Exhibit 10.1

 

 

LOAN AGREEMENT

dated as of

April 8, 2014

by and among

114-15 GUY BREWER BOULEVARD, LLC, 49-19 ROCKAWAY

BEACH BOULEVARD, LLC, 612 WORTMAN AVENUE, LLC,

AND 23-85 87TH STREET, LLC, together with each other party

that may become a Borrower hereunder,

AS BORROWERS,

GTJ REIT, INC. AND GTJ REALTY, LP,

AS GUARANTORS

AND

CAPITAL ONE, NATIONAL ASSOCIATION,

AS LENDER

 

 

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TABLE OF CONTENTS

 

              Pages(s)  

1.

 

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

     1     

1.1

  

Specific Definitions

     1     

1.2

  

Principles of Construction

     32     

1.3

  

Accounting Terms; GAAP

     32   

2.

 

GENERAL LOAN TERMS

     33     

2.1

  

Revolving Loans

     33     

2.2

  

Loans and Borrowings

     33     

2.3

  

Requests for Borrowings

     34     

2.4

  

Letters of Credit

     35     

2.5

  

Funding of Borrowings

     39     

2.6

  

Interest Elections

     39     

2.7

  

Termination and Conversion of the Commitments

     40     

2.8

  

Repayment of Loans; Evidence of Debt

     41     

2.9

  

Prepayment of Loans

     42     

2.10

  

Fees

     43     

2.11

  

Interest

     43     

2.12

  

Break Funding Payments

     45     

2.13

  

Use of Proceeds

     45     

2.14

  

Swingline Loans

     45     

2.15

  

Extension of Maturity Date

     46     

2.16

  

Swap Agreements

     47     

2.17

  

Increased Costs

     49     

2.18

  

Deposit Unavailable

     50     

2.19

  

Illegality

     50     

2.20

  

Closing Conditions/Credit Event

     50   

3.

 

REPRESENTATIONS AND WARRANTIES

     52     

3.1

  

Organization; Special Purpose

     52     

3.2

  

Proceedings; Enforceability

     53     

3.3

  

No Conflicts

     53     

3.4

  

Litigation

     53     

3.5

  

Agreements

     53     

3.6

  

Title

     53     

3.7

  

No Bankruptcy Filing

     55     

3.8

  

Full and Accurate Disclosure

     55     

3.9

  

Tax Filings

     55     

3.10

  

ERISA

     56     

3.11

  

Compliance

     56     

3.12

  

Contracts

     57     

3.13

  

Federal Reserve Regulations; Investment Company Act

     57     

3.14

  

Easements; Utilities and Public Access

     57     

3.15

  

Physical Condition

     57   

 

i

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TABLE OF CONTENTS

(continued)

 

              Pages(s)     3.16   

Borrowing Base Properties

     58      3.17   

Fraudulent Transfer

     59      3.18   

Purchase Options

     60      3.19   

Management Agreement

     60      3.20   

Hazardous Substances

     60      3.21   

Name; Principal Place of Business

     61      3.22   

Other Debt

     61      3.23   

Insurance

     61      3.24   

Own Behalf; For Own Account

     61      3.25   

Anti-Money Laundering/International Trade Law Compliance

     61      3.26   

Security Interests and Liens

     62   

4.

 

COVENANTS

     63      4.1   

Financial Statements and Other Information

     63      4.2   

Notices of Material Events

     64      4.3   

Existence

     65      4.4   

Taxes and Other Charges

     65      4.5   

Access to Borrowing Base Properties

     66      4.6   

Repairs; Maintenance and Compliance; Alterations

     66      4.7   

Performance of Other Agreements

     67      4.8   

Cooperate in Legal Proceedings

     67      4.9   

Further Assurances

     67      4.10   

Environmental Matters

     67      4.11   

Title to the Property

     70      4.12   

Special Purpose Entity

     70      4.13   

Change in Business or Operation of Property

     70      4.14   

Debt Cancellation

     70      4.15   

Affiliate Transactions

     70      4.16   

Zoning

     70      4.17   

No Joint Assessment

     71      4.18   

Principal Place of Business

     71      4.19   

Change of Name, Identity or Structure

     71      4.20   

Licenses

     71      4.21   

Compliance with Restrictive Covenants, Etc.

     71      4.22   

ERISA

     71      4.23   

Liens

     72      4.24   

Expenses

     72      4.25   

Indemnity

     73      4.26   

Patriot Act Compliance

     74      4.27   

Borrower Accounts

     74      4.28   

Security Deposits

     74      4.29   

Mortgage Tax Reserve Amount

     75      4.30   

Grant of Security Interest; Application of Funds

     75      4.31   

Collateral Matters; Liens and Security Interest

     75   

 

ii

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TABLE OF CONTENTS

(continued)

 

         Pages(s)  

5.

 

NEGATIVE COVENANTS

     78     

5.1

  

Financial Covenants

     78     

5.2

  

Liens

     81     

5.3

  

Fundamental Changes

     81     

5.4

  

Indebtedness

     82     

5.5

  

Transactions with Affiliates; Joint Ventures

     82     

5.6

  

Restrictive Agreements

     83     

5.7

  

Fiscal Year; Fiscal Quarters

     83     

5.8

  

Employees

     83     

5.9

  

ERISA

     83     

5.10

  

Asset Sales

     83     

5.11

  

Prohibited Transfers; REIT Covenants

     84     

5.12

  

Management Fees

     84     

5.13

  

Status

     84     

5.14

  

Line of Business; Investments

     84     

5.15

  

Zoning

     86     

5.16

  

Borrowing Base Properties; Ground Leases

     86   

6.

 

NOTICES AND REPORTING

     87     

6.1

  

Notices

     87   

7.

 

INSURANCE; CASUALTY; AND CONDEMNATION

     87     

7.1

  

Insurance

     87     

7.2

  

Casualty

     90     

7.3

  

Condemnation

     91     

7.4

  

Application of Proceeds or Award

     92   

8.

 

DEFAULTS

     93     

8.1

  

Events of Default

     93     

8.2

  

Remedies

     97   

9.

 

ASSIGNMENTS/PARTICIPATIONS

     99     

9.1

  

Assignments

     99     

9.2

  

Participations

     100   

10.

 

BORROWING BASE PROPERTIES

     100     

10.1

  

Borrowing Base Properties

     100     

10.2

  

Exclusion Events

     105     

10.3

  

Addition and Removal of Borrowing Base Properties

     106   

11.

 

MISCELLANEOUS

     109     

11.1

  

Full Recourse

     109     

11.2

  

Brokers and Financial Advisors

     109     

11.3

  

Survival

     110     

11.4

  

Lender’s Discretion

     110   

 

iii

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TABLE OF CONTENTS

(continued)

 

         Pages(s)    

11.5

  

Governing Law

     110     

11.6

  

Modification, Waiver in Writing

     111     

11.7

  

Trial by Jury

     111     

11.8

  

Headings/Exhibits

     111     

11.9

  

Severability

     111     

11.10

  

Preferences

     112     

11.11

  

Waiver of Notice

     112     

11.12

  

Remedies of Borrower

     112     

11.13

  

Prior Agreements

     112     

11.14

  

Offsets, Counterclaims and Defenses

     112     

11.15

  

Publicity

     113     

11.16

  

Confidentiality

     113     

11.17

  

No Usury

     113     

11.18

  

Conflict; Construction of Documents

     114     

11.19

  

No Third Party Beneficiaries

     114     

11.20

  

Assignment

     114     

11.21

  

Set-Off

     114     

11.22

  

Keepwell in Respect of Swap Debt

     115     

11.23

  

Counterparts

     115     

11.24

  

Limitation on Liability of Lender’s Officers, Employees

     115     

11.25

  

Promotional Material

     115   

 

iv

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TABLE OF CONTENTS

(continued)

 

 

                Pages(s) Schedules and Exhibits Exhibit A   -      Loan Request
   Exhibit B   -      Compliance Certificate    Exhibit C   -      Interest Rate
Selection Request    Exhibit D   -      Form of Borrowing Base Certificate   
Exhibit E   -      Joinder Agreement    Schedule I   -      Closing Borrowing
Base Properties    Schedule II   -      Original GTJ Properties    Schedule III
  -      Recently Contributed Wu/Lighthouse Properties    Schedule IV   -     
Organizational Chart/Subsidiaries    Schedule V   -      Applicable Margin
Leverage Ratio Grid    Schedule VI   -      Special Purpose Entity Requirements
   Schedule VII   -      Closing Date Borrowing Base Calculation   

 

v

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LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”), dated as of April 8, 2014, is made by
and among 114-15 GUY BREWER BOULEVARD, LLC, 49-19 ROCKAWAY BEACH BOULEVARD, LLC,
612 WORTMAN AVENUE, LLC, AND 23-85 87TH STREET, LLC, each a New York limited
liability company (together with any other Borrowers that become a party to this
Agreement pursuant to Section 10.3 hereof, each a “Borrower”, and collectively,
the “Borrowers”), GTJ REIT, INC., a Maryland corporation and the sole general
partner of Borrower (the “REIT”), GTJ REALTY, LP, a Delaware limited partnership
(the “OP”, and together with the REIT, individually each a “Guarantor” and
collectively, the “Guarantors”), and CAPITAL ONE, NATIONAL ASSOCIATION, as
lender (in such capacity, the “Lender”).

With respect to the definition of “Borrower” and “Credit Party” hereunder or in
any other Loan Document, except where the context otherwise provides, (i) any
representations contained herein or in any other Loan Documents of Borrower or
Credit Party shall be applicable to each Borrower or Credit Party, as
applicable, (ii) any affirmative covenants contained herein or in any other Loan
Documents of Borrower or Credit Party shall be deemed to be covenants of each
Borrower or each Credit Party, as applicable, and shall require performance by
all Borrowers or all Credit Parties, as applicable, (iii) any negative covenants
contained herein or in any other Loan Documents of any Borrower or Credit Party
shall be deemed to be covenants of each Borrower or each Credit Party, as
applicable, and shall be breached if any Borrower or any Credit Party, as
applicable, fails to comply therewith, (iv) the occurrence of a Default or Event
of Default with respect to any Borrower or Credit Party shall be deemed to be a
Default or Event of Default, as applicable, hereunder or thereunder, and (v) any
Debt of Borrower (x) shall be deemed to include any Debt of the Borrower, or any
Debt of any one of them, and (y) shall be joint and several. Each Credit Party
recognizes that credit available to Borrower under the Loan is in excess of and
on better terms than any Credit Party otherwise could obtain on and for its own
account and that one of the reasons therefor is its joining in the credit
facility contemplated herein with all other Credit Parties.

The Borrower has requested that the Lender make revolving loans to the Borrower
in an aggregate principal amount of up to $45,000,000.00. The Lender is willing
to make such loans to the Borrower upon the terms and subject to the conditions
set forth in this Agreement.

Accordingly, the parties hereto agree as follows:

 

1. DEFINITIONS; PRINCIPLES OF CONSTRUCTION

1.1 Specific Definitions. The following terms have the meanings set forth below:

“Accounts” shall have the meaning set forth in Section 4.27.

