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<SEC-DOCUMENT>0001193805-06-002580.txt : 20061027
<SEC-HEADER>0001193805-06-002580.hdr.sgml : 20061027
<ACCEPTANCE-DATETIME>20061027120209
ACCESSION NUMBER:		0001193805-06-002580
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20061024
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Completion of Acquisition or Disposition of Assets
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
FILED AS OF DATE:		20061027
DATE AS OF CHANGE:		20061027

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Gales Industries Inc
		CENTRAL INDEX KEY:			0001009891
		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728]
		IRS NUMBER:				204458244
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-29245
		FILM NUMBER:		061167879

	BUSINESS ADDRESS:	
		STREET 1:		1479 NORTH CLINTON AVENUE
		CITY:			BAY SHORE
		STATE:			NY
		ZIP:			11706
		BUSINESS PHONE:		631-968-5000

	MAIL ADDRESS:	
		STREET 1:		1479 NORTH CLINTON AVENUE
		CITY:			BAY SHORE
		STATE:			NY
		ZIP:			11706

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Ashlin Development Corp
		DATE OF NAME CHANGE:	20050127

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	HEALTH & NUTRITION SYSTEMS INTERNATIONAL INC
		DATE OF NAME CHANGE:	20000118
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>e601149_8k-gales.txt
<DESCRIPTION>CURRENT REPORT
<TEXT>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                         Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                Date of Report (date of earliest event reported):
                                October 24, 2006

                          GALES INDUSTRIES INCORPORATED
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

Delaware                           000-29245                        20-4458244
- --------                           ---------                        ----------
State of                           Commission                       IRS Employer
Incorporation                      File Number                      I.D. Number

                 1479 North Clinton Avenue, Bay Shore, NY 11706
                 ----------------------------------------------
                     Address of principal executive offices

                  Registrant's telephone number: (631) 968-5000
          -------------------------------------------------------------
          (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|   Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)

|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)

|_|   Pre-commencement communications pursuant to Rule 14d-2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))

|_|   Pre-commencement communications pursuant to Rule 13e-4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))

<PAGE>

Item 1.01. Entry into a Material Definitive Agreement.

On October 24, 2006, Air Industries Machining, Corp. ("Air Industries"), a
wholly-owned subsidiary of Gales Industries Incorporated ("Gales"), consummated
its agreement with STNLA-SPVEF Bay Shore, LLC, successor in interest to Net
Lease Advisors LLC ("Purchaser"), whereby Air Industries sold to the Purchaser
the buildings and related real property at its corporate headquarters in Bay
Shore, New York (the "Property"), for $6,200,000. Air Industries' net proceeds
from the sale, after transaction and other related costs, were approximately
$4,850,000, which Air Industries used to repay debt obligations.

Simultaneously with the closing of the purchase agreement Air Industries entered
into a 20-year triple-net lease with the Purchaser for the Property. The lease
grants Air Industries an option to renew the lease for an additional period of
five years. Base annual rent is approximately $540,000 for the first five years
of the lease, increases to $621,000 for the sixth year of the term, and
thereafter increases 3% per year. Air Industries deposited with Purchaser
$127,500 as security for performance of its obligations under the lease which it
intends to replace with a $127,500 letter of credit. Pursuant to the terms of
the lease, Air Industries is required pay all of the costs associated with the
operation of the facilities, including, without limitation, insurance, taxes and
maintenance.

The lease contains customary representations, warranties, obligations,
conditions and indemnification provisions and grants the landlord customary
remedies upon a breach of the lease by Air Industries, including the right to
terminate the lease and hold Air Industries liable for any deficiency in future
rent.

The foregoing summary is subject to, and qualified in its entirety by, the terms
of the agreement of sale, attached hereto as Exhibit 10.1, and the lease,
attached hereto as Exhibit 10.2. The terms of the agreement of sale, the lease
and all other documents attached thereto are incorporated herein by reference. A
copy of the press release announcing the closing of the transaction is attached
as Exhibit 99.1.

The representations, warranties and obligations contained in the purchase and
sale agreement and the lease are intended for the benefit of the parties as of
the date thereof, and are not to be considered factual representations to
shareholders of or prospective purchasers of the shares of Gales. Investors are
advised to review Gales' periodic filings with the SEC.

Item 2.01. Completion of Acquisition or Disposition of Assets

The information set forth under Item 1.01 is incorporated herein by reference.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
           Off-Balance Sheet Arrangement of a Registrant

The information set forth under Item 1.01 is incorporated herein by reference.


                                       2
<PAGE>

EXHIBIT

- --------------------------------------------------------------------------------
10.1  Agreement of Sale, dated June 5, 2006, between Air Industries Machining,
      Corp. and Net Lease Advisors LLC (predecessor-in-interest to STNLA-SPVEF
      Bay Shore, LLC).
- --------------------------------------------------------------------------------
10.2  Lease, dated October 24, 2006, between Air Industries Machining, Corp, as
      tenant, and STNLA-SPVEF Bay Shore, LLC, as Landlord.
- --------------------------------------------------------------------------------
99.1  Press Release, dated October 24, 2006, of Gales Industries Incorporated
      announcing consummation of sale-and-leaseback transaction.
- --------------------------------------------------------------------------------


                                       3
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.

Dated: October 25, 2006

                                        GALES INDUSTRIES INCORPORATED


                                        By: /s/ Michael A. Gales
                                            ------------------------------------
                                            Michael A. Gales, Executive Chairman


                                       4
<PAGE>

EXHIBIT INDEX

- --------------------------------------------------------------------------------
10.1  Agreement of Sale, dated June 5, 2006,between Air Industries Machining,
      Corp. and Net Lease Advisors LLC (predecessor-in-interest to STNLA-SPVEF
      Bay Shore, LLC).
- --------------------------------------------------------------------------------
10.2  Lease, dated October 24, 2006, between Air Industries Machining, Corp, as
      tenant, and STNLA-SPVEF Bay Shore, LLC, as Landlord.
- --------------------------------------------------------------------------------
99.1  Press Release, dated June 29, 2006, of Gales Industries Incorporated
      announcing a up to five-year government contract.
- --------------------------------------------------------------------------------


                                       5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>e601149_ex10-1.txt
<DESCRIPTION>AGREEMENT OF SALE, DATED JUNE 5, 2006
<TEXT>

                                AGREEMENT OF SALE

      THIS AGREEMENT OF SALE is made this _____ day of ________________, 2006
(the "Effective Date"), between Net Lease Advisors, LLC, a New Jersey limited
liability company having an address at 345 Old Short Hills Road, Short Hills,
New Jersey 07078 ("Buyer") and Air Industries Machining Corp., a New York
corporation, having an address at 1479 North Clinton Avenue, Bay Shore New York
11706 ("Seller").

      In consideration of the covenants and provisions contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

1. Agreement to Sell and Purchase. Seller agrees to sell to Buyer, and Buyer
agrees to purchase from Seller, subject to the terms and conditions of this
Agreement, that certain tract or piece of land known as 1479-1480 N Clinton
Avenue and 1460 N Fifth Avenue Bay Shore New York as more fully described by
metes and bounds in the legal description attached hereto as Exhibit "A," being
all of the property owned by Seller in that location, together with all right,
title, and interest of Seller in and to any land lying in the bed of any
highway, street, road, or piece of land and any easements and appurtenances
pertaining thereto (including, without limitation, all easements, licenses and
right, title and interest of Seller in and to adjacent streets, alleys and
rights of way and all right, title and interest, if any, to any award for any
taking by condemnation or by reason of a change of grade of any street or
highway) (the "Real Property"), all the buildings and other improvements situate
thereon, including all sign structures, fixtures and systems used in connection
with the Real Property and all intangible property related to the Improvements
and all warranties related to the Improvements (the "Improvements"), all
personal property used in connection with operation and maintenance of the
Improvements, but specifically excluding Seller's machinery, equipment and
furnishings used in the operation of its business (the "Personal Property") and
all of the Seller's right, title and interest in and to all surveys and similar
items within Seller's possession and/or control, including but not limited to,
zoning reports, concurrency exemption certificates, soil condition test reports,

                                       1
<PAGE>

market appraisals, value appraisals, utility availability, access, approvals,
permits, environmental reports, studies or audits and any related documentation,
development orders, any easements or cross-easement agreements, impact fee
agreements and information, water/sewer capacity reservation agreements, site
plans, development rights, engineering plans and construction drawings and plans
(collectively the "Reports"). The Real Property, the Improvements, the Personal
Property and the Reports are collectively called the "Property".

2.    Purchase Price. The purchase price for the Property is Six Million two
      hundred thousand and 00/100 Dollars ($6,200,000.00) (the "Purchase
      Price"), payable as follows:

      (a)   a deposit of Fifty Thousand and 00/100 Dollars ($50,000.00) (the
            "Deposit") shall be due and payable on or before that date which is
            three (3) business days following the Effective Date; provided,
            however, that if the Deposit is not delivered to the Escrowee (as
            hereinafter defined) by that date which is five (5) business days
            following the Effective Date, then this Agreement shall
            automatically terminate and the parties hereto shall be relieved of
            all further obligations and liability to the other. The Deposit
            shall be held in escrow in accordance with the terms hereof, in an
            interest bearing account. Upon closing of title to the Property
            ("Closing"), all interest accrued on the Deposit shall be credited
            to Buyer. In the event that this Agreement is terminated for any
            reason other than a default by Buyer, all interest accrued on the
            Deposit shall be paid to Buyer. The Deposit shall be applied against
            the Purchase Price at Closing subject to the earlier termination of
            this Agreement as provided herein, in which event the Deposit may be
            refundable, pursuant to the terms and provisions hereof; and

      (b)   the balance of the Purchase Price, in the amount of Six Million One
            hundred fifty Thousand and 00/100 Dollars ($6,150,000) shall be paid
            at Closing, subject to the prorations and adjustments set forth in
            this Agreement, by bank check, certified funds, or wire transfer to
            Seller's designated bank account on the date of Closing.

      (c) (i) The Deposit shall be drawn to the order of, delivered to and held
by Seller's attorney ("Escrowee"), the Escrowee shall hold the proceeds thereof
in escrow in a special bank account (or as otherwise agreed in writing by
Seller, Buyer and Escrowee) until the Closing or sooner termination of this
Agreement and shall pay over or apply such proceeds in accordance with the terms
of this section. Escrowee will hold such proceeds in an interest-bearing


                                       2
<PAGE>

account, and any interest earned thereon shall be paid to the same party
entitled to the escrowed proceeds, and the party receiving such interest shall
pay any income taxes thereon. The tax identification numbers of the parties are
shall be furnished to Escrowee upon request. At the Closing, such proceeds and
the interest thereon, if any, shall be paid by Escrowee to Seller. If for any
reason the Closing does not occur and either party makes a written demand upon
Escrowee for payment of such amount, Escrowee shall give written notice to the
other party of such demand. If Escrowee does not receive a written objection
from the other party to the proposed payment within 5 business days after the
giving of such notice, Escrowee is hereby authorized to make such payment. If
Escrowee does receive such written objection within such 5 day period or if for
any other reason Escrowee in good faith shall elect not to make such payment,
Escrowee shall continue to hold such amount until otherwise directed by written
instructions from the parties to this contract or a final judgment of a court.
However, Escrowee shall have the right at any time to deposit the escrowed
proceeds and interest thereon, if any, with the clerk of the Supreme Court of
the county in which the Land is located. Escrowee shall give written notice of
such deposit to Seller and Purchaser. Upon such deposit Escrowee shall be
relieved and discharged of all further obligations and responsibilities
hereunder.

      (ii) The parties acknowledge that Escrowee is acting solely as a
stakeholder at their request and for their convenience, that Escrowee shall not
be deemed to be the agent of either of the parties, and that Escrowee shall not
be liable to either of the parties for any act or omission on its part unless
taken or suffered in bad faith, in willful disregard of this contract or
involving gross negligence. Seller and Purchaser shall jointly and severally
indemnify and hold Escrowee harmless from and against all costs, claims and
expenses, including reasonable attorneys' fees, incurred in connection with the
performance of Escrowee's duties hereunder, except with respect to actions or
omissions taken or suffered by Escrowee in bad faith, in willful disregard of
this contract or involving gross negligence on the part of Escrowee.

      (iii) Escrowee has acknowledged agreement to these provisions by signing
in the place indicated on the signature page of this contract.

      (iv) If Escrowee is Seller's attorney, Escrowee or any member of its firm
shall be permitted to act as counsel for Seller in any dispute as to the
disbursement of the Deposit or any other dispute between the parties whether or
not Escrowee is in possession of the Deposit and continues to act as Escrowee.


                                       3
<PAGE>

      (v) Escrowee may act or refrain from acting in respect of any matter
referred to in this section 2(c) in full reliance upon and with the advice of
counsel which may be selected by it (including any member of its firm) and shall
be fully protected in so acting or refraining from action upon the advice of
such counsel.

3.    Closing; Closing Date. The Closing shall be held on that date which is not
      more than forty-five (45) business days immediately following the
      expiration date of the Due Diligence Period as defined in Section 6 below
      (or on the next business day thereafter if such date is not a business
      day), or on such earlier date as Buyer shall designate by at least five
      (5) days' advance written notice to Seller (the "Closing Date"). The
      Closing shall take place at the office of the attorneys for the Seller at
      3 Park Avenue, 16th Floor, New York, New York, or, upon reasonable prior
      written notice to the Seller, the offices of the Buyer's lender or its
      counsel, provided such offices are in the New York, or such other place as
      is agreed to by the parties. At Buyer's option, the Closing may be
      conducted by escrow, through the Title Company, or other escrow agent
      selected by Buyer.

4.    Condition of Title.

      (a)   Within ten (10) days after the Effective Date (the date this
            Agreement has been executed by the last of Buyer and Seller),
            Seller, at its sole cost and expense, shall provide Buyer and
            Buyer's attorney with: (a) a current standard commitment to issue an
            owner's policy of title insurance (1992 ALTA Form B), (the "Title
            Commitment"), issued by the First American Title Company or other
            nationally recognized title insurance company licensed to conduct
            business in the State of New York (the "Title Company") and hard
            copies of all title exceptions; and (b) a current ALTA/ACSM Land


                                       4
<PAGE>

            Title As-Built survey of the Property, which has been certified to
            Buyer and such other parties as Buyer may request. Title to the
            Property shall be good and marketable: (i) free and clear of all
            liens, restrictions, easements, encumbrances, claims or liens by
            contractors, subcontractors, mechanics and materialmen, leases,
            financing statements or other personal property liens or
            encumbrances and other title objections, other than those exceptions
            as set forth on the Title Commitment and approved by Buyer (the
            "Permitted Exceptions") and to the standard printed exceptions in an
            ALTA form of policy, and (ii) insurable as aforesaid at ordinary
            rates. Seller shall pay and discharge all liens at Closing or before
            Closing, at Seller's option; if Seller fails to do so, Buyer shall
            have the option, at its election, to pay and discharge such liens
            out of the Purchase Price.

      (b)   If Buyer determines, in its sole and absolute discretion, prior to
            the expiration of the "Due Diligence Period" (as defined in Section
            6(b) below), that there are defects to title such that title to the
            Property cannot be conveyed to Buyer at Closing in accordance with
            the requirements of this Agreement for a reason other than the
            existence of any lien which cannot be paid at Closing, Seller shall
            take reasonable action to cure the defect, and at Buyer's option,
            the Closing Date may be postponed for a reasonable time, not
            exceeding fifteen (15) days, to permit Seller to correct the title
            defect. If the title defect is of such a nature that it is not
            capable of being corrected within the fifteen (15) day cure period,
            then provided Seller shall have been proceeding diligently to effect
            a cure of the title defect, Seller shall have an additional time
            period of not exceeding fifteen (15) additional days, in which to
            complete its cure. If Seller fails or refuses to correct the title
            defect within the time periods set forth above, Buyer shall have the
            option: (i) of taking such title as Seller can convey without any
            abatement of the Purchase Price; or (ii) of terminating Buyer's
            obligations under this Agreement, in which event, the Deposit and
            all interest accrued on the Deposit shall be returned to Buyer and
            the parties shall have no further obligations to each other except
            those which by their terms shall specifically survive the
            termination of this Agreement. Survey issues raised by Buyer are to
            be treated pursuant to this paragraph 4(b) as if they are title
            defects.

5.    Seller's Representations, Covenants, Warranties and Indemnity.

      (a)   Seller represents, warrants, and covenants to Buyer that the
            following statements are true and correct as follows as of the date
            of this Agreement, and will remain true and correct as of the
            Closing Date:


                                       5
<PAGE>

      (i)   Seller has no knowledge of, and has received no notice from any
            governmental authority stipulating that any assessments or charges
            for any public improvements have been made against the Property
            which remain unpaid, no improvements to the Property or any roads or
            facilities abutting the Property have been made or ordered for which
            a lien, assessment, or charge can be filed or made and Seller has no
            knowledge of, and has received no notice of any plans for
            improvements by any governmental or quasi-governmental authority
            which might result in a special assessment against the Property.

      (ii)  Seller is not a party to any management, employment, service,
            equipment, supply, maintenance, water, sewer, or other utility or
            concession agreements escrows or bonds with respect to or affecting
            the Property (collectively, "Service Contracts") which will burden
            the Property or be binding upon Buyer after Closing in any manner
            whatsoever, except for instruments of record and those agreements
            set forth on Exhibit "B". At Closing, Seller shall to Buyer assign
            to Buyer those Service Contracts which Buyer has elected to
            continue.


                                       6
<PAGE>

      (iii) Seller is a duly existing corporation incorporated and in good
            standing in the State of New York, the Guarantor is a duly existing
            corporation incorporated and in good standing in State of Delaware,
            and is qualified to do business and in good standing in the State of
            New York. Seller has the power and authority to enter in this
            Agreement and to consummate the transactions herein contemplated and
            Guarantor has the power and authority to enter into the Guarantee.
            This Agreement and all documents executed by Seller or Guarantor, as
            applicable, which are to be delivered to Buyer at Closing: (A) are
            duly authorized, executed and delivered by Seller or Guarantor, as
            applicable and are enforceable in accordance with their terms; (B)
            are the legal, valid and binding obligations of Seller or Guarantor,
            as applicable. Neither Seller nor Guarantor is bankrupt or insolvent
            and no bankruptcy, insolvency or reorganization proceeding is
            contemplated by Seller or Guarantor.

      (iv)  Seller is not a "foreign person" as contemplated by Section 1445 of
            the Internal Revenue Code.

