. SELLER shall furnish PURCHASER with any authorization necessary to make the searches that could disclose these matters. Omit if the Property is Not in the City of New York b. All obligations affecting the PREMISES, incurred pursuant to the Administrative Code of the City of New York prior to CLOSING and payable in money shall be discharged by SELLER at CLOSING. This provision shall survive CLOSING. Installment Assessments: 12. If at the time of CLOSING the PREMISES are affected by an assessment which is or may become payable in annual installments, and the first installment is then a lien, or has been paid, then for the purposes of this contract all the unpaid installments shall be considered due and are to be paid by SELLER at CLOSING. APPORTIONMENTS: 13. The following are to be apportioned as of midnight of the day before the day of CLOSING: (a) Rents as and when collected. (b) (Intentionally deleted) (d) Taxes, water charges and sewer rents, on the basis of the fiscal period for which assessed. (e) Fuel, if any. (f) Vault charges, if any. (g) Rent Security, if any. If CLOSING shall occur before a new tax rate is fixed, the apportionment of taxes shall be upon the basis of the old tax rate for the proceeding period applied to the latest assessed valuation. Any errors or omissions in computing apportionments at CLOSING shall be corrected. This provision shall survive CLOSING. WATER METER READINGS: 14. If there be a water meter on the PREMISES, the unfixed meter charge and sewer rent, if any, shall be apportioned on the basis of such last reading. ALLOWANCE FOR UNPAID TAXES, ETC.: 15. SELLER has the option to credit PURCHASER as an adjustment of the purchase price with the amount of any unpaid taxes, assessments, water charges and sewer rents, together with any interest and penalties thereon to a date not less than five business days after CLOSING, provided that official bills therefor computed to said date are produced at CLOSING. USE OF PURCHASE PRICE TO PAY ENCUMBRANCES: 16. If there is anything else affecting the sale which SELLER is obligated to pay and discharge at CLOSING, SELLER may use any portion of the balance of the purchase price to discharge it. As an alternative, SELLER may deposit money with the title insurance company employed by PURCHASER required by it to assure its discharge, but only if the title insurance company will insure PURCHASER'S title clear of the matter or insure against its enforcement out of the PREMISES. Upon request made within a reasonable time before CLOSING, PURCHASER agrees to provide separate certified checks as requested to assist in clearing up these matters. AFFIDAVIT AS TO JUDGEMENTS, BANKRUPT- 17. (Intentionally deleted) Deed Transfer and Recording Taxes: 18. At CLOSING, SELLER shall deliver a certified check payable to the order of the appropriate State, City or County officer in the amount of any applicable transfer and/or recording tax payable by reason of the delivery or recording of the deed, together with any required tax return. PURCHASER agrees to duly complete the tax return and to cause the check(s) and the tax return to be delivered to the appropriate officer promptly after CLOSING. Purchaser's Lien: 19. All money paid on account of this contract, and the reasonable expenses of examination of the title to the PREMISES and of any survey and survey inspection charges are hereby made liens on the PREMISES and collectable out of the PREMISES. Such liens shall not continue after default in performance of the contract by PURCHASER. Seller's Inability to Convey Limitation of Liability: 20. If SELLER is unable to transfer title to PURCHASER in accordance with this contract, SELLER'S sole liability shall be to refund all money paid on account of this contract, plus all charges made for: (i) examining the title, (ii) any appropriate additional searches made in accordance with this contract, and (iii) survey and survey inspection charges. Upon such refund and payment this contract shall be considered cancelled, and neither SELLER nor PURCHASER shall have any further rights against the other. Condition of Property: 21. PURCHASER has inspected the buildings on the PREMISES and the personal property included in this sale and is thoroughly acquainted with their condition. PURCHASER agrees to purchase them "as is" and in their present condition subject to reasonable use, wear, tear, and natural deterioration between now and CLOSING. PURCHASER shall have the right, after reasonable notice to SELLER, to inspect them before CLOSING. Entire Agreement: 22. All prior understandings and agreements between SELLER and PURCHASER are merged in this contract. It completely expresses their full agreement. It has been entered into after