Exhibit 10.5
 
Hartford Loan No. BHM0J4YP7
 
CARVEOUT INDEMNITY AGREEMENT
 
THIS CARVEOUT INDEMNITY AGREEMENT (this “Agreement”) is executed as of July 1,
2010, by GTJ REIT, INC., a Maryland corporation, having its principal place of
business at 444 Merrick Road, Lynbrook, New York 11563 (“Carveout Indemnitor”),
to and for the benefit of HARTFORD LIFE INSURANCE COMPANY, HARTFORD LIFE AND
ACCIDENT INSURANCE COMPANY and HARTFORD LIFE AND ANNUITY INSURANCE COMPANY, each
a Connecticut corporation, having an address c/o Hartford Investment Management
Company, 55 Farmington Avenue, Hartford, Connecticut 06105 (collectively,
“Lender”).
 
RECITALS:
 
WHEREAS, pursuant to that certain Fixed Rate Term Loan Agreement of even date
herewith (the “Loan Agreement”), by and among Lender and 165-25 147th Avenue,
LLC and 85-01 24th Avenue, LLC (collectively, “Borrower”), Lender has provided
financing (the “Loan”) to Borrower as evidenced by certain Promissory Notes of
even date herewith, executed by Borrower in the aggregate principal amount of
$45,500,000 (collectively, the “Notes”); and
 
WHEREAS, the Loan is secured by a certain Consolidated, Amended and Restated
Mortgage, Security Agreement and Fixture Filing of even date herewith, from
Borrower for the benefit of Lender encumbering, among other things, certain real
property located in the State of New York (the “Mortgage”), and is further
evidenced, secured or governed by other instruments and documents executed in
connection with the Loan; and
 
WHEREAS, Lender is not willing to make the Loan, or otherwise extend credit, to
Borrower unless Carveout Indemnitor agrees to provide for the benefit of Lender
the indemnification and guaranty contained herein; and
 
WHEREAS, Carveout Indemnitor is the owner of a direct or indirect interest in
Borrower and will directly benefit from Lender’s making the Loan to Borrower.
 
NOW, THEREFORE, as an inducement to Lender to make the Loan to Borrower, and for
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties do hereby agree as follows:
 
1.           Definitions.
 
(a)           All capitalized terms used and not defined herein shall have the
respective meanings given to such terms in the Loan Agreement.
 
(b)           Unless otherwise noted, all “Section” references shall be to
Sections of this Agreement.  All uses of the word “including” shall mean
“including, without limitation” unless the context shall indicate
otherwise.  Unless otherwise specified, the words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.  Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.  All references to the Loan Documents shall mean such document
as it is constituted as of the date hereof, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
 

 
 

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2.           Indemnification.  Carveout Indemnitor (jointly and severally with
Borrower pursuant to the Loan Agreement) hereby indemnifies, defends and holds
harmless Lender from and against any and all liabilities, costs, losses
(including any reduction in value of the Property or any other Collateral or the
loss of Lender’s security interest therein), damages, expenses (including
reasonable attorneys’ fees and disbursements, and court costs, if any), or
claims suffered or incurred by Lender by reason of or in connection with any of
the following:
 
(a)           Any fraud committed by any Borrower Party in connection with the
Loan;
 
(b)           Any material misrepresentation contained in any of the Loan
Documents or any report furnished pursuant to any of the Loan Documents by any
Borrower Party;
 
(c)           The failure by Borrower to maintain insurance in accordance with
Section 3.1 of the Loan Agreement;
 
(d)           The failure of any Borrower Party to apply Operating Revenues
received by any Borrower Party to pay Debt Service, Impounds (if any and as
applicable), Operating Expenses (including in fulfilling the obligations of
Borrower as “landlord” under any Lease) and any reasonable and necessary capital
expenditures or costs during the 12-month period immediately preceding the
occurrence of the Event of Default triggering Lender’s exercise of remedies;
provided, however, that neither Borrower nor Carveout Indemnitor shall have
liability under this subparagraph (d) to the extent Operating Revenues generated
during the 12-month period immediately preceding the occurrence of the Event of
Default triggering Lender’s exercise of remedies were not sufficient to pay in
full all such amounts and all Operating Revenues so received by any Borrower
Party were applied to pay such amounts to the full extent of Operating Revenues
so received;
 