      (v)   No brokerage or leasing commissions or other compensation is or will
            be due or payable to any person, firm, corporation, or other entity
            with respect to or on account of any leases or occupancy agreements
            affecting the Property or any extensions or renewals thereof, if
            any.

      (vi)  There are no tenants, licensees or other occupants of the Property
            except for Seller, and no party has any right or option to acquire
            or lease the Property or any portion thereof.

      (vii) Neither the execution and delivery of this Agreement, or any
            documents required in connection with the Closing, nor compliance
            with the terms and conditions of this Agreement by Seller, nor the
            consummation of the Sale, constitutes or will constitute a violation
            or breach of the Articles of Incorporation or By-Laws of Seller, or
            of any agreement or other instrument to which Seller is a party, to
            which it is subject or by which it is bound.


                                       7
<PAGE>

      (viii) To Seller's knowledge the present use of the Property is in
            compliance with applicable zoning classifications. Neither Seller
            nor the Property is in violation of: (a) any law, statute, code,
            regulation of any governmental agency or authority applicable to the
            Property; or (b) any building or occupancy permit; or (c) any
            condition, easement, right-of-way, covenant, agreement or
            restriction of record applicable to the Property, including without
            limitation any applicable building, land use or environmental laws.

      (ix)  There is no pending or, to the best of Seller's knowledge,
            threatened condemnation of any portion of the Property or other
            enforcement action brought or threatened by any governmental agency
            or official for violation in of any laws, rules, regulations or
            ordinances to which the Property is subject.

      (x)   No litigation is presently pending with respect to the Property, nor
            to the best of the Seller's knowledge has any litigation been filed,
            or threatened in writing, affecting the Seller's ability to
            consummate the transaction contemplated by this Agreement.

      (xi)  Seller holds fee simple title to and is the sole owner of the
            Property.

      (xii) Except as expressly set forth in the environmental reports provided
            to Buyer as attached hereto as Exhibit "C" (the "Environmental
            Report") and subject to subparagraph (xiii) below, (i) the Seller is
            in compliance with all applicable Environmental Laws; (ii) the
            Seller has not transported from, stored or disposed of any Hazardous
            Materials from or upon the Premises in contravention of applicable
            Environmental Laws; (iii) there has not occurred, nor is there
            presently occurring, a Release of any Hazardous Materials on, into
            or beneath the surface of the Property except in compliance with
            applicable Environmental Laws; (iv) the Seller has not transported
            or disposed of, or allowed or arranged for any third parties to
            transport or dispose of, any Hazardous Material to or at a site
            which, pursuant to CERCLA, has been placed on the National
            Priorities List; (v) the Seller has not received written notice that
            it is a potentially responsible party for a federal or state
            environmental cleanup site or for corrective action under RCRA; and
            (vi) the Seller has not undertaken (or been requested to undertake)
            any response or remedial actions at the request of any federal,
            state or local governmental entity;


                                       8
<PAGE>

      (xiii) In connection with complying with the recommendations contained in
            the Phase I Environmental Site Assessment, dated October 12, 2005
            (the "Phase I"), (1) Seller represents and warrants that (A) the
            storm drains located on the Real Property have been drained and
            cleaned, and, if required by Buyer's lender, such storm drains shall
            be tested by Seller at Seller's sole cost, (B) the two 1,000-gallon
            fuel oil storage tanks located at 1480 North Clinton Avenue have
            been registered and tested for tightness, the results of which are
            to be made available to Buyer by June 12, 2006, however, if it is
            determined the tightness test has not been complete, Seller shall
            conduct the tightness test and provide Buyer the results of which by
            June 12, 2006, and (C) the 3,000-gallon underground storage tank
            located at 1479 North Clinton Avenue has been removed in accordance
            with applicable regulations; and (2) Seller covenants that (V)
            Seller shall clean the area around the storm drains located on the
            Real Property prior to recertification of the Phase I, or any
            additional Phase I Environmental Site Assessment being conducted on
            Real Property by Buyer, (W) Seller shall place all drums located in
            or on the Real Property on spill pallets prior to recertification of
            the Phase I, or any additional Phase I Environmental Site Assessment
            being conducted on Real Property by Buyer, (X) Seller shall clean
            the floors of all the buildings located on the Real Property, using
            a spill absorbent material, prior to recertification of the Phase I,
            or any additional Phase I Environmental Site Assessment being
            conducted on the Real Property by Buyer, (Y) Seller shall clean up
            the area of the Real Property where salvageable metal pieces are
            stored prior to recertification of the Phase I, or any additional
            Phase I Environmental Site Assessment being conducted on Real
            Property by Buyer, and (Z) Seller shall undertake to renew the
            permit for the 1100-gallon drum storage unit located at 1479 North
            Clinton Avenue.

For purposes of this Agreement:

      "Environmental Laws" shall mean any and all federal, state, local and
foreign statutes, laws, codes, regulations, ordinances, rules, judgments,
injunctions, orders, decrees, permits, franchises or licenses relating to
pollution, hazardous substances, hazardous wastes, petroleum or otherwise
relating to protection of the environment, natural resources or human health,
including but not limited to: the Clean Air Act; Clean Water Act; Resource
Conservation and Recovery Act ("RCRA"); Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"); Emergency Planning and Community
Right-to-Know Act; Federal Insecticide, Fungicide and Rodenticide Act; Safe


                                       9
<PAGE>

Drinking Water Act; Toxic Substances Control Act; Hazardous Materials
Transportation Act; Occupational Safety and Health Act; and Endangered Species
Act of 1973, each as amended.

      "Hazardous Materials" means any substance in amounts and concentrations
that: (i) require reporting, investigation, removal or remediation under any
Environmental Law; (ii) are regulated as a "hazardous waste," "hazardous
substance" or "pollutant" or "contaminant" under any Environmental Law; (iii)
cause a nuisance, trespass or other tortious condition or poses a hazard to the
health or safety of persons; or (iv) contain gasoline, diesel fuel or other
petroleum fuels, PCBs, asbestos or urea formaldehyde foam insulation.

      "Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the environment of any Hazardous Material (including the abandonment or
discarding of barrels, containers, and other closed receptacles containing any
Hazardous Material).

            (xiv) There are no tax abatements or exemptions affecting the
      Property.

            (xv) During the period of Seller's ownership of the Property: (A)
      none of the Property has been excavated by Seller; (B) no landfill was
      deposited on, or taken from, the Property by Seller; and (C) no
      construction debris or other debris (including, without limitation, rocks,
      stumps, or concrete) was buried upon any of the Property and to Seller's
      best knowledge known of the foregoing occurred prior to Seller's taking
      title to the Property.

            (xvi) A permanent unconditional certificate of occupancy for the
      improvements has been issued by the appropriate governmental authority and
      is in full force and effect.

            (xvii) The Property has direct and continuous ingress and egress to
      and from a dedicated county road and there is no action, pending or
      threatened that would impair or curtail such ingress or egress


                                       10
<PAGE>

      The representations and warranties of Seller contained in this Section 5
shall survive Closing and the delivery of the deed.

      (b) Seller shall indemnify, defend and hold Buyer harmless from and
against any and all claims, actions, judgments, liabilities, suits, liens,
damages, penalties, fines, costs and reasonable attorneys' fees (whether or not
a suit is commenced and including any appeal), foreseen or unforeseen, asserted
against, imposed on or suffered or incurred by Buyer (or the Property) directly
or indirectly arising out of or in connection with any breach of the warranties,
representations and covenants set forth in this Section 5 made as of the date of
this Agreement. The warranties and representations set forth in this Section 5
shall be deemed remade as of Closing and updated if necessary, and all of such
warranties and representations, as so remade and updated, and the indemnity
obligation set forth in this Section 5 shall survive Closing and the delivery of
the deed. In the event any of Seller's warranties and representations are prior
to Closing known to be inaccurate in a circumstance that is material and adverse
to Buyer and not otherwise permitted herein, and if Buyer shall be unwilling to
waive same and close this transaction without abatement of the Purchase Price or
allowance of any kind, Buyer's sole remedy shall be to terminate this Agreement
by giving written notice thereof to Seller, and thereupon the Deposit (and all
interest accrued thereon) shall be refunded to Buyer and neither party shall
have any further rights or obligations hereunder, except for those rights and
obligations which by their terms specifically survive the termination of this
Agreement.

      Except as set forth in Section 5(a) hereof Seller has not made and does
not make any representations or warranties as to the physical condition, rents,
leases, income, expenses, zoning or legality of occupancy of the Property, stays
of title or any other matter or thing affecting or relating to the Property and
Buyer acknowledges that no such representations and warranties have been made
and Buyer further agrees to take the property "as is" in its present physical
condition subject to reasonable wear and tear and normal depreciation between
the date hereof and the Closing date. Seller shall not be liable or bound in any
way for any verbal or written statements, representations or information
pertaining to the property furnished by any real estate broker or agent thereof
or employee of Seller or any other person. All prior and contemporaneous
representations, statements, understanding and agreements between the parties
with respect to the subject matter hereof are merged into this Agreement.


                                       11
<PAGE>

6.    Conditions of Buyer's Obligations. The obligation of Buyer under this
      Agreement to purchase the Property from Seller is contingent upon and
      subject to the satisfaction at Closing of each of the following conditions
      (any one of which my be waived in whole or in part by Buyer at or prior to
      Closing):

      (a)   All of the representations and warranties by Seller set forth in
            this Agreement shall be true and correct at and as of the date of
            this Agreement and as of the Closing Date in all respects as though
            such representations and warranties were made at and as of the
            Closing Date, and Seller shall have timely performed, observed, and
            complied with all covenants, agreements, and conditions required by
            this Agreement to be performed on its part prior to or as of
            Closing.

      (b)   Buyer shall have a period from the Effective Date through the date
            that is thirty (30) business days thereafter (the "Due Diligence
            Period") to conduct due diligence investigations and analysis of the
            Property and all information pertaining to the Property. Seller
            shall permit Buyer and its representatives to have access to the
            Property during regular business hours in order to conduct its due
            diligence investigations, subject to the notice requirement set
            forth in subparagraph (iii) below.

            (i)   Buyer shall have the right, but not the obligation, to perform
                  any and all inspections, investigations and tests deemed
                  appropriate by Buyer in its sole discretion including, but
                  limited to of the following:

                  (A) Inspect all physical aspects of the Property, including
                  without limitation, all operating systems, structural
                  components and related service contracts, building approvals,
                  plans and specifications and all occupancy certificates and
                  permits;


                                       12
<PAGE>

                  (B) Investigate all zoning, code and governmental
                  requirements;

                  (C) Review existing environmental reports and studies in
                  Seller's possession or control;

                  (D) Review preliminary title reports and surveys;

                  (E) Review the financial statements of Seller and of Gales
                  Industries Incorporated, a Delaware corporation ("Guarantor"),
                  which is to guarantee all of Seller's obligations as tenant
                  pursuant to the Lease (as hereinafter defined).

                  (F) Review of all agreements relating to the use, operation
                  and occupancy of the Property, including, without limitation,
                  financial and operating statements, leases, occupancy
                  agreements, equipment or other rental agreements, maintenance
                  agreements, service agreements and any and all other contracts
                  with third parties.

            (ii) If Buyer, in its sole and absolute discretion, determines that
            the Property is unsuitable for purchase for any reason whatsoever,
            and Buyer notifies Seller and Title Company of Buyer's election to
            terminate before 5:00 p.m. on the last day of the Due Diligence
            Period, this Agreement thereupon shall become void, the Deposit
            shall be returned to Buyer forthwith with interest and there shall
            be no further obligation or liability on either of the parties
            hereto. Upon receipt of notice of termination under this
            subparagraph, Title Company shall immediately deliver the Deposit
            and accrued interest to Buyer.

            (iii) Buyer shall notify Seller twenty-four (24) hours in advance of
            any time that it intends to be on site conducting its due diligence
            investigations and shall restore the Property to its original


                                       13
<PAGE>

            condition at the conclusion of the Due Diligence Period. Buyer shall
            endeavor to conduct its due diligence investigations in a matter
            that does not unreasonably disrupt the business operations of Seller
            at the Property.

            (iv) Prior to any contractor retained by Buyer or such contractor's
            representatives entering upon the Property, Buyer shall deliver, or
            cause its contractors to deliver, a public liability policy naming
            Seller as a named insured with a combined single limit in case of
            death or injury or property damage of not less than $3,000,000.
            Buyer shall keep the property free and clear and any and all liens
            and will indemnify, defend and hold Seller harmless from any and all
            claims and liabilities asserted against Seller as a result of any
            inspections, investigations, and entry by Buyer, its agents,
            employees or representatives. If any inspection or test disturbs the
            Property, Buyer will restore the Property to substantially the same
            condition as existed prior to any such inspection or test. The
            obligations of Buyer under this section shall survive the
            termination of this Agreement.

      (c) Within five (5) days of the Effective Date, Seller shall deliver to
      Buyer any and all of the following materials:

            (i) The most recent survey of the Property (the "Survey") prepared
            by a registered and licensed surveyor;

            (ii) Copies of the floor plans of all buildings on the Property,
            together with copies of all other plans and specifications of the
            Property and the Improvements and any appraisals of the Property or
            any portion thereof, to the extent that such plans and
            specifications are in Seller's possession;

            (iii) Copies of all Service Contracts;

            (iv) Copies of all environmental, engineering, soil, hydrology and
            other reports in Seller's possession or under Seller's control with
            respect to the Property;


                                       14
<PAGE>

            (v) Copies of the latest title policy with respect to the Property;

            (vi) Certified financial statements of (A) the Seller for the three
            (3) years prior to the Effective Date and (B) the Guarantor for the
            one year prior to the Effective Date;

            (vii) Copies of all tax bills relating to the Property;

            (viii) Copies of all permits and approvals relating to the Property,
            including, without limitation, all zoning approvals, building or
            construction permits and certificates of occupancy.

            (ix) all Reports and any other agreement(s) directly or indirectly
            affecting or impacting the Premises and any and all other documents
            or correspondence that impact or affect the Premises, the value of
            the Premises or the business being conducted on the Premises

      (d) At Closing, Seller shall deliver to Buyer duly executed originals of
      the following:

            (i) A bargain and sale deed in the usual and customary form with
            covenant's against grantor's act duly executed and acknowledged by
            Seller and in proper form for recording (the "Deed").

            (ii) Originals of the following instruments (or copies if originals
            are unavailable), all certified by Seller as true and correct to the
            best knowledge of Seller:

                  (A) Each bill of current real estate taxes, sewer charges and
                  assessments, water charges, and other utilities, together with
                  proof of payment thereof (to the extent same have been paid);


                                       15
<PAGE>

                  (B) All assigned guaranties and warranties relating to the
                  improvements and equipment therein, if any; and

                  (C) All documents listed in Section 6(c) above.

            (iii) An assignment of all Service Contracts which Buyer has elected
                  to assume and a termination of any Service Contracts Buyer has
                  not elected to assume.

            (v) An affidavit of title in favor of Buyer and the Title Company in
            the form customarily used by the Title Company.

            (vi) The original Lease, and the original Lease Guaranty (as defined
            in Section 16 below)

            (vii) An estoppel certificate from Seller, as tenant pursuant to the
            Lease, dated not more than fifteen (15) days prior to the Closing
            Date and in form and substance acceptable to the Buyer and its
            Lender, if any and an estoppel certificate from Guarantor relative
            to the Guarantee in form and substance acceptable to Buyer and its
            Lender, if any.

            viii  Such other documents as reasonably may be required by the
                  Buyer, its counsel or the Title Company in order to consummate
                  this transaction accordance with this Agreement, including,
                  without limitation, all necessary corporate authorizations,
                  approvals and resolutions, and a certificate confirming that
                  Seller is not a foreign person or entity that would be subject
                  to withholding.

            ix    a closing statement


                                       16
<PAGE>

            x     Satisfactions of any and all liens, encumbrances and other
                  conditions to be satisfied and extinguished upon Closing and
                  any necessary corrective title instruments;

            xi    A sworn affidavit of Seller authorizing the sale of the
                  Property, an incumbency certificate and a certificate stating
                  that all representations contained herein were true and
                  correct when made and are true, correct and restated as of the
                  time of Closing and that each representation and warranty
                  shall survive the Closing and the purchase and sale
                  transaction contemplated in this Agreement and a sworn
                  affidavit from Guarantor authorizing the execution of the
                  Lease Guaranty;

            xii   there shall not have been any adverse change in environmental
                  condition, physical condition or title of the Property, no
                  event or condition shall have occurred which has or might
                  reasonably have a material adverse effect on the Property and
                  the Property shall be free of any hazardous substances

            (e) (i) Seller will have paid, prior to the Closing Date, all taxes
            and assessments for commenced or completed improvements, including
            assessments payable in installments, which are to become due and
            payable, or a lien upon the Property, except for taxes for the
            current year, which shall be prorated in accordance with this
            Agreement. No special assessments have been levied against the
            Property. No work has been performed at the Property or is in
            progress, and no materials have been furnished to the Property other
            than ordinary and usual maintenance and repair work. If any lien for
            any such work is filed before or after Closing, Seller shall
            promptly discharge the same.

                  (ii) Seller will not further sell, encumber, convey, assign or
            contract to sell, convey, assign or pledge, all or any part of the
            Property, nor restrict the use of all or any part of the Property,
            nor take or cause to be taken any action in conflict with this
            Agreement at any time between the date of this Agreement and: (A)
            Closing, or (B) the earlier termination of this Agreement pursuant
            to its terms.


                                       17
<PAGE>

                  (iii) During the period between the Effective Date and the
            Closing Date, Seller shall: (A) comply with all applicable
            governmental laws, codes and requirements (including, without
            limitation, Environmental Laws) and the terms and conditions of all
            agreements affecting the Property; (B) continue to operate,
            maintain, use and repair the Property in a manner consistent with
            Seller's current practices, including, without limitation,
            maintaining all insurance coverage as now currently exists and/or
            may be required by the terms of any mortgages affecting the
            Property; (C) promptly inform Buyer in writing of any event
            adversely affecting the ownership, use, occupancy operation or
            management of the Property; (D) not enter into any new or amend any
            existing service agreements or maintenance agreements or other
            agreements affecting the Property that would be binding upon Buyer
            following Closing, unless Buyer has specifically consented in
            writing to same; and (E) not create any manner of lien or
            encumbrance upon the Property, without the express prior written
            consent of Buyer which consent may be withheld at Buyer's sole
            discretion.

