Document:

Exhibit
10.8

 

STOCK PLEDGE AGREEMENT

 

STOCK PLEDGE AGREEMENT
(the “Agreement”) dated this 22nd day of March, 2004, made by and between Time
America, Inc., a Nevada corporation (“Pledgor”), and Laurus Master Fund, Ltd.,
a Cayman Islands company, the holder (the “Noteholder”) of a term note of even
date herewith issued by the Pledgor in favor of the Noteholder in the aggregate
principal amount of $2,000,000 (the “Term Note”).

 

PRELIMINARY STATEMENTS:

 

(1)                                  Concurrently
herewith the Pledgor is executing and delivering to the Noteholder the Term
Note, which evidences the Pledgor’s obligation to pay Noteholder pursuant to
that certain Securities Purchase Agreement of even date herewith both by and
between the Noteholder and Pledgor (the “Loan Agreement”).

 

(2)                                  The
securities held by the Pledgor in its wholly-owned subsidiaries as listed in
Schedule A hereof are collectively referred to herein as the “Pledged
Securities”.

 

NOW, THEREFORE, in
consideration of the premises and in further consideration of the covenants
contained herein, the parties hereto agree as follows:

 

SECTION 1.                                Pledge.  For the benefit of the Noteholder, the
Pledgor hereby pledges and grants a security interest in, the following (the
“Pledged Collateral”):

 

(a)                                  the
Pledged Securities and the certificates representing the Pledged Securities,
and all dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Securities; and

 

(b)                                 all
proceeds of any and all of the foregoing (including, without limitation,
proceeds that constitute property of the types described above).

 

SECTION 2.                                Security
for Obligations.  This Agreement
secures the payment of all obligations of the Pledgor now or hereafter existing
under the Term Note, whether for principal, interest, expenses or otherwise,
and all obligations of the Pledgor now or hereafter existing under this
Agreement.  The Noteholder shall file
appropriate financing statements.

 

SECTION 3.                                Delivery
of Pledged Collateral.  All
certificates or instruments representing or evidencing the Pledged Collateral
shall be delivered to and held by the Noteholder pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Noteholder.  Upon
the occurrence and during the continuation of an

 

 

Event of Default (as defined below), the Noteholder
shall have the duty, at any time on five business days’ notice to the Pledgor,
to transfer to or to register in the name of the Noteholder or any of its
nominees, any or all of the Pledged Collateral.  In addition, the Noteholder shall have the right at any such time
to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations.

 

SECTION 4.                                Representations
and Warranties.  The Pledgor
represents and warrants as follows:

 

(a)                                  The
Pledgor is and will be the sole legal, record and beneficial owner of the
Pledged Collateral free and clear of any lien, security interest, option or
other charge or encumbrance, except for the security interest created by this
Agreement.

 

(b)                                 The
pledge of the Pledged Collateral pursuant to this Agreement creates and will
create a valid and perfected first priority security interest in the Pledged
Collateral, securing the payment of the Pledgor’s obligations under Term Note.

 

SECTION 5.                                Further
Assurances.  At any time and from
time to time, at the expense of the Pledgor, the Pledgor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that the Noteholder may reasonably
request, in order to perfect and protect the security interest granted or
purported to be granted hereby or to enable the Noteholder to exercise and
enforce the rights and remedies hereunder with respect to any Pledged
Collateral.

 

SECTION 6.                                Voting
Rights; Dividends; Etc.

 

(a)                                  So
long as no Event of Default or event which, with the giving of notice or the
lapse of time, or both, would become an Event of Default shall have occurred
and be continuing:

 

(i)                                     The
Pledgor shall be entitled to exercise or refrain from exercising any and all
voting and other consensual rights pertaining to the Pledged Collateral or any
part thereof for any purpose not inconsistent with the terms of this Agreement.

 

(ii)                                  The
Pledgor shall be entitled to receive and retain any and all dividends and distributions
paid in respect of the Pledged Collateral, provided, however,
that any and all (A) dividends paid or payable other than in cash in respect
of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, Pledged Collateral, and (B)
dividends and other distributions paid or payable in cash in respect of any
Pledged Collateral in connection with a partial or

 

2

 

total liquidation or
dissolution, shall be, and shall be forthwith delivered to the Noteholder to
hold as, Pledged Collateral and shall, if received by the Pledgor, be received
in trust for the benefit of the Noteholder, be segregated from the other
property or funds of the Pledgor, and be forthwith delivered to the Noteholder
as Pledged Collateral in the same form as so received (with any necessary
endorsement or assignment).