(e)           The misappropriation of any Net Proceeds or condemnation awards by
any Borrower Party to the extent any Net Proceeds or condemnation awards are
payable to any Borrower Party pursuant to the NYC Leases;
 
(f)           The failure of any Borrower Party to (x) properly apply any and
all security deposits held by any Borrower Party, (y) properly return same to
Tenants when due, or (z) deliver security deposits to Lender, any receiver or
any Person purchasing the Property or any part thereof at a foreclosure sale or
upon the taking of possession of the Property or any part thereof by Lender,
such receiver or such other Person, provided that neither Borrower nor Carveout
Indemnitor will have the liability under this subparagraph (f) if the required
activity under (z) above is limited or prohibited by applicable Legal
Requirements;
 
(g)           The failure of Borrower to secure Lender’s consent (or deemed
consent) in accordance with Section 5.2 of the Loan Agreement;
 

 
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(h)           Intentional removal or destruction of property (without the
concurrent replacement thereof with property of at least equivalent value and
utility) constituting any material portion of the Collateral, or any other
intentional and material waste of any portion of the Collateral, by any Borrower
Party;
 
(i)           Any Borrower Party contesting or in any way interfering with,
directly or indirectly, any foreclosure action, Uniform Commercial Code sale
and/or deed in lieu of foreclosure transaction commenced by Lender or with any
other enforcement of Lender’s rights, power or remedies under any of the Loan
Documents (whether by making any motion, bringing any counterclaim (other than
mandatory or compulsory counterclaims), claiming any defense, seeking any
injunction or other restraint, commencing any action or otherwise) in connection
with Lender’s rights arising from an Event of Default; provided, however, that
if any Borrower Party raises a defense or commences any action (other than the
occurrence of any of the events described in subparagraphs (j) and (k) below)
and establishes before a court of competent jurisdiction that said defense or
action is based on a valid, meritorious claim that Lender’s collection efforts
or exercise of a right or remedy should not be enforced, then neither Borrower
nor Carveout Indemnitor will have liability under this subparagraph (i);
 
(j)           Borrower or Carveout Indemnitor (1) filing a voluntary petition
under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency
law, or (2) making an assignment for the benefit of creditors; or
 
(k)           Any Borrower Party (1) filing, or joining in the filing of, an
involuntary petition against Borrower or Carveout Indemnitor under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, or
(2) soliciting or causing to be solicited petitioning creditors for any
involuntary petition against Borrower or Carveout Indemnitor, or (3) filing an
answer consenting to or otherwise acquiescing in or joining in any involuntary
petition filed against Borrower or Carveout Indemnitor by any other Person under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law,
or (4) voting adversely to Lender’s interest in any proceeding under the
Bankruptcy Code or any other state or Federal bankruptcy or insolvency law which
involves Borrower, Carveout Indemnitor or any portion of the Collateral, or (5)
consenting to or acquiescing or joining in an application for the appointment of
a custodian, receiver, trustee or examiner for Borrower or Carveout Indemnitor
or any portion of the Collateral (unless such action is at the written request
of Lender).
 
Notwithstanding the foregoing, if Borrower and any other necessary Borrower
Parties consent, pursuant to a stipulation in form reasonably required by Lender
(to be executed by Borrower and any other necessary Borrower Parties and
delivered to Lender within five (5) Business Days following Lender’s request),
to the appointment of a receiver for the Property (the identity of such receiver
to be designated by Lender and approved by Borrower, such approval not to be
unreasonably withheld), and neither Borrower nor any other Borrower Party seeks
or participates in the removal of said receiver (absent a material violation by
said receiver of the order appointing the receiver, in which case a substitute
receiver designated by Lender and approved by Borrower, such approval not to be
unreasonably withheld, will be appointed) then neither Borrower nor Carveout
Indemnitor shall have liability under this Section 2 solely as a result of any
reduction in value of the Property or any other Collateral during the period
that Lender is pursuing its rights and remedies as a result of an Event of
Default.
 

 
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3.           Guaranty.
 
(a)           Carveout Indemnitor hereby irrevocably and unconditionally
guarantees to Lender and its successors and assigns the prompt and full payment
and performance of the Obligations, as and when the same shall be due and
payable (whether by lapse of time, by acceleration of maturity or otherwise), in
the event any prohibited Transfer occurs in violation of Section 7.1 of the Loan
Agreement (including the voluntary placement of a Lien on all or any portion of
the Collateral in violation of the Loan Documents).
 