                  (iv) Buyer shall have received from a Title Company an ALTA
            Owner's fee policy of title insurance for the Property, or in the
            alternative an irrevocable commitment for the issuance thereof,
            insuring title to the Property in the name of Buyer and in an amount
            not less than the Purchase Price. The policy shall be consistent
            with the Title Commitment referred to above, subject only to the
            Permitted Exceptions set forth on Exhibit B and to the standard
            printed exceptions in an ALTA form of policy. and which shall
            include such endorsements as Buyer shall request

                  (v) The Property shall be free of any and all municipal and
            other liens and there shall be no open permits effecting the
            Property;

                  (vi) There shall not have been any material adverse change in
            environmental condition, physical condition or title of the


                                       18
<PAGE>

            Property, no event or condition shall have occurred which has or
            might reasonably have a material adverse effect on the Property and
            the Property shall be free of any hazardous substances.

            (f) Seller and Buyer shall enter into the Lease (as defined in
            Section 16 below).

            (g) As of the Closing Date, there shall exist no pending action,
            lawsuit or proceeding with respect to Seller, Guarantor or the
            Property before any court, administrative agency or tribunal which
            seeks to restrain or prohibit the consummation of the sale of the
            Property as contemplated by this Agreement.

            (h) Notwithstanding anything contained in this Agreement to the
            contrary, Buyer, in its sole and absolute discretion, shall have the
            right to terminate this Agreement after the expiration of the Due
            Diligence Period and receive the return of the Deposit (plus all
            accrued interest) (i) if there occurs any change or alteration in
            the environmental condition of the Property that occurs after the
            expiration of the Due Diligence Period and is not a result of the
            direct actions of Buyer or (ii) if there is a material adverse
            change in the financial condition of the Guarantor.

7.    Possession. Possession of the Property shall be given to Buyer at Closing
      unoccupied and free of any liens, subject only to the tenancy with the
      Seller pursuant to the Lease, as more particularly set forth and described
      in Section 16 below.

8.    Apportionments.

            (a)   Real estate taxes, assessments, utilities, operating expenses,
                  and other apportionable income and expenses are not to be
                  pro-rated inasmuch as these shall be the responsibility of
                  Seller as Tenant under the Lease .

            (b)   All real property transfer taxes, stamp fees and taxes, and
                  escrow fees, if any, imposed on or in connection with this
                  transaction shall be paid by Seller. All other costs of
                  closing shall be paid for by either Buyer or Seller, according
                  to the customary practices for commercial real estate closings
                  in the Bay Shore, New York area.


                                       19
<PAGE>

            (c)   Seller shall pay all rollback taxes pertaining to the
                  Property, if any.

            (d)   Each party shall pay for the fees of its own attorneys.

9.    Condemnation. Seller covenants and warrants that Seller has not received
      any notice of any pending or threatened condemnation proceeding or other
      proceeding in the nature of eminent domain in connection with the
      Property. If prior to Closing any such proceeding is commenced or any
      change is made, or proposed to be made, to the current means of ingress
      and egress to the Property or the roads or driveways adjoining the
      Property, or to change such ingress or egress or to change the grade
      thereof, Seller agrees immediately to notify Buyer thereof. Buyer then
      shall have the right, at Buyer's option, to terminate this Agreement by
      giving written notice to Seller within thirty (30) days after receipt of
      such notice. If Buyer does not so terminate this Agreement, Buyer shall
      proceed to Closing pursuant to this Agreement as if no such proceeding had
      commenced and will pay Seller the full Purchase Price in accordance with
      this Agreement. Seller shall assign to Buyer all of its right, title, and
      interest in and to any compensation for such condemnation. As long as
      Buyer has elected to proceed with the Agreement and pay the full Purchase
      Price for the Property, Seller shall not negotiate or settle any claims
      for compensation prior to Closing, and Buyer shall have the sole right (in
      the name of Buyer or Seller or both) to negotiate for, to agree to, and to
      contest all offers and awards.

10.   Default by Buyer. If Buyer, without the right to do so and in default of
      its obligation hereunder, fails to complete Closing, the Deposit and all
      accrued interest shall be paid to Seller. Such payment of the Deposit and
      all accrued interest to Seller shall be deemed to be liquidated damages
      for Buyer's default. Seller hereby waives any right to pursue any other
      remedy permitted at Law or in equity against Buyer.


                                       20
<PAGE>

11.   Default by Seller. If Seller, without the right to do so and in default of
      its obligations hereunder, fails to complete Closing, the Deposit and all
      accrued interest shall be returned to Buyer, and Seller shall reimburse
      Buyer for all of Buyer's reasonable costs incurred in connection with this
      transaction, including, without limitation, costs of title and survey,
      costs of inspections and environmental reviews, cost of Buyer's
      consultants and attorneys, up to a maximum of $25,000. In addition, Buyer
      may exercise any remedies available to it at law or in equity, including,
      but not limited to, specific performance.

12.   Risk of Loss. Seller shall bear the risk of all loss or damage to the
      Property from all causes, other than the willful acts or negligence of
      Buyer, its agents, contractors, and/or representatives, until Closing. If
      the Property or any part thereof is damaged by fire or other casualty
      prior to Closing which would cost in excess of $50,000.00 to repair (as
      determined by an insurance adjuster selected by the insurance carriers),
      Seller shall promptly notify Buyer thereof and Buyer, at its option, may
      terminate this Agreement by written notice to Seller given on or before
      the earlier of: (i) twenty (20) days following the date that Buyer
      receives notice of such casualty; or (ii) the Closing Date (provided,
      however, that in the event that Buyer has less than twenty (20) days in
      which to respond, the Closing Date shall be adjourned to the extent
      necessary in order to provide Buyer with a twenty (20) day response
      period). In the event of such termination, this Agreement shall be of no
      further force and effect and, except for those obligations which by their
      terms shall survive the termination of this Agreement, neither party shall
      thereafter have any further obligation under this Agreement, and Seller
      shall promptly return the Deposit and all accrued interest to Buyer. If
      Buyer does not elect to terminate this Agreement or the cost of repair is
      determined by the selected adjusters to be less than $50,000.00, then the
      Closing shall take place as herein provided without abatement of the
      Purchase Price, and Seller shall assign and transfer to Buyer at the
      Closing, without warranty or recourse, all of Seller's right, title and
      interest to the insurance proceeds paid or payable to Seller on account of
      such fire or casualty. Seller shall pay or credit to Buyer the amount of
      the deductible of any of Seller's applicable insurance policies.

13.   Brokerage. Buyer represents and warrants to Seller and Seller represents
      and warrants to Buyer that each dealt with no broker, agent, finder, or
      other intermediary in connection with this sale and purchase other than
      George Tsunis Real Estate Inc. Seller shall be solely responsible for all
      commissions due to Broker pursuant to a separate agreement, and such


                                       21
<PAGE>

      commissions shall be payable out of Seller's closing proceeds if and when
      Closing takes place. Seller agrees to pay any other real estate broker or
      other intermediary claiming a commission in connection with this sale and
      purchase or the Lease, and Buyer shall have no liability or obligation in
      connection therewith. Seller agrees to indemnify, defend, and hold Buyer
      harmless from and against the claims of any and all brokers and other
      intermediaries claiming a commission in connection with this sale and the
      leaseback of the property pursuant to the Lease. These covenants and
      indemnities shall survive the Closing and the delivery of the Deed or the
      sooner termination of this Agreement.

14.   Notices. All notices, requests, and other communications under this
      Agreement shall be in writing and shall be delivered: (i) in person; (ii)
      by registered or certified mail, return receipt requested; (iii) by
      recognized overnight delivery service providing positive tracking of items
      (for example, Federal Express); or (iv) by facsimile, with the original to
      follow as provided in (ii) or (iii) above, addressed as follows or at such
      other address of which Seller or Buyer shall have given notice as herein
      provided:

         If intended for Seller:
                  Air Industries Machining, Corp.
                  1479 North Clinton Avenue
                  Bay Shore, New York 11716

                  Attention: Michael A. Gales, Executive Chairman

         With a copy to:
                  Eaton & Van Winkle LLP
                  3 Park Avenue, 16th Floor,
                  New York, New York 10016
                  Attn: Vincent J. McGill, Esq.


                                       22
<PAGE>

         If intended for Buyer:
                  Net Lease Advisors, LLC
                  345 Old Short Hills Road
                  Short Hills, New Jersey   07078
                  Attn:  Peter Weisman
                  Pw1955@aol.com

         And to:           Single-Tenant Financial Corp
                           11730 Berry Drive
                           Cooper City, FL 33026
                           Att:  David Piasecki
                           drpinvestco@aol.com

      All such notices, requests, and other communications shall be deemed to
      have been sufficiently given for all purposes hereof one (1) day after
      overnight delivery and three (3) days after deposit of the notice in the
      U.S. mail. Notices by the parties may be given on their behalf by their
      respective attorneys.

15.   Further Assurance. After Closing, at Buyer's sole cost and expense, Seller
      shall execute, acknowledge, and deliver, for no further consideration, all
      reasonable forms of assignments, transfers, deeds, and other documents as
      Buyer may reasonably request to vest in Buyer and perfect Buyer's right,
      title, and interest in and to the Property.

16.   Lease Execution. The parties acknowledge and agree that as a condition to
      their respective obligations hereunder, Buyer shall lease to Seller, and
      Seller shall lease as tenant, from Buyer, effective the Closing, the
      entire Property and improvements located thereon pursuant to the terms and
      provisions of that certain lease agreement which shall be substantially in
      the form attached hereto and made a part hereof as Exhibit "D" (the
      "Lease"). At Closing, Buyer and Seller shall fully execute and deliver to
      the other, the Lease, as same may have been amended, in a mutually
      agreeable form, and such delivery shall be a material obligation of Buyer


                                       23
<PAGE>

      and Seller under this Agreement. All of Seller's obligations as tenant
      pursuant to the Lease shall be unconditionally guaranteed by the Guarantor
      pursuant to the terms and provisions of a guaranty agreement, which shall
      be substantially in the form attached hereto and made a part hereof as
      Exhibit "E" (the "Lease Guaranty").

17.   Miscellaneous.

      (a)   The captions in this Agreement are inserted for convenience of
            reference only and in no way define, describe, or limit the scope or
            intent of this Agreement or any of the provisions hereof.

      (b)   Buyer shall have the right to assign this Agreement without Seller's
            consent. The assignee shall sign an assignment and assumption of
            this Agreement, by which the assignee agrees to undertake all of
            Buyer's obligations pursuant to this Agreement. Buyer shall provide
            written notice of such assignment to Seller, and Seller agrees to
            convey the Property directly to Buyer's assignee. Time is of the
            essence with respect to this Agreement.

      (c)   This Agreement shall be binding upon and shall inure to the benefit
            of the parties hereto and their respective heirs, executor,
            administrators, legal representatives, successors, and assigns.

      (d)   This Agreement, including the exhibits attached hereto, contains the
            whole agreement as to the Property between Seller and Buyer, and
            there are no other terms, obligations, covenants, representations,
            statements, or conditions, oral or otherwise of any kind whatsoever
            concerning this sale and purchase, except for the Lease, upon the
            execution of same. This Agreement shall not be altered, amended,
            changed, or modified except in writing executed by the parties
            hereto.


                                       24
<PAGE>

      (e)   This Agreement shall be construed in accordance with the laws of the
            State of New York.

      (f)   All of the parties hereto are experienced and sophisticated in
            business and understand the terms and conditions set forth herein.
            Each of the parties hereto has sought or has knowingly waived its
            opportunity to seek the advice of independent legal counsel prior to
            entering into this Agreement. Should any provision of this Agreement
            require judicial interpretation, it is agreed the Court interpreting
            or construing such provision shall not apply any presumption that
            the terms hereof shall be more strictly construed against one party
            by reason of any rule of construction which might otherwise require
            or permit this document to be construed more strictly against the
            party who itself or through its agents prepared this document.

      (g)   In the event of termination of this Agreement by either party for
            any reason, then, upon the return of the Deposit to Buyer, plus all
            interest accrued thereon, this Agreement shall terminate and the
            parties shall have no further rights or obligations with respect to
            the other, except for those provisions of this Agreement which, by
            their terms, specifically survive the Closing or sooner termination
            of this Agreement.

      (h)   Neither this Agreement nor any provision may be changed, waived,
            discharged or terminated orally, but only by a written agreement
            signed by both Buyer and Seller.

      (i)   The waiver by any party of any breach or default by any other party
            under any of the terms of this Agreement, shall not be deemed to be,
            nor shall the same constitute, a waiver of any subsequent breach or
            default in the part of any party. This Agreement shall be construed
            and enforced under the laws of the state of Florida. Whenever a date
            specified herein shall fall on a Saturday, Sunday or legal holiday,
            the date shall be extended to the next succeeding business day.


                                       25
<PAGE>

      (j)   Any dispute that may arise relative to this Agreement shall be
            resolved by submitting the same to binding Arbitration to be
            conducted under the authority of the American Arbitration
            Association, the parties agreeing to submit jurisdiction of such
            dispute(s) to such body pursuant to its rules and regulations. The
            prevailing party in any proceeding shall be entitled to recover from
            the other party, in addition to any damages or other relief granted
            as a result of such proceeding, all costs and expenses of such
            proceeding and reasonable attorneys' fees as fixed by the
            Arbitrator(s). A single member panel shall be employed and the venue
            for any Arbitration shall be New York.

18. Exhibits. The following exhibits are attached to and made a part of this
Agreement:

Exhibit "A" - Metes and Bounds Description of the Property
Exhibit "B" - List of Service Contracts
Exhibit "C" - Environmental Matters
Exhibit "D" - Form of Lease
Exhibit "E" - Form of Lease Guaranty

19. Counterparts. This Agreement may be signed in one or more counterparts, each
of which shall be an original and all of which, taken together, shall constitute
one and the same instrument.

                            [SIGNATURE PAGE FOLLOWS]


                                       26
<PAGE>

      IN WITNESS WHEREOF, intending to be legally bound, the parties have caused
this Agreement to be duly executed, under seal, as of the day and year first
written above.

WITNESS/ATTEST:                          SELLER:

                                         Air Industries Machining, Corp.
                                         A New York Corporation

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

                                         BUYER:

                                         NET LEASE ADVISORS, LLC
                                         A New Jersey Limited Liability Company

                                         By:
- ------------------------------               -----------------------------------
                                             Name:  Peter Weisman
                                             Title: Managing Member

ESCROW RECEIVED AND CONDITIONS OF
ESCROW ACCEPTED:

EATON & VAN WINKLE LLP, AS ESCROW AGENT



- --------------------------------


                                       27
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>e601149_ex10-2.txt
<DESCRIPTION>LEASE, DATED OCTOBER 24, 2006
<TEXT>

            THIS LEASE, made the _____ day of_______________, 2006, by and
between STNLA-SPVEF Bay Shore, LLC, a Delaware limited liability company, whose
address is 11730 Berry Drive, Cooper City, Florida 33026 ("Landlord"), and Air
Industries Machining, Corp., a New York Corporation, whose address is 1479 North
Clinton Avenue, Bay Shore, New York 11706 ("Tenant").

                              W I T N E S S E T H:

      Landlord and Tenant hereby covenant and agree as follows:

                                    ARTICLE I

                               Demise of Premises

      Section 1.01. Landlord, for and in consideration of the rents to be paid
and of the covenants and agreements herein contained to be kept and performed by
Tenant, hereby demises and leases unto Tenant, and Tenant hereby hires and
leases from Landlord, for the term and the rent and upon the covenants and
agreements herein set forth, the parcel of land consisting of approximately 4.49
acres located at 1479 & 1480 N Clinton Avenue, Bay Shore New York and 1460 N.
Fifth Avenue, Bay Shore New York all as shown on Exhibit A attached hereto and
made a part hereof (the "Land"), together with industrial buildings containing
approximately 75,421 gross square feet (the "Buildings") and all other
improvements now or hereafter located on the Land (the "Improvements") (the
Land, the Building and the Improvements being hereinafter collectively referred
to as the "Demised Premises")

                                   ARTICLE II

                                  Term of Lease

      Section 2.01. The term of this Lease and the demise of the Demised
Premises shall be for Twenty (20) years beginning on the date hereof (the
"Initial Commencement Date"), plus any partial month from the Initial
Commencement Date to the first day of the following month (the "Commencement
Date"), if the Initial Commencement Date occurs on a day other than the first
day of the calendar month, and ending on the last day of the calendar month in
which the twentieth (20th) anniversary of the Commencement Date shall occur (the
"Term", which shall include any renewals hereof). Each twelve (12) month period
commencing on the Commencement Date and ending on the day before the first and
each subsequent anniversary of the Commencement Date shall be a "Lease Year" as
used in this Lease.

                                   ARTICLE III

                                   Basic Rent

      Section 3.01. Tenant's obligation to pay rent shall commence on the
Initial Commencement Date. Tenant shall pay to Landlord during the Term, without
demand, counterclaim, deduction or setoff, basic rent ("Basic Rent") as follows:


                                       1
<PAGE>

      (a) During the first complete Lease Year, Tenant shall pay the sum of Five
Hundred Forty Thousand and 00/100 ($540,000.00) Dollars payable in twelve (12)
equal monthly installments of Forty-five Thousand and 00/100 ($45,000.00)
Dollars each; and monthly thereafter for the 1st 60 months of the Lease.

      (b) Beginning on the 61st month of the Lease, the Basic Rent payable by
Tenant shall be increased by fifteen (15%) percent over the Basic Rent payable
by Tenant in the immediately preceding Lease Year; thereafter the Basic Rent
shall increase by 3% per annum for the remainder of the Term.

      (c) In the event the Commencement Date is not the first day of a calendar
month, the Basic Rent for such partial month shall be pro-rated upon a daily
basis.

      The Basic Rent, Additional Rent (as defined in Section 30.02 below) and
all other sums payable under this Lease shall be payable, by wire transfer, at
the office of Landlord on the first business day of each month, at the address
above set forth, or as may otherwise be directed by notice from Landlord to
Tenant. Basic Rent shall be paid monthly in advance.

      Section 3.02. During the Term, Tenant shall well and truly pay, or cause
to be paid, to Landlord, the monthly installments of Basic Rent as herein
provided and all other sums that may become due and payable by Tenant under this
Lease, at the time and in the manner herein provided, without counterclaim,
offset or deduction; and all other sums due and payable by Tenant hereunder may,
at Landlord's option, be deemed to be, and treated as, Additional Rent, and
added to any Basic Rent due and payable by Tenant hereunder. In the event of
nonpayment of such other sums, Landlord shall have all the rights and remedies
herein provided for in the case of the nonpayment of Basic Rent or of a breach
of any covenant to be performed by Tenant. No payment to or receipt by Landlord
of a lesser amount than the then-amount required to be paid under this Lease
shall be deemed to be other than on account of the earliest amount of such
obligation then due. No endorsement or statement on any check or other
communication accompanying a check for payment of any amounts payable hereunder
shall be deemed an accord and satisfaction, and Landlord may accept such check
in payment without prejudice to Landlord's right to recover the balance of any
sums owed by Tenant under this Lease.