“Acquisition Cost” as to any Real Property shall mean the purchase price, prior
to any adjustment for closing costs (including legal fees), rents and other
accounts receivable, expenses including real estate taxes and other customary
pro-rations, paid by Borrower or applicable Subsidiary of Borrower to acquire
such Real Property.

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“Adjusted LIBOR Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum equal to (a) the LIBOR Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.

“Adjusted Borrowing Base Net Operating Income” for any Borrowing Base Property
for the four (4) fiscal quarters most recently ended, means the Net Operating
Income of such Borrowing Base Property for such period (as adjusted pursuant to
the provisions of Section 10.1.4) less Capital Reserves attributable to such
period.

“Adjusted Net Operating Income” for any Real Property the value of which is
included in the calculation of Total Asset Value for the four (4) fiscal
quarters most recently ended means the Net Operating Income of such Real
Property for such period less Capital Reserves attributable to such period.

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person.

“Agreement” shall have the meaning set forth in the introductory paragraph
hereof.

“Alternative Use Properties” means, collectively, that Borrowing Base Property
located at 612 Wortman Avenue and any future Borrowing Base Properties in which
the rental revenue generated from leases that do not conform to the highest and
best use of the such Borrowing Base Property, as reasonably determined by
Lender.

“Anti-Terrorism Laws” has the meaning set forth in Section 3.25.

“Applicable Margin” means the amount set forth opposite the indicated
Consolidated Leverage Ratio in the grid set forth on Schedule V.

“Applicable Taxes” has the meaning set forth in Section 2.8.3.

“Appraisal” means an appraisal of a Real Property, contracted by or approved by
Lender and paid for by Borrower, prepared by an independent third-party
appraiser certified in the State in which the applicable Real Property is
located, which appraisal must comply in all respects with the standards for real
estate appraisal established pursuant to Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, and otherwise in form and
substance satisfactory to Lender.

“Appraised Value” as to any Real Property shall mean, as of any date of
determination the “as-is” appraised value of such Real Property reflected in the
Appraisal thereof most recently obtained by and approved by Lender.

“Approved Fund” means any entity that is engaged in making, purchasing, holding
or investing in bank loans and similar extensions of credit in the ordinary
course of business and that is administered or managed by (a) a Lender, (b) an
Affiliate of Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

2

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“Approved Ground Lease” means, at any time, any ground lease (whether related to
an interest in land alone or an interest in land and the improvements located
thereon) with respect to any Real Property which is on terms and conditions that
are reasonably acceptable to Lender, and: (a) under which a Borrower is the
lessee or holds equivalent rights (including, without limitation, as a
sublessee), (b) that has a remaining term of not less than forty (40) years
(assuming the exercise of any extension options that are exercisable at the
Borrower’s option) or be subject to a purchase option in favor of the Borrower
that is exercisable in the sole discretion of the Borrower and is for a nominal
purchase price, (c) under which any required rental payment, principal or
interest payment or other payment due under such lease or sublease, as
applicable, from the Borrower to the ground lessor is not more than thirty
(30) days past due, (d) where no party to such lease or sublease, as applicable,
is the subject of an Insolvency Proceeding, (e) where the Borrower’s interest in
the Real Property or the lease or sublease, as applicable, is not subject to any
Lien (other than Permitted Encumbrances), (f) contains provisions which create
an obligation of the lessor to give the holder of any (i) recorded or unrecorded
mortgage lien on such leased property or (ii) security interest in the Equity
Interests of the owner of such leased property (provided such lessor has
received written notice of either such lien or security interest) written notice
of any defaults on the part of the Borrower and agreement of such lessor that
such lease will not be terminated until such holder has had a reasonable
opportunity to cure such defaults (after foreclosure, if necessary for such
cure), and fails to do so, (g) contains provisions which permit the use of such
Real Property for its then-current use, (h) contains provisions which provide
for such other rights customarily required by mortgagees making a loan secured
by the interest of the holder of the leasehold estate demised pursuant to a
ground lease or sublease, and (i) under which there exists no default or event
of default by a ground lessor, which default or event of default has caused or
otherwise resulted in or could reasonably be expected to cause or otherwise
result in any material interference with the Borrower’s occupancy or other
rights under the applicable ground lease or sublease.

“Asset” means, with respect to any Credit Party, any Real Property or other
investment assets owned directly or indirectly by such Credit Party or any of
its Subsidiaries from time to time.

“Assignment and Assumption” means an assignment and assumption entered into by
Lender and an assignee (with the consent of any party whose consent is required
by Section 10.05), in a form approved by the Lender.

“Assignment of Agreements” means, collectively, each Assignment of Agreements,
Licenses, Permits and Contracts from each Borrower to Lender, in form and
substance reasonably acceptable to Lender and Lender’s counsel.

“Auto-Extension Letter of Credit” has the meaning specified in Section 2.4.2(c).

“Award” has the meaning set forth in Section 7.3.2.

“Bankruptcy Proceeding” has the meaning set forth in Section 3.7.

“Base Rate” means, for any day, a rate per annum equal to the highest of (a) the
Federal Funds Rate for such day plus 1/2 of 1%, (b) the Prime Rate for such day
or (c) the sum of (i)

 

3

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the LIBOR Rate (for a one month Interest Period) plus (ii) 1%. Each change in
any interest rate provided for herein based upon the Base Rate resulting from a
change in the Base Rate shall take effect at the time of such change in the Base
Rate. For purposes of this definition, LIBOR referred to above shall be the rate
for deposits in U.S. dollars for a one-month period in the London interbank
market, as determined by Lender based on quotes or other information available
to it, and shall not be required to be determined strictly in accordance with
the requirements of the definition of “LIBOR” and the notice and other
provisions applicable thereto as set forth herein.

“Base Rate Borrowing” or “Base Rate Loan” refer to, when used in reference to
any Loan or Borrowing, whether such Loan, or the Loans comprising such
Borrowing, are bearing interest at a rate determined by reference to the Base
Rate.

“Board” means the Board of Governors of the Federal Reserve System of the United
States of America.

“Borrower” shall have the meaning set forth in the Preamble. With respect to the
definition of “Borrower”, except where the context otherwise provides, in the
event more than one Person is Borrower hereunder, (i) any representations
contained herein of Borrower shall be applicable to each Borrower, (ii) any
affirmative covenants contained herein shall be deemed to be covenants of each
Borrower and shall require performance by all Borrowers, (iii) any negative
covenants contained herein shall be deemed to be covenants of each Borrower, and
shall be breached if any Borrower fails to comply therewith, (iv) the occurrence
of any Event of Default with respect to any Borrower shall be deemed to be an
Event of Default hereunder, and (v) any Indebtedness and/or obligations of
Borrower shall be deemed to include any Indebtedness and/or obligations of
Borrower, or any Indebtedness and/or obligations of any one of them.

“Borrowing” means Loans of the same Type made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect. For purposes hereof, the date of a Borrowing comprising one
or more Loans that have been converted or continued shall be the effective date
of the most recent conversion or continuation of such Loan or Loans.

“Borrowing Base” shall mean during any fiscal quarter or portion thereof,

(i) the lesser of:

(a) the Commitment;

(b) the Value-Based Borrowing Base Limit; and

(c) the DSCR-Based Borrowing Base Limit;

Minus

(ii) the Mortgage Tax Reserve Amount.

“Borrowing Base Addition” has the meaning set forth in Section 10.3.

 

4

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“Borrowing Base Asset Value” shall mean with respect to any Borrowing Base
Property:

(a) until the date that is twelve (12) months from the Effective Date, the
lesser of (i) the Acquisition Cost for such Borrowing Base Property or (ii) the
Appraised Value of such Borrowing Base Property as determined prior to the
addition of such Borrowing Base Property to the Borrowing Base pursuant to
Section 10.1.2(g) or, if applicable, as subsequently determined pursuant to
Section 10.1.2(h); and

(b) from and after the date that is twelve (12) months from the Effective Date,
at Borrower’s election, either the Estimated Value of the Borrowing Base
Properties or the Appraised Value of such Borrowing Base Properties; provided
that the Appraised Value of the Borrowing Base Properties shall be utilized at
Borrower’s election in this clause (b) only if (A) no Default or Event of
Default exists, (B) an updated Appraisal shall have been obtained by Lender
during the period of twelve (12) months from and after the date of value
indicated in the original Appraisal for each Borrowing Base Property, and
(C) Borrower has elected pursuant to Section 5.1.3 to calculate the Borrowing
Base Asset Values for all Borrowing Base Properties, subject to the exceptions
described therein, based on their Appraised Values.

“Borrowing Base Certificate” means a certificate of a Responsible Officer of
Borrower, substantially in the form of Exhibit D and appropriately completed.

“Borrowing Base Property” means, as of any date of determination, each Real
Property:

(a) that is set forth on Schedule I hereto (as such schedule may be updated from
time to time in accordance with Section 10.3 to the extent that such Real
Property has not otherwise been removed as a “Borrowing Base Property” pursuant
to the other criteria for qualification as set forth in this definition and the
other provisions of this Agreement);

(b) that is 100% owned in fee simple by, or 100% ground leased pursuant to an
Approved Ground Lease by, a Borrower in accordance with Section 10.3;

(c) with respect to which neither (i) such Real Property is subject to any Lien
or Negative Pledge (other than Permitted Encumbrances) nor (ii) any Equity
Interest of any applicable Borrower (including the lease thereof or any indirect
interest owned by Borrower), is subject to any Lien or Negative Pledge (other
than Permitted Encumbrances);

(d) with respect to which Borrower has certified to Lender that, to Borrower’s
actual knowledge, such Real Property is free from any material structural (based
on a third party property condition report) or environmental (based on a third
party Phase I environmental site assessment report) issues; and

(e) that is in compliance with all covenants and conditions relative to
Borrowing Base Properties set forth herein, including, without limitation, the
provisions of Section 10 hereof and as to which no Exclusion Event has occurred.

“Borrowing Base Removal” has the meaning set forth in Section 10.3.

 

5

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“Borrowing Request” means a request by Borrower for a Borrowing in accordance
with Section 2.3.1.

“Business Day” means any day other than a Saturday, Sunday or any day on which
commercial banks in New York City are authorized or required to close by law or
executive order.

“Capital Lease Obligations” of any Person means the obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP. For
purposes hereof, all ground leases shall be deemed to be “Capital Lease
Obligations.”

“Capital One” means Capital One, National Association.

“Capital Reserves” means, on the date of any determination, (i) for the
Borrowing Base Properties located at (a) 49-19 Rockaway Beach Boulevard,
Arverne, New York, (b) 114-15 Guy Brewer Boulevard, Jamaica, New York and
(c) 23-25 87th Street and 88-08 23rd Avenue, East Elmhurst, New York, an amount
equal to the product of ten cents ($0.10) and the total rentable square footage
of such Property on an annual basis, and (ii) for all other Properties, an
amount equal to the product of thirty cents ($0.30) and the total rentable
square footage of the applicable Property on an annual basis.

“Capitalization Rate” means (i) with respect to Borrowing Base Properties
located in the Borough of Manhattan, New York, seven percent (7.00%) and
(ii) with respect to Borrowing Base Properties located outside of the Borough of
Manhattan, New York, eight percent (8.00%).