(b)           This Agreement is an irrevocable, absolute, continuing guaranty of
payment and performance and not a guaranty of collection.  This Agreement may
not be revoked by Carveout Indemnitor and shall continue to be effective with
respect to any obligations of Carveout Indemnitor arising or created after any
attempted revocation by Carveout Indemnitor and after (if Carveout Indemnitor is
a natural person) Carveout Indemnitor’s death (in which event this Agreement
shall be binding upon Carveout Indemnitor’s estate and Carveout Indemnitor’s
legal representatives and heirs).  Carveout Indemnitor hereby irrevocably and
unconditionally covenants and agrees that, to the extent that Carveout
Indemnitor has any liability or obligations under this Section 3, Carveout
Indemnitor is liable for the Obligations as a primary obligor.
 
4.           Obligations Not Reduced by Offset. The liabilities and obligations
of Carveout Indemnitor to Lender hereunder shall not be reduced, discharged or
released because or by reason of any existing or future offset, claim or defense
of Carveout Indemnitor, or any other party, against Lender or against payment of
such liabilities or obligations, whether such offset, claim or defense arises in
connection with the Obligations (or the transactions creating the Obligations)
or otherwise.
 
5.           No Duty To Pursue Others. It shall not be necessary for Lender (and
Carveout Indemnitor hereby waives any rights which Carveout Indemnitor may have
to require Lender), in order to enforce the obligations of Carveout Indemnitor
hereunder, first to (i) institute suit or exhaust its remedies against Borrower
or others liable on the Loan or the Obligations or any other person, (ii)
enforce Lender’s rights or exhaust any remedies available to Lender against any
portion of the Property, (iii) enforce Lender’s rights against any other
guarantors, (iv) join Borrower or any other person liable on the Obligations in
any action seeking to enforce this Agreement, or (v) resort to any other means
of obtaining payment of the Obligations. Lender shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
Obligations.
 
6.           Waivers.  Carveout Indemnitor acknowledges that it has received and
reviewed a copy of all Loan Documents, and hereby waives notice of (i) any loans
or advances made by Lender to Borrower, (ii) acceptance of this Agreement, (iii)
any amendment or extension of the Loan Agreement, the Notes, the Mortgage or of
any other Loan Documents, (iv) the execution and delivery by Borrower and Lender
of any other loan or credit agreement or of Borrower’s execution and delivery of
any promissory notes or other documents arising under the Loan Documents or in
connection with the Property, (v) the occurrence of any Event of Default under
the Loan Documents, (vi) Lender’s transfer or disposition of the Obligations, or
any part thereof, (vii) sale or foreclosure (or posting or advertising for sale
or foreclosure) of any Property, (viii)
 

 
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protest, proof of non-payment or default by Borrower, (ix) any other action at
any time taken or omitted by Lender, and (x) generally, all demands and notices
of every kind in connection with this Agreement, the Loan Documents, any
documents or agreements evidencing, securing or relating to any of the
Obligations.
 
7.           Payment of Expenses.  In the event that Carveout Indemnitor should
breach or fail to timely perform any of the provisions of this Agreement,
Carveout Indemnitor shall, within the Demand Period, pay Lender all reasonable
costs and expenses (including court costs and reasonable attorneys’ fees)
incurred by Lender in the enforcement hereof or the preservation of Lender’s
rights hereunder.  The covenant contained in this Section 7 shall survive the
payment and performance of any liabilities or obligations herewith.
 
8.           Effect of Bankruptcy.  In the event that, pursuant to any
insolvency, bankruptcy, reorganization, receivership or other debtor relief law,
or any judgment, order or decision thereunder, Lender must rescind or restore
any payment, or any part thereof, received by Lender in full or partial
satisfaction of the Obligations, any prior release or discharge from the terms
of this Agreement given to Carveout Indemnitor by Lender shall be without
effect, and this Agreement shall remain in full force and effect.  It is the
intention of Carveout Indemnitor that Carveout Indemnitor’s obligations
hereunder shall not be discharged except by Carveout Indemnitor’s full and final
payment and performance of such obligations and then only to the extent of such
full and final payment and performance.
 