full investigation, neither party relying upon any statements made by anyone else that is not set forth in this contract. CHANGES MUST BE IN WRITING: 23. This contract may not be changed or cancelled except in writing. The contract shall also apply to and bind the distributees, heirs, executors, administrators, successors and assigns of the respective parties. Each of the parties hereby authorize their attorneys to agree in writing to any changes in dates and time periods provided for in this contract. SINGULAR ALSO MEANS PLURAL: 24. Any singular word or term herein shall also be read as in the plural whenever the sense of this contract may require it. 25. A rider consisting of 3 pages is annexed hereto and made a part hereof. 26. A Mortgage Contingency rider consisting of 2 pages is annexed hereto and made a part hereof. ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION In Presence Of: BY: /s/ [Illegible] V. Pres ----------------------------- ----------------------------- ----------------------------- /s/ Peter Castellana, Jr. ----------------------------- Vice President Ranbar Packing, Inc. RIDER TO CONTRACT OF SALE DATED: June, 1993 PREMISES: 44-12/22A College Point Blvd., Flushing, NY 1. THIS rider is in addition and supplemental to the printed contract, but in the event of any inconsistency between the provisions of this rider and of the printed portions of the contract, the provisions of this rider shall prevail. 2. THE parties agree that Kahhls Realty Inc. and Crifasi Real Estate brought about this sale and the Seller agrees to pay the commission as per separate agreement. The Purchaser herein named does hereby represent that no broker, or if a broker is identified herein, no broker except the said broker identified brought these premises to their attention and that all the dealings of the Purchaser in connection with the purchase of said property were held directly with the Seller and said broker. The Purchaser agrees that the foregoing representation shall survive the delivery of the deed and shall enure to the benefit of the Seller, their successors and assigns and the Purchaser agrees to give testimony to this effect in case any action or proceeding shall be instituted by any real estate broker or other person, licensed or otherwise, claiming commission in connection with this contract of sale and the Purchaser further agrees and does hereby indemnify and hold the Seller harmless from any and all claims for the payment of any commission, arising from the acts of the purchaser, in connection with the sale of the within premises. 3. SAID premises are sold and are to be conveyed subject to: (a) a survey dated August 4, 1987 made by Montrose Surveying Co., Inc. (a copy of which is annexed hereto and made a part hereof) and to any state of facts that said survey brought down to date will show, provided the additional facts thereon by reason of having been brought down to date will not render title unmarketable; or, if no such existing survey is identified herein, then to any state of facts an accurate survey may show, provided same does not render title unmarketable; (b) all existing covenants, consents, restrictions, reservations, agreements, consents for utilities, and public utility, driveway, railroad and other easements of record and City Zoning Plans, regulations and ordinances and amendments thereto not violated by existing structures or their present use; (c) possible encroachments or variations from record lines of retaining walls, cellar doors, fences, and fire escapes. 4. SELLER HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATIONS AS TO THE PHYSICAL CONDITION, INCOME, EXPENSE, OPERATION OR ANY OTHER MATTER OR THING AFFECTING OR RELATING TO THE PREMISES, THE STRUCTURES THEREON OR THE PERSONAL PROPERTY INCLUDED IN THIS TRANSACTION, EXCEPT AS HEREIN SPECIFICALLY SET FORTH. PURCHASER EXPRESSLY ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS HAVE BEEN MADE. Purchaser has inspected the same and is fully aware of the condition thereof. Purchaser takes the premises, including any personal property included in this transaction, "AS IS", in its present physical condition. Seller is not bound by any verbal or written statements, representations, broker's listing or information furnished by anyone, unless the same is specifically set forth herein. 5. SELLER makes no representations whatsoever as to the ownership, physical condition, operation or any other matter or thing affecting or relating to the personal property in, on or used in connection with the premises. Seller shall not be responsible for the removal of any structures; rubbish or any personal property, etc., presently on the premises. 