      Section 3.03. The Basic Rent payable by Tenant pursuant to this Lease
shall be absolutely net to Landlord. All costs, operating expenses, and
obligations imposed upon the Demised Premises or incurred in connection with its
use, occupancy, care, maintenance, operation and control (including, but not
limited to, all costs of replacements, maintenance and repairs (capital and
ordinary, structural and non-structural, foreseen and unforeseen, ordinary and
extraordinary) of the structure, roof, parking lot, utilities, taxes, insurance
and all other payments required in connection with the Demised Premises during
the Term of this Lease) shall be paid by Tenant in addition to all items of
Basic Rent payable by Tenant under this Lease. Additionally, Tenant shall be
responsible for compliance with any and all legal requirements and shall pay any
and all current and future costs relative thereto.


                                       2
<PAGE>

      Section 3.04. All amounts payable by Tenant to or on behalf of Landlord
under this Lease, whether or not designated as "Rent", shall constitute rent for
all purposes, including without limitation, as used in this Lease, "Rent" shall
be deemed to include all Basic Rent, all Additional Rent and all other sums due
under this Lease for the purpose of Section 502(b)(6) of the Bankruptcy Code, 11
U.S.C. 502(b)(6).

      Section 3.05. Except as may be expressly otherwise provided in this Lease,
there shall be no abatement, diminution or reduction of Basic Rent, Additional
Rent or any other sums due under this Lease under any circumstances including,
without limitation, due to charges or other compensation claimed by or allowed
to Tenant or any person claiming under it, nor shall there be any abatement or
diminution or reduction of the performance of the obligations of Tenant under
any circumstances.

                                   ARTICLE IV

                        Condition of the Demised Premises

      Section 4.01. Tenant acknowledges that it has inspected and is fully
familiar with and is leasing the Demised Premises in AS IS condition. Without
limiting the generality of the foregoing, Tenant acknowledges, agrees and
represents that Tenant has been given free access to and has inspected the
Demised Premises to its satisfaction and is relying solely on its inspection.
Neither Landlord nor any other party has made any representations or warranties
of any kind as to the condition, design, use, operation, expenses, maintenance
or repair of the Demised Premises. Landlord shall not be responsible for any
latent or other defects or changes in the condition of the Demised Premises.

      Section 4.02. The Demised Premises constitutes a self-contained unit; and
nothing in this Lease shall impose upon Landlord any obligation to provide any
services for the benefit of Tenant, including but not limited to water, gas,
electricity, heat, janitorial or garbage removal.

      Section 4.03. (a) In addition to any Basic Rent, Additional Rent and any
other sums due under this Lease, Tenant has placed with Landlord the sum of
$303,750 (referred to herein as the "Roof Reserve"). The Roof Reserve shall be
kept in an interest bearing account under Tenant's tax identification number and
interest earned thereon shall be taxed to the Tenant; and Landlord's right to
possession of the Demised Property for non-payment of Basic Rent, or for any
other reason, shall not in any event be affected by reason of the Landlord's
holding the Roof Reserve.

      (b) Tenant shall expeditiously make those certain repairs to or
replacements of the roofs to the Buildings as set forth in that certain report
attached hereto as Exhibit B and shall utilize the Roof Reserve for such repairs
to or the replacement of the roofs to the Buildings. Tenant shall access the
Reserve and conduct any permitted repairs or replacements subject to the
requirements of and in the same manner as set forth in Section 11.03 of the
Lease except that any remaining proceeds, including interest accrued, shall be
distributed to the Tenant upon completion of the repairs.


                                       3
<PAGE>

      (c) In the event it is determined to the reasonable satisfaction of
Landlord that the amount necessary to meet the conditions of this Paragraph 4.03
is less than $303,750, the Roof Reserve shall be reduced accordingly with any
excess being distributed to the Tenant.

      (d) The foregoing is in addition to, and not in lieu of, Tenant's
continuing obligation to be responsible for all structural and roof repairs and
replacement

      Section 4.04. (a) In addition to any Basic Rent, Additional Rent and any
other sums due under this Lease, Tenant has placed with Landlord the sum of
$21,875 (referred to herein as the "Remediation Reserve"); The Remediation
Reserve shall be kept in an interest bearing account under Tenant's tax
identification number and interest earned thereon shall be taxed to the Tenant;
and Landlord's right to possession of the Demised Property for non-payment of
Basic Rent, or for any other reason, shall not in any event be affected by
reason of the Landlord's holding the Remediation Reserve.

      (b) Tenant shall expeditiously make those certain repairs to or
replacements as required by that certain Phase 2 Environmental Report dated
October 5, 2006 (the "Phase 2 Report") as set forth in that certain report
attached hereto as Exhibit C and shall utilize the Remediation Reserve for such
repairs to or replacements. Tenant shall access the Reserve and conduct any
permitted repairs or replacements subject to the requirements of and in the same
manner as set forth in Section 11.03 of the Lease except that, provided there is
no condition of an uncured material default under the Lease by Tenant, any
remaining proceeds, including interest accrued, shall be distributed to the
Tenant upon completion of the repairs.

      (c) The foregoing is in addition to, and not in lieu of, Tenant's
continuing obligation to be responsible for all structural and Remediation
repairs and replacement

                                    ARTICLE V

                                       Use

      Section 5.01. The Demised Premises may be used solely for offices, the
assembly/manufacturing and warehousing and ancillary offices in connection
therewith and for no other purposes (the "Permitted Use"). Throughout the Term,
Tenant covenants to continuously occupy and use the Demised Premises solely for
the Permitted Use. Nothing contained herein shall be construed as a
representation on the part of Landlord that Tenant's use of the Demised Premises
is permitted under applicable zoning or other land use requirements, and, it
shall be Tenant's obligation, at Tenant's sole cost and expense, research
applicable zoning and other land use requirements and to make application for
and to obtain any and all certificates and/or permits to permit Tenant's use
from any governmental agencies having jurisdiction over the Demised Premises.

      Section 5.02. Tenant shall continuously and without interruption, during
all usual business hours, and on such days as most comparable businesses of like
nature are open for business, occupy, use and operate the Demised Premises for


                                       4
<PAGE>

the Permitted Use. Tenant shall, at all times, operate the business conducted by
it on the Demised Premises in a first class manner.

                                   ARTICLE VI

                                 Quiet Enjoyment

      Section 6.01. Landlord covenants that if, and for so long as, Tenant pays
Basic Rent, Additional Rent and all other sums due under this Lease as herein
provided, and observes and performs the covenants and conditions of this Lease,
Landlord shall do nothing to affect Tenant's right to peacefully and quietly
have, hold and enjoy the Demised Premises for the Term, subject to the
provisions of this Lease and to any present or future ground lease, mortgage or
deed of trust to which this Lease shall be subordinate.

                                   ARTICLE VII

                      Additional Rent, Taxes, Assessments,
                         Water Rates, Electric, Charges

      Section 7.01. The Tenant agrees during the Term of the Lease to pay, as
Additional Rent, an amount equal to all the real estate taxes assessed against
the Demised Premises together with all governmental and non-governmental water
and sewer charges pertaining to the Demised Premises (collectively, "Taxes"
which, among other charges set forth herein, are deemed a part of Additional
Rent) plus an amount equal to all of the insurance required to be paid pursuant
to Paragraphs 8(A), (B), (C), (D), (E) and (G) below (collectively, "Insurance"
which among other charges set forth herein, are deemed a part of Additional
Rent). Throughout the Term hereof, for each fiscal tax year, Taxes and Insurance
to become due shall be payable by Tenant to Landlord with the monthly Basic Rent
installment in twelve (12) equal installments as reasonably estimated by
Landlord until the actual sum of Taxes and Insurance for such fiscal year is
known, and thereafter an adjustment shall be made, with any deficiency being due
from Tenant within ten (10) days following demand, or any overage being credited
to Tenant against the monthly installment of Taxes and Insurance next following
the billing. If Landlord's lender requires tax and insurance escrows, such
lender's estimate of Taxes and Insurance shall be deemed to be a reasonable
estimate that will not be questioned by Tenant.

      Section 7.02. If at any time during the Term of this Lease, under the laws
of the State of New York or any political subdivision thereof, a tax on rents is
assessed against the Landlord or the Basic Rent, as a substitution, in whole or
in part, for a real estate tax, assessment, water rent, rate or charge, sewer
rent or other governmental imposition or charge with respect to the Demised
Premises, Tenant shall pay an amount equal to same to the extent that it is in
substitution, in whole or in part, for real estate taxes. Taxes shall not
include any income tax, capital levy or transfer tax imposed on Landlord, or any
franchise taxes imposed upon any corporate owner of the fee of the Demised
Premises or income tax imposed upon the rent received by the Landlord unless
such tax is a substitute for any real estate tax, property tax or rent tax. Any
sales, value added, use and similar tax assessed or payable on account of the
acquisition, ownership, leasing operation, possession or use of the Demised
Property shall be paid by Tenant.


                                       5
<PAGE>

      Section 7.03. Tenant shall, at its sole cost, arrange for service by all
utility providers serving the Building and the Demised Premises (including,
without limitation electricity, oil, gas, sewer, water and telephone) and shall
pay for all such utility service before any interest or penalties accrue
thereon, directly to the providers thereof.

      Section 7.04. Landlord shall not be liable in any way to Tenant for any
loss, damage or expense which Tenant may sustain or incur as a result of any
failure, interruption, defect or change in the quantity or character of any
utility or service and, in all events, no such interruption or cessation shall
affect or modify this Lease or give rise to any right of cancellation,
termination, offset or defense to Basic Rent, Additional Rent or any other
charge hereunder. Tenant agrees that such supply may be interrupted for
inspection, repairs and replacement and in emergencies.

                                  ARTICLE VIII

                                    Insurance

      Section 8.01. During the Term, Tenant, at its sole cost, but for the
mutual benefit of Landlord and Tenant, shall maintain the following insurance:

            (A) General Comprehensive public liability insurance protecting and
      indemnifying Landlord and Tenant against all claims for damages to person
      or property or for loss of life or property occurring in, upon or about
      the Demised Premises and the areas adjacent thereto, in the amount of not
      less than Three Million and 00/100 ($3,000,000.00) per occurrence and Five
      Million and 00/100 ($5,000,000.00) annual general aggregate limit per
      location, naming Landlord, its managing agent, if any, and any
      mortgagee(s), as their respective interests may appear:

            (B) Insurance against damage to the Buildings by all risks of direct
      physical loss (at Landlord's option to include earthquake, flood and such
      other risks as Landlord deems appropriate) with the policy to contain
      either the agreed amount endorsement or a replacement cost endorsement, in
      amounts equal to one hundred (100%) percent of full replacement cost, and
      in any event in an amount sufficient to prevent Landlord from becoming a
      co-insurer. Replacement Cost shall be determined from time to time by an
      independent appraiser, architect or engineer designated by Landlord, at
      Tenant's expense. The policy may include, at Landlord's option, a
      contingent liability endorsement and/or demolition and increased cost of
      construction endorsement in order for the Building to be constructed in
      accordance with all requirements and regulations which may be applicable
      at the time of loss or damage, of all governmental agencies having
      jurisdiction over the Building and construction of the Building.

            (C) "All Risk" property insurance against fire, theft, vandalism,
      malicious mischief, sprinkler leakage and such additional perils as are
      now, or hereafter may be, included in a standard extended coverage
      endorsement from time to time in general use in the State of New York upon
      property of every description and kind owned by Tenant and/or under


                                       6
<PAGE>

      Tenant's care, custody or control located in the Building or the Demised
      Premises or for which Tenant is legally liable or installed by or on
      behalf of Tenant, including by way of example and not by way of
      limitation, furniture, fixtures, fittings, equipment, installations and
      any other personal property in an amount equal to the full replacement
      cost thereof.

            (D) Boiler and machinery insurance coverage, if appropriate, for all
      eligible objects, including pressure vessels and air conditioning
      equipment, with the electrical apparatus clause, with such limits as may
      be reasonably necessary to properly insure the values at risk in the
      Buildings.

            (E) Business interruption and rent loss insurance, against the loss
      of Basic and Additional Rent for no less than one (1) year as provided
      herein, as well as such amounts as will reimburse Landlord for direct or
      indirect loss of earnings attributable to all perils commonly insured
      against by prudent tenants or assumed by Tenant pursuant to this Lease or
      attributable to prevention or denial of access to the Demised Premises or
      the Buildings as a result of any such perils.

            (F) Workers' Compensation Insurance (including employers' liability
      insurance) covering all persons employed at the Demised Premises to the
      extent required by the laws of the State of New York.

            (G) Insurance for such other hazards and in such amounts as Landlord
      may reasonably require and as at the time are commonly insured against
      with respect to buildings similar in character, general location and use
      and occupancy to the Demised Premises in relative amounts normally carried
      with respect thereto. If, by reason of changed economic conditions, the
      insurance amounts referred to in this Section 8.01 become inadequate, in
      Landlord's reasonable determination, Tenant agrees to increase the amounts
      of such insurance promptly upon Landlord's reasonable request.

      Tenant represents, said representation being specifically designed to
induce Landlord to execute this Lease, that Tenant's personal property,
fixtures, goods and inventory and any other items which Tenant may bring to the
Demised Premises or which may be under Tenant's care, custody and control which
may be subject to any claim for damages or destruction shall never exceed the
amount of insurance which Tenant is required to carry pursuant to this Lease.
Tenant shall name Landlord, its managing agent, if any, and Landlord's
mortgagee[s] as an additional named insureds, as their interests may appear,
with Landlord (of its mortgagee(s)) being designated as "loss payee" in all
cases. If at any time the amount of personal property, fixtures, goods and
inventory or other items located at the Demised Premises shall exceed said
amount, Tenant covenants to so notify Landlord and at the same time increase the
amount of insurance required to be carried pursuant to Subsection 8.01(C) to an
amount sufficient to cover the aforesaid to preclude any liability on Landlord's


                                       7
<PAGE>

part to Tenant. Should Tenant fail to do so, or fail to maintain insurance
coverage adequate to cover the aforesaid, naming Landlord, its managing agent,
if any, and Landlord's mortgagee[s] as an additional named insured, then, after
written notice and a ten (10) day opportunity to cure, Tenant shall be in
default hereunder and shall be deemed to have breached its covenants as set
forth herein.

      Tenant shall not do or permit to be done any act or thing on the Demised
Premises which shall invalidate or be in conflict with, or cause additional
premium for any insurance policy insuring the Demised Premises.

      All policies of insurance required pursuant to this Section 8.01 shall be
from a company rated in the A.M. Best Key Rating Guide with a policyholder's
service rating of A and a financial rating of X or such other rating as may be
required by Landlord's mortgagee. The insurance company shall be licensed to do
business in the State of New York and a certificate(s) evidencing the existence
of such policy shall be delivered to Landlord, together with evidence of the
payment of the premiums therefore upon the execution of this Lease. Each
insurance company shall agree to provide a notice of cancellation or non-renewal
to Landlord and any mortgagee at least thirty (30) days prior to said event
becoming effective. At least thirty (30) days prior to the expiration or
termination date of any policy, Tenant shall deliver a renewal or replacement
policy, or certificate(s) evidencing the existence thereof, to Landlord together
with proof of the payment of the premium therefor. No deductible on any
insurance required hereunder shall exceed One Thousand and 00/100 ($1,000.00)
Dollars. If Tenant shall fail to comply with the provisions of this Article
VIII, Landlord shall have the right, but not the obligation, to procure such
insurance and pay the premiums thereof and Landlord shall be entitled to
repayment by Tenant immediately on demand, as Additional Rent.

      Section 8.02 Tenant is and shall be in exclusive control and possession of
the Demised Premises as provided herein, and Landlord shall not be liable to
Tenant for any loss suffered by Tenant under any circumstances, including, but
not limited to: (i) loss of or injury to Tenant or to Tenant's property or that
for which Tenant is legally liable from any cause whatsoever, including but not
limited to theft or burglary; or (ii) that which results from or is incidental
to the furnishing of or failure to furnish or the interruption in connection
with the furnishing of any service; or (iii) that which results from any
inspection, repair, alteration or addition or the failure thereof undertaken or
failed to be undertaken by Landlord; or (iv) any interruption to Tenant's
business, however occurring.

      The aforesaid exculpatory Section is to induce Landlord, in its judgment,
to avoid or minimize covering risks which are better quantified and covered by
Tenant either through insurance, thereby avoiding the need to increase the rent
charged Tenant to compensate Landlord for the additional costs in obtaining said
coverage or reserving against such losses.

      Tenant shall indemnify, defend and save Landlord harmless against and from
all and all liabilities, claims, suits, fines, penalties, damages, losses, fees,
obligations, costs and expenses (including attorneys' fees) which may be imposed
upon, incurred by or asserted against Landlord by reason of:

      (A) Any work or thing done in, on or about the Demised Premises or any
      part thereof;

      (B) Any use, occupation, condition or operation of the Demised Premises;


                                       8
<PAGE>

      (C) Any act or omission on the part of Tenant or any of its agents,
      employees, invitees, licensees or subtenants on or within the Demised
      Premises or any part thereof, or any occurrence on any of the same;

      (D) Any accident, injury (including death) or damage to any third party or
      property owned by someone other than Tenant and not under the care,
      custody or control of Tenant occurring in, on or about the Demised
      Premises or any part thereof;

      (E) Any failure on the part of Tenant to perform or comply with any of the
      covenants, agreements, terms or conditions contained in this Lease.

      The provisions of this Section 8.02 shall survive the expiration or
earlier termination of the Lease.

      Section 8.03. Any policies required to be furnished by Tenant pursuant to
this Article VIII will unequivocally provide an undertaking by the insurers to
notify Landlord and the mortgagees or ground lessors of Landlord in writing not
less than thirty (30) days prior to any material change, reduction in coverage,
cancellation or other termination thereof.

      Section 8.04. All policies of insurance set forth in this Article shall
expressly provide that any losses thereunder shall be adjusted with Landlord,
Tenant and Landlord's mortgagees. The Tenant will not take out separate
insurance concurrent in form or contributing in the event of loss with that
required (or which may reasonably be required) pursuant to this paragraph to be
furnished by the Tenant unless the Landlord and each of Landlord's mortgagees
are included therein as an insured, with all losses payable thereunder as
provided above. Any such additional policy shall be subject to Landlord's prior
consent and if approved, shall be delivered to Landlord.