9.           Borrower Party (Parties).  The term “Borrower” as used herein shall
include any new or successor corporation, association, partnership (general or
limited), limited liability company, joint venture, trust or other organization
formed as a result of any merger, reorganization, sale, transfer, devise, gift
or bequest of Borrower or any interest in Carveout Indemnitor permitted by the
terms of the Loan Documents.
 
10.           No Reduction in Carveout Indemnitor’s Obligations.  Carveout
Indemnitor hereby consents and agrees to each of the following, and agrees that
Carveout Indemnitor’s liabilities and obligations under this Agreement shall not
be released, diminished, impaired, reduced or adversely affected by any of the
following, and Carveout Indemnitor waives any common law, equitable, statutory
or other rights (including rights to notice) which Carveout Indemnitor might
otherwise have as a result of or in connection with any of the following:
 
(a)           any renewal, extension, increase, modification, alteration or
rearrangement of all or any part of the Obligations, the Loan Agreement, the
Notes, the Mortgage, the other Loan Documents, or any other document,
instrument, contract or understanding between Borrower and Lender, or any other
person, pertaining to the Obligations, or any failure of Lender to notify
Carveout Indemnitor of any such action;
 
(b)           any adjustment, indulgence, forbearance or compromise that might
be granted or given by Lender to Borrower, Carveout Indemnitor or any other
Person at any time liable for the payment of all or any portion of the
Obligations;
 

 
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(c)           the insolvency, bankruptcy, arrangement, adjustment, composition,
liquidation, disability, dissolution or lack of power of Borrower, Carveout
Indemnitor or any other Person at any time liable for the payment of all or part
of the Obligations;
 
(d)           any dissolution of Borrower, or any other Person at any time
liable for the payment of all or any portion of the Obligations;
 
(e)           any sale, lease or transfer of any or all of the assets of
Borrower or Carveout Indemnitor, or any changes in the shareholders, partners or
members of Borrower or Carveout Indemnitor, or any reorganization of Borrower or
Carveout Indemnitor;
 
(f)           the invalidity, illegality or unenforceability of all or any part
of the Obligations, or any document or agreement executed in connection with or
evidencing the Obligations, including any Loan Document, for any reason
whatsoever, including the fact that (i) the Obligations, or any part thereof,
exceeds the amount permitted by law, (ii) the act of creating the Obligations or
any part thereof is ultra vires, (iii) the officers or representatives executing
the Loan Agreement, the Notes, the Mortgage or the other Loan Documents or
otherwise creating the Obligations acted in excess of their authority, (iv) the
Obligations violate applicable usury laws, (v) Borrower has valid defenses,
claims or offsets (whether at law, in equity or by agreement) which render the
Obligations wholly or partially uncollectible from Borrower, (vi) the creation,
performance or repayment of the Obligations (or the execution, delivery and
performance of any document or instrument representing part of the Obligations
or executed in connection with the Obligations, or given to secure the repayment
of the Obligations) is illegal, uncollectible or unenforceable, or (vii) the
Loan Agreement, the Notes, the Mortgage or any of the other Loan Documents have
been forged or otherwise are irregular or not genuine or authentic, it being
agreed that Carveout Indemnitor shall remain liable hereon regardless of whether
Carveout Indemnitor or any other Person is found not liable on the Obligations
or any part thereof for any reason;
 
(g)           any full or partial release of the liability of Borrower with
respect to the Obligations, or any part thereof, or of any co-guarantors, or any
other person or entity now or hereafter liable, whether directly or indirectly,
jointly, severally, or jointly and severally, to pay, perform, guarantee or
assure the payment of the Obligations, or any part thereof, it being recognized,
acknowledged and agreed by Carveout Indemnitor that Carveout Indemnitor may be
required to pay the Obligations in full without assistance or support of any
other party, and Carveout Indemnitor has not been induced to enter into this
Agreement on the basis of a contemplation, belief, understanding or agreement
that other persons will be liable to pay or perform the Obligations, or that
Lender will look to each and every Carveout Indemnitor or any individual
Carveout Indemnitor to pay or perform the Obligations;
 
(h)           the taking or accepting of any other security, collateral or
guaranty, or other assurance of payment, for all or any part of the Obligations;
 