“Cash Collateralize” means, to pledge and deposit with or deliver to Lender, as
collateral for L/C Obligations or obligations of Lender to fund participations
in respect of L/C Obligations, cash or deposit account balances or, if Lender
shall agree in its sole discretion, other credit support, in each case pursuant
to documentation in form and substance reasonably satisfactory to Lender. “Cash
Collateral” shall have a meaning correlative to the foregoing and shall include
the proceeds of such cash collateral and other credit support.

“Cash Equivalents” means any of the following types of Investments, to the
extent owned by the REIT or any of its Subsidiaries free and clear of all Liens
(other than Liens created under the Collateral Documents and other Liens
permitted hereunder):

(a) readily marketable obligations issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
having maturities of not more than one year from the date of acquisition
thereof; provided that the full faith and credit of the United States of America
is pledged in support thereof;

(b) time deposits with, or insured certificates of deposit or bankers’
acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized
under the laws of the United States of America, any state thereof or the
District of Columbia or is the principal

 

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banking subsidiary of a bank holding company organized under the laws of the
United States of America, any state thereof or the District of Columbia, and is
a member of the Federal Reserve System, (ii) issues (or the parent of which
issues) commercial paper rated as described in clause (c) of this definition and
(iii) has combined capital and surplus of at least $1,000,000,000, in each case
with maturities of not more than 90 days from the date of acquisition thereof;

(c) commercial paper in an aggregate amount of no more than $10,000,000 per
issuer outstanding at any time issued by any Person organized under the laws of
any state of the United States of America and rated at least “Prime-1” (or the
then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent
grade) by S&P, in each case with maturities of not more than 180 days from the
date of acquisition thereof;

(d) bonds or other obligations having a short-term unsecured debt rating of not
less than A+ by S&P and P+ by Moody’s and having a longer term debt rating of
not less than A by S&P and A1 by Moody’s issued by or by authority of any state
of the United States

(e) repurchase agreements having a term not greater than thirty (30) days and
fully secured by securities described in the foregoing clauses (a), (b), (c) or
(d) with banks described in the foregoing clause (b) or with financial
institutions or other corporations having total assets in excess of
$500,000,000; and

(f) shares of any money market mutual fund rated at least AAA or the equivalent
thereof by S&P or at least Aaa or the equivalent thereof by Moody’s, and the
portfolios of which are limited solely to Investments of the character, quality
and maturity described in clauses (a), (b), (c), (d) and (e) of this definition.

“Casualty” has the meaning set forth in Section 7.2.1.

“CEA” shall mean the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended
from time to time, and any successor statute.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.

“CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.

“CFTC” shall mean the Commodity Futures Trading Commission.

“Change in Control” means an event or series of events by which:

(a) If (i) Paul Cooper or Louis Sheinker shall die or become disabled or
otherwise cease to be active on a daily basis in the management of the REIT or
serve as board members of the REIT, provided, further, that if at least one
(1) of such individuals shall continue to be active on a daily basis in the
management of the REIT, it shall not be a “Change of Control” if a replacement
executive of comparable experience and reasonably satisfactory to the Lender
shall have been retained within three (3) months of such event; or

 

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(b) REIT ceases to directly or indirectly own hundred percent (100%) of the
Equity Interests of the general partner of the OP and at least sixty five
percent (65%) of limited partner interests in the OP;:

(c) OP ceases to have the sole responsibility for managing and administering the
day-to-day business and affairs of each Borrower; or otherwise ceases to own,
directly or indirectly, one hundred percent (100%) of the Equity Interests of
any Borrower, unless the Borrowing Base Property owned by such Borrower is
removed from the calculation of the Borrowing Base Asset Value in accordance
with Section 10; or

(d) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan
of such person or its Subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all Equity Interests that such person or group
has the right to acquire, whether such right is exercisable immediately or only
after the passage of time (such right, an “option right”)), directly or
indirectly, of thirty-five percent (35%) or more of the Equity Interests of the
REIT entitled to vote for members of the board of directors or equivalent
governing body of the REIT on a fully-diluted basis (and taking into account all
such Equity Interests that such person or group has the right to acquire
pursuant to any option right); or

(e) during any period of twelve (12) consecutive months ending after the
Effective Date, individuals who at the beginning of any such twelve (12) month
period constituted the Board of Directors of the REIT (together with any new
directors whose election by such Board or whose nomination for election by the
shareholders of the REIT was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved but
excluding any director whose initial nomination for, or assumption of office as,
a director occurs as a result of an actual or threatened solicitation of proxies
or consents for the election or removal of one or more directors by any person
or group other than a solicitation for the election of one or more directors by
or on behalf of the Board of Directors) cease for any reason to constitute a
majority of the Board of the REIT of Borrower then in office.

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption of any law, rule, regulation or treaty,
(b) any change in any law, rule, regulation or treaty or in the interpretation
or application thereof by any Governmental Authority or (c) the making or
issuance of any request, rule, guideline or directive (whether or not having the
force of law) by any Governmental Authority; provided that notwithstanding
anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and
Consumer Protection Act and all requests, rules, guidelines or directives
thereunder or issued in connection therewith or in implementation thereof and
(y) all requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to
be a “Change in Law”, regardless of the date enacted, adopted, issued or
implemented.

 

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“Closing Date” has the meaning set forth in Section 2.20.1.

“Code” means the Internal Revenue Code of 1986, as amended and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

“Collateral” means, collectively, (i) the collateral covered by the definition
of “Collateral” as set forth in the Pledge and (ii) the collateral covered by
the definition of “Mortgaged Property” as set forth in the Mortgage.

“Commitment” means the commitment of the Lender to make Loans (including
Swingline Loans) and issue Letters of Credit hereunder

“Competitor” means a Person other than a Lender, an Affiliate of a Lender, an
Approved Fund that is or is an Affiliate of a real estate investment trust
(other than the REIT or any mortgage real estate investment trust) which is
primarily engaged in the business of acquiring assets of a similar size, type
and quality as the REIT in the geographic markets in which the REIT is active.

“Consolidated Adjusted EBITDA” means, for the four (4) fiscal quarters most
recently ended, Consolidated EBITDA, less the Capital Reserve applicable to such
period.

“Consolidated EBITDA” means an amount, for the four (4) fiscal quarters most
recently ended, equal to the following amounts: (a) Consolidated Net Income for
such period, plus (b) the sum of the following (without duplication, except as
set forth below, and to the extent reflected as a charge in the statement of
such Consolidated Net Income for such period): (i) income tax expense,
(ii) interest expenses, amortization or write-off of debt discount and debt
issuance costs and commissions, discounts and other fees and charges associated
with Indebtedness, (iii) depreciation and amortization expenses,
(iv) amortization of intangibles (including goodwill) and organization costs,
(v) any extraordinary, unusual or non-recurring expenses or losses (including,
whether or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets outside of
the ordinary course of business and costs and expenses incurred during such
fiscal quarter with respect to acquisitions, whether or not consummated),
(vi) any other non-cash charges, (vii) loss from discontinued operations; and
(viii) all fees and expenses incurred in connection with the negotiation and
execution of this Agreement and the other Loan Documents, minus (c) the sum of
the following (to the extent included in the statement of such Consolidated Net
Income for such fiscal quarter): (i) interest income (except to the extent
deducted in determining such Consolidated Net Income); (ii) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such fiscal quarter, gains on the sales of assets outside of the ordinary
course of business); (iii) any other non-cash income; and (iv) any cash payments
made during such fiscal quarter in respect of items described in clause (b)(v)
above subsequent to the fiscal quarter in which the relevant non-cash expenses
or losses were reflected as a charge in the statement of Consolidated Net
Income.

 

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“Consolidated Entity” means the REIT, Borrower and any member of the
Consolidated Group.

“Consolidated Fixed Charges” means, on a consolidated basis, for the
Consolidated Group for the four (4) fiscal quarters most recently ended, the sum
(without duplication) of (a) Consolidated Interest Expense, (b) provision for
cash income taxes made on a consolidated basis in respect of such period,
(c) scheduled principal amortization payments due during such period on account
of Indebtedness (excluding balloon payments), and (d) Restricted Payments
payable in cash with respect to Disqualified Capital Stock and preferred Equity
Interests of such Person during such period.

“Consolidated Group” means the REIT and all Persons whose financial results are
consolidated with the REIT for financial reporting purposes under GAAP.

“Consolidated Interest Expense” means, for the four (4) fiscal quarters most
recently ended, without duplication, the amount of interest expense, determined
in accordance with GAAP, of the Consolidated Group for such fiscal quarter
attributable to Consolidated Total Debt during such period (excluding
amortization or write-off of debt issuance costs and commissions). Consolidated
Interest Expense shall exclude any interest expense in respect of any
convertible Indebtedness in excess of the cash coupon on such convertible
Indebtedness.

“Consolidated Leverage Ratio” means, as of the date of determination, the ratio,
expressed as a percentage, of (a) Consolidated Total Debt to (b) Total Asset
Value.

“Consolidated Net Income” means, for any Person for the four (4) fiscal quarters
most recently ended, the consolidated net income (or loss) of such Person for
such period, determined on a consolidated basis in accordance with GAAP;
provided that in calculating Consolidated Net Income of the REIT for period,
there shall be excluded (a) the income (or deficit) of any Person accrued prior
to the date it becomes a Subsidiary or is merged into or consolidated with the
REIT or any of its Subsidiaries, (b) the income (or deficit) of any Person
(other than a Consolidated Entity) in which any Consolidated Entity has an
ownership interest, except to the extent that any such income is actually
received by such Consolidated Entity in the form of dividends or similar
distributions, and (c) the undistributed earnings of any Subsidiary of any
Consolidated Entity to the extent that the declaration or payment of dividends
or similar distributions by such Subsidiary is not at the time permitted by the
terms of any Contractual Obligation (other than under any Loan Document) or
Legal Requirement applicable to such Subsidiary.

“Consolidated Net Worth” shall mean with respect to any Person, as of any date
of determination, such Person’s net worth, as determined in accordance with GAAP
(except that in determining such net worth, Indebtedness shall include such
Person’s pro rata share of the Indebtedness of any unconsolidated partnership,
joint venture or Affiliate in which such Person directly or indirectly holds any
interest plus any Recourse or contingent obligations, directly or indirectly, of
such Person with respect to any Indebtedness of such unconsolidated partnership,
joint venture or Affiliate in excess of its proportionate share), all determined
on a consolidated basis.

 

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“Consolidated Total Debt” means, the aggregate principal amount of all
Indebtedness of the REIT and its Subsidiaries determined on a consolidated basis
and shall include, as of any date of determination, without duplication, the sum
of (a) the indebtedness of the Consolidated Group outstanding as of such date,
as determined in accordance with GAAP (but adjusted to eliminate increases or
decreases arising from ASC-805), and (b) the applicable pro rata share of any
member of the Consolidated Group of the outstanding Indebtedness (including
recourse and non-recourse mortgage debt, letters of credit, net obligations
under uncovered interest rate contracts, contingent obligations to the extent
the obligations are binding, unsecured debt, capitalized lease obligations
(including ground leases), guarantees of Indebtedness (excluding traditional
carve-outs relating to non-recourse debt obligations), and subordinated debt) as
of such date of any unconsolidated partnership, joint venture or Affiliate in
which such member owns a direct or indirect Equity Interest as would be shown on
a consolidated balance sheet of REIT and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, but in any event excluding
(x) Indebtedness of such member of the consolidated group or investment
affiliate owed to a member of the consolidated group, (y) obligations with
respect to any conditional sale or title retention agreement, liabilities
secured by a lien of the property of a person to the extent of the value of such
property, security deposits, accounts payable, accrued liabilities, prepaid
rents, any intracompany debt, and (z) obligations to purchase equity interests
within 12 months of the Maturity Date to the extent not yet payable or
obligations under hedge agreements to the extent not yet payable.