 

(iii)                               The
Noteholder, shall execute and deliver (or cause to be executed and delivered)
to the Pledgor all such proxies and other instruments as the Pledgor may
reasonably request for the purpose of enabling the Pledgor to exercise the
voting and other consensual rights that it is entitled to exercise pursuant to
subsection (i) above and to receive the dividends that it is authorized to
receive and retain pursuant to subsection (ii) above.

 

(b)                                 Upon
the occurrence and during the continuance of an Event of Default or an event
which, with the giving of notice or the lapse of time, or both, would become an
Event of Default:

 

(i)                                     All
rights of the Pledgor to exercise or refrain from exercising the voting and
other consensual rights that it would otherwise be entitled to exercise
pursuant to Section 6(a)(i) and to receive the dividends payments that it
would otherwise be authorized to receive and retain pursuant to
Section 6(a)(ii) shall cease, and all such rights shall thereupon become
vested in the Noteholder who shall thereupon have the sole right to exercise or
refrain from exercising such voting and other consensual rights at the
direction of the Noteholder and to receive and hold as Pledged Collateral such
dividends.

 

(ii)                                  All
dividends that are received by the Pledgor contrary to the provisions of
subsection (i) of this Section 6(b) shall be received in trust for the
benefit of the Noteholder, shall be segregated from other funds of the Pledgor
and shall be forthwith paid over to the Noteholder as Pledged Collateral in the
same form as so received (with any necessary endorsement).

 

(c)                                  As
used herein, “Event of Default” (i) shall have the meaning given such term in
the Term Note, and (ii) shall mean the failure of the Pledgor to pay or perform
any of its obligations under this Agreement and the continuation of such
failure for a period of 5 (five) days.

 

SECTION 7.                                Transfers
and Other Liens.  The Pledgor will
not (i) sell, assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to, any of

 

3

 

the Pledged Collateral, or (ii) create or permit to
exist any lien, security interest, option or other charge or encumbrance upon
or with respect to any of the Pledged Collateral, except for the security
interest under this Agreement.

 

SECTION 8.                                Noteholder
Appointed Attorney-in-Fact.  The Pledgor
hereby appoints the Noteholder the Pledgor’s attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, from time to time in the Noteholder’s discretion to take any
action and to execute any instrument that the Noteholder may deem necessary or
advisable to accomplish the purposes of this Agreement (subject to the rights
of the Pledgor under Section 6), including, without limitation, to
receive, endorse and collect all instruments made payable to the Pledgor
representing any dividend or any part thereof and to give full discharge for
the same.

 

SECTION 9.                                Noteholder
May Perform.  If the Pledgor fails
to perform any agreement contained herein, the Noteholder, may itself perform,
or cause performance of, such agreement, and the expenses of the Noteholder
incurred in connection therewith shall be payable by the Pledgor under
Section 11.

 

SECTION 10.                          Remedies
upon Event of Default.  Subject to
the provisions of Section 6, if any Event of Default shall have occurred
and be continuing:

 

(a)                                  The
Noteholder may exercise in respect of the Pledged Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of New York at the time (the “Code”)
(whether or not the Code applies to the Pledged Collateral), and may also,
without notice except as specified below, sell the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, at any exchange,
broker’s board or at any office of the Noteholder or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Noteholder may
deem commercially reasonable.  The
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least 5 (five) days’ notice to the Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall constitute
reasonable notification.  The Noteholder
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given.  The
Noteholder may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.

 

(b)                                 Any
cash held by the Noteholder as Pledged Collateral and all cash proceeds
received by the Noteholder in respect of any sale of, collection from, or other
realization upon all or any part of the Pledged Collateral may, in the
discretion of the Noteholder, be held by the Noteholder as collateral for,
and/or then or at any time thereafter be applied (after payment of any amounts
payable to the Noteholder pursuant to Section 11) in whole or in part by
the Noteholder against, all or any part of the Term Note in such order as the
Noteholder shall be

 

4

 

directed by the
Noteholder.  Any surplus of such cash or
cash proceeds held by the Noteholder and remaining after payment in full of the
Pledgor’s obligations under the Term Note shall be paid over to the Pledgor or
to whomsoever may be lawfully entitled to receive such surplus.