(i)           any release, surrender, exchange, subordination, deterioration,
waste, loss or impairment (including negligent, willful, unreasonable or
unjustifiable impairment) of the Property at any time existing in connection
with, or assuring or securing payment of, all or any part of the Obligations;
 

 
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(j)           the alleged failure of Lender or any other party to exercise
diligence or reasonable care in the preservation, protection, enforcement, sale
or other handling or treatment of all or any part of the Property, including any
neglect, delay, omission, failure or refusal of Lender (i) to take or prosecute
any action for the collection of any of the Obligations, or (ii) to foreclose,
or initiate any action to foreclose, or, once commenced, prosecute to completion
any action to foreclose upon any security therefor, or (iii) to take or
prosecute any action in connection with any instrument or agreement evidencing
or securing all or any part of the Obligations, except arising from the gross
negligence or willful misconduct of Lender or its agents, representatives or
contractors;
 
(k)           the fact that any security, security interest or lien contemplated
or intended to be given, created or granted as security for the repayment of the
Obligations, or any part thereof, shall not be properly perfected or created, or
shall prove to be unenforceable or subordinate to any other security interest or
lien, it being recognized and agreed by Carveout Indemnitor that Carveout
Indemnitor is not entering into this Agreement in reliance on, or in
contemplation of the benefits of, the validity, enforceability, collectibility
or value of any of the collateral for the Obligations;
 
(l)           any existing or future right of offset, claim or defense of
Borrower against Lender, or any other person, or against payment of the
Obligations, whether such right of offset, claim or defense arises in connection
with the Obligations (or the transactions creating the Obligations) or
otherwise;
 
(m)           the reorganization, merger or consolidation of Borrower into or
with any other corporation or entity;
 
(n)           any payment by Borrower to Lender is held to constitute a
preference under bankruptcy laws, or for any reason Lender is required to refund
such payment or pay such amount to Borrower or someone else; and/or
 
(o)           any other action taken or omitted to be taken with respect to the
Loan Documents, the Obligations, or the Property, whether or not such action or
omission prejudices Carveout Indemnitor or increases the likelihood that
Carveout Indemnitor will be required to pay the Obligations pursuant to the
terms hereof, it being the unambiguous and unequivocal intention of Carveout
Indemnitor that Carveout Indemnitor shall be obligated to pay the Obligations
when due, notwithstanding any occurrence, circumstance, event, action, or
omission whatsoever, whether contemplated or unanticipated, and whether or not
otherwise or particularly described herein, which obligation shall be deemed
satisfied only upon the full and final payment and satisfaction of the
Obligations.
 
11.           Representation, Warranties and Covenants of Carveout
Indemnitor.  To induce Lender to enter into the Loan Documents and extend credit
to Borrower, Carveout Indemnitor represents and warrants to Lender and covenants
as follows:
 
(a)           Carveout Indemnitor is an affiliate of Borrower, is the owner of a
direct or indirect interest in Borrower, and has received, or will receive,
direct or indirect benefit from the making of this Agreement with respect to the
Obligations;
 

 
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(b)           Carveout Indemnitor is familiar with, and has independently
reviewed books and records regarding the financial condition of Borrower and is
familiar with the value of any and all Property intended to be serve as security
for the payment of the Notes or Obligations; however, Carveout Indemnitor is not
relying on such financial condition or the Property as an inducement to enter
into this Agreement;
 
(c)           Neither Lender nor any other Person has made any representation,
warranty or statement to Carveout Indemnitor in order to induce Carveout
Indemnitor to execute this Agreement;
 
(d)           As of the date hereof, and after giving effect to this Agreement
and the contingent obligation evidenced hereby, Carveout Indemnitor is, and will
be, solvent, and has and will have assets which, fairly valued, exceed its
obligations, liabilities (including contingent liabilities) and debts, and has
and will have property and assets sufficient to satisfy and repay its
obligations and liabilities;
 
(e)           The execution, delivery and performance by Carveout Indemnitor of
this Agreement and the consummation of the transactions contemplated hereunder
do not, and will not, contravene or conflict with any law, statute or regulation
whatsoever to which Carveout Indemnitor is subject or constitute a default (or
an event which with notice or lapse of time or both would constitute a default)
under, or result in the breach of, any indenture, mortgage, deed of trust,
charge, lien, or any contract, agreement or other instrument to which Carveout
Indemnitor is a party or which may be applicable to Carveout Indemnitor.  This
Agreement and any other Loan Documents to which Carveout Indemnitor is a party
are legal and binding obligations of Carveout Indemnitor and is enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or other
laws of general application relating to the enforcement of creditors’ rights and
subject to general principles of equity.
 