“Contingent Non-Recourse Obligation” means, as to any Person, any Contingent
Obligation of that Person with respect to customary carve-outs for fraud,
misrepresentation, bankruptcy, misapplication or misappropriation of funds,
waste, environmental claims and liabilities and other circumstances customarily
excluded by institutional commercial real estate lenders from exculpation
provisions or included in separate indemnification agreements or guarantees in
connection with non-recourse Indebtedness created, incurred, suffered or assumed
in compliance with this Agreement, except if (a) the party entitled to enforce
such guaranty or indemnity has commenced or is continuing efforts to enforce
such guaranty or indemnity and either (i) has obtained an initial judgment or
order with respect to such enforcement action in such party’s favor
(notwithstanding any rights of appeal), or (ii) such Person is not actively
defending such enforcement action in good faith, (b) the guarantor’s obligations
with respect thereto have become liquidated or (c) with respect to any
Contingent Obligation pursuant to which the obligor is obligated to pay all or
any portion of the principal of the Indebtedness of another Person as a result
of the commencement or conduct of any voluntary or involuntary Insolvency
Proceeding with respect to that Person (or any actions of such Person, such
obligor or their affiliates in connection with the commencement or conduct of
any such voluntary or involuntary Insolvency Proceeding), such voluntary or
involuntary Insolvency Proceeding with respect to that Person shall have been
commenced.

“Contingent Obligation” means, as to any Person, (a) any obligation, contingent
or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other

 

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obligation of the payment or performance of such Indebtedness or other
obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of
the primary obligor so as to enable the primary obligor to pay such Indebtedness
or other obligation, or (iv) entered into for the purpose of assuring in any
other manner the obligee in respect of such Indebtedness or other obligation of
the payment or performance thereof or to protect such obligee against loss in
respect thereof (in whole or in part), or (b) any Lien on any assets of such
Person securing any Indebtedness or other obligation of any other Person,
whether or not such Indebtedness or other obligation is assumed by such Person
(or any right, contingent or otherwise, of any holder of such Indebtedness to
obtain any such Lien), but only to the extent of the value of the property
encumbered by such Lien; provided that the term Contingent Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Contingent Obligation shall be deemed to
be an amount equal to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith.

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, undertaking, contract, mortgage, deed
of trust, indenture, or other instrument, document or agreement to which such
Person is a party or by which it or any of its property is bound.

“Contributed Properties” means properties contributed to the Consolidated Group
after the date hereof in exchange for Equity Interests in either Guarantor.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Controlled Group” means the REIT, Borrower and all Persons (whether or not
incorporated) under a “controlled group of corporations” (within the meaning of
Section 414 of the Code) with the REIT or Borrower which maintains, sponsors or
contributes to a “defined benefit plan” (within the meaning of Section 3(35) of
ERISA) or a “multiemployer pension plan” (within the meaning of Section 3(37)(A)
of ERISA).

“Covered Entity” has the meaning set forth in Section 3.25(f).

“Credit Exposure” means the sum of the outstanding principal amount of Lender’s
Loans, L/C Obligations (after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date) and Swingline Exposure at such time.

“Credit Party” means each Borrower and each Guarantor.

“Debt” the unpaid Principal, L/C Obligations, all interest accrued and unpaid
thereon, and all due and unpaid fees and other sums due to Lender with respect
to the Loan or under any Loan Document, and any and all obligations of Borrower
and/or its Affiliates pursuant to any Secured Swap Agreement.

 

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“Debt Service” means, with respect to any particular period during the term of
this Agreement, scheduled payments of interest and principal due with respect to
an outstanding principal balance equal to the sum of the outstanding principal
balance of the Loans plus the L/C Obligations on the last day of such period
based on a 30-year mortgage-style amortization schedule and an assumed interest
rate equal to the greater of (a) the yield in effect as of the last day of such
period on U.S. Treasury obligations having a maturity corresponding to ten
(10) years from the date of determination (and, if no such maturity shall so
exactly correspond, yields for the two most closely corresponding published
maturities shall be calculated as of such determination date, and the yield for
a maturity corresponding to ten (10) years from the date of determination,
interpolated or extrapolated (as applicable) from such yields on a straight-line
basis (rounding, in the case of relevant periods, to the nearest month), shall
be utilized), plus two and three quarters percent (2.75%), and (b) six percent
(6.0%).

“Debt Service Coverage Ratio” means, as of any date, the ratio calculated and
submitted by Borrower, of (i) the Adjusted Borrowing Base Net Operating Income
for the four (4) fiscal quarters most recently ended, to (ii) the Debt Service
with respect to such period.

“Debt Yield” means, as of any determination date, the aggregate amount of
Adjusted Borrowing Base Net Operating Income from the Property for the 3-month
period immediately preceding the most recently completed calendar month,
annualized, divided by the aggregate Principal amount of the Loan outstanding as
of the date of determination.

“Default” means any event or condition which constitutes an Event of Default or
a condition which, after any applicable notice from Lender to Borrower or,
following the expiration of any applicable cure period therefor, would become an
Event of Default.

“Default Rate” has the meaning set forth in Section 2.11.3.

“Disqualified Capital Stock” shall mean with respect to any Person any Equity
Interest of such Person that by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable), or otherwise
(including upon the occurrence of any event), is required to be redeemed or is
redeemable for cash at the option of the holder thereof, in whole or in part
(including by operation of a sinking fund), or is exchangeable for Indebtedness
(other than at the option of such Person), in whole or in part, at any time.

“Dollars” or “$” refers to lawful money of the United States of America.

“DSCR-Based Borrowing Base Limit” shall mean as of any date the maximum
principal amount of Credit Exposure that would be available to be outstanding
under this Agreement as would result in a Debt Service Coverage Ratio for the
four (4) fiscal quarters most recently ended equal to 1.50:1.00, where the Debt
Service Coverage Ratio calculation is based on the Adjusted Borrowing Base Net
Operating Income for all Borrowing Base Properties for such period, and the Debt
Service for such period.

“Effective Date” means the date of this Agreement.

 

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“Eligible Assignee” means any of (i) a commercial bank organized under the laws
of the United States, or any State thereof, and having (x) total assets in
excess of $1,000,000,000 and (y) a combined capital and surplus of at least
$250,000,000; (ii) a commercial bank organized under the laws of any other
country which is a member of the Organization of Economic Cooperation and
Development (“OECD”), or a political subdivision of any such country, and having
(x) total assets in excess of $1,000,000,000 and (y) a combined capital and
surplus of at least $250,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of OECD; (iii) a life insurance company organized
under the laws of any State of the United States, or organized under the laws of
any country and licensed as a life insurer by any State within the United States
and having admitted assets of at least $1,000,000,000; (iv) a nationally
recognized investment banking company or other financial institution in the
business of making loans, or an Affiliate thereof (other than any Person which
is directly or indirectly a Borrower or Guarantor or directly or indirectly an
Affiliate of Borrower or Guarantor) organized under the laws of any State of the
United States, and licensed or qualified to conduct such business under the laws
of any such State and having (1) total assets of at least $1,000,000,000 and
(2) a net worth of at least $250,000,000; (v) an Approved Fund; or (vi) any
Affiliate of Capital One, any other Person into which, or with which, Capital
One is merged, consolidated or reorganized, or which is otherwise a successor to
Capital One by operation of law, or which acquires all or substantially all of
the assets of Capital One, any other Person which is a successor to the business
operations of Capital One and engages in substantially the same activities, or
any Affiliate of any of the foregoing. Notwithstanding the foregoing, a
Competitor shall not be an Eligible Assignee unless an Event of Default
specified in Section 8.1(a), (f) or (g) shall be in existence.

“Eligible Contract Participant” means an “eligible contract participant” as
defined in the CEA and regulations thereunder.

“Eligibility Date” means, with respect to Borrower or Guarantor and each swap
transaction under a Secured Swap Agreement, the date on which this Agreement or
any Loan Document becomes effective with respect to such transaction.

“Environmental Laws” means, collectively, any Legal Requirement pertaining to or
imposing liability or standards of conduct concerning environmental regulation,
contamination or clean-up, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, the Resource
Conservation and Recovery Act, the Emergency Planning and Community
Right-to-Know Act of 1986, the Hazardous Substances Transportation Act, the
Solid Waste Disposal Act, the Clean Water Act, the Clean Air Act, the Toxic
Substance Control Act, the Safe Drinking Water Act, the Occupational Safety and
Health Act, any state super-lien and environmental clean-up statutes (including
with respect to Toxic Mold), and all amendments to and regulations in respect of
the foregoing laws.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Credit Party or their Affiliates resulting
from or based upon (a) violation of any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials in violation of any Environmental Law, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment

 

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in violation of any Environmental Law or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock, partnership interests, membership interests of (or other
ownership or profit interests in) such Person, all of the subscriptions,
warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
subscriptions, warrants, options, rights or other interests are outstanding on
any date of determination, and all related voting rights, rights to information
and other rights attributable to such shares, subscriptions, warrants, options,
rights or other interests.

“Equity Issuance” means the issuance or sale by any Person of any of its Equity
Interests or any capital contribution to such Person by the holders of its
Equity Interests.

“ERISA” means the Employment Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder.

“ERISA Affiliate” means all members of a Controlled Group and all trades and
business (whether or not incorporated) under common control and all other
entities which, together with Borrower, are treated as a single employer under
any or all of Section 414(b), (c), (m) or (o) of the Code.

“Estimated Value” means, for any Borrowing Base Property or Real Property, on
the date of any determination, (i) in the case of a Borrowing Base Property, the
Adjusted Borrowing Base Net Operating Income for such Borrowing Base Property,
divided by the applicable Capitalization Rate therefor and (ii) in the case of
Real Property that is not a Borrowing Base Property, the Adjusted Net Operating
Income for such Real Property, divided by the applicable Capitalization Rate
therefor.

“Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether
such Loans, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Adjusted LIBOR Rate.

“Event of Default” has the meaning set forth in Article VIII.

“Executive Order” has the meaning set forth in the definition of Prohibited
Person.