6. IF any material difference or discrepancy shall be found in any statement or representation herein contained, or document attached hereto, or if, for any reason, the Seller shall be unable to convey good and marketable title to said premises, free from encumbrances, restrictions or other defects, except as specified in this contract, the Purchaser shall, at his election, have the right to accept such title as the Seller is able to convey, without any abatement in the purchase price by reason of such differences, defects or objections; or, the Purchaser shall have the right to rescind this contract, and should he so rescind, he shall be entitled to the return of the amount paid by him under this contract together with his net liability to a title company for a title search, if the Purchaser has ordered an examination of title from a New York title company, a member of the American Land Title Association, not in excess of their customary charge for examining the title, and survey or survey inspection charge. The lien reserved to secure such sums shall be preserved, but upon such refund and payment this contract shall be deemed cancelled, null and void and of no force and effect, and neither party shall have any claim against the other in law or equity. The Seller shall not be required to bring any action or proceeding, or procure any certificate, permit or other document, or otherwise to incur any expense, in excess of $10,000,00, to obtain any certificate, permit or document, or make title marketable or to make any repairs to the property which maybe required. This provision is in lieu of and supersedes paragraph "20", or any similar paragraph or provision, of the printed portion of this contract, which is deemed deleted hereby. 7. CONDITIONAL bills of sale, chattel mortgages, financing statements or like liens, filed more than their effective period prior to closing of title, which have not been renewed of record, shall not be deemed objections to title, provided the Seller executes and delivers an affidavit that the property is no longer in the premises or has been fully paid for. Any of the foregoing against a tenant shall not be deemed an objection to title. 8. THE non-payment or non-fixation of any franchise, estate or inheritance tax, if any, shall not be an objection to title but the Seller shall deposit with the Title Company, a reasonable sum to insure the prompt filing of all necessary returns and the prompt payment of the tax. The Seller agrees to hold the Purchaser harmless from such taxes. 9. SELLER shall be entitled to a reasonable adjournment of closing for the purpose of removing objections to title, if any. 10. THIS contract may not be recorded by the Purchaser, and may not be assigned by the Purchaser without the express written consent of the Seller. 11. IF, between this date and the date title closes, any assessment is imposed, the Seller agrees to pay such assessment, if it does not exceed $5,000.00. If it does exceed $5,000.00, Seller may elect to cancel this contract upon returning of the down payment and net cost of title examination, unless Purchaser shall elect to take subject to such assessment and receive a credit of $5,000.00 in the purchase price. 12. NO provision of this contract survives the delivery of the deed except as expressly provided. Acceptance of the deed is an acceptance of all of the obligations of the seller hereunder except such as may expressly be stated to survive the delivery. Seller shall have no liability after Closing and delivery of the deed for any obligation, statement or representation of Seller set forth in this contract unless it is accompanied by an express statement that it shall survive the Closing and delivery of the deed. 13. NOTICES, memoranda, stipulations and other matters of a like nature, signed by the attorneys for the respective parties shall be deemed authorized for the purposes of this agreement. 14. PURCHASER shall apply for a title search and report promptly after receipt of the mortgage commitment referred to in this contract, or, if this contract is not conditioned upon issuance of a mortgage commitment, promptly after execution and delivery of this contract by both parties. A copy of the title report shall be furnished to Seller's attorney promptly upon receipt, and is a condition precedent to the scheduling of the closing. 15. IT is expressly understood and agreed that delivery of this Contract for inspection or otherwise by Seller to the Purchaser shall not constitute an offer or create any rights in favor of the Purchaser or another and shall in no way obligate or be binding upon the Seller or Purchaser, and this Contract shall have no force or effect unless and until the same is fully executed and delivered by the Seller and the Purchaser, and fully executed copied of this Contract are exchanged by the parties hereto. 