(f)           All representations and warranties made by Carveout Indemnitor
herein shall survive the execution hereof.
 
(g)           Any financial statements delivered by Carveout Indemnitor to
Lender as described in Section 6.3 of the Loan Agreement are true, complete and
correct in all material respects, with no material change since the date
thereof.  Except as disclosed in such financial statements, there is (a) no
material liability (fixed or contingent) affecting Carveout Indemnitor and (b)
no litigation, administrative proceeding, investigation or other legal action
(including any proceeding under any state or federal bankruptcy or insolvency
law) pending or, to the knowledge of Carveout Indemnitor, threatened, against
Carveout Indemnitor.  Carveout Indemnitor is not contemplating either the filing
of a petition by it under state or federal bankruptcy or insolvency laws or the
liquidation of all or a major portion of its assets or property, and Carveout
Indemnitor has no knowledge of any Person contemplating the filing of any such
petition against it.
 
(h)           Carveout Indemnitor is not a party to any agreement or instrument
or subject to any court order, injunction, permit, or restriction which might
adversely affect the business, operations, or condition (financial or otherwise)
of Carveout Indemnitor.  Carveout Indemnitor is not in violation of any
agreement which violation would have an adverse effect on Carveout Indemnitor’s
business, properties, or assets, operations or condition, financial or
otherwise.
 

 
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(i)           Carveout Indemnitor has all requisite licenses, permits,
franchises, qualifications, certificates of occupancy or other governmental
authorizations to carry on its business.
 
(j)           Carveout Indemnitor has filed (or has obtained effective
extensions for filing) all federal, state and local tax returns required to be
filed and have paid or made adequate provision for the payment of all federal,
state and local taxes, charges and assessments payable by Carveout Indemnitor.
 
(k)           No statement of fact made by or on behalf of Carveout Indemnitor
in any Loan Document to which it is a party contains any untrue statement of a
material fact or omits to state any material fact necessary to make statements
contained herein or therein not misleading.  To the best of its knowledge, there
is no fact presently known to Carveout Indemnitor which has not been disclosed
to Lender that materially adversely affects, or as far as Carveout Indemnitor
can reasonably predict, might materially adversely affect, the business,
operations or condition (financial or otherwise) of Carveout Indemnitor or the
value of the Property.
 
12.           Subordination of all Carveout Indemnitor Claims.  As used herein,
the term “Carveout Indemnitor Claims” shall mean all debts and liabilities of
Borrower to Carveout Indemnitor, whether such debts and liabilities now exist or
are hereafter incurred or arise, or whether the obligations of Borrower therein
be direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or liabilities be evidenced by
note, contract, open account, or otherwise, and irrespective of the person in
whose favor such debts or liabilities may, at their inception, have been, or may
hereafter be created, or the manner in which they have been or may hereafter be
acquired by Carveout Indemnitor.  Carveout Indemnitor Claims shall include
without limitation all rights and claims of Carveout Indemnitor against Borrower
(arising as a result of subrogation or otherwise) as a result of Carveout
Indemnitor’s payment of all or a portion of the Obligations. Upon the occurrence
of a Potential Default or an Event of Default, Carveout Indemnitor shall not
receive or collect, directly or indirectly, from Borrower or any other party any
amount of Carveout Indemnitor Claims.
 
13.           Claims in Bankruptcy.  In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings
involving Borrower as debtor, Lender shall have the right to prove its claim in
any such proceeding so as to establish its rights hereunder and receive directly
from the receiver, trustee or other court custodian dividends and payments which
would otherwise be payable upon Carveout Indemnitor Claims.  Carveout Indemnitor
hereby assigns such dividends and payments to Lender.  Should Lender receive,
for application upon the Obligations, any such dividend or payment which is
otherwise payable to Carveout Indemnitor, and which, as between Borrower and
Carveout Indemnitor, shall constitute a credit upon Carveout Indemnitor Claims,
then upon payment to Lender in full of the Obligations, Carveout Indemnitor
shall become subrogated to the rights of Lender to the extent that such payments
to Lender on Carveout Indemnitor Claims have contributed toward the liquidation
of the Obligations, and such subrogation shall be with respect to that amount of
the Obligations which would have been unpaid if Lender had not received
dividends or payments upon Carveout Indemnitor Claims.
 