“Excluded Swap Obligation” means with respect to Borrower or Guarantor, any
Secured Swap Obligation if, and to the extent that, all or a portion of
Guarantor’s guaranty of, or the grant by Borrower or Guarantor of a security
interest to secure, such Secured Swap Obligation (or any guaranty thereof) is or
becomes illegal under the CEA or any rule, regulation or order of the CFTC (or
the application or official interpretation of any thereof) by virtue of such
Borrower’s or

 

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Guarantor’s respective failure for any reason to constitute an “eligible
contract participant” as defined in the CEA and the regulations thereunder at
the time the Guarantor’s guaranty or the grant of such security interest becomes
effective with respect to such Secured Swap Obligation. Notwithstanding anything
to the contrary contained in the foregoing or in any other provision of this
Agreement or any Loan Document, the foregoing is subject to the following
provisos: (a) If a Secured Swap Obligation arises under a master agreement
governing more than one swap, such exclusion shall apply only to the portion of
such Secured Swap Obligation that is attributable to swaps for which such
Guaranty or security interest is or becomes illegal under the CEA, or any rule,
regulations or order of the CFTC, solely as a result of the failure by such
Borrower or Guarantor for any reason to qualify as an Eligible Contract
Participant on the Eligibility Date for such swap; (b) if a guarantee of a
Secured Swap Obligation would cause such obligation to be an Excluded Swap
Obligation but the grant of a security interest would not cause such obligation
to be an Excluded Swap Obligation, such Secured Swap Obligation shall constitute
an Excluded Swap Obligation for purposes of the guaranty but not for purposes of
the grant of the security interest; and (c) if there is more than one Borrower
or Guarantor executing this Agreement or the Loan Documents and a Secured Swap
Obligation would be an Excluded Swap Obligation with respect to one or more of
such Persons, but not all of them, this definition of Excluded Swap Obligation
Liability with respect to each such Person shall only be deemed applicable to
(i) the particular Secured Swap Obligations that constitute Excluded Swap
Obligations with respect to such Person, and (ii) the particular Person with
respect to which such Secured Swap Obligations constitute Excluded Swap
Obligations.

“Exclusion Event” has the meaning set forth in Section 10.2.3.

“Existing Properties” means the Original GTJ Properties and Recently Contributed
Wu/Lighthouse Properties.

“Extended Maturity Date” has the meaning set forth in Section 2.15.1.

“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, provided that
(a) if such day is not a Business Day, the Federal Funds Rate for the
immediately preceding Business Day shall be applicable, as determined by Lender,
or such other commercial bank as selected by Lender.

“FFO Distribution Allowance” means, for the REIT, for calendar year, 95% of the
greater of: (i) the sum of Modified Fund From Operations as reasonably
determined by the REIT in good faith and as reasonably acceptable to the Lender
plus Qualified Gains; and (ii) Taxable REIT Income.

“Fitch” means the meaning set forth in the definition of “Rating Agency”.

“Fixed Charge Coverage Ratio” means, for the four (4) fiscal quarters most
recently ended, the ratio of (i) Consolidated Adjusted EBITDA for such period to
(ii) Consolidated Fixed Charges for such period.

“Fundamental Change” has the meaning set forth in Section 5.3.1.

 

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“Funds From Operations” means, with respect to any fiscal quarter, the REIT’s
net income (or loss) computed in accordance with GAAP, excluding loss from
discontinued operations, gains or losses from sales of property and asset
impairment write-downs, plus depreciation and amortization, after adjustments
for unconsolidated partnerships and joint ventures determined in a manner
consistent with the “white paper” issued in April 2002 by the National
Association of Real Estate Investment Trusts, and after adjustments for costs
and expenses incurred during such fiscal quarter with respect to acquisitions,
whether or not consummated.

“GAAP” means generally accepted accounting principles in the United States of
America as of the date of the applicable financial report.

“Government Lists” means (i) the Specially Designated Nationals and Blocked
Persons Lists maintained by Office of Foreign Assets Control (“OFAC”), (ii) any
other list of terrorists, terrorist organizations or narcotics traffickers
maintained pursuant to any of the Rules and Regulations of OFAC that Lender
notified Borrower in writing is now included in “Governmental Lists”, or
(iii) any similar lists maintained by the United States Department of State, the
United States Department of Commerce or any other government authority or
pursuant to any executive order of the President of the United States of America
that Lender notified Borrower in writing is now included in “Governmental
Lists”.

“Governmental Authority” means the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government (including any supra-national bodies such as the European Union or
the European Central Bank).

“GTJ Management Agreement” shall mean that certain property management agreement
dated as of even date herewith between the OP and GTJ Management LLC regarding
the Borrowing Base Properties.

“Guaranteed Obligations” has the meaning set forth in each of the Guaranties.

“Guarantor” has the meaning set forth in the introductory paragraph hereto.

“Guaranty” means that certain Guaranty dated as of the date hereof, entered into
by each Guarantor in favor of the Lender, as the same may be amended, modified,
or otherwise in effect from time to time.

“Hazardous Substances” means any explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes, substances, materials or other
pollutants which are included under or regulated by Environmental Laws,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
hazardous, toxic and/or dangerous substances, and Toxic Mold.

“Hedge Obligation” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options,

 

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forward commodity contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price
or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.

“Hedge Termination Value” means, in respect of any one or more Hedge
Obligations, after taking into account the effect of any legally enforceable
netting agreement relating to such Hedge Obligations, (a) for any date on or
after the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Hedge Obligations, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Hedge Obligations (which may include Lender or any
Affiliate of Lender).

“Honor Date” has the meaning specified in Section 2.4.3.

“Included Property(ies)” shall mean each of the assets consisting of improved
Real Property (other than a Borrowing Base Property) the value of which is
included in any calculation of Total Asset Value that is delivered to or made by
Lender under this Agreement.

“Indebtedness” means, as to any Person, at a particular time, all items which
constitute, without duplication, (i) indebtedness for borrowed money or the
deferred purchase price of property or services (other than trade accounts
payable in the ordinary course of business and not past due for more than ninety
(90) days after the date on which such trade account was created),
(ii) indebtedness evidenced by notes, bonds, debentures or similar instruments,
(iii) obligations with respect to any conditional sale or title retention
agreement, (iv) the maximum amount of all direct or contingent obligations of
such Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments,
(v) all liabilities secured by any lien on any property owned by such Person
even though such Person has not assumed or otherwise become liable for the
payment thereof (other than carriers’, warehousemen’s, mechanics’, repairmen’s
or other like non-consensual statutory Liens arising in the ordinary course of
business, and only to the extent of the value of the property encumbered by such
Lien), (vi) Capital Lease Obligations, (vii) all obligations of such Person to
purchase, redeem, retire, defease or otherwise make any payment in respect of
any Equity Interest in such Person at any time prior to the date that is twelve
(12) months after the Maturity Date (excluding any such obligation to the extent
the obligation can be satisfied solely by the issuance of Equity Interests),
(viii) indebtedness arising under any Hedge Obligation, and (ix) all Contingent
Obligations of such Person with respect to liabilities of the type referenced in
clauses (i) through

 

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(viii) above (other than Contingent Non-Recourse Obligations). For all purposes
hereof, the Indebtedness of any Person shall include such Person’s pro rata
share of the Indebtedness of any unconsolidated partnership, joint venture or
Affiliate in which such Person holds any direct or indirect Equity Interests,
plus any Recourse or contingent obligations, directly or indirectly, of such
Person with respect to any Indebtedness of such unconsolidated partnership,
joint venture or Affiliate in excess of its proportionate share. For these
purposes, the amount of any net obligation under any Hedge Obligation on any
date shall be deemed to be the applicable Hedge Termination Value thereof as of
such date. “Indebtedness” includes, without limitation, L/C Obligations and
Loans outstanding under this Agreement.

“Initial Qualified Properties” means the properties located at (i) 114-15 Guy
Brewer Blvd, Jamaica, NY (the “Guy Brewer Property”); (ii) 49-19 Rockaway Beach
Blvd, Arverne (aka Far Rockaway), NY (the “Rockaway Property”); (iii) 612
Wortman Avenue, Brooklyn, NY (the “Wortman Avenue Property”); and (iv) 23-85
87th Street, East Elmhurst, NY (the “87th Street Property”).

“Insolvency Proceeding” means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; in each case as undertaken under U.S. Federal, State or foreign law.

“Interest Election Request” means a request by Borrower to convert or continue a
Borrowing in accordance with Section 2.6.

“Interest Payment Date” means (i) with respect to any Loan (other than a
Swingline Loan), the first day of each month (or if such day is not a Business
Day, on the next Business Day) and (iii) with respect to any Swingline Loan, the
day that such Loan is required to be repaid.

“Interest Period” shall mean, with respect to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day in the calendar month that is one (1), two (2), or three
(3) months thereafter, as Borrower may elect pursuant to Section 2.3.1;
provided, that (a) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests of another Person, (b) a loan, advance or
capital contribution to, incurrence of a Contingent Obligation in relation to or
assumption of debt of, or purchase or other acquisition of any other debt or
equity participation or interest in, another Person, including any partnership
or joint

 

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venture interest in such other Person and any arrangement pursuant to which the
investor guarantees Indebtedness of such other Person, (c) the purchase of
assets of another Person that constitute a business unit, or (d) the purchase or
other acquisition (in one transaction or a series of transactions) of interests
in Real Property. For purposes of covenant compliance, the amount of any
Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

“Investment Grade Borrowing Base Property” means any Borrowing Base Property
that is a Single Tenant Asset, the lessee of which is (i) an Investment Grade
Tenant or (ii) a tenant whose obligations under its net lease for such Borrowing
Base Property are guaranteed by an Investment Grade Guarantor.

“Investment Grade Guarantor” means any guarantor of a net lease of a Borrowing
Base Property that has a rating of BBB- or better from S&P or Baa3 or better
from Moodys.

“Investment Grade Tenant” means any tenant under a net lease of a Borrowing Base
Property that has a rating of BBB- or better from S&P or Baa3 from Moodys.

“IRS” means the United States Internal Revenue Service.

“Issuer Documents” means with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by the Lender and Borrower (or any Subsidiary) or in favor of the Lender,
as issuer of the Letter of Credit, and relating to such Letter of Credit.

“Joinder Agreement” means a Joinder Agreement substantially in the form attached
to hereto as Exhibit D.

“Late Payment Charge” the meaning set forth in Section 2.15.3.

“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

“L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings. For all purposes of
this Agreement, if on any date of determination a Letter of Credit has expired
by its terms but any amount may still be drawn thereunder by reason of the
operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be
“outstanding” in the amount so remaining available to be drawn.

“Lease” means a lease, sublease, license, concession agreement or other
agreement or other agreement (not including any ground lease) providing for the
use or occupancy of any portion of any Real Property owned or leased by the
Borrower or other Subsidiary, including all amendments, supplements,
restatements, assignments and other modifications thereto.

 

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“Legal Requirements” means all statutes, laws, rules, orders, regulations,
ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting any Credit Party, any Loan Document or all or part of any Borrowing
Base Property or the construction, ownership, use, alteration or operation
thereof, whether now or hereafter enacted and in force, and all permits,
licenses and authorizations and regulations relating thereto.

“Letter of Credit” means any letter of credit issued hereunder. For purposes of
clarification, a Letter of Credit may only be a standby letter of credit only.

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by Lender.

“Letter of Credit Expiration Date” means a day not later than the earlier of
(i) twelve (12) months after its date of issuance and (ii) the fifth
(5th) Business Day prior to the Maturity Date (or, if such day is not a Business
Day, the next succeeding Business Day); provided, however, that any such Letter
of Credit may provide for renewal thereof for additional periods of up to twelve
(12) months on customary terms (which in no event shall extend beyond the date
referred to in clause (ii) of the foregoing).

“Letter of Credit Fee” has the meaning specified in Section 2.4.5.