16. SELLER shall be responsible for the New York State and New York City Real Property Transfer Taxes and any New York Gains Tax resulting from this sale. 18. THE Purchaser shall in no event take possession of any part of the premises prior to the actual delivery of the deed unto the Purchaser and full compliance by the Purchaser with the terms of this contract, and should the Purchaser violate this provision, the Purchaser consents that the Seller shall have the right to dispossess it as a squatter and intruder by summary proceedings, and Purchaser shall pay $150.00 per day for use and occupancy from the date of such occupancy, or at Seller's option, Purchaser shall close title and accept a deed irrespective of Seller's title. 19. THE premise shall be delivered unoccupied. 20. Omitted 21. SELLER makes no representation as to the current zoning classification of the property. 22. Gains Tax. A. Concurrently with the execution and delivery of this Contract, Purchaser shall deliver to Seller a Transferee Real Property Transfer Gains Tax Questionnaire (the "Transferee Questionnaire"), signed and sworn to by an officer of Purchaser, as required pursuant to Section 1447 of the Gains Tax Law, signed and sworn to by Seller. Seller and Purchaser each shall promptly furnish to the Tax Department such other affidavits and information, signed and sworn to where necessary, as the Tax Department or any agent thereof may require in order to establish the Tentative Assessment, to the extent Seller or Purchaser can reasonably provide the required affidavits and information. Copies of any documents submitted by either party to the Tax Department pursuant hereto (including, without limitation, the Transferor Questionnaire) shall be sent concurrently to the other party. B. Seller will be deemed to have complied with its obligations as to Gains Tax by presenting at closing the Tentative Assessment and Return or Statement of No Tax Due, in favor of the transferee named in the Transferee Questionnaire submitted to Seller's attorney. Astoria Federal Savings and Loan Association By: /s/ By: /s/ Peter Castellana, Jr. ---------------------------------- ------------------------- Vice President Ranbar Packing, Inc. Peter Castellana, Jr. Vice President MORTGAGE CONTINGENCY RIDER PREMISES: 44-12/22A College Point Blvd., Flushing, NY The obligations of Purchaser [and of the Seller if the "Mortgagee" identified below is to be Astoria Federal Savings and Loan Association ("Astoria Federal")] are conditioned upon issuance of a written commitment from such Mortgagee pursuant to which such Mortgagee agrees to make a first mortgage loan (other than VA, FHA or other government insured loan) to Purchaser, at Purchaser's sole cost and expense, as set forth in this Section, and on other customary commitment terms, whether or not conditional upon any factors other than an appraisal satisfactory to Mortgagee. 23. Purchaser shall within ten (10) business days from the date of this contract (a) make application to Mortgagee for such commitment, (b) furnish, on such forms and in such fashion as Mortgagee requests, accurate and complete information regarding Purchaser and members of Purchaser's family, as required, (c) pay all costs, fees, points, expenses and charges required in connection with such application and the making and closing of the loan, (d) pursue such application with diligence, (e) cooperate in good faith with Mortgagee to obtain such approval and commitment, (f) promptly give notice to Seller of the name and address of each Mortgagee to which Purchaser has made such application. Purchaser shall comply with all terms, conditions and requirements of such application and commitment (or of any other commitment accepted by Purchaser), and shall furnish Seller with a copy thereof promptly after receipt thereof. 24. If the Mortgagee is Astoria Federal, the note, mortgage and other documents in connection therewith shall be drawn by the attorney for Astoria Federal, at Purchaser's sole cost and expense, in the standard form used by Astoria Federal in its regular lending activities for first mortgage loans (other than VA, FHA or other government insured loans) secured by owner-occupied properties similar (as to its use and occupancy) to the property herein being sold, and for the principal amount set forth below (or such lesser sum as Purchaser shall be willing to accept). Purchaser shall pay at or before Closing all costs, fees, points, expenses and charges normally required by Astoria Federal in connection therewith, including, but not limited to, all mortgage recording taxes, all recording fees, all title examination and insurance fees, survey and/or survey inspection fees, departmental searches, flood certification fees and credit report fees, appraisal fee, "points", and attorney's fees not to exceed $500.00, all of which Purchaser is obligated to pay at or prior to closing. 