 
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14.           Payments Held in Trust.  In the event that, notwithstanding
anything to the contrary in this Agreement, Carveout Indemnitor should receive
any funds, payment, claim or distribution which are prohibited by this
Agreement, Carveout Indemnitor agrees to hold in trust for Lender an amount
equal to the amount of all funds, payments, claims or distributions so received,
and agrees that it shall have absolutely no dominion over the amount of such
funds, payments, claims or distributions so received except to pay them promptly
to Lender, and Carveout Indemnitor covenants promptly to pay the same to Lender.
 
15.           Liens Subordinate.  Carveout Indemnitor agrees that any liens,
security interests, judgment liens, charges or other encumbrances upon
Borrower’s assets securing payment of Carveout Indemnitor Claims shall be and
remain inferior and subordinate to any liens, security interests, judgment
liens, charges or other encumbrances upon Borrower’s assets securing payment of
the Obligations, regardless of whether such encumbrances in favor of Carveout
Indemnitor or Lender presently exist or are hereafter created or
attach.  Without the prior written consent of Lender (which may be granted or
withheld in Lender’s sole discretion), Carveout Indemnitor shall not (i)
exercise or enforce any creditor’s right it may have against Borrower, or (ii)
foreclose, repossess, sequester or otherwise take steps or institute any action
or proceedings (judicial or otherwise, including the commencement of, or joinder
in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency
proceeding) to enforce any liens, mortgages, deeds of trust, security interests,
collateral rights, judgments or other encumbrances on assets of Borrower held by
Carveout Indemnitor.
 
16.           Miscellaneous.
 
(a)           Waiver.  No failure to exercise, and no delay in exercising, on
the part of Lender, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right.  The rights of Lender
hereunder shall be in addition to all other rights provided by law or in
equity.  No modification or waiver of any provision of this Agreement, nor any
consent to depart therefrom, shall be effective unless in writing and no such
consent or waiver shall extend beyond the particular case and purpose
involved.  No notice or demand given in any case shall constitute a waiver of
the right to take other action in the same, similar or other instances without
such notice or demand.
 
(b)           Notices.  Any notice, demand, statement, request or consent made
hereunder shall be given and deemed received in accordance with the terms of
Section 11.1 of the Loan Agreement.
 
(c)           Governing Law.  This Agreement shall be governed in accordance
with the State of New York and the applicable law of the United States of
America.
 
(d)           Invalid Provisions.  If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws effective
during the term of this Agreement, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement, unless such continued effectiveness of this
Agreement, as modified, would be contrary to the basic understandings and
intentions of the parties as expressed herein.
 

 
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(e)           Amendments.  This Agreement may be amended only by an instrument
in writing executed by the party or an authorized representative of the party
against whom such amendment is sought to be enforced.
 
(f)           Parties Bound; Assignment; Joint and Several.  This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns and legal representatives; provided, however,
that Carveout Indemnitor may not, without the prior written consent of Lender
(which consent may be granted or withheld in Lender’s sole discretion), assign
any of its rights, powers, duties or obligations hereunder.  If Carveout
Indemnitor consists of more than one person or party, the obligations and
liabilities of each such person or party shall be joint and several.
 
(g)           Headings.  Section headings are for convenience of reference only
and shall in no way affect the interpretation of this Agreement.
 
(h)           Recitals.  The recital and introductory paragraphs hereof are a
part hereof, form a basis for this Agreement and shall be considered prima facie
evidence of the facts and documents referred to therein.
 
(i)           Counterparts.  To facilitate execution, this Agreement may be
executed in as many counterparts as may be convenient or required.  It shall not
be necessary that the signature of, or on behalf of, each party, or that the
signature of all persons required to bind any party, appear on each
counterpart.  All counterparts shall collectively constitute a single
instrument.  It shall not be necessary in making proof of this Agreement to
produce or account for more than a single counterpart containing the respective
signatures of, or on behalf of, each of the parties hereto.
 