 

SECTION 11.                          Expenses.  The Pledgor will upon demand pay to the
Noteholder the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Noteholder may incur in connection with (i) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of the Pledged
Collateral, (ii) the exercise or enforcement of any of the rights of the
Noteholder hereunder or (iii) the failure by the Pledgor to perform or observe
any of the provisions hereof.

 

SECTION 12.                          Amendments,
Etc.  No amendment or waiver of any
provision of this Agreement, and no consent to any departure by the Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by each of the parties hereto, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.

SECTION 13.                          Notices.  All notices, request, demands and other
communications required or permitted hereunder shall be sent in accordance with
Section 11.8 of the Securities Purchase Agreement.

 

SECTION 14.                          Continuing
Security Interest.

 

(a)                                  This
Agreement shall create a continuing security interest in the Pledged Collateral
and shall (i) remain in full force and effect until the payment in full of the
Pledgor’s obligations under the Term Note and under this Agreement, (ii) be
binding upon the Pledgor, its successors and assigns, and (iii) inure to the
benefit of, and be enforceable by, the Noteholder and its successors,
transferees and assigns.

 

(b)                                 Upon
the payment in full of the Pledgor’s obligations under the Term Note and under
this Agreement, the security interest granted hereby shall terminate and all
rights to the Pledged Collateral shall revert to the Pledgor.  Upon any such termination, the Noteholder
will, at the Pledgor’s expense, return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant to the
terms hereof and execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request to evidence such termination.

 

SECTION 15.                          Governing
Law; Terms.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF

 

5

 

ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. ANY ACTION, SUIT OR
PROCEEDING INITIATED BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO UNDER
OR IN CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT IN ANY STATE OR FEDERAL
COURT IN NEW YORK COUNTY, STATE OF NEW YORK. 
TO THE EXTENT IT MAY LEGALLY DO SO, EACH PARTY HERETO SUBMITS ITSELF TO
THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT, WAIVES AND AGREES NOT TO ASSERT
BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, ANY CLAIMS OF FORUM NON CONVENIENS
OR THAT THE VENUE OF ANY SUCH ACTION, SUIT OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY DOCUMENT OR INSTRUMENT REFERRED TO HEREIN MAY NOT BE
LITIGATED IN SUCH COURT.

IN WITNESS WHEREOF, each
of the parties hereto has caused this Agreement to be duly executed and
delivered as of the date first above written.

 

	
   

  	
  PLEDGOR:

  
	
   

  	
   

  	
   

  
	
   

  	
  Time America,
  Inc., a Nevada corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
  51 West
  Third Street, Suite 310

  
	
   

  	
  Tempe,
  Arizona 85281

  
	
   

  	
  Attention:
  Craig J. Smith, Chief Financial Officer

  
	
   

  	
  Facsimile:
  (480) 967-5444

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  NOTEHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  Laurus Master
  Fund, Ltd.,

  
	
   

  	
  a Cayman Islands
  company

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
  c/o Ironshore
  Corporate Services Ltd.

  
	
   

  	
  P.O. Box 1234
  G.T., Queensgate House,

  
	
   

  	
  South Church
  Street,

  
	
   

  	
  Grand Cayman,
  Cayman Islands

  
	
   

  	
  Fax:
  345-949-9877

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

6

 

SCHEDULE A

 

Attached to and forming a
part of that certain 

Stock Pledge Agreement dated March 22, 2004, by and between

Time America, Inc., a
Nevada corporation and 

Laurus Master Fund, Ltd., a Cayman Island company

 

 

Pledged Securities

 

	
  Class of Security

  	
   

  	
  Certificate

  No(s) (if any)

  	
   

  	
  Number

  of Shares (Units)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Common
  Stock of Time America, Inc., an Arizona corporation

  	
   

  	
   

  	
   

  	
  9,314,445 Shares

  

 

7<PAGE>

                                                                   Exhibit 10.13
                                 FIFTH AMENDMENT

         THIS FIFTH AMENDMENT ("Amendment") made as of this 29th day of
November, 2003 among GRISTEDE'S FOODS, INC., a Delaware corporation having its
principal place of business at 823 Eleventh Avenue, New York, New York 10019
(the "Borrower"), each of the Subsidiaries of the Borrower listed on Schedule 1
to the Agreement, as hereinafter defined (each individually, a "Guarantor" and
collectively, the "Guarantors") (the Borrower and the Guarantors, collectively,
the "Credit Parties"), CITIBANK, N.A., a national banking association, having an
office at 666 Fifth Avenue, New York, New York 10103 ("Citibank" or a "Bank"),
ISRAEL DISCOUNT BANK OF NEW YORK, a New York banking organization, having an
office at 511 Fifth Avenue, New York, New York 10017 ("Israel Discount" or a
"Bank"), BANK LEUMI USA, a New York trust company, having an office at 562 Fifth
Avenue, New York, New York 10036 ("Leumi" or a "Bank") ("Leumi" or a "Bank") and
CITIBANK, N.A., as agent for the Banks (the "Agent").

                              W I T N E S S E T H :

         WHEREAS, the Borrower, the Banks and the Agent have entered into a Loan
Agreement dated as of the 31st day of October, 2001, which Loan Agreement has
heretofore been amended pursuant to that certain First Amendment dated as of
November 30, 2002, that certain Second Amendment dated as of March 1, 2003, that
certain Third Amendment dated as of August 30, 2003 and that certain Fourth
Amendment dated as of January 26, 2004 (as so amended, the "Agreement"); and

         WHEREAS, the Banks have made loans to the Borrower as evidenced by
certain notes of the Borrower and specifying interest to be paid thereon; and

         WHEREAS, the Credit Parties have requested that the Agent and the Banks
agree to extend the Revolving Credit Maturity Date to March 31, 2005; and

         WHEREAS, the Credit Parties have requested that the Agent and the Banks
agree to amend certain of the financial requirements contained in the Agreement.

         NOW, THEREFORE, in consideration of Ten ($10.00) Dollars and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Guarantors, the Agent and the Banks do hereby
agree as follows:

         1. Defined Terms. As used in this Amendment, capitalized terms, unless
otherwise defined, shall have the meanings set forth in the Agreement.
<PAGE>

         2. Representations and Warranties. As an inducement for the Agent and
the Banks to enter into this Amendment, the Credit Parties each represent and
warrant as follows:

                  A. That with respect to the Agreement and the Loan Documents
executed in connection therewith and herewith:

                           (i) There are no defenses or offsets to the
                  Borrower's or any Guarantor's obligations under the Agreement
                  as amended hereby, the Notes or any of the Loan Documents or
                  any other agreements in favor of the Bank referred to in the
                  Agreement, and if any such defenses or offsets exist without
                  the knowledge of the Borrower or any Guarantor, the same are
                  hereby waived.

                           (ii) All of the representations and warranties made
                  by the Borrower and any Guarantor in the Agreement as amended
                  hereby are true and correct in all material respects as if
                  made on the date hereof, except for those made with respect to
                  a particular date, which such representations and warranties
                  are restated as of the date of this Amendment to be true and
                  correct in all material respects as of such date; and provided
                  further that the representations and warranties set forth in
                  Section 4.01(f) of the Agreement shall relate to the
                  consolidated balance sheet of the Borrower and its
                  Consolidated Subsidiaries for the fiscal year ended December
                  1, 2002 and the interim financial statement for the quarterly
                  fiscal period ended August 31, 2003.

                           (iii) The outstanding aggregate principal balance of
                  the Revolving Credit Loans as evidenced by the Revolving
                  Credit Notes is $17,000,000.00 as of April 1, 2004 and
                  interest has been paid through April 1, 2004.

                           (iv) The outstanding aggregate principal balance of
                  the Term Loans as evidenced by the Term Loan Notes is
                  $10,116,666.00 as of April 1, 2004 and interest has been paid
                  through April 1, 2004.

         3. Amendments.

         (a) The definition of Revolving Credit Maturity Date is hereby amended
to read as follows:

         "Revolving Credit Maturity Date" means March 31, 2005.