25. Purchaser agrees to execute the forms and documents and comply with the requirements of the Mortgagee. If the Mortgagee is Astoria Federal, they shall be those generally specified in commitments to its borrowers for this type of mortgage loan, including, but not limited to, the requirement of constant monthly principal and interest payments, owner-occupancy and those with respect to hazard and flood insurance, including the production at closing of the required policy or policies and proof of payment of the premium(s) for a least one year in advance. In addition, all liens, including those for real estate taxes or water and sewer rent charges, which are due at closing or within the number of days thereof usually specified by the Mortgagee, shall be paid at closing. Purchaser shall also make all the usual deposits for future charges for such items as real estate taxes, water and sewer rent charges, hazard and flood insurance premiums, private mortgage insurance and other like charges. If Astoria Federal is the Mortgagee, interest shall be prepaid from date of closing to end-of-month, and paid monthly in advance thereafter on the first day of each calendar month, the first full monthly payment of principal and interest being due on the first of the month immediately after closing. 26. If Astoria Federal is the Mortgagee, the obligation of Astoria Federal to make such loan or forbearance shall be conditioned on and subject to the Purchaser qualifying under Astoria Federal's standard credit requirements. 27. If Astoria Federal is not the Mortgagee designated in this contract, and such commitment is not issued on or before the Commitment Date (set forth below for Mortgagees other than Astoria Federal), then, unless Purchaser has accepted a commitment that does not comply with the requirements herein set forth, Purchaser may cancel this contract by giving written notice sent registered mail, return receipt requested, to Seller within three (3) business days after the Commitment Date. In the event that Astoria Federal is the Mortgagee, and it determines that Purchaser does not qualify (whose determination shall be conclusive and binding on the Purchaser), Seller and/or Astoria Federal will promptly notify Purchaser and/or Purchaser's attorney. In either applicable event, this contract shall be automatically cancelled as of the date of such notification and thereafter neither party shall have any further rights against, or obligations or liabilities to, the other by reason of this contract, except that the downpayment shall be promptly refunded to Purchaser on surrender by Purchaser of all copies of this contract received by Purchaser together with a duly executed general release in recordable form from Purchaser in favor of Seller and Astoria Federal, and except as set forth in Section "2" (with respect to the real estate brokers, if any) of annexed rider. 28. MORTGAGEE: [x] Astoria Federal Savings and Loan Association (Astoria Federal) [ ] Any Institutional Lender other than Astoria Federal Commitment Date: 29. PRINCIPAL AMOUNT: $1,000,000.00, or such lesser sum as Purchaser shall be willing to accept. 30. TERM: 10 YEARS. 31. INTEREST RATE: [x] Fixed rate of 9.00% [x] I point discount payable to Lender. 32. PAYMENTS [x] Constant [x] fixed interest; self-liquidating, additional $50,000.00 principal payments on the first and second anniversary date. 33. OTHER CONDITIONS: [x] Western Beef, Inc. the exchange listed company shall be the guarantor on the note. Astoria Federal Savings and Loan Association By: /s/ [SIGNATURE] By: /s/ Peter Castellana, Jr. --------------------------------------- --------------------------- Vice President Ranbar Packing, Inc. Peter Castellana, Jr. Vice President Title No. ?????? SCHEDULE A ALL that certain plot, piece or parcel of land, with the buildings and improvements thereon erected, situate, lying and being in the Borough and County of Queens, City and State of New York, bounded and described as follows: BEGINNING at a point on the Westerly side of College Point Boulevard (Laurence Street) distant 100.00 feet Southerly from the corner formed by the intersection of the Southerly side of Maple Avenue with the said Westerly side of College Point Boulevard; RUNNING THENCE Westerly at right angles to the Westerly side of College Point Boulevard a distance of 200.00 feet to a point; RUNNING THENCE Southerly at right angle to Maple Avenue a distance of 83 feet 10 7/8 inches to