“Letter of Credit Sublimit” means, as of any date of determination, an amount
equal to the lesser of (a) $5,000,000 and (b) the then outstanding Commitment as
of such date.

“LIBOR Rate” means, with respect to any Interest Period, the rate for deposits
in U.S. Dollars for a period of one (1), two (2), three (3) or six (6) months,
as may be elected by Borrower pursuant to Section 2.06, which appears on the
Reuters Screen LIBOR01 Page as of 11:00 a.m., London, England, time, on the
Business Day that is at least two (2) London Banking Days preceding the Reset
Date for such Interest Period. If such rate does not appear on the Reuters
Screen LIBOR01 Page, then LIBOR for that Interest Period will be determined as
if the parties had specified “USD-LIBOR-Reference Banks” as the applicable rate.

“Lien” means, with respect to any asset, any mortgage, deed of trust, lien
(statutory or otherwise), pledge, hypothecation, easement, restrictive covenant,
preference, assignment, security interest or any other encumbrance, charge or
transfer of, or any agreement to enter into or create any of the foregoing, on
or affecting all or any part of such asset or any interest therein, or any
direct or indirect interest in Borrower, including any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
and mechanic’s, materialmen’s and other similar liens and encumbrances.

“Loan Documents” means each of this Agreement, the Note, the Pledge, the
Mortgages, any other Security Documents, each Assignment of Agreements, each
Environmental Indemnity Agreement, the Guaranty, each Subordination of
Management Agreement, and the other instruments or agreements made or entered
into by any of the Credit Parties with or in favor of any or all of the Secured
Parties in connection with the Transactions, and any supplements or amendments
to or waivers of any of the foregoing executed and delivered from time to time.

 

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“Loans” means the loans made by the Lender to Borrower pursuant to this
Agreement.

“London Banking Day” means any day on which commercial banks are open for
general business (including dealings in foreign exchange and foreign currency
deposits) in London, England.

“Management Agreement” the management agreement for any Borrowing Base Property,
between a Borrower and a Manager, pursuant to which such Manager is to manage a
Borrowing Base Property, as same may be amended, restated, replaced,
supplemented or otherwise modified from time to time in accordance with a
Subordination of Management Agreement.

“Manager” means the Person acting as the manager of any Borrowing Base Property
pursuant to a Management Agreement, and any successor, assignee or replacement
manager appointed by Borrower with Lender’s consent.

“Margin Stock” means “margin stock” within the meaning of Regulation U of the
Board.

“Material Adverse Effect” means any event, matter, condition or circumstance
which (i) has or would reasonably be expected to have a material adverse effect
on the business, properties, results of operations or condition (financial or
otherwise) of any Credit Party and its Subsidiaries taken as a whole; (ii) would
materially impair the ability of any Credit Party or any other Person to perform
or observe its obligations under or in respect of the Loan Documents, or
(iii) affects the legality, validity, binding effect or enforceability of any of
the Loan Documents or the perfection or priority of any Lien granted to the
Lender under any of the Security Documents.

“Material Alteration” means any alteration affecting structural elements of the
Property the cost of which exceeds $250,000; provided, however, that in no event
shall (i) any tenant improvement work performed pursuant to any Lease existing
on the date hereof or entered into hereafter in accordance with the provisions
of this Agreement, or (ii) alterations performed as part of a Restoration,
constitute a Material Alteration.

“Maturity Date” means April 8, 2016, as the same may be extended pursuant to
Section 2.15, or such earlier date on which the final payment of principal of
the Note becomes due and payable as therein provided, whether by declaration of
acceleration or otherwise.

“Modified Funds From Operations” means, with respect to any fiscal quarter, the
REIT’s Funds From Operations for such quarter, adjusted for the following items,
as applicable, included in the determination of GAAP net income for such quarter
(without duplication of any adjustments included in Funds From Operations for
such quarter): acquisition fees and expenses; amounts relating to amortization
of above and below market leases and liabilities (which are adjusted in order to
reflect such payments from a GAAP accrual basis to a cash basis of disclosing
the rent and lease payments); accretion of discounts and amortization of
premiums on debt investments; mark-to-market adjustments included in net income;
gains or losses included in net income from the extinguishment or sale of debt,
hedges, foreign exchange, derivatives or securities holdings where trading of
such holdings is not a fundamental attribute of the business plan, unrealized
gains or losses resulting from consolidation from, or deconsolidation to, equity
accounting, and after adjustments for consolidated and unconsolidated
partnerships and joint

 

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ventures, determined in a manner consistent with the Investment Program
Association’s Guideline 2010-01 (it being understood that Modified Funds From
Operations shall not include an adjustment for amounts relating to deferred rent
receivables), Supplemental Performance Measure for Publicly Registered,
Non-Listed REITs: Modified Funds from Operations, or the Practice Guideline,
issued in November 2010.

“Moody’s” shall have the meaning set forth in the definition of “Rating Agency”.
Mortgage: the meaning set forth in the definition of Loan Documents.

“Mortgage” means, collectively, each deed of trust, mortgage or similar real
property security instrument encumbering a Borrowing Base Property in favor of
the Lender, in form and substance reasonably acceptable to Lender and Lender’s
counsel.

“Mortgage Tax Reserve Amount” means all amounts as may be reasonably estimated
by Lender to cover recording charges, any mortgage or documentary stamp taxes,
title premium charges, and all other amounts anticipated to be due in connection
with the recording of the Mortgages following an Event of Default.

“Multiemployer Plan” means a “multiemployer plan” within the meaning of
Section 3(37)(A) of ERISA and to which any member of the Controlled Group makes,
is making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.

“Negative Pledge” means any covenant, agreement or arrangement in favor of the
creditor of any Person whereby that Person has agreed with respect to itself or
any of its subsidiaries or affiliates, (i) not to sell, dispose of or create any
Lien upon any of the assets of such Person or its subsidiaries or affiliates or
(ii) not to incur or grant in favor of any Person other than such creditor any
covenant not to sell or dispose of, or create any Lien upon, the assets of such
Person or its subsidiaries or affiliates.

“Net Equity Proceeds” means, with respect to the sale or issuance of any Equity
Interest by the REIT, the excess of (i) the sum of the cash and Cash Equivalents
received in connection with such transaction over (ii) the underwriting
discounts and commissions, and other reasonable and customary out-of-pocket
expenses, incurred by the REIT, in connection therewith.

“Net Operating Income” means, with respect to any Real Property for any period,
property rental and other income (as determined in accordance with GAAP)
attributable to such property accruing for such period (adjusted to eliminate
the straight lining of rents) minus (b) the amount of all expenses (as
determined in accordance with GAAP) incurred in connection with and directly
attributable to the ownership and operation of such property for such period,
including without limitation, management fees (which shall be assumed to be the
higher of (i) the actual management fees payable or (ii) three percent (3%) of
gross revenues from the property) and amounts accrued for the payment of real
estate taxes and insurance premiums, but excluding any general and
administrative expenses related to the operation of the REIT, any Borrower, any
interest expense or other debt service charges and any non-cash charges such as
depreciation or amortization of financing costs. Net Operating Income shall be
adjusted to remove any impact from straight line rent leveling adjustments as
required under GAAP and amortization of deferred market rent into income
pursuant to Statement of Financial Accounting Standards number 141.

 

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“Newly Purchased Properties” means properties purchased in whole or in part with
the proceeds of Borrowings hereunder.

“Non-Extension Notice Date” has the meaning specified in Section 2.4.2(c).

“Non-Qualifying Party” shall mean Borrower or any Guarantor that on the
applicable Eligibility Date fails for any reason to qualify as an Eligible
Contract Participant.

“Non-Recourse” means, with reference to any obligation or liability, any
obligations or liability for which a Person, as obligor thereunder, is not
liable or obligated other than as to such Person’s interest in a specifically
identified asset only, subject to such limited exceptions to the non-recourse
nature of such obligation or liability for customary carve-outs for fraud,
misrepresentation, bankruptcy, misapplication or misappropriation of funds,
waste, environmental claims and liabilities, the non-payment of taxes and
assessments, insolvency proceedings and other circumstances customarily excluded
by institutional commercial real estate lenders from exculpation provisions or
included in separate indemnification agreements or guarantees.

“Note” means that certain Promissory Note dated as of the date hereof by
Borrower in favor of the Lender the maximum principal amount of $45,000,000.00,
as the same may be amended, restated, extended, increased, modified, or
otherwise in effect from time to time.

“Notice” the meaning set forth in Section 6.1.1.

“Obligations” means all obligations, liabilities and indebtedness of every
nature of any Credit Party, including (i) under a Swap Contract and (ii) the
Guaranteed Obligations, from time to time owing to Lender under or in connection
with this Agreement or any other Loan Document to which such Credit Party is a
party, including principal, interest, fees (including fees of external counsel),
and expenses whether now or hereafter existing under the Loan Documents.
Notwithstanding the foregoing, the Obligations of a Credit Party shall not
include any Excluded Swap Obligations with respect to such Credit Party.

“O & M Program” has the meaning set forth in Section 4.10.3.

“OFAC” has the meaning set forth in the definition of “Government Lists”.

“OP” has the meaning set forth in the introductory paragraph of this Agreement

“Organizational Documents” shall mean (a) for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, any subscription agreements for such
corporation, and any amendments thereto, (b) for any limited liability company,
the articles of organization or certificates of formation and any certificate
relating thereto and the limited liability company (or operating) agreement of
such limited liability company, any subscription agreements for such limited
liability company, and any amendments

 

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thereto, and (c) for any partnership (general or limited), the certificate of
limited partnership or other certificate pertaining to such partnership and the
partnership agreement of such partnership (which must be a written agreement),
any subscription agreements for such partnership, and any amendments thereto.

“Original GTJ Properties” means the properties identified on Schedule II.

“Other Charges” means all ground rents, maintenance charges, impositions other
than Taxes, and any other charges, including vault charges and license fees for
the use of vaults, chutes and similar areas adjoining any Borrowing Base
Property, now or hereafter levied or assessed or imposed against any Borrowing
Base Property or any part thereof

“Participant” has the meaning set forth in Section 9.2.

“Participant Register” has the meaning set forth in Section 9.2.

“Patriot Act” has the meaning set forth in Section 4.26.

“Patriot Act Offense” means any violation of the criminal laws of the United
States of America or of any of the several states, or that would be a criminal
violation if committed within the jurisdiction of the United States of America
or any of the several states, relating to terrorism or the laundering of
monetary instruments, including any offense under (a) the criminal laws against
terrorism; (b) the criminal laws against money laundering, (c) the Bank Secrecy
Act, as amended, (d) the Money Laundering Control Act of 1986, as amended, or
the (e) Patriot Act. “Patriot Act Offense” also includes the crimes of
conspiracy to commit, or aiding and abetting another to commit, a Patriot Act
Offense.

“Permitted Encumbrances” means (i) the Liens created by the Loan Documents and
any Secured Swap Agreement, (ii) all Liens and other matters disclosed in the
Title Insurance Policy, (iii) Liens, if any, for Taxes or Other Charges not yet
due and payable and not delinquent, (iv) any workers’, mechanics’ or other
similar Liens on any Borrowing Base Property provided that any such Lien is
bonded (per Legal Requirements that result in the release of such Lien as
against the applicable Borrowing Base Property) or discharged within 30 days
after Borrower first receives notice of such Lien and (v) such other title and
survey exceptions as Lender approves in writing in Lender’s discretion.