                                   ARTICLE IX

                       Repairs and Alterations; Surrender

      Section 9.01. Tenant covenants that throughout the Term, Tenant shall, at
its sole cost and expense, take good care of the Demised Premises, and make all
necessary repairs and replacements thereto, interior and exterior, ordinary and
extraordinary, foreseen and unforeseen, structural and non-structural, needed to
keep the same in good order, repair and condition. As used in this Lease, the
term "repair" shall include all necessary replacements, renewals, alterations,
additions and betterments. Tenant shall keep the Demised Premises and all parts
thereof in a clean and sanitary condition and free from trash, flammable
material and other objectionable matter. Tenant shall keep the sidewalks,
parking areas, and roadways within the Demised Premises clean and free of
obstructions, snow and ice. Tenant shall re-pave and re-stripe as required all
parking areas and roadways within the Demised Premises. Tenant shall keep,
maintain and replace as required all landscaping on the Demised Premises. Tenant
shall replace, at Tenant's expense, all glass in and on the Demised Premises,


                                       9
<PAGE>

which may become broken after the Commencement Date. Tenant shall also keep in
effect a service and maintenance contract with respect to the HVAC unit
servicing the Demised Premises and shall be responsible for all repairs and
replacements to any such unit(s). Tenant shall redecorate, paint and renovate
the Demised Premises as may be necessary to keep them in good appearance,
condition and repair. Tenant shall comply with all legal requirements as may now
or in the future exist in taking or not taking any action under this Lease.

      Tenant, at its sole cost and expense, shall be responsible for the
maintenance, repair and replacement of: (a) all electric, water, sewer and other
utility lines serving the Demised Premises and the mains to the points of
connection; (b) all structural and non-structural elements of the Buildings and
other improvements, including, without limitation, the roof and all roof
structures, HVAC system, plumbing, electrical, and other building systems.
Tenant shall provide snow removal services for the Demised Premises, including
the removal of heavy accumulations of snow from the roof of the Buildings which
threaten to cause the roof to collapse, and removal of snow from all sidewalks,
driveways and parking areas.

      All repairs or replacements made by Tenant shall be equal or better in
quality and class to the original work. Tenant shall quit and surrender the
Demised Premises at the end of the Term in as good condition as the reasonable
use thereof will permit and in compliance with the requirements stated herein
and in a "broom-clean" condition, and shall, by way of example and not by way of
limitation, clean and reseal all concrete floors.

      Section 9.02. Landlord covenants and agrees that Landlord shall not make
any alterations or additions to the Demised premises without Tenant's consent.
Landlord shall not permit any mechanics' or other liens to stand against the
Demised Premises for work or materials furnished to landlord. Notwithstanding
the foregoing, should Tenant fail to keep the Demised Premises in good condition
and repair, Landlord, after notice to Tenant (or without notice in the case of
an emergency), may, without being obligated to do so, make the repairs, but
nothing herein shall be construed to impose a duty on Landlord to mitigate its
damages by undertaking any repair which is Tenant's obligation. Any costs
incurred by Landlord in connection with the making of such repairs shall be paid
to Landlord promptly after demand and shall be deemed Additional Rent under this
Lease.

      Section 9.03. At any time and from time to time, Tenant, at Tenant's cost
and expense, may make such non-structural and structural alterations and
additions to the Demised Premises as Tenant desires, including the construction
of new building(s) on the vacant area included within the Demised Premises,
provided that any such alteration and addition shall be of such character and
condition as not to diminish the structural integrity of any improvement on the
Demised Premises and shall not violate applicable laws. Any such alteration
shall not reduce the square footage of the Buildings by more than 5% from that
as of the date hereof and shall not enlarge the square footage of the Buildings
by more than that allowed by applicable law. Any alterations to the Demised
Premises shall be made subject to compliance with all of the following
conditions: (i) Tenant shall first obtain all governmental permits and
approvals, if any, required therefor; (ii) no alteration of or involving the
structural portions, and no alteration, the cost of which would exceed $125,000,
of or involving the non-structural portions, of the Buildings shall be
undertaken until detailed plans and specifications have first been approved in
writing by the Landlord (which approval shall not be unreasonably withheld,
delayed or conditioned); (iii) all alterations when completed shall be of such a
character as shall not reduce, or otherwise adversely affect, the value, cubic


                                       10
<PAGE>

content or structural soundness of the Demised Premises and shall immediately
become the property of the Landlord; (iv) all alterations shall be done promptly
and in a good and workmanlike manner and in compliance with all governmental
laws, ordinances, orders, rules, regulations and requirements, and in accordance
with the orders, rules and regulations of the Board of Fire Underwriters or any
other body exercising similar functions and having jurisdiction thereof; (v)
Tenant, prior to performing any work, shall provide Landlord with evidence that
Tenant and each of its contractors and subcontractors have (and will continue to
have), at their sole cost and expense, adequate insurance therefor, including
statutory worker's compensation insurance (or certificates for contractors
indicating worker's compensation insurance is in force) covering all persons
employed in connection with the work, builder's risk insurance (including
completed operations) and general liability insurance for the mutual benefit of
the Tenant, Landlord and Landlord's mortgagees with limits reasonably acceptable
to Landlord, at all times when any work is in process in connection with any
alteration; (vi) Tenant shall pay all increased taxes and insurance premiums
assessed or charged as a result of the alterations; and (vii) Tenant shall post
with Landlord a completion bond in form and substance acceptable to Landlord.
The Tenant shall not be permitted to do any work on the Demised Premises which
would void any portion of any insurance coverage for Landlord's benefit.

      Section 9.04. All alterations, additions and improvements, whether
temporary or permanent in character, which may be made upon or to the Demised
Premises by Tenant (except furniture or movable trade fixtures installed at the
expense of Tenant) shall become the property of Landlord and shall remain upon
and be surrendered with the Demised Premises as a part thereof at the expiration
or sooner termination of this Lease, without compensation to Tenant.

      Any furniture or movable trade fixtures remaining at the Demised Premises
on the next day after the end of the Term shall be conclusively deemed abandoned
and may be removed by Landlord and discarded or stored at Tenant's sole risk and
expense.

      Section 9.05. On the Termination Date or earlier termination of this
Lease, Tenant shall, at Tenant's sole cost and expense: (1) peaceably surrender
the Demised Premises broom-clean, in good order and condition and upon
Landlord's request, restored to its original condition as of the Commencement
Date; and (2) at its expense remove from the Demised Premises the signage,
movable furniture, equipment, machinery, trade fixtures (the personalty which
belongs to Tenant and which Tenant may remove shall be referred to as "Tenant's
Property"), and any of Tenant's Property not so removed may at Landlord's
election and without limiting Landlord's right to compel removal thereof, be
deemed abandoned. Any damage to the Demised Premises caused by Tenant in the
removal of Tenant's Property shall be repaired by and at Tenant's expense, or if
not done by Tenant in a timely manner, may be performed by Landlord and all sums
expended by Landlord shall be deemed Additional Rent. Any cost or expense
incurred by Landlord in removing Tenant's Property shall be deemed Additional
Rent.

                                    ARTICLE X

                                 Management Fee


                                       11
<PAGE>

      Section 10.01. Intentionally omitted.

                                   ARTICLE XI

                            Casualty or Condemnation

      Section 11.01. Tenant shall give prompt written notice to Landlord in the
event of any damage, destruction to or condemnation of the Demised Premises.

      Section 11.02. Tenant hereby irrevocably assigns to Landlord any award,
compensation or insurance payment to which Tenant may become entitled by reason
of Tenant's interest in the Demised Premises (i) if the use, occupancy or title
of the Demised Premises or any part thereof, is taken, requisitioned or sold in,
by or on account of any actual or threatened eminent domain proceeding or other
action by any person having the power of eminent domain ("Condemnation") or (ii)
if the Demised Premises or any part thereof are damaged or destroyed by fire,
flood or other casualty ("Casualty"). All awards, compensations and insurance
payments on account of any Condemnation or Casualty are herein collectively
called "Compensation." Landlord may appear in any such proceeding or action to
negotiate, prosecute and adjust any claim for any Compensation, and Landlord
shall collect any such Compensation. Tenant shall pay all of Landlord's costs
and expenses in connection with each such proceeding, action, negotiation,
prosecution and adjustment. Tenant shall be entitled to participate in any such
proceeding, action, negotiation, prosecution or adjustment. Notwithstanding
anything to the contrary contained in this Article XI, if permissible under
applicable law, any separate Compensation made to Tenant for its moving and
relocation expenses, anticipated loss of business profits, loss of goodwill or
fixtures and equipment paid for by Tenant and which are not part of the Demised
Premises, shall be paid directly to and shall be retained by Tenant (unless such
Compensation reduces amounts otherwise due to Landlord). All Compensation shall
be applied pursuant to this Section 11.02, and all such Compensation (less the
expense of collecting such Compensation) is herein called the "Net Proceeds".

      Section 11.03. Substantial Condemnation. If a Condemnation shall, in
Tenant's good faith judgment, affect all or a substantial portion of the
Premises and shall render the Premises unsuitable for restoration for continued
use and occupancy in Tenant's business, then Tenant shall, not later than thirty
(30) days after such Condemnation, deliver to Landlord (i) notice of its
intention to terminate this Lease on the rental payment date immediately after
any such Condemnation occurs (the "Condemnation Termination Date"); (ii) a
certificate of an authorized officer of Tenant describing the event giving rise
to such termination and stating that Tenant has determined that such
Condemnation has rendered the Premises unsuitable for restoration for continued
use and occupancy in Tenant's business; and (iii) documentation to the effect
that termination of this Lease will not be in violation of any agreement then in
effect with which Tenant is obligated to comply pursuant to this Lease. This
Lease shall terminate on the Condemnation Termination Date, except with respect
to obligations and liabilities of Tenant hereunder, actual or contingent, which
have arisen on or prior to the Condemnation Termination Date, upon payment by
Tenant of all Basic Rent, Additional Rent and other sums due and payable
hereunder to and including the Condemnation Termination Date and the Net
Proceeds shall belong to Landlord.


                                       12
<PAGE>

      Section 11.04. Substantial Casualty during the Renewal Term. Intentionally
Omitted

      Section 11.05. Less Than Substantial Condemnation or any Casualty. If,
after a Condemnation or Casualty, Tenant does not give or does not have the
right to give notice of its intention to terminate this Lease as provided in
Subsections 11.03 and 11.04, then this Lease shall continue in full force and
effect (with no abatement of Basic Rent, Additional Rent or any other sums due
under this Lease) and Tenant shall, at its expense, rebuild, replace or repair
the Demised Premises in conformity with the requirements of Section IX, and
other applicable Sections of this Lease so as to restore the Demised Premises
(in the case of Condemnation, as nearly as practicable) to the condition,
character and fair market value thereof immediately prior to such Casualty or
Condemnation. Prior to any such rebuilding, replacement or repair, Landlord and
Tenant shall agree on the maximum cost thereof (the "Restoration Cost"). The
Restoration Cost shall be paid first out of Tenant's own funds to the extent
that the Restoration Cost exceeds the Net Proceeds payable in connection with
such occurrence, after which expenditure Tenant shall be entitled to receive the
Net Proceeds, but only against (i) certificates of Tenant delivered to Landlord
from time to time as such work of rebuilding, replacement and repair progresses,
each such certificate describing the work for which Tenant is requesting payment
and the cost incurred by Tenant in connection therewith and stating that Tenant
has not theretofore received payment for such work and (ii) such additional
documentation as Landlord may reasonably require, including, but not limited to,
copies of contracts and subcontracts relating to restoration, architects'
certifications, title policy updates and lien waivers or releases. Any Net
Proceeds remaining after final payment has been made for such work and after
Tenant has been reimbursed for any portions it contributed to the Restoration
Cost shall be retained by Landlord. In the event of any temporary Condemnation,
this Lease shall remain in full effect and Tenant shall be entitled to receive
the Net Proceeds allocable to such temporary Condemnation, except that any
portion of the Net Proceeds allocable to the period after the expiration or
termination of the Term shall be paid to Landlord. If the cost of any
rebuilding, replacement or repair required to be made by Tenant pursuant to this
subsection 11.05 shall exceed the amount of such Net Proceeds, the deficiency
shall be paid by Tenant.

                                   ARTICLE XII

                                     Reserve

      Section 12.01. In addition to any Basic Rent, Additional Rent and any
other sums due under this Lease, Tenant shall pay to Landlord, concurrently with
each payment of Basic Rent, a monthly installment for Annual Replacement Reserve
Costs (as defined below and referred to herein as the "Reserve"). "Annual
Replacement Reserve Costs" is hereby defined as the estimated annual replacement
reserve for repair and replacement to the structure of the Buildings and
replacement of the roof of the Buildings. The annual Reserve shall be 12.5 cents
($0.125) per sq.ft. per annum and each monthly installment shall be one twelfth
(1/12th) of such amount. The Reserve shall be held by the Landlord, in escrow,
and the following shall apply:


                                       13
<PAGE>

      i)    Tenant acknowledges and agrees that the Reserve may be pledged to
            Landlord's mortgagee(s);

      ii)   The Reserve shall be kept in a non-interest bearing account unless
            Landlord is required by law to pay interest in which event the
            Reserve shall be placed in an interest bearing account under
            Tenant's tax identification number and interest earned thereon shall
            be taxed to the Tenant;

      iii)  So long as no default has occurred under this Lease and is
            continuing, any amount remaining in the Reserve at the termination
            of the Lease, including any permitted Renewal Term, shall be
            returned to the Tenant; and

      iv)   Landlord's right to possession of the Demised Property for
            non-payment of Basic Rent, or for any other reason, shall not in any
            event be affected by reason of the Landlord's holding the Reserve.

      Section 12.02. So long as there is no default has occurred under this
Lease and is continuing, Tenant shall have the option, but not the obligation,
to utilize the Reserve for structural repairs or replacements to the Buildings
and for the replacement of the roof(s) of the Building(s). Tenant shall access
the Reserve and conduct any permitted repairs or replacements subject to the
requirements of and in the same manner as set forth in Section 11.03 above
except that any remaining proceeds shall remain in the Reserve.

The foregoing is in addition to, and not in lieu of, Tenant's continuing
obligation to be responsible for all structural and roof repairs and
replacement.

                                  ARTICLE XIII

                Compliance With Laws, Etc.; Environmental Matters

      Section 13.01. Tenant shall not do or permit anything to be done in the
Demised Premises which shall constitute a public nuisance or which will conflict
with the regulations of the Fire Department or with any insurance policy upon
said improvements or any part thereof or which will conflict with or violate any
governmental law, regulation, ordinance or code.

      Section 13.02. Tenant shall, at its own expense, obtain all necessary
environmental and operating permits and comply with all present and future
requirements of law and with all present and future ordinances or orders, rules
and regulations of any Federal, State, Municipal or other public authority
affecting the Demised Premises and with all requirements of the Fire Insurance
Exchange or similar body, and of any liability insurance company insuring
Landlord against liability for accidents in or connected with the Demised
Premises including, but not limited to laws, ordinances, orders, rules and
regulations which apply to the interior or exterior of the Demised Premises, the
structural or nonstructural parts thereof, and to make all improvements and
repairs required by such laws, ordinances, orders, rules and regulations,
ordinary or extraordinary, foreseen or unforeseen.

      Section 13.03. Tenant acknowledges and agrees to comply with all
applicable municipal, county, State, and Federal laws, rules and regulations now
or hereafter enacted or amended (collectively, "Laws") with respect to its use
of the Demised Premises. Tenant acknowledges that it has reviewed the documents
listed as exceptions 7, 8, 9 and 10 as set forth on Schedule B-II of that


                                       14
<PAGE>

certain Title Commitment issued by First American Title Insurance Company of New
York (Title Number 3008-147496 with an effective date of May 9, 2006) naming Net
Lease Advisor's, LLC as "Purchaser". Tenant shall comply with the requirements
of such documents and shall take any and all required actions or inactions
necessary to comply with and maintain compliance with such requirements.

      Section 13.04. Environmental Compliance.

(a)   For purposes of this Lease

      (i)   the term "Environmental Laws" shall mean and include the Resource
            Conservation and Recovery Act, as amended by the Hazardous and Solid
            Waste Amendments of 1984, the Comprehensive Environmental Response,
            Compensation and Liability Act, the Hazardous Materials
            Transportation Act, the Toxic Substances Control Act, the Federal
            Insecticide, Fungicide and Rodenticide Act and all applicable
            federal, state and local environmental laws, ordinances, rules,
            requirements, regulations and publications, as any of the foregoing
            may have been or may be from time to time amended, supplemented or
            supplanted, and any and all other federal, state or local laws,
            ordinances, rules, requirements, regulations and publications, now
            or hereafter existing, relating to the preservation of the
            environment or the regulation or control of toxic or hazardous
            substances or materials; and

      (ii)  the term "Regulated Substance" shall mean and include any, each and
            all substances or materials now or hereafter, regulated pursuant to
            any Environmental Law, including but not limited to any such
            substance or material now or hereafter defined as or deemed to be a
            "regulated substance", "pesticide", "hazardous substance" or
            "hazardous waste" under any Environmental Law, or included in any
            similar or like classification or categorization, thereunder.