(j)           Rights and Remedies.  If Carveout Indemnitor becomes liable for
any indebtedness owing by Borrower to Lender, by endorsement or otherwise, other
than under this Agreement, such liability shall not be in any manner impaired or
affected hereby and the rights of Lender hereunder shall be cumulative of any
and all other rights that Lender may ever have against Carveout Indemnitor.  The
exercise by Lender of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.  All rights and remedies of
Lender under this Agreement are cumulative with, and in addition to, any rights
and remedies of Lender under any other guaranty or with respect to any other
guarantor or obligor under any other document or instrument.
 

 
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(k)           Entirety.  THIS AGREEMENT EMBODIES THE FINAL AND ENTIRE AGREEMENT
OF CARVEOUT INDEMNITOR AND LENDER WITH RESPECT TO CARVEOUT INDEMNITOR’S
INDEMNIFICATION AND GUARANTY WITH RESPECT TO THE OBLIGATIONS AND SUPERSEDES ANY
AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS,
WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.  THIS AGREEMENT
IS INTENDED BY CARVEOUT INDEMNITOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION
OF THE TERMS OF THE INDEMNIFICATION AND GUARANTY, AND NO COURSE OF DEALING
BETWEEN CARVEOUT INDEMNITOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE
PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE
USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
AGREEMENT.  THERE ARE NO ORAL AGREEMENTS BETWEEN CARVEOUT INDEMNITOR AND LENDER.
 
(l)           Waiver of Right To Trial By Jury/Submission to
Jurisdiction.  CARVEOUT INDEMNITOR AND LENDER HEREBY AGREE NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS AGREEMENT, THE LOAN AGREEMENT, THE NOTES, THE MORTGAGE, OR THE
OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY CARVEOUT INDEMNITOR AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE.  LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY CARVEOUT
INDEMNITOR AND LENDER.  CARVEOUT INDEMNITOR AND LENDER HEREBY IRREVOCABLY SUBMIT
TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK,
COUNTY OF QUEENS, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND
RELATED TO OR IN CONNECTION WITH THIS AGREEMENT AND TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO ASSERT BY WAY
OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY
CLAIM THAT IT IS NOT SUBJECT TO THE JURISDICTION OF SUCH FEDERAL OR STATE
COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM,
THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS
AGREEMENT OR ANY OTHER SECURITY DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT
REFERRED TO HEREIN OR THEREIN OR THE SUBJECT MATTER HEREOF OR THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH FEDERAL OR STATE COURTS.
 

 
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(m)           WAIVER OF PUNITIVE OR CONSEQUENTIAL DAMAGES.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED HEREIN, NEITHER LENDER NOR CARVEOUT
INDEMNITOR SHALL BE RESPONSIBLE OR LIABLE TO THE OTHER OR TO ANY OTHER PERSON
FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A
RESULT OF THIS AGREEMENT OR THE TRANSACTION CONTEMPLATED BY THE LOAN AGREEMENT,
INCLUDING ANY BREACH OR OTHER DEFAULT BY ANY PARTY HERETO.
 
(n)           Limitation of Liability.  It is understood and agreed that no
party other than Carveout Indemnitor shall have any liability or obligation to
Lender under this Agreement.  No such obligation or liability shall be
personally binding upon, nor shall resort for the enforcement thereof be had to,
the property of any of Carveout Indemnitor’s directors, officers, employees, or
shareholders.
 
[Remainder of this page intentionally left blank; Signature page to follow]

 
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IN WITNESS WHEREOF, this Agreement has been executed by Carveout Indemnitor and
is effective as of the day and year first above written.
 

 
GTJ REIT, INC.,
   
a Maryland corporation
                     
By:           
   
Name:           Jerome Cooper
   
Title:           President
       

 
STATE OF______________                        )
)      ss:
COUNTY _______________                       )
 
On this the ____ day of ______________, 2010, before me
_________________________, the undersigned officer, personally appeared Jerome
Cooper who acknowledged himself to be the President of GTJ REIT, Inc., a
corporation and that he as such __________________, being authorized so to do,
executed the foregoing instrument for the purposes therein contained, by signing
the name of the corporation by himself as such _________________ and as his and
its free act and deed.
 
IN WITNESS WHEREOF, I hereunto set my hand.
 

       
Notary Public
   
My Commission Expires:
 

 

 

[Signature and Acknowledgment Page to Carveout Indemnity Agreement]
 
 

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