“Person” means any individual, corporation, partnership, limited liability
company, joint venture, estate, trust, unincorporated association, any other
person or entity, and any federal, state, county or municipal government or any
bureau, department or agency thereof and any fiduciary acting in such capacity
on behalf of any of the foregoing.

“Plan” means (i) an employee benefit or other plan established or maintained by
Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate
makes or is obligated to make contributions and (ii) which is subject to Title
IV of ERISA or Section 302 of ERISA or Section 412 of the Code.

 

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“Pledge” means, collectively, the Pledge and Security Agreement, dated as of the
Effective Date, made by OP in favor of the Lender and, each additional Pledge
and Security Agreement delivered by OP pursuant to Article X hereof

“Policies” has the meaning set forth in Section 7.1.2.

“Prime Rate” means the rate of interest from time to time announced by Lender at
its principal office as its prime commercial lending rate, it being understood
that such prime commercial rate is a reference rate and does not necessarily
represent the lowest or best rate being charged by Lender to any customer and
such rate is set by Lender based upon various factors including Lender’s costs
and desired return, general economic conditions and other factors. Any change in
such prime rate announced by Lender shall take effect at the opening of business
on the day specified in the announcement of such change.]

“Principal” shall mean the outstanding principal balance of the Loan from time
to time.

“Proceeds” the meaning set forth in Section 7.2.2.

“Prohibited Person” shall mean any Person:

(i) listed in the Annex to, or otherwise subject to the provisions of, the
Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,
and relating to Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism (the “Executive Order”);

(ii) that is owned or controlled by, or acting for or on behalf of, any person
or entity that is listed to the Annex to, or is otherwise subject to the
provisions of, the Executive Order;

(iii) with whom Lender is prohibited from dealing or otherwise engaging in any
transaction by any terrorism or money laundering law, including the Executive
Order;

(iv) who is known to Borrower to commit, threaten or conspire to commit or
support “terrorism”, as defined in the Executive Order;

(v) that is named as a “specially designated national and blocked person” on the
most current list published by the U.S. Treasury Department Office of Foreign
Assets Control at its official website, http://www.treas.gov.ofachl1sdn.pdf or
at any replacement web site or other replacement official publication of such
list;

(vi) that is named on the consolidated list of asset freeze targets by the
United Nations, the European Union and the United Kingdom (maintained by the
Asset Freezing Unit of the United Kingdom Treasury:
http://www.hm-treasury.gov.uklfinancialsanctions);

(vii) that is named on the most current lists pertaining to EU-Regulations Nos.
2580/2001 and/or 881/2002;

 

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(viii) that violates any of the criminal laws of the United States of America or
of any of the several states, or commits any act that would be a criminal
violation if committed within the jurisdiction of the United States of America
or any of the several states, relating to terrorism or the laundering of
monetary instruments, including any offense under (a) the criminal laws against
terrorism; (b) the criminal laws against money laundering, (c) the Bank Secrecy
Act, as amended, (d) the Money Laundering Control Act of 1986, as amended, or
the (e) Patriot Act; or

(ix) who is known to Borrower to be an Affiliate of or affiliated with a Person
listed above.

“Property” means, as the context requires, each Borrowing Base Property or other
Real Property owned directly or indirectly by the REIT.

“Qualified Carrier” has the meaning set forth in Section 7.1.1.

“Qualified ECP Loan Guarantor” means any Borrower or Guarantor that on the
Eligibility Date is (a) a corporation, partnership, proprietorship,
organization, trust, or other entity other than a “commodity pool” as defined in
Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets
exceeding $10,000,000 or (b) an Eligible Contract Participant that can cause
another person to qualify as an Eligible Contract Participant on the Eligibility
Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise
providing a “letter of credit or keepwell, support, or other agreement” for
purposes of Section 1a(18)(A)(v)(II) of the CEA.

“Qualified Gains” means gains from the sale of real estate provided all debt on
the asset is repaid and the asset sold is not a Borrowing Base Property.

“Quarterly Dates” means the last Business Day of March, June, September and
December in each year, the first of which shall be the first such day after the
Effective Date.

“Rate Contracts” means interest rate and currency swap agreements, cap, floor
and collar agreements, interest rate insurance, currency spot and forward
contracts and other agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates.

“Rating Agency” each of Standard & Poor’s, a division of The McGraw-Hill
Companies, Inc. (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”), and Fitch,
Inc., a division of Fitch Ratings Ltd. (“Fitch”) or any other
nationally-recognized statistical rating organization.

“Real Property” means any Asset consisting of real property.

“Recently Contributed Wu/Lighthouse Properties” means the properties identified
on Schedule III.

“Recourse” means, with reference to any obligation or liability, any direct or
indirect liability or obligation that is not Non-Recourse to the obligor
thereunder.

 

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“Register” has the meaning set forth in Section 9.1.

“REIT” has the meaning set forth in the introductory paragraph of this
Agreement.

“REIT Status” means, with respect to any Person, (a) the qualification and
taxation of such Person as a real estate investment trust under Sections 856
through 860 of the Code, and (b) the qualification and taxation of such Person
as a real estate investment trust under analogous provisions of state and local
law in each state and jurisdiction in which such Person owns property, operates
or conducts business.

“Remedial Work” has the meaning set forth in Section 4.10.2.

“Rents” shall mean all rents, rent equivalents, moneys payable as damages
(including payments by reason of the rejection of a Lease in a Bankruptcy
Proceeding) or in lieu of rent or rent equivalents, royalties (including all oil
and gas or other mineral royalties and bonuses), income, fees, receivables,
receipts, revenues, deposits (including security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
payment and consideration of whatever form or nature received by or paid to or
for the account of or benefit of Borrower, Manager or any of their agents or
employees from any and all sources arising from or attributable to any Borrowing
Base Property and the Improvements, including all receivables, customer
obligations, installment payment obligations and other obligations now existing
or hereafter arising or created out of the sale, lease, sublease, license,
concession or other grant of the right of the use and occupancy of any Borrowing
Base Property or rendering of services by Borrower, Manager or any of their
agents or employees and proceeds, if any, from business interruption or other
loss of income insurance.

“Reportable Compliance Event” has the meaning set forth in Section 3.25.

“Responsible Officer” means, with respect to any Person, the president, chief
financial officer, the senior vice president or treasurer of such Person.

“Restoration” has the meaning set forth in Section 7.4.1.

“Restricted Payment” means, with respect to any Person, any dividend or other
distribution (whether in cash, Equity Interests or other property) with respect
to any capital stock or other Equity Interest of such Person, or any payment
(whether in cash, Equity Interests or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to such Person’s
stockholders, partners or members (or the equivalent holder thereof).

“S&P” has the meaning set forth in the definition of Rating Agency.

“Sanctioned Country” has the meaning set forth in Section 3.25.

“Sanctioned Person” has the meaning set forth in Section 3.25.

 

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“Secured Indebtedness” means any Indebtedness for borrowed money of a Person
that is secured by a Lien on any Real Estate or on any Equity Interests in any
other Person owning Real Estate, provided that if such Indebtedness is
Non-Recourse the portion of such Indebtedness included in Secured Indebtedness
shall not exceed the sum of the aggregate value of the assets securing such
Indebtedness, plus the aggregate value of any improvements to such assets.

“Secured Swap Agreement” has the meaning set forth in Section 2.16.1.

“Secured Swap Obligations” means the obligations of Borrower or any of its
Affiliates under any Secured Swap Agreement.

“Security Deposit Account” shall have the meaning set forth in Section 4.28.

“Security Documents” means, collectively, the Pledge, the Mortgage and all UCC
financing statements required by this Agreement, the Pledge and/or the Mortgage
to be filed with respect to the security interests in accounts and other
property created pursuant to this Agreement, the Pledge and/or the Mortgage.

“Significant Casualty” the meaning set forth in Section 7.2.2.

“Single Tenant Asset” means either (i) improved Real Property the entirety of
which has been leased to a single tenant (or group of affiliated tenants);
(ii) improved Real Property consisting of a distribution facility; or
(iii) improved Real Property consisting of a parking facility.

“Solvency” or “Solvent” as to any Person means that such Person (a) is not
“insolvent” within the meaning of Section 101(32) of the Bankruptcy Code or
Section 271 of the Debtor and Creditor Law of the State of New York and (b) is
in compliance with the representations and warranties that are set forth in
Section 3.17 hereof determined as if such Person were a “Credit Party”
referenced therein

“Special Purpose Entity” the meaning set forth in Section 4.12.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which Lender is subject with respect to the Adjusted
LIBOR Rate, for eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of the Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or offsets
that may be available from time to time to Lender under such Regulation D or any
comparable regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

“Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of the parent in the
parent’s consolidated financial

 

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statements if such financial statements were prepared in accordance with GAAP as
of such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or, in the case of a partnership, more than 50% of the
Equity Interests are, as of such date, directly or indirectly owned, controlled
or held, or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent. Unless otherwise specified, “Subsidiary” means a
Subsidiary of the REIT.

“Swap Obligations” means the obligations of Borrower or any of its Affiliates
under any Secured Swap Agreement.

“Swingline Exposure” means, at any time, the aggregate principal amount of all
Swingline Loans outstanding at such time.

“Swingline Loan” means a loan made by Lender pursuant to Section 2.14.

“Tangible Net Worth” shall mean with respect to any Person, as of any date of
determination, such Person’s net worth, as determined in accordance with GAAP
plus accumulated depreciation and amortization (except that in determining such
net worth, Indebtedness shall include, without duplication, such Person’s pro
rata share of the Indebtedness of any unconsolidated partnership, joint venture
or Affiliate in which such Person directly or indirectly holds any interest),
minus (to the extent included when determining such Person’s net worth in
accordance with GAAP): (a) the amount of any write-up in the book value of any
assets reflected in any balance sheet resulting from revaluation thereof or any
write up in excess of the cost of such assets acquired and (b) the aggregate of
all amounts appearing on the assets side of any such balance sheet for
franchises, licenses, permits, patents, patent applications, copyrights,
trademarks, service marks, trade names, goodwill, treasury stock, experimental
or organizational expenses and other like assets which would be classified as
intangible assets under GAAP (excluding acquired intangible lease assets and
amortization in respect thereof), all determined on a consolidated basis.

“Taxable REIT Income” is defined as the amount of income that is used to
calculate the company’s income tax due pursuant to 26 USC 857.

“Taxes” all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

“Term” means the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Borrower pursuant to the Loan Documents and any Secured Swap
Agreement.

“Third Party Swap Agreement” has the meaning set forth in Section 2.16.1.

“Threshold Amount” shall mean (a) Twenty Million Dollars ($20,000,000) with
respect to any Indebtedness or obligations in respect of Hedge Termination Value
that are Non-Recourse, and (b) Five Million Dollars ($5,000,000) with respect to
any Indebtedness or obligations in respect of Hedge Termination Value that are
Recourse

 

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“Title Insurance Policy” shall the ALTA mortgagee title insurance policy in the
form acceptable to Lender issued with respect to the Property and insuring the
Lien of a Mortgage.