(b)   Tenant shall

      (i)   not cause or permit any Regulated Substance to be placed, held,
            located, released, transported or disposed of on, under, at or from
            the Demised Premises or to otherwise adversely affect the Demised
            Premises;

      (ii)  contain at or remove from the Demised Premises, or perform any other
            necessary or desirable remedial action regarding, any Regulated
            Substance in any way affecting the Demised Premises if, as and when
            such containment, removal or other remedial action is required under
            any Environmental Law and, whether or not so required, shall perform
            any containment, removal or remediation of any kind involving any
            Regulated Substance in any way affecting the Demised Premises in
            compliance with all Laws, and shall arrange for periodic
            environmental tests to be conducted at the Demised Premises by
            qualified companies specializing in environmental matters and
            reasonably satisfactory to Landlord in order to ascertain compliance


                                       15
<PAGE>

            with all Laws and the requirements of this Lease, all of the
            foregoing to be at Tenant's sole cost and expense. Further, Tenant
            shall, upon the request of Landlord, provide Landlord with a bond or
            letter of credit, in form and substance satisfactory to Landlord, in
            an amount sufficient to cover the aggregate of the foregoing costs;

      (iii) provide Landlord with written notice (and a copy as may be
            applicable) of any of the following within five (5) days thereof:
            (A) Tenant's obtaining knowledge or notice of any kind of the
            presence, or any actual or threatened release, of any Regulated
            Substance in any way affecting the Demised Premises; (B) Tenant's
            receipt or submission, or Tenant's obtaining knowledge or notice of
            any kind, of any report, citation, notice or other communication
            from or to any federal, state or local governmental or
            quasigovernmental authority regarding any Regulated Substance in any
            way affecting the Demised Premises; or (c) Tenant's obtaining
            knowledge or notice of any kind of the incurrence of any cost or
            expense by any federal, state or local governmental or
            quasigovernmental authority or any private party in connection with
            the assessment, monitoring, containment, removal or remediation of
            any kind of any Regulated Substance in any way affecting the Demised
            Premises, or of the filing or recording of any lien on the Demised
            Premises or any portion thereof in connection with any such action
            or Regulated Substance in any way affecting the Demised Premises;
            and

      (iv)  in addition to the requirements of this Section 13.04 hereof, defend
            all actions against Landlord and its members, officers, employees,
            agents and lenders (the "Indemnified Parties") and pay, protect,
            indemnify and save harmless the Indemnified Parties from and against
            any and all liabilities, losses, damages, costs, expenses
            (including, without limitation, reasonable attorneys' fees and
            expenses), causes of action, suits, claims, demands or judgments of
            any nature relating, directly or indirectly, to any Environmental
            Laws, Regulated Substance or other environmental matters. Tenant
            shall comply with all Environmental Laws in existence now or in the
            future and, if some action(s) or inaction(s) is required pursuant to
            any such future Environmental Laws, Tenant shall take such action(s)
            or inaction(s) and shall fully comply with such Environmental Laws
            at its sole cost and expense. The indemnity and the compliance
            obligation of Tenant contained in this Section 13.04 shall survive
            the expiration or earlier termination of this Lease.

      (v)   Notwithstanding anything to the contrary in this Section 13.04,
            Landlord hereby acknowledges that Tenant uses certain Regulated
            Substances, and may use other Regulated Substances in the future,
            and that such use of Regulated Substances in connection with the
            operation of its business on the Demised Premises shall not be deem
            a violation of this Lease, as long as such use complies with
            applicable Environmental Laws.


                                       16
<PAGE>

      Section 13.05. Tenant shall immediately provide the Landlord with copies
of all correspondence, reports, notices, orders, findings, declarations and
other materials pertinent to the Tenant's compliance and the requirements of the
New York Department of Environmental Protection ("DEP") with respect to any
Environmental Law as they are issued or received by the Tenant.

      Section 13.06. Tenant covenants to indemnify, defend and hold Landlord and
each mortgagee of the Demised Premises harmless from and against any and all
liabilities, damages, claims, losses, judgments, causes of action, costs and
expenses (including, without limitation, the fees and expenses of counsel and
consultants and expenses incurred by Landlord as the result of the filing of a
lien against the Demised Premises by any governmental agency or authority) which
may be incurred by Landlord or any such mortgagee or threatened against Landlord
or such mortgagee, relating to or arising out of any breach by Tenant of the
undertakings set forth in this Lease, or the release of any Hazardous Substances
in, on, about, above or under the Demised Premises occurring as a result of
Tenant's activities on and occupancy of the Demised Premises.

      Section 13.07. Intentionally omitted.

      Section 13.08. On or before the Commencement Date, Tenant, at its sole
cost and expense, shall provide Landlord with an environmental insurance policy
issued by AIG or similar insurance carrier specializing in environmental
insurance policies, as required by Landlord, including, without limitation, a
so-called "Cost-Cap Environmental Policy" and/or a so-called "Pollution Coverage
Legal Liability Policy" (collectively, the "Environmental Insurance"). The
Environmental Insurance shall name Landlord (and its mortgagee, if so required)
as the insured and loss payee. The amounts, coverage and insurance company
issuing the Environmental Insurance must be acceptable to Landlord in all
respects. Tenant shall maintain the Environmental Insurance for the benefit of
Landlord and its mortgagee throughout the 20 Year Term in the amount of
$5,000,000.

      Section 13.09. In the event of Tenant's failure to comply in full with the
provisions of this Article XIII, Landlord may at its option, but without any
obligation to do so, perform any or all of Tenant's obligations and all costs
and expenses incurred by Landlord in exercise of such rights shall be deemed to
be Additional Rent payable to Landlord upon demand.

      Section 13.10. The undertakings and indemnities of this Article XIII shall
survive the termination or sooner expiration of the Lease and surrender of the
Demised Premises and shall also survive sale, or lease or assignment of the
Demised Premises by Landlord.

      Section 13.11. The undertakings of Tenant contained in this Section shall
not require Tenant to remove those Hazardous Substances referred to in the
Environmental Report annexed hereto as Exhibit C unless and until (i) Tenant
shall remove the Building which lies above such material or (ii) a governing
agency shall order Tenant to do so, provided that Tenant shall not be required
to comply with such order so long as it is contesting the same in a manner which
prevents the imposition of any penalty or fine or, in such event, Tenant
provides a bond in an amount sufficient to satisfy any penalty or fine to which
landlord or the Demised Premises may be subjected.


                                       17
<PAGE>

      Section 13.12. The Tenant shall, at least once every Lease Year, drain the
storm drain located between the buildings located on the property known as 1460
North Fifth Avenue and 1479 North Clinton Avenue.

                                   ARTICLE XIV

                      Subordination & Estoppel Certificate

      Section 14.01. This Lease is and shall be automatically subject and
subordinate to all present and future ground leases and mortgages of Landlord
affecting the Demised Premises (including all modifications, extensions and
renewals thereof) without the need for further documentation or instrumentation
to effectuate such subordination, provided that as a condition of such
subordination the holder of such ground lease or mortgage provides Tenant a
Non-Disturbance Agreement in form and substance reasonably satisfactory to
Tenant and such mortgagee or ground lessor. However, if requested by Landlord
and subject to Tenant's receipt of the aforesaid Non-Disturbance Agreement,
Tenant shall execute any instrument which reasonably may be requested by
Landlord to confirm the subordination of this Lease to any such ground lease or
mortgage. Landlord may assign this Lease to any such mortgagee in connection
with any such lien, and subject to Tenant's receipt of the aforesaid
Non-Disturbance Agreement Tenant shall execute any instrument which may be
necessary or desirable by Landlord or the holder of said lien in connection with
said assignment.

      Section 14.02. Tenant agrees, within ten (10) days of Landlord's written
request, to certify by written instrument duly executed and acknowledged to any
mortgagee, ground lessee or purchaser, or any proposed mortgagee, ground lessee
or purchaser, that this Lease is in full force and effect, or if not, in what
respect it is not, that this Lease has not been modified, or the extent to which
it has been modified, that there are no existing defaults hereunder to the best
of the knowledge of the party so certifying, or specifying the defaults, if any,
and any other information which Landlord shall reasonably require.

      Section 14.03. Tenant shall not seek to enforce any remedy it may have
under this Lease for any default on the part of Landlord without first giving
written notice by certified mail, return receipt requested, specifying the
default in reasonable detail, to any Landlord's mortgagee whose address has been
provided to Tenant and affording Landlord's mortgagee a reasonable opportunity
to perform Landlord's obligations under this Lease.

                                   ARTICLE XV

                               Defaults & Remedies

      Section 15.01. The occurrence of any one or more of the following acts or
occurrences shall be referred to as a default or as an "Event of Default" under
this Lease:


                                       18
<PAGE>

      (A) If Tenant shall fail to make any payment of Basic Rent or pay
      Additional Rent or any other amount due under this Lease as and when the
      same shall become due and payable; or

      (B) If Tenant shall default in the performance of or compliance with any
      of the other covenants, agreements, terms or conditions of this Lease to
      be performed by Tenant (other than any default curable by payment of
      money), and such default shall continue for a period of thirty (30) days
      after written notice thereof from Landlord to Tenant; or where such
      default reasonably cannot be cured within such thirty (30) days, if Tenant
      shall not have commenced the curing thereof within such period of time and
      shall not be proceeding with reasonable diligence to cure it, provided,
      however, that such default must be cured within ninety (90) days after
      commencement of the curing thereof; or

      (C) If Tenant or any guarantor of this Lease shall make an assignment for
      the benefit of creditors or file a voluntary petition in bankruptcy or
      shall be adjudicated a bankrupt or insolvent, or shall file any petition
      or answer seeking any reorganization, composition, readjustment or similar
      relief under any present or future bankruptcy or other applicable law, or
      shall seek or consent to or acquiesce in the appointment of any trustee,
      receiver, or liquidator of Tenant or any guarantor of this Lease or of all
      or any substantial part of its properties or of all or any part of the
      Demised Premises; or

      (D) If, within thirty (30) days after the filing of an involuntary
      petition in bankruptcy against Tenant or any guarantor of this Lease, or
      the commencement of any proceeding against Tenant or such guarantor
      seeking any reorganization, composition, readjustment or similar relief
      under any law, such proceeding shall not have been dismissed, or if,
      within thirty (30) days after the appointment (with or without the consent
      or acquiescence of Tenant or such guarantor), of any trustee, receiver or
      liquidator of Tenant or such guarantor, or of all or any part of the
      Demised Premises, such appointment shall not have been vacated or stayed
      on appeal or otherwise, or if, within thirty (30) days after the
      expiration of any such stay, such appointment shall have been vacated, or
      if, within thirty (30) days after the taking possession, without the
      consent or acquiescence of Tenant or such guarantor, of the property of
      Tenant, or of such guarantor by any governmental office or agency pursuant
      to statutory authority for the dissolution or liquidation of Tenant or
      such guarantor, such taking shall not have been vacated or stayed on
      appeal or otherwise; or

      (E) If the Demised Premises shall be abandoned, unoccupied or vacated by
      Tenant; or

      (F) If Tenant liquidates, ceases to exist or sells all or a substantial
      portion of its assets; or

      (G) Intentionally omitted.

      (H) If any representation or warranty made by Tenant or any guarantor of
      this Lease that is set forth herein or in any contract, notice,
      certificate, estoppel or request proves to be incorrect in any respect; or


                                       19
<PAGE>

      (I) If a final judgment of more than $1,000,000 or any amount which
      creates a default under any material debt of Tenant or any guarantor
      occurs and is not discharged or bonded within thirty (30) days of such
      occurrence.

      Section 15.02. Following the occurrence of an Event of Default, Landlord,
in addition to any and all rights and remedies it may have at law and equity,
may at its option exercise any one or more of the following remedies:

      (a) Landlord may give Tenant a notice (the "Eviction Notice") of its
intention to terminate this Lease specifying a date not less than five (5) days
thereafter, upon which date this Lease, the term and estate hereto granted and
all rights of Tenant hereunder shall expire and terminate. Notwithstanding the
foregoing: (i) Tenant shall remain liable for damages as hereinafter set forth,
and (ii) Landlord may institute dispossession proceedings for non-payment of
rent, or other proceedings to enforce the payment of rent without giving the
Eviction Notice. Upon any such eviction or expiration of this Lease, Tenant
shall peaceably quit and surrender the Demised Premises to Landlord, and
Landlord may without further notice enter upon. re-enter, possess and repossess
itself thereof, by summary proceedings, ejectment or otherwise and may have,
hold and enjoy the Demised Premises and the right to receive all rental and
other income of and from the same as heretofore provided. However, so long as
Tenant is not in default in the payment of Basic Rent or Additional Rent or in
the performance of any other terms, covenants and conditions of this Lease
beyond the expiration of relevant cure periods, Landlord shall not terminate
this Lease.

      (b) Landlord may, at Landlord's sole option (without imposing any duty
upon Landlord to do so), and Tenant hereby authorizes and empowers Landlord to:
(i) re-enter the Demised Premises as Tenant's agent or for any occupant of the
Demised Premises under Tenant, or for its own account or otherwise, (ii) relet
the same for any term, (iii) restore the Demised Premises to the condition in
which it was required to be surrendered by Tenant under this Lease, and (iv)
receive and apply the rent so received to pay all reasonable fees and expenses
incurred by Landlord, directly or indirectly, as a result of Tenant's default,
including, without limitation, any reasonable legal fees and expenses arising
therefrom, the reasonable cost of re-entry, repair and reletting and the payment
of the rent and other charges due hereunder. No entry, re-entry or reletting by
Landlord, whether by summary proceedings, termination or otherwise, shall
discharge Tenant from any of its liability to Landlord as set forth in this
Lease, and in no event shall Tenant be entitled to or receive any benefit or
credit from any rental in excess of the rent reserved under this Lease which
results from a reletting of the Demised Premises after Tenant's default;

      (c) Regardless of whether Landlord relets the Demised Premises, or enters
or re-enters the same, whether by summary proceedings, termination or otherwise,
Tenant shall pay Landlord, and be liable to Landlord for the full amount of all
Basic Rent, Additional Rent, and all other charges then due or thereafter to
become due to Landlord hereunder less any sums collected by Landlord during the
remaining term of this Lease, such amount shall be paid by Tenant to Landlord on
the days originally fixed herein for payment thereof. Landlord may apply any or


                                       20
<PAGE>

all sums held by Landlord as a security deposit pursuant to Article XXIII toward
all sums due by Tenant for Basic Rent, Additional Rent or any other obligations
of Tenant;

      (d) If Tenant shall fail to pay any Taxes or make any other payment
required to be made under this Lease, or shall default in the performance of any
covenant, agreement, term, provision or condition herein contained, Landlord
may, without being under any obligation to do so, and without thereby waiving
such default, make such payment and/or remedy such default for the account and
at the sole expense of Tenant. Tenant shall pay to Landlord, on demand, the
amount of all sums so paid and all expenses so incurred by Landlord, together
with interest, at the rate set forth in subparagraph 15.02(e) below, on such
sums and expenses from the date incurred until payment in full;

      (e) Interest on any sums due to Landlord from Tenant under this Lease
shall accrue from the date such sums became due and payable at the lesser of:
(a) the highest permitted rate by law, and (b) eighteen percent (18%) per annum.
Landlord, at its option, shall forthwith, notwithstanding any other provision of
this Lease, be entitled to recover from Tenant (in lieu of all other claims for
damages on account of such termination) as and for liquidated damages an amount
equal to the excess of all Basic Rent and Additional Rent reserved hereunder for
the unexpired portion of the Term of this Lease discounted at the rate of three
(3%) percent per annum to the then present worth, over the fair rental value of
the Demised Premises at the time of termination for such unexpired portion of
the Term (the rent received on a reletting shall be conclusively accepted as the
fair rental value). Additionally, Tenant agrees to pay, as Additional Rent, all
reasonable attorney's fees and other expenses incurred by Landlord in enforcing
any of the obligations under this Lease, including but not limited to the
payment of any rental obligations hereunder. This covenant shall survive the
expiration or sooner termination of this Lease.

      (f) Nothing herein contained shall limit or prejudice the right of
Landlord, in any bankruptcy or reorganization or insolvency proceeding, to prove
for and obtain as liquidated damages by reason of such termination an amount
equal to the maximum allowed by any statute or rule of law whether such amount
shall be greater or less than the excess referred to above.

      Section 15.03. All remedies of Landlord set forth herein, and all remedies
of Landlord at law and in equity, may be exercised from time to time in such
order and in such combination as Landlord elects.

      Section 15.04. Tenant hereby waives all right of redemption or re-entry or
re-possession to which Tenant or any person under it may be entitled by any law
now or hereafter in force. In addition, in the event of an Event of Default
which results in the Landlord recovering possession of the Demised Premises,
Landlord shall be under no duty to mitigate Tenant's damages as provided for in
this Article XV unless such mitigation is required by applicable law. Landlord's
remedies hereunder are in addition to any remedy allowed by law.

      Section 15.05. In the event of any breach or threatened breach by Tenant
of any of the agreements, terms, covenants or conditions contained in this
Lease, Landlord shall be entitled to enjoin such breach or threatened breach and
shall have the right to invoke any right or remedy allowed at law or in equity
or by statute or otherwise as though re-entry, summary dispossession


                                       21
<PAGE>

proceedings, and other remedies were not provided for in this Lease. During the
pendency of any proceedings brought by Landlord to recover possession by reason
of default, Tenant shall continue all money payments required to be made to
Landlord, and Landlord may accept such payments for use and occupancy of the
Demised Premises. In such event, Tenant waives its right in such proceedings to
claim as a defense that the receipt of such money payments by Landlord
constitutes a waiver by Landlord of such default.

      Section 15.06. No failure by Landlord to insist upon the strict
performance of any covenant, agreement or term or condition of this Lease, or to
exercise any right or remedy upon default, and no acceptance of full or partial
Basic Rent, Additional Rent or any other sum due under this Lease during the
continuance of any such default shall constitute a waiver of such default or of
any covenant, agreement, term or condition. No covenant, agreement, term or
condition of this Lease, or any breach thereof, shall be waived, altered or
modified except by a written instrument executed by Landlord.

      Section 15.07. In the event of any breach or threatened breach by Tenant
of any of the terms or conditions contained in this Lease, Landlord shall be
entitled to enjoin such breach or threatened breach and shall have the right to
invoke any right or remedy allowed at law or in equity.

                                   ARTICLE XVI

                            Assignment and Subletting

      Section 16.01. Unless a default shall have occurred hereunder and be
continuing, Tenant may, for its own account, assign this Lease or sublet all or
any part of the Demised Premises for the Term of this Lease subject to the
approval of Landlord which approval shall not be unreasonably withheld, delayed
or conditioned. Each such assignment or sublease shall expressly be made subject
to the provisions hereof. No such assignment or sublease shall modify or limit
any right or power of Landlord hereunder or affect or reduce any obligation of
Tenant hereunder and all such obligations shall be those of Tenant and shall
continue in full effect as obligations of a principal and not of a guarantor or
surety, as though no subletting or assignment had been made, such liability of
the Tenant named herein to continue notwithstanding any subsequent modifications
or amendments of this Lease; provided, however, that (other than with respect to
any modifications required by law or on account of bankruptcy or insolvency) if
any modification or amendment is made without the consent of the Tenant named
herein (which consent shall not be unreasonably withheld or delayed), such
modification or amendment shall be ineffective as against the Tenant named
herein to the extent, and only to the extent, that the same shall materially
increase the obligations of the Tenant, it being expressly agreed that (even if


                                       22
<PAGE>

any such modification or amendment shall materially increase the likelihood of a
default by Tenant under this Lease) the Tenant named herein shall remain liable
to the full extent of this Lease as if such modification had not been made.
Neither this Lease nor the Term hereby demised shall be mortgaged by Tenant, nor
shall Tenant mortgage or pledge its interest in any sublease of the Demised
Premises or the rentals payable thereunder. Any such mortgage or pledge, any
sublease made otherwise than as expressly permitted by this Section 16.01 and
any assignment of Tenant's interest hereunder made otherwise than as expressly
permitted by this Section 16.01 shall be void. Tenant shall, within twenty (20)
days after the execution of any assignment or sublease, deliver a conformed copy
thereof to Landlord.