         (b) Section 2.17(iii) of the Agreement is hereby deleted in its
entirety and replaced as follows:
<PAGE>

                  "(iii) Notwithstanding the foregoing, for the period beginning
                  on the date of the Third Amendment to the Agreement and ending
                  on the date of delivery by the Borrower to the Agent of its
                  financial statements for the fiscal quarter ending February
                  29, 2004 as required pursuant to Section 5.01(b)(i) hereof,
                  the Prime Applicable Margin shall be 1.50% and the LIBOR
                  Applicable Margin shall be 3.25%."

         (c) Section 5.01(b)(i) of the Agreement is hereby deleted in its
entirety and replaced as follows:

                  "(i) Annual Financial Statements. As soon as available and in
                  any event not later than the date it is required to be filed
                  with the Securities and Exchange Commission (April 6, 2004 in
                  the case of the fiscal year ending November 30, 2003), a copy
                  of Form 10-K for each fiscal year of the Borrower, including
                  the audited consolidated financial statements of the Borrower
                  and its Consolidated Subsidiaries for such year, including a
                  balance sheet with a related statement of income and retained
                  earnings and statement of cash flows, all in reasonable detail
                  and setting forth in comparative form the figures for the
                  previous fiscal year, together with an unqualified opinion,
                  prepared by BDO Seidman, LLP or such other independent
                  certified public accountants selected by the Borrower and
                  reasonably satisfactory to the Agent, all such financial
                  statements to be prepared in accordance with GAAP."

         (d) Section 5.01(b)(iii) of the Agreement is hereby deleted in its
entirety and replaced as follows:

                  "(iii) Consolidating Financial Statements. (1) As soon as
                  available and in any event within ninety (90) days after the
                  end of each fiscal year of the Borrower (April 9, 2004 in the
                  case of the fiscal year ending November 30, 2003) and within
                  sixty (60) days after the end of each of the first three
                  fiscal quarters of the Borrower, a copy of the consolidating
                  financial statements of the Borrower and its operating
                  Subsidiaries for such year or quarter, including balance
                  sheets with related statements of income and retained earnings
                  and statements of cash flows, all in reasonable detail and
                  setting forth in comparative form the figures for the previous
                  fiscal year or previous fiscal quarter, all such financial
                  statements to be prepared by management of the Borrower in
                  accordance with GAAP (subject to year end audit adjustments),
                  and (2) as soon as available and in any event within sixty
                  (60) days after the end of each fiscal quarter of the Borrower
                  (90 days in the case of the fourth fiscal quarter of each year
                  and April 9, 2004 in the case of the fiscal quarter ending
                  November 30, 2003), a copy of a financial schedule showing
                  EBITDA operating results by store location for such quarter,
                  prepared by management of the Borrower."
<PAGE>

         (e) Section 5.02(l) of the Agreement is hereby deleted in its entirety
and replaced as follows:

                  "Losses. Incur a net loss (i) in excess of $930,000.00 for the
                  fiscal year ending December 1, 2002, (ii) $11,600,000.00 loss
                  for the fiscal year ended November 30, 2003, or (iii) for any
                  fiscal year thereafter."

         (f) Section 5.03(a) of the Agreement is hereby deleted in its entirety
and replaced as follows:

                "(a) Minimum Consolidated Tangible Net Worth. The Borrower and
                Guarantors will maintain at all times a Consolidated Tangible
                Net Worth ("TNW") plus Subordinated Debt of not less than the
                following, to be tested quarterly at the end of each fiscal
                quarter:

                Date/Fiscal Year Ending ("FYE")               Minimum TNW

                Quarter ended September 2, 2001               $20,000.000
                End of FYE 2001 and through the first
                three fiscal quarters of FYE 2002             $20,000,000
                End of FYE 2002 and through the first
                three fiscal quarters of FYE 2003             $22,000,000
                End of FYE 2003                               $22,950,000
             Each fiscal quarter and year thereafter          $24,500,000"

         (g) Section 5.03(c) of the Agreement is hereby deleted in its entirety
         and replaced as follows:

         "(c) Leverage Ratio. The Borrower and the Guarantors will at all times
         maintain a Leverage Ratio of not greater than the following, to be
         tested quarterly at the end of each fiscal quarter:

         Date/Fiscal Year Ending                     Maximum Leverage Ratio

         Quarter ended September 2, 2001                      4.00 to 1.0
         End of FYE 2001 and through the first
         three fiscal quarters of FYE 2002                    3.75 to 1.0
         End of FYE 2002 and through the second
         fiscal quarter of FYE 2003                           4.50 to 1.0
         Third fiscal quarter
         of FYE 2003                                          4.25 to 1.0
         End of FYE 2003                                      4.60 to 1.0
         Each fiscal quarter and year thereafter              3.00 to 1.0"

<PAGE>

         (h) Section 5.03(e) of the Agreement is hereby deleted in its entirety
and replaced as follows:

         "Fixed Charge Coverage Ratio. The Borrower and Guarantors will maintain
         at all times, on a consolidated basis, a minimum Fixed Charge Coverage
         Ratio of not less than the following, such ratio to be tested quarterly
         on a rolling four quarter basis at the end of each fiscal quarter:

         Date/Fiscal Year Ending                     Fixed Charge Coverage Ratio

         Quarter ended September 2, 2001                      1.05 to 1.0
         End of FYE 2001 and through the first
         three fiscal quarters of FYE 2002                    1.10 to 1.0
         End of FYE 2002 and through the Second
         fiscal quarter of FYE 2003                           1.10 to 1.0
         Third fiscal quarter
         of FYE 2003                                          1.15 to 1.0
         End of FYE 2003                                      1.15 to 1.0
         Each fiscal quarter and year thereafter              1.20 to 1.0"

         (i) Section 5.03(f) of the Agreement is hereby deleted in its entirety
and replaced as follows:

         "(f) Debt Service Ratio. The Borrower and Guarantors will maintain at
         all times, on a consolidated basis, a minimum Debt Service Ratio of not
         less the following, such ratio to be tested quarterly on a rolling four
         quarter basis at the end of each fiscal quarter:

         Date/Fiscal Year Ending                     Debt Service Ratio

         Quarter ended September 2, 2001                      1.15 to 1.0
         End of FYE 2001 and through the first
         three fiscal quarters of FYE 2002                    1.25 to 1.0
         End of FYE 2002 and through the first
         three fiscal quarters of FYE 2003                    1.30 to 1.0
         End of FYE 2003                                      1.45 to 1.0
         Each fiscal quarter and year thereafter              1.50 to 1.0"

         5. Effectiveness. This Amendment shall become effective upon the
receipt and satisfactory review by the Bank and its counsel of:

                  (a) This Amendment, duly executed by the Borrower and each
Guarantor; and
<PAGE>

                  (b) From the Borrower, an amendment fee of $13,666.67 for the
pro rata distribution to the Banks.

                  (c) Proof that the Borrower has received a total of
$22,008,258.00 in Subordinated Debt from United Acquisition Corp.

                  (d) From United Acquisition Corp. an amended and restated
Subordination Agreement in the amount of $22,008,258.00, which amended and
restated Subordination Agreement shall be satisfactory to the Agent and its
counsel in all respects.

                  (e) The Agent's counsel shall have been paid their fees and
disbursements in connection with this Amendment.

         6. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.

         7. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

         8. Ratification. Except as hereby amended, the Agreement and all other
Loan Documents executed in connection therewith shall remain in full force and
effect in accordance with their originally stated terms and conditions. The
Agreement and all other Loan Documents executed in connection therewith, as
amended hereby, are in all respects ratified and confirmed.

                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the year and date first above written.

CITIBANK, N.A., as Agent

By:
   -------------------------------
   Anthony V. Pantina
   Vice President

CITIBANK, N.A.

By:
   -------------------------------
   Anthony V. Pantina
   Vice President

ISRAEL DISCOUNT BANK OF NEW YORK

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

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

BANK LEUMI USA

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

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

GRISTEDE'S FOODS, INC.

By:
   -------------------------------
   John Catsimatidis
   Chief Executive Officer

CITY PRODUCE OPERATING CORP.

By:
   -------------------------------
   John Catsimatidis
   President

NAMDOR INC.

By:
   -------------------------------
   John Catsimatidis
   President

<PAGE>

GRISTEDE'S FOODS NY, INC.

By:
   -------------------------------
   John Catsimatidis
   Title:

GRISTEDE'S DELIVERY SERVICE INC.

By:
   -------------------------------
   John Catsimatidis
   Title:

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