the land now or formerly of the Flushing North Shore and Central Railroad Company; RUNNING THENCE along said land the following (2) courses and distances: 1. Southeasterly forming an interior angle of 128 degrees 00 minutes 02 seconds with the last mentioned line a distance of 14 feet, 11--1/4 inches 2. again Southeasterly forming an interior angle of 186 degrees 32 minutes 08 seconds with the last mentioned line a distance of 138 feet 3--1/8 inches to a point; RUNNING THENCE Easterly at right angles with the westerly side of College Point Boulevard a distance of 91 feet 3--1/8 inches to the said Westerly side of College Point Boulevard; RUNNING THENCE Northerly along the Westerly side of College Point Boulevard 191 feet 7--3/4 inches to the point or place of BEGINNING. /s/ [SIGNATURE] For conveyancing only, if intended to be conveyed. Together with all rights, title and interest of, in and to any streets and roads abutting the above described premises, to the center line thereof. [PROPERTY APPRAISAL MAP OMITTED] [PROPERTY APPRAISAL MAP OMITTED] [PROPERTY APPRAISAL MAP OMITTED] [PROPERTY APPRAISAL MAP OMITTED] EX-21.1 19 SUBSIDIARIES OF WESTERN BEEF, INC. SUBSIDIARIES OF WESTERN BEEF, INC. Western Beef - Metropolitan Avenue, Inc. Western Beef - Morris Avenue, Inc. Western Beef - Forest Avenue, Inc. Western Beef - 14th Street, Inc. W.B. Produce - Metropolitan Avenue, Inc. Western Beef - Merrick Blvd., Inc. Western Beef - Fort Greene Place, Inc. Western Beef - Canarsie, Inc. W.B. Produce - Canarsie, Inc. Western Beef - 173rd Street, Inc. Western Beef - Rosedale Avenue, Inc. Western Beef - Steinway Street, Inc. Western Beef - Empire Blvd. Inc. Western Beef - Mineola, Inc. Western Beef - West End Avenue, Inc. (Formerly known as Western Beef- Atlantic Avenue, Inc.) Western Beef - Roosevelt, Inc. Western Beef - Rockaway Blvd., Inc. Western Beef - Myrtle Avenue, Inc. Western Beef - W.B. International FoodNation, Inc. (Formerly known as Quarex Operating Company, Inc.) SUBSIDIARIES OF FOODNATION, INC. Western Beef - College Point Blvd., Inc. (Formerly known as Ranbar Packing, Inc.) Western Beef - East Orange, N.J., Inc. Western Beef - East New York, Inc. Western Beef - Park Avenue, Inc. Western Beef - Elmont, Inc. (Formerly known as Quarex-Elmont, Inc.) Western Beef Supermarket, Inc. NOTE: All corporations listed above were incorporated in New York except for Western Beef-East Orange, N.J., Inc. which was incorporated in New Jersey and W.B. International which was incorporated in Nevada. SUBSIDIARIES 1. General Western Beef, Inc. conducts it retail and wholesale food business directly and through 19 consolidated wholly-owned subsidiaries and six consolidated subsidiaries wholly-owned by FoodNation, Inc. (Formerly know as Quarex Company, Inc.) a 100% subsidiary of the registrant. 2. Other Subsidiaries Awesome Transportation, Inc. East Central Meats, Inc. Quarex New England, Inc. Western Beef Advertising, Inc. Western Beef Administration, Inc. (Formerly Known as Western Beef, Inc. (New York Corporation) W.B. Packing, Inc. Sabrina Food Sales, Inc. Food Warehouse, Inc. NOTE: All Corporations listed above were incorporated in New York except for Quarex-New England, Inc. which was incorporated in Massachusetts. EX-23.1 20 CONSENTS OF EXPERTS AND COUNSEL CONSENT OF INDEPENDENT AUDITORS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-80379) of our report dated March 5, 1998 appearing on page F-1 of the Annual Report of Western Beef, Inc. on Form 10-K for the year ended January 2, 1998. We also consent to the incorporation by reference of our report on the Financial Statement Schedule which appears on Page F-25 in this Form 10-K. PRICE WATERHOUSE LLP New York, New York March 31, 1998 EX-23.2 21 CONSENT OF BDO SEIDMAN CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Western Beef, Inc. We hereby consent to the incorporation by reference in the respective Registration Statement on Form S-8 (No. 33-80379) of our report dated March 3, 1997, relating to the consolidated financial statements and schedule of Western Beef, Inc. appearing in the Company's Annual Report on Form 10-K for the year ended January 2, 1998. /s/ BDO Seidman, LLP BDO Seidman, LLP New York, New York March 5, 1998 EX-27 22 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Western Beef, Inc. and Subsidiaries Annual Report on Form 10-K for the year ended January 2, 1998 and is qualified in its entirety by reference to such financial statements. 1,000 12-MOS JAN-02-1998 JAN-04-1997 JAN-02-1998 7,527 0 6,827 552 14,113 32,083 62,784 20,526 76,254 18,395 8,837 0 0 273 44,856 76,254 317,079 318,768 237,808 237,808 0 0 1,086 5,335 2,132 3,203 0 0 0 3,203 .59 .58
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