      Section 16.02 Related Parties. At any time and from time to time Tenant's
interest under this Lease may be assigned and re-assigned without Landlord's
consent to a corporation or other entity which is a parent, subsidiary or
affiliate of Tenant or to a corporation or other entity resulting from any
consolidation, reorganization, or merger with Tenant, or any ot its parent or
subsidiary entities. For purposes of this paragraph, an affiliate of Tenant
shall mean any entity which directly or indirectly controls or is controlled by
Tenant or Guarantor.

      Section 16.03. Tenant agrees that it shall not be unreasonable for
Landlord to withhold its consent to a proposed sublease or assignment if:

            I.    The proposed assignee refuses to provide Landlord with
                  financial statements covering a period of at least 12 months
                  ending no earlier than six months and no later than three
                  months prior to the as of which they are provided to Landlord
                  or as of the effective date of the proposed assignment, the
                  Proposed Assignee shall have a financial standing
                  substantially inferior to the financial standing of Tenant as
                  of the Commencement Date;

            II.   The Proposed Assignee shall not agree in writing to assume all
                  of the obligations of Tenant under this Lease from and after
                  the date of the assignment;

            III.  The term of any such assignment or sublease shall be less than
                  five (5) years or the balance of the term of this Lease, if
                  less;

            IV.   Tenant or the Proposed Assignee shall fail to pay to Landlord
                  a processing fee of Two Thousand Five Hundred and 00/100
                  ($2,500.00) Dollars in connection with the proposed sublet or
                  assignment of this Lease;

            V.    Tenant shall fail to furnish Landlord with a true and correct
                  copy of the sublease or assignment and assumption not less
                  than thirty (30) days prior to execution for Landlord's review
                  and approval (such approval not to be unreasonably withheld)
                  and a fully executed counterpart of the sublease or assignment
                  and assumption of this Lease, as applicable, within ten (10)
                  days after the date of the execution of same;

            VI.   Tenant shall refuse to pay to Landlord fifty (50%) percent of
                  any sums (including without limitation Basic Rent and
                  Additional Rent) received by Tenant, as and when received, in
                  excess of the Rent payable by Tenant to Landlord as Rent under
                  this Lease.

            VII.  The Proposed Assignee is not solvent or is generally held in
                  disrepute.

Section 16.04 Limits on Assignees

Notwithstanding anything to the contrary contained in this Lease, Tenant shall
not., without the prior written consent (which consent, to be effective must
expressly state the Landlord is aware that the subject assignee or subtenant, as
the case may be, is a tax-exempt entity) of Landlord in each instance (which
Landlord may grant or withhold in its sole discretion), assign all or any part
of its interest in this Lease or sublet all or any part of the Demised Premises,
or in any other manner grant any right to use, occupy or otherwise "lease"
(within the meaning of Internal Revenue Code of 1986, Section 168(h), as amended


                                       23
<PAGE>

("Section 168(h)")) all or any part of the Demised Premises, to any "tax-exempt
entity", as defined in Section 168(h), to the extent that the aggregate portion
of the Premises sublet, assigned, used, occupied or "leased" by all such
tax-exempt entities shall be more than thirty-five (35%) percent of the Demised
Premises. Tenant agrees that any assignment of lease or subletting made in
violation of the foregoing sentence will be deemed initially void, and Tenant
acknowledges that, notwithstanding such voiding, Landlord may incur damages as a
result of such violations and Tenant agrees to indemnify Landlord from any such
damages

Section 16.05. Transfer or Pledge by Landlord

Landlord shall be free to transfer its fee interest in the Demised Premises or
any part thereof or interest therein, subject, however, to the terms of this
Lease and the assumption of such terms by the proposed assignee. Any such
transfer shall relieve the transferor of all liability and obligation hereunder
(to the extent of the interest transferred) accruing after the date of the
transfer. Landlord shall be free to pledge or mortgage its interest in the
Demised Premises and this Lease. Tenant agrees to make such reasonable
modifications to this Lease as may be requested by Landlord's mortgagee(s), if
any, provided that such modifications do not materially increase Tenant's
obligations or increase the rent due hereunder

      Section 16.06. If Tenant is an entity other than an entity that files
periodic reports with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 and whose stock is publicly traded, the
provisions of this Article XVI shall apply to a transfer (however accomplished,
whether in a single transaction or in a series of related or unrelated
transactions) of stock (or any other mechanism such as, by way of example, the
issuance of additional stock, a stock voting agreement or change in class(es) of
stock) which results in a change of control of Tenant as if such transfer of
stock (or other mechanism) resulting in a change of control of Tenant were an
assignment of this Lease, and if Tenant is a limited liability company,
partnership, limited partnership, joint venture or other entity other than an
entity that files periodic reports with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 and whose interests are publicly
traded, such provisions shall apply with respect to a transfer (by one or more
transfers) of an interest in the entity or distributions of profits and losses
of such partnership, limited partnership or joint venture (or other mechanism,
such as, by way of example, the creation of additional general partnership or
limited partnership interests) which results in a change of control of such an
entity, partnership or joint venture as if such transfer of an interest in the
distributions of profits and losses of such entity, partnership or joint venture
which results in a change of control of such entity, partnership or joint
venture were an assignment of this Lease.

      Section 16.07. Tenant shall have no claim, and hereby waives the right to
any claim, against Landlord for money damages by reason of any refusal,
withholding or delaying by Landlord of any consent to Tenant's request for a
proposed subletting or assignment.

      Section 16.08. Any assignment or subletting that is not made in compliance
with the provisions of this Article XVI shall be void, and at Landlord's option,
shall constitute an Event of Default under this Lease. The provisions of this
Article XVI do not and shall not be construed to create any rights in favor of
any third parties.


                                       24
<PAGE>

                                  ARTICLE XVII

                                     Notices

      Section 17.01. All notices, demands, consents, approvals, requests and
instruments or documents by this Lease required or permitted to be given to or
served upon Landlord or Tenant shall be in writing. Any such notice, demand,
consent, approval, request, instrument or document shall be sufficiently given
or served only if delivered personally or if sent by a recognized overnight
courier service or if sent by certified or registered mail, postage prepaid,
addressed at the address set forth below, or at such other address as it shall
designate by notice, as follows:

         If to Landlord:     STNLA-SPVEF Bay Shore, LLC
                             Single-Tenant Financial Corp
                             11730 Berry Drive
                             Cooper City, FL 33026
                             Att:  David Piasecki

         With Copy to:       Lawrence A. Saichek, Esq.
                             601 Brickell Key Drive, Suite 505,
                             Miami, Florida 33131
                             Laslaw18@aol.com

         If to Tenant:       Air Industries Machining, Corp.
                             1479 North Clinton Avenue
                             Bay Shore, New York 11706
                             Attention:  Michael A. Gales, Executive Chairman

         With Copy to:       Eaton & Van Winkle LLP
                             3 Park Avenue, 16th Floor,
                             New York, New York 10016
                             Attention: Vincent J. McGill, Esq.

      Any notice so sent shall be deemed delivered one (1) business day after
delivery to the overnight courier or five (5) business days after deposit in the
U.S. mail. The addresses and names of the parties to whom notices are to be sent
may be changed by the giving of a notice as provided in this Section 17.01.


                                       25
<PAGE>

                                  ARTICLE XVIII

                                  Holding Over

      Section 18.01. If Tenant shall remain in the Demised Premises after the
expiration of the Term without having executed and delivered a new lease with
Landlord, such holding over shall not constitute a renewal or extension of this
Lease. Landlord may, at its option, elect to treat Tenant as one who has not
removed at the end of its Term, and thereupon be entitled to all the remedies
against Tenant provided by law and in equity in that situation, or Landlord may
elect, at its option, to construe such holding over as a tenancy from month to
month made at the sufferance of Landlord, subject to all the terms and
conditions of this Lease, except: (a) as to duration thereof; and (b) that the
Basic Rent shall be at a monthly rate equal to two hundred (200%) percent of the
Basic Rent payable in the month immediately prior to the expiration of the Term
(or renewal thereof). The time limitations described in this Article XVIII shall
not be subject to extension for Force Majeure.

                                   ARTICLE XIX

                                      Liens

      Section 19.01. Tenant shall not do any act, or make any contract, which
may create or be the foundation for any lien or other encumbrance upon any
interest of Landlord or any ground or underlying lessor in any portion of the
Building, the Land, or the Demised Premises. If, because of any act or omission
(or alleged act or omission) of Tenant, any notice of intention, mechanic's or
other lien (collectively, a "Lien"), charge or order for the payment of money or
other encumbrance shall be filed against Landlord and/or any ground or
underlying lessor and/or any portion of the Demised Premises (whether or not
such lien, charge, order, or encumbrance is valid or enforceable as such),
Tenant shall, at its own cost and expense, cause same to be discharged of record
or bonded within fifteen (15) days after the filing thereof; and Tenant shall
indemnify, defend and save harmless Landlord and all ground and underlying
lessor(s) against and from all costs, liabilities, suits, penalties, claims, and
demands, including counsel fees, resulting therefrom. If Tenant fails to comply
with the foregoing provisions, Landlord shall have the right (but not the
obligation) to discharge or bond any such lien, charge, order, or encumbrance,
and Tenant agrees to reimburse Landlord for all costs, expenses and other sums
of money in connection therewith with interest at the maximum rate permitted by
law promptly upon demand, and all such sums shall be Additional Rent.

      Section 19.02. All materialmen, contractors, artisans, mechanics,
laborers, and any other persons now or hereafter contracting with Tenant or any
contractor or subcontractor of Tenant for the furnishing of any labor services,
materials, supplies, or equipment with respect to the Building or any other
portion of the Demised Premises, at any time from the date hereof until the end
of the Lease Term, are hereby charged with notice that they must look
exclusively to Tenant and not to any mechanic's or other lien on the Demised
Premises to obtain payment for same.


                                       26
<PAGE>

                                   ARTICLE XX

                                   Bankruptcy

      Section 20.01. If, as a matter of law, Landlord has no right on the
bankruptcy of Tenant to terminate this Lease, then, if Tenant, as debtor, or its
trustee wishes to assume or assign this Lease, in addition to curing or
adequately assuring the cure of all defaults existing under this Lease on
Tenant's part on the date of filing of the proceeding (such assurances being
defined below), Tenant, as debtor, or the trustee or assignee, must also furnish
adequate assurances of future performance under this Lease (as defined in the
Bankruptcy Code (as hereinafter defined). In the case of an assignee, Tenant or
its trustee shall assure Landlord that the assignee is financially capable of
assuming this Lease, and that its use of the Demised Premises will not be
detrimental to Landlord. In a reorganization under Chapter 11 of 11 U.S.C. ss.
101 et seq. (the "Bankruptcy Code"), the debtor or trustee must assume this
Lease or assign it within sixty (60) days from the filing of the proceedings, or
it shall be deemed to have rejected and terminated this Lease.

      Section 20.02. If this Lease is assigned to any person or entity pursuant
to the provisions of the Bankruptcy Code, any and all monies or other
consideration to be delivered in connection with the assignment shall be
delivered to Landlord, shall be and remain the exclusive property of Landlord
and shall not constitute property of Tenant or of the estate of Tenant within
the meaning of the Bankruptcy Code. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code shall be deemed to
have assumed all of the obligations arising under this Lease on or after the
date of the assignment and shall on demand execute and deliver to Landlord an
instrument confirming the assumption.

                                   ARTICLE XXI

                     Inspection, For Sale and For Rent Signs

      Section 21.01. Landlord, or its agents, shall have the right to enter the
Demised Premises at reasonable hours and by providing Tenant with no less than
one (1) business day's notice (except that no notice shall be required in an
emergency) to examine the same, or to exhibit the Demised Premises to
prospective purchasers and lenders and to place upon the Demised Premises a
suitable "For Sale" sign. For twelve (12) months prior to the expiration of the
Term, Landlord, or its agents, may exhibit the Demised Premises to prospective
tenants and may place the usual "For Rent" signs thereon.

                                  ARTICLE XXII

                                      Signs

      Section 22.01. Tenant shall not affix or place any sign, advertisement or
notice upon any part of the Demised Premises, except in conformity with all
applicable governmental ordinances and regulations and provided Tenant shall
apply for and receive all necessary governmental approvals required for erection
and maintenance of the sign; and no later than the last day of the Term, Tenant
shall, at Tenant's expense, remove the sign and repair all damage done by or in
connection with the installation or removal of the sign.


                                       27
<PAGE>

                                  ARTICLE XXIII

                     Advanced Rent, Security and Late Charge

      Section 23.01. On or before the Commencement Date, Tenant shall deposit
with Landlord, as security for the payment of the Rent due hereunder and the
full and faithful performance by Tenant of the covenants and conditions on the
part of Tenant to be performed under this Lease, an irrevocable, unconditional,
transferable "evergreen" commercial letter of credit issued by an S&P "A" rated
commercial bank approved in advance by Landlord and otherwise acceptable in all
respects to Landlord, in its sole and absolute discretion (the "Letter of
Credit"). The initial amount of the Letter of Credit shall be the sum of One
Hundred Twenty Seven Thousand Five hundred and 00/100 ($127,500) Dollars. The
Letter of Credit shall have an initial expiration date of not less than one (1)
year from the Commencement Date and shall provide for the automatic extension of
its expiration date for successive one (1) year periods throughout the Term,
unless Landlord is given written notice to the contrary by the issuing bank not
less than sixty (60) days prior to the expiration of the Letter of Credit. Not
less than thirty (30) days prior to the expiration of the Letter of Credit, or
at any time following notice by the issuing bank that it will not renew the
Letter of Credit, Tenant shall provide a substitute letter of credit conforming
in all respects to the requirements of this Section 23.01. In the event: (i) of
any default by Tenant under this Lease; or (ii) that Tenant has failed to
provide a substitute letter of credit as required by this Section 23.01,
Landlord is hereby authorized to draw upon the Letter of Credit, and shall have
the right to retain the cash proceeds of the Letter of Credit, or so much
thereof as shall remain after curing any default. In such case, Tenant shall
immediately provide Landlord with a substitute letter of credit in the amount
equal to the aggregate of twelve (12) monthly payments of the then-current Basic
Rent.

      Section 23.02. Intentionally deleted

      Section 23.03. The original Letter of Credit (less any portions thereof
used, applied or retained by Landlord in accordance with this Article 23) shall
be returned to Tenant after the expiration of the Term, provided that Tenant has
fully and faithfully performed all such covenants and conditions of this Lease,
is not in arrears in Rent and has vacated the Demised Premises. In the event of
a sale, pledge, transfer or encumbrance of the Demised Premises subject to this
Lease, Landlord shall have the right to transfer the Letter of Credit to a
purchaser or lender, as applicable, and Landlord shall be considered released by
Tenant from all liability for the return of the Letter of Credit. All costs
incurred in connection with the transfer of the Letter of Credit shall be paid
by Tenant. Tenant agrees to look solely to the new owner for the return of the
Letter of Credit, and it is agreed that this shall apply to every transfer or
assignment made of the Letter of Credit to the new landlord.

      Section 23.04. In the event of the insolvency of Tenant or in the event of
the entry of a judgment in bankruptcy in any court against Tenant which is not
discharged within thirty (30) days after entry, or in the event a petition is
filed by or against Tenant under any chapter of the bankruptcy or insolvency
laws of any state or the United States of America, then and in such event
Landlord may require Tenant to deposit additional security in such amount as may
be necessary to adequately assure Tenant's performance of all of its obligations
under this Lease, including all payments subsequently accruing. Failure of
Tenant to deposit the additional security required by this section within ten
(10) days after Landlord's written demand shall constitute a default by Tenant
under this Lease.


                                       28
<PAGE>

      Section 23.05. Simultaneously with the execution of this Lease, the Tenant
has delivered to Landlord the sum of $45,000.00 as Basic Rent for the first
month of Tenant's rental obligation.

      Section 23.06. Tenant shall pay a "Late Charge" of eight (8%) percent of
any installment of Basic Rent or Additional Rent received by Landlord more than
five (5) days after the due date thereof. Landlord and Tenant stipulate and
agree that this Late Charge is a reasonable amount to be charged to Tenant for
the purpose of offsetting Landlord's costs and other charges incurred by
Landlord as a result of Tenant's failure (including, but not limited to,
Landlord's cost of collection efforts) which are incapable of precise definition
at this time. The assessment and/or collection of any of the foregoing charges
shall not in any way be construed or deemed to be a waiver or a continuing
waiver of any of the terms, provisions, covenants, and conditions of this Lease
or any of Landlord's rights hereunder or under applicable law nor shall it be
construed as a cure for any non-payment under this Lease. Tenant shall pay any
such Late Charge on demand.

                                  ARTICLE XXIV

                              Financial Statements

      Section 24.01. Lessee shall deliver to Lessor within thirty (30) days
(except as set forth below) of filing, sending, delivering to lenders or
otherwise making available, copies of all financial statements and copies of all
documents filed with the Securities and Exchange Commission ("SEC"), (including
without limitation all 8-K, 10-K and 10-Q reports, and notices and proxy
statements sent by Lessee to its stockholders); provided, however, that if such
statements and reports do not include the following information, Lessee will
deliver to Lessor the following:

            (i)   within seven (7) days after filing with the SEC but in no
                  event more than one hundred twenty (120) days after the end of
                  each fiscal year of Lessee, (1) a balance sheet of Lessee and
                  its consolidated subsidiaries as of the end of such year, (2)
                  a statement of profits and losses of Lessee and its
                  consolidated subsidiaries for such year, and (3) a statement
                  of cash flows of Lessee and its consolidated subsidiaries for
                  such year, setting forth in each of (1), (2), and (3) above,
                  in comparative form, the corresponding figures for the
                  preceding fiscal year in reasonable detail and scope and
                  certified by independent certified public accountants of
                  recognized national standing selected by Lessee, and within
                  sixty (60) days after the end of each fiscal quarter of Lessee
                  a balance sheet of Lessee and its consolidated subsidiaries as
                  of the end of such quarter and statements of profits and
                  losses of Lessee and its consolidated subsidiaries for such
                  quarter setting forth in each case, in comparative form, the


                                       29
<PAGE>

                  corresponding figures for the similar quarter of the preceding
                  year, in reasonable detail and scope, and complying with the
                  requirements for Form 10-Q quarterly reports pursuant to the
                  Securities Exchange Act of 1934, and certified by the chief
                  financial officer of Lessee; all of the foregoing financial
                  statements being prepared in accordance with generally
                  accepted accounting principles, consistently applied; and

            (ii)  Within ninety (90) days after the end of Tenant's fiscal year
                  or at any time upon the request of Landlord or Landlord's
                  lender(s), such financial statements and information
                  (including, without limitation, copies of public reports filed
                  by Lessee or financial statements and information delivered by
                  Lessee to its shareholders or lenders, and if Lessee is part
                  of a consolidated group, its financial statement consolidating
                  entries in reasonable detail) regarding the business affairs
                  and financial condition of Lessee as Lessor may request.

                                   ARTICLE XXV

                              Intentionally deleted

                                  ARTICLE XXVI

                        Memorandum of Lease for Recording

      Section 26.01. Intentionally omitted.

                                  ARTICLE XXVII

                Waiver of Jury Trial/Non-Mandatory Counterclaims

      Section 27.01. LANDLORD AND TENANT WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER THE LANDLORD OR THE TENANT AGAINST
THE OTHER IN ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS LEASE, THE TENANT'S USE OR OCCUPANCY OF THE DEMISED PREMISES, AND/OR ANY
CLAIM OF INJURY OR DAMAGE.

                                 ARTICLE XXVIII

                                 Landlord's Lien

      Section 28.01. Landlord shall have a lien and security interest, in
addition to statutory liens of Landlord now or hereafter in effect, on all
personal property and equipment of Tenant; provided, however, the Landlord
agrees that the lien and security granted herein shall be subordinate to any and
all liens on such personal property and equipment held by Tenant's institutional
lender, whether existing prior to the Initial Commencement Date and/or
hereinafter created or granted by Tenant, and shall be further limited to two
(2) times the Basic Rent.


                                       30
<PAGE>

                                  ARTICLE XXIX

                Limitation of Liability; Definition of "Landlord"

      Section 29.01. Notwithstanding anything to the contrary provided in this
Lease, each and every term, covenant, condition and provision of this Lease, is
hereby made specifically subject to the provisions of this Article XXIX. The
term "Landlord" as used in this Lease means only the owner or lessor for the
time being of the Demised Premises so that in the event of any conveyance of
such interest (and the transfer to the transferee of any funds then being held
under this Lease by such owner), the assigning Landlord shall be and hereby is
entirely freed and relieved of any and all obligations of Landlord hereunder
thereafter accruing, and it shall be deemed without further agreement between
the parties and such grantee(s) that the grantee has assumed and agreed to
observe and perform all future obligations of Landlord hereunder. It is
specifically understood and agreed that notwithstanding anything to the contrary
herein provided or otherwise provided at law or in equity, there shall be
absolutely no personal liability to the Landlord in excess of its interest in
the Demised Premises (whether the same be an individual, joint venture, limited
liability company, tenancy in common, firm or partnership, general, limited or
otherwise) or on the part of the members of any firm, limited liability company,
partnership or joint venture or other unincorporated Landlord with respect to
any of the terms, covenants and/or conditions of this Lease. In the event of a
breach or default by Landlord or any of its obligations under this Lease, Tenant
shall look solely to the interest in the Demised Premises of the then Landlord
for the satisfaction of each and every remedy of Tenant, such exculpation of
personal and additional liability which is in excess of such interest in the
Demised Premises to be absolute and without any exception whatsoever.

                                   ARTICLE XXX

                                   Definitions

      Section 30.01. Force Majeure. A "Force Majeure" shall mean and include
those situations beyond either party's control, including by way of example and
not by way of limitation, acts of God; accidents; repairs; strikes; shortages of
labor, supplies or materials; inclement weather; or, where applicable, the
passage of time while waiting for an adjustment of insurance proceeds. Any time
limits required to be met by either party hereunder, whether specifically made
subject to Force Majeure or not, except those related to the payment of Basic
Rent or Additional Rent and except as to the time periods set forth in Article
XVIII, shall, unless specifically stated to the contrary elsewhere in this
Lease, be automatically extended by the number of days by which any performance
called for is delayed due to Force Majeure.


                                       31
<PAGE>

      Section 30.02. Additional Rent. As used in this Lease, "Additional Rent"
shall mean all sums in addition to Basic Rent payable by Tenant to Landlord
pursuant to the provisions of this Lease.

                                  ARTICLE XXXI

                                  Miscellaneous

      Section 31.01. Partial Validity. If any term or provision of this Lease or
the application thereof to any party or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease or the application of such
term or provision to parties or circumstances other than those 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 enforced to the fullest extent
permitted by law.

      Section 31.02. Waivers. One or more waivers by either party of the
obligation of the other to perform any covenant or condition shall not be
construed as a waiver of a subsequent breach of the same or any other covenant
or condition. The receipt of Basic Rent and/or Additional Rent by Landlord, with
knowledge of any breach of this Lease by Tenant or of any default on the part of
Tenant in the observance or performance of any of the conditions or covenants of
this Lease, shall not be deemed to be a waiver of any provision of this Lease.
Neither acceptance of the keys nor any other act or thing done by Landlord or
any agent or employee during the Term herein demised shall be deemed to be an
acceptance of a surrender of the Demised Premises, excepting only an agreement
in writing signed by Landlord accepting or agreeing to accept such a surrender.

      Section 31.03. Number, Gender. Wherever herein the singular number is
used, the same shall include the plural, and the masculine gender shall include
the feminine and neuter genders.

      Section 31.04. Successors, Assigns. The terms, covenants and conditions
herein contained shall be binding upon and inure to the benefit of the
respective parties and their successors and assigns.

      Section 31.05. Headings. The Article and marginal headings herein are
intended for convenience in finding the subject matters, are not to be taken as
part of this Lease and are not to be used in determining the intent of the
parties to this Lease.

      Section 31.06. Entire Agreement. This document recites the entire and only
agreement between the parties relating to the leasing of the Demised Premises;
and no unwritten statements or representations or prior written matter not
contained in this document shall have any force or effect. This Lease shall not
be modified in any way or terminated except by a writing executed by both
parties.

      Section 31.07. Landlord. The "Landlord" means only the holder, for the
time being, of Landlord's interest under this Lease so that in the event of any
transfer of title to the Demised Premises Landlord shall be and hereby is
entirely freed and relieved of all obligations of Landlord hereunder accruing


                                       32
<PAGE>

after such transfer, and it shall be deemed without further agreement between
the parties that such grantee, transferee or assignee has assumed and agreed to
observe and perform all obligations of Landlord hereunder arising during the
period it is the holder of Landlord's interest hereunder.

      Section 31.08. Words of Duty. Whenever in this Lease any words of
obligation or duty are used, such words or expressions shall have the same force
and effect as though made in the form of covenants.

      Section 31.09. Cumulative Remedies. The specified remedies to which
Landlord or Tenant may resort under the terms of this Lease are cumulative and
are not intended to be exclusive of any other remedies or means of redress to
which Landlord or Tenant may lawfully be entitled in case of any breach or
threatened breach of any provision of this Lease.

      Section 31.10. No Option. The submission of this Lease to Tenant for
examination and/or execution does not constitute a reservation of, or option
for, the Demised Premises; and this Lease becomes effective as a Lease only upon
execution and delivery thereof by Landlord and Tenant.

      Section 31.11. Accord and Satisfaction. No payment by Tenant or receipt by
Landlord of a lesser amount than the Basic Rent and Additional Rent payable
hereunder shall be deemed to be other than a payment on account of the earliest
stipulated monthly Basic Rent and Additional Rent, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment for Basic
Rent or Additional Rent be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance of such Basic Rent and Additional Rent or pursue any other remedy
provided herein or by law.

      Section 31.12. Corporate Authority. If Tenant is a corporation, Tenant
represents and warrants that this Lease and the Tenant's execution of this Lease
has been duly authorized and approved by the Tenant's Board of Directors. The
undersigned officers and representatives of the corporation executing this Lease
on behalf of Tenant represent and warrant that they are officers of the
corporation with authority to execute this Lease on behalf of the corporation.

      Section 31.13. Lease Commencement. Notwithstanding anything contained
herein to the contrary, if Landlord, for any reason whatsoever including Force
Majeure and Landlord's negligence, cannot deliver possession of the Demised
Premises to Tenant at the commencement of the agreed Term as set forth in
Section 2.01, this Lease shall not be void or voidable, nor shall Landlord be
liable to Tenant for any loss or damage resulting therefrom, but in that event,
the Term shall be for the full Term as specified in Section 2.01 to commence
from and after the date Landlord shall have delivered possession of the Demised
Premises to Tenant, and, if requested by Landlord or Tenant, Landlord and Tenant
shall, by a writing signed by the parties, ratify and confirm the Lease
Commencement and Termination Dates.


                                       33
<PAGE>

      Section 31.14. Applicable Law. This Lease shall be interpreted and
construed in accordance with the laws of the State of New York and by the state
courts of New York.

      Section 31.15. Survival of Tenant's Obligations. All obligations of Tenant
which by their nature involve performance, in any particular, after the end of
the Term, or which cannot be ascertained to have been fully performed until
after the end of the term, shall survive the expiration or sooner termination of
this Lease.

      Section 31.16. Parking Area. Under no circumstances shall Tenant be
permitted to use any portion of the parking area for on-site storage.

      Section 31.17. Assumption. It shall be a condition precedent to the merger
of Lessee into any Person, to the consolidation of Lessee with one or more
Persons and to the sale or other disposition of all or substantially all of the
assets of Lessee to one or more Persons that the surviving entity or transferee
of assets, as the case may be, shall deliver to Lessor, and any assignee of any
interest of Lessor, an acknowledged instrument assuming all obligations,
covenants and responsibilities of Lessee hereunder

      Section 31.18. No Merger. There shall be no merger of this Lease or of the
leasehold estate hereby created with the fee estate in the Premises by reason of
the fact that the same person acquires or holds, directly or indirectly, this
Lease or the leasehold estate hereby created or any interest herein or in such
leasehold estate as well as the fee estate in the Premises or any interest in
such fee estate

      Section 31.19. Surrender. Upon the expiration or termination of this
Lease, Lessee shall surrender the Premises to Lessor in good repair and
condition. The provisions of this Section and Article IX shall survive the
expiration or other termination of this Lease

      Section 31.20. Counterparts. This Lease may be executed in two or more
counterparts and shall be deemed to have become effective when and only when one
or more of such counterparts shall have been executed by or on behalf of each of
the parties hereto (although it shall not be necessary that any single
counterpart be executed by or on behalf of each of the parties hereto, and all
such counterparts shall be deemed to constitute but one and the same
instrument), and shall have been delivered by each of the parties to the other.

                                  ARTICLE XXXII

                                 Renewal Option

      Section 32.01. Tenant is hereby granted one (1) option to renew (the
"Renewal Option") this Lease upon the following terms and conditions:

      (A) At the time of the exercise of the Renewal Option and at the
      commencement of the renewal term (the "Renewal Term"), the Tenant shall
      not be in default of any of the terms and provisions of this Lease, and
      shall be in possession of the Demised Premises pursuant to this Lease.


                                       34
<PAGE>

      (B) Notice of the exercise of the Renewal Option shall be sent to the
      Landlord in writing at least twenty-four (24) months before the expiration
      of the current Term of this Lease, TIME HEREBY BEING MADE OF THE ESSENCE.

      (C) The Renewal Term shall be for a period of five (5) years, commencing
      at the expiration of the twentieth (20th) Lease Year. All of the terms and
      conditions of this Lease, other than the Basic Rent, shall apply during
      the Renewal Term.

      (D) Should Tenant exercise the Renewal Option in accordance with the
      provisions of this Article, within forty-five (45) days after receipt of
      Tenant's notice of intent to exercise the Renewal Option, Landlord shall
      provide to Tenant, in writing a statement indicating Landlord's
      calculation of the fair market value of the annual Basic Rent for the
      first Lease Year of the Renewal Term (the "FMV Rent"). In calculating the
      FMV Rent for the first Lease Year of the Renewal Term, Landlord shall look
      to arms-length transactions between an unrelated landlord and tenant in
      other comparable buildings, in the geographical area in which the Demised
      Premises are located, taking into account all generally applicable terms
      of tenancy for comparable leases of comparable premises in the Suffolk
      County, New York marketplace at the time of calculation. Tenant shall have
      twenty (20) days from receipt of Landlord's calculation of the FMV Rent
      for the first Lease Year of the Renewal Term in which to accept or reject
      such calculation. Tenant's failure to object within such twenty (20) day
      period shall be deemed Tenant's acceptance of such calculation. In the
      event that Tenant disputes Landlord's calculation, the parties shall seek
      to reach a mutually acceptable amount of the FMV Rent during the first
      Lease Year of the Renewal Term. In the event that the parties are unable
      to reach such mutual agreement within fifteen (15) days of receipt by
      Landlord of Tenant's objection, the parties shall engage the services of a
      mutually acceptable independent MAI appraiser experienced with properties
      located within the geographical area in which the Demised Premises are
      located. The cost of the third party appraiser shall be paid by Tenant.
      The determination of such appraiser shall be binding upon both parties.
      Notwithstanding the foregoing, the Basic Rent for the first Lease Year of
      the Renewal Terms shall not be less than the Basic Rent for the
      immediately preceding Lease Year.

      (E) During each subsequent Lease Year of the Renewal Term, the Basic Rent
      payable by Tenant shall be equal to the greater of: (i) the then-current
      FMV Rent for the Demised Premises, calculated in accordance with the
      provisions set forth in Section 32.01(D) above; or (ii) the Base Rent
      payable by Tenant for the immediately preceding Lease Year.

      (F) Tenant shall have no further renewal options unless expressly granted
      in writing by Landlord.


                                       35
<PAGE>

                                 ARTICLE XXXIII

                                    Guaranty

      Section 33.01. Tenant's payment and performance obligations under this
Lease shall be unconditionally guaranteed, jointly and severally by Gales
Industries Incorporated, a Delaware corporation ("Guarantor") pursuant to a
Guaranty in the form attached to this Lease as Exhibit D attached hereto and
made a part hereof (the "Guaranty"). The Guarantor shall deliver the original
signed Guaranty simultaneously with the execution and delivery of this Lease.

         [This page is intentionally left blank. Signature page follows]


                                       36
<PAGE>

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and seals
the month, day and year first above written.

                                LANDLORD:

                                STNLA-SPVEF BAY SHORE, LLC,
                                a Delaware limited liability company

                                By: Single-Tenant Net Lease Advisors, LLC,
                                    a Florida limited liability company,
                                    its Manager

                                    By: Single-Tenant Financial Corp.,
                                        a Florida corporation,
                                        its Managing Member


                                        By:
                                            ------------------------------------
                                            David R. Piasecki, President

                                TENANT:

                                AIR INDUSTRIES MACHINING, CORP.,
                                A New York Corporation


                                By:
                                    --------------------------------------------
                                Name:  Michael A. Gales
                                Title: Executive Chairman


                                       37
<PAGE>

                                    EXHIBIT A

                                Demised Premises


                                       38
<PAGE>

                                    EXHIBIT B

                                  Roof Repairs


                                       39
<PAGE>

                                    EXHIBIT C

                             Phase 2 Report Repairs


                                       40
<PAGE>

                                    EXHIBIT D

                             Form of Lease Guaranty


                                       41
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>e601149_ex99-1.txt
<DESCRIPTION>PRESS RELEASE, DATED JUNE 29, 2006
<TEXT>

Gales Industries Announces Successful Completion of Sale and Lease Back of Real
                Properties to Pave the Way for Next Acquisitions

BAY SHORE, NY -- October 24, 2006 -- Gales Industries Incorporated (OTCBB:
GLDS), a leading operating/holding and management services integrator group
within the aerospace/defense field, today announced the successful completion of
the sale and lease back of the real estate properties in Bay Shore, Long Island,
New York, where its corporate headquarters and wholly-owned subsidiary Air
Industries Machining Corp. are located. The Company had previously purchased the
properties as two separate transactions that were part of a series of deals that
included the primary funding and acquisition of Air Industries and reverse
merger to effectuate the public listing of Gales in November 2005.

The sale and lease back agreement included three manufacturing and office
buildings of 76,000 square feet on approximately 5.4 acres in Bay Shore, New
York. The property and buildings had been purchased by Gales in November 2005
for approximately $4.2 million and, upon the consummation of the sale and lease
back, sold for $6.2 million. Net of closing costs and other fees relating to the
transaction, Gales has reduced its overall Bank debt by approximately 45%. As
part of the transaction, Gales has repaid approximately $4.851 million in
borrowings from PNC Bank that had been used to make the initial purchase of the
property and buildings. Finally, underscoring its commitment to Long Island and
the local work force, Gales has entered into a 20-year lease agreement and will
continue to have its corporate office and principle operations located in the
Bay Shore location. Commenting on the transactions, Gales Industries' Vice
Chairman and Chief Financial Officer Louis Giusto said, "We are pleased to have
concluded this transaction which enables Gales to move forward with its growth
strategy." Gales' President and Chief Executive Officer Peter Rettaliata added,
"We remain focused on pursuing acquisitions and increasing our presence on Long
Island. The profit from the sale of real properties and the availability of
capital from our improved post-sale financial condition are intended to be
applied toward future acquisitions which are part of our overall growth
strategy."

ABOUT GALES INDUSTRIES INCORPORATED

Gales' strategy and attendant tactical plan is to execute a consolidation among
Tier III, IV and V aerospace/defense subcontractors. Gales offers a tailored
exit strategy or management continuity strategy in exchange for qualified

<PAGE>

acquisitions, and targets technically superior organizations in the $15-100
million annual range. Gales is an operating/holding and management services
integrator group within the aerospace/defense field, focusing on manufacturing,
technical services and strategic product distribution opportunities.

                                      # # #

Certain matters discussed in this press release are 'forward-looking statements'
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. In particular, the Company's
statements regarding trends in the marketplace and potential future results are
examples of such forward-looking statements. The forward-looking statements
include risks and uncertainties, including, but not limited to, the timing of
projects due to the variability in size, scope and duration of projects,
estimates made by management with respect to the Company's critical accounting
policies, regulatory delays, and other factors, including general economic
conditions, not within the Company's control. The factors discussed herein and
expressed from time to time in the Company's filings with the Securities and
Exchange Commission could cause actual results and developments to be materially
different from those expressed in or implied by such statements. The
forward-looking statements are made only as of the date of this press release
and the Company undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstance.

Contact:
Jordan M. Darrow
Darrow Associates, Inc.
631-367-1866
jdarrow@darrowir.com

or

Gales Industries Incorporated
Michael A. Gales
631-328-7024 (Direct)
mag@airindmc.com
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