“Total Asset Value” means the aggregate of (1) the value of all Existing
Properties, Newly Purchased Properties and Contributed Properties determined as
follows: with respect to (A) Newly Purchased Properties and Contributed
Properties, the sum of (a) the lower of the (i) actual cost (purchase price for
Newly Purchased Properties or value attributed by GTJ for each of the
Contributed Properties) for each Property and (ii) as is Appraised Value of each
such Property as reflected on the most recently obtained Acceptable Appraisal
and (B) Existing GTJ Properties, the as is Appraised Value of each such Property
as reflected on the most recently obtained Acceptable Appraisal (which must be
dated within 6 months of closing). Commencing twelve (12) months from the
Effective Date, the Borrower shall have the right to reappraise Included
Properties from time to time by delivering updated Acceptable Appraisals (which
shall then be used for the next 12 month valuation period); (2) cash and Cash
Equivalents at quarter end, (3) vacant land valued at cost, and (4) construction
in process valued at cost.

“Toxic Mold” has the meaning set forth in Section 3.20.

“Transactions” means the execution, delivery and performance by the Credit
Parties of the Loan Documents to which they are parties, the establishment of
the credit facilities hereunder, the borrowing of Loans, the use of the proceeds
thereof or the granting of Liens on the Collateral under the Loan Documents.

“Transfer” means (i) any sale, conveyance, transfer, lease or assignment, or the
entry into any agreement to sell, convey, transfer, lease or assign, whether by
law or otherwise, of, on, in or affecting (x) all or part of the Property
(including any legal or beneficial direct or indirect interest therein), or
(y) any direct or indirect legal or beneficial interest in a Credit Party
(including any profit interest), or (ii) any Change of Control of a Credit
Party.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the
rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the Adjusted LIBOR Rate or the Base Rate.

“UCC” means the Uniform Commercial Code as in effect in the State of New York.

“Unreimbursed Amount” shall have the meaning set forth in Section 2.4.3.

“USD-LIBOR-Reference Banks” means, with respect to any Interest Period, the
rates at which deposits in U.S. Dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on the day that is two (2) London Banking
Days preceding the Reset Date for such Interest Period to prime banks in the
London interbank market for a period of one month, two months, three months or
six months, as elected by Borrower pursuant to Section 2.06, commencing on that
Reset Date and in an amount equal to the portion of the principal amount
outstanding under the Note as to which Borrower has made such election pursuant
to Section 2.06. Lender will request the principal London office of each of the
Reference Banks to provide

 

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a quotation of its rate. If at least two (2) such quotations are provided, the
rate for that Reset Date will be the arithmetic mean of the quotations.
Notwithstanding the foregoing, if fewer than two (2) quotations are provided as
requested, the rate for that Reset Date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by Lender, at approximately
11:00 a.m., New York City time, on that Reset Date for loans in U.S. Dollars to
leading European banks for a period of one month, two months or three months, as
elected by Borrower pursuant to Section 2.06, commencing on that Reset Date, and
in an amount equal to the portion of the principal amount outstanding under the
Note as to which Borrower has made such election pursuant to Section 2.06.

“Value-Based Borrowing Base Limit” shall mean fifty percent (50%) of the
Borrowing Base Asset Value of all Borrowing Base Properties.

“Variable Rate Indebtedness” means any Indebtedness for borrowed money that
bears interest at a variable rate without benefit of a Rate Contract.

“Welfare Plan” means an employee welfare benefit plan, as defined in
Section 3(1) of ERISA.

1.2 Principles of Construction. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include,” “includes” and “including” shall
be deemed to be followed by the phrase “without limitation.” The word “will”
shall be construed to have the same meaning and effect as the word “shall.”
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein,” “hereof’ and “hereunder,” and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to
any law or regulation herein shall, unless otherwise specified, refer to such
law or regulation as amended, modified or supplemented from time to time, and
(f) the words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

1.3 Accounting Terms; GAAP.

(a) GAAP. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time.

(b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the

 

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Guarantor, Borrower or Lender shall so request, the Lender, the Guarantor and
Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP; provided
that until so amended, (i) such ratio or requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the
Guarantor and Borrower shall provide to Lender financial statements and other
documents required under this Agreement or as reasonably requested hereunder
setting forth a reconciliation between calculations of such ratio or requirement
made before and after giving effect to such change in GAAP.

(c) Consolidation of Variable Interest Entities. All references herein to
consolidated financial statements of the REIT or to the determination of any
amount for the REIT on a consolidated basis or any similar reference shall, in
each case, be deemed to include each variable interest entity that the REIT is
required to consolidated pursuant to FASB ASC 810 as if such variable interest
entity were a Subsidiary as defined herein, provided further that for all
purposes in calculating consolidated covenants hereunder the REIT shall be
deemed to own one hundred percent (100%) of the Equity Interests in Borrower.

(d) Financial Standards. All financial computations required of a Person under
this Agreement shall be calculated without giving effect to any election under
Accounting Standards Codification 825-10-25 (or any other Accounting Standards
Codification or Financial Accounting Standard having a similar result or effect)
to value any Indebtedness or other liabilities of the Guarantor, Borrower or any
Subsidiary at “fair value”, as defined therein.

(e) Rounding. Any financial ratios required to be maintained by Borrower
pursuant to this Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

 

2. GENERAL LOAN TERMS

2.1 Revolving Loans. Subject to the terms and conditions set forth herein,
Lender agrees to make Loans to Borrower from time to time through the Maturity
Date in U.S. dollars in an aggregate principal amount that will not result in
the Credit Exposure exceeding the Borrowing Base then in effect. Within the
foregoing limits and subject to the terms and conditions set forth herein,
Borrower may borrow, prepay and reborrow the Loans.

2.2 Loans and Borrowings.

2.2.1 Type of Loans. Subject to Sections 2.17 and 2.18, each Borrowing shall be,
at Borrower’s election, comprised entirely of Eurodollar Loans or Base Rate
Loans as Borrower may request in accordance herewith. Lender at its option may
make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate
of Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of Borrower to repay such Loan in accordance with the
terms of this Agreement. Each Swingline Loan shall be a Base Rate Loan.

 

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2.2.2 Minimum Amounts; Limitation on Number of Borrowings. At the commencement
of each Interest Period for any Borrowing, such Borrowing shall be not less than
$1,000,000.00; provided that a Borrowing may be in an aggregate amount that is
required to finance the repayment of any Swingline Loan. Each Swingline Loan
shall be in an amount that is not less than $500,000.00. Borrowings of more than
one Type may be outstanding at the same time; provided that there shall not at
any time be more than a total of five (5) Eurodollar Borrowings outstanding.

2.2.3 Limitations on Lengths of Interest Periods. Notwithstanding any other
provision of this Agreement, Borrower shall not be entitled to request, or to
elect to convert to or continue as a Eurodollar Borrowing, any Borrowing if the
Interest Period requested therefor would end after the Maturity Date.

2.3 Requests for Borrowings.

2.3.1 Requests for Borrowings. To request a Borrowing (other than a Swingline
Borrowing, which shall be governed by the terms of Section 2.14), Borrower shall
notify Lender of such request in a written notice signed by Borrower (which
signed written notice may be delivered to Lender by (i) email to
janet.whitedepaul@capitalone.com or (ii) by facsimile transmission to
(732) 635-0994, or to any such other email addresses or facsimile numbers as
Lender may designate in a written notice to Borrower pursuant to Section 6.1
hereof) in the form of Exhibit A not later than 11:00 a.m., New York City time,
with respect to Eurodollar Loans, three (3) Business Days before the date of the
proposed Borrowing; with respect to Base Rate Loans, one (1) Business Day before
the date of the proposed Revolver Borrowing. Each written Borrowing Request
shall specify the following information:

(a) the aggregate amount of the requested Borrowing;

(b) the date of such Borrowing, which shall be a Business Day;

(c) whether the requested Borrowing shall be a Eurodollar Loan or a Base Rate
Loan; and

(d) the location and number of Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2. 5.

2.3.2 General Borrowing Requirements.

(a) Together with each Borrowing Request, a Responsible Officer of Borrower
shall deliver to Lender a duly executed Borrowing Base Certificate as of such
date.

(b) Each Eurodollar Borrowing shall be based upon an Adjusted LIBOR Rate
determined as of two (2) Business Days prior to commencement of such Interest
Period.

 

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2.4 Letters of Credit.

2.4.1 The Letter of Credit Commitment.

(a) Subject to the terms and conditions set forth herein, Lender agrees,
(1) from time to time on any Business Day during the period from the Effective
Date until the fifth (5th) Business Day prior to the Maturity Date (or, if such
day is not a Business Day, the next succeeding Business Day), to issue Letters
of Credit for the account of Borrower, and to amend or extend Letters of Credit
previously issued by it, in accordance with subsection (b) below, and (2) to
honor drawings under the Letters of Credit; provided that after giving effect to
any L/C Credit Extension with respect to any Letter of Credit, (x) the total
Credit Exposure shall not exceed the Borrowing Base then in effect, and (y) the
L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by
Borrower for the issuance or amendment of a Letter of Credit shall be deemed to
be a representation by Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding sentence.
Within the foregoing limits, and subject to the terms and conditions hereof,
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and
accordingly Borrower may, during the foregoing period, obtain Letters of Credit
to replace Letters of Credit that have expired or that have been drawn upon and
reimbursed by Borrower and terminated.

(b) Lender shall not be under any obligation to issue any Letter of Credit if:

(i) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the Lender from issuing the
Letter of Credit, or any Legal Requirements or any request or directive (whether
or not having the force of law) from any Governmental Authority with
jurisdiction over the Lender shall prohibit, or request that the Lender refrain
from, the issuance of letters of credit generally or the Letter of Credit in
particular or shall impose upon the Lender with respect to the Letter of Credit
any restriction, reserve or capital requirement (for which the Lender is not
otherwise compensated hereunder) not in effect on the Effective Date, or shall
impose upon the Lender any unreimbursed loss, cost or expense which was not
applicable on the Effective Date and which the Lender in good faith deems
material to it;

(ii) the issuance of the Letter of Credit would violate one or more policies of
the Lender applicable to letters of credit generally;

(iii) except as otherwise agreed by Lender, the Letter of Credit is in an
initial stated amount less than $100,000;

(iv) such Letter of Credit is to be denominated in a currency other than
Dollars; or

(v) such Letter of Credit would have an expiry date beyond the Letter of Credit
Expiration Date.

(c) Lender shall be under no obligation to amend any Letter of Credit if
(A) Lender would have no obligation at such time to issue the Letter of Credit
in its amended form under the terms hereof, or (B) the beneficiary of the Letter
of Credit does not accept the proposed amendment to the Letter of Credit.

 

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2.4.2 Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension
Letters of Credit.

(a) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of Borrower delivered to Lender in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer of
Borrower. Such Letter of Credit Application must be received by the Lender not
later than 11:00 a.m. at least three (3) Business Days (or such later date and
time as Lender may agree in a particular instance in its sole discretion) prior
to the proposed issuance date or date of amendment, as the case may be. In the
case of a request for an initial issuance of a Letter of Credit, such Letter of
Credit Application shall specify in form and detail reasonably satisfactory to
the Lender: (A) the proposed issuance date of the requested Letter of Credit
(which shall be a Business Day); (B) the amount thereof; (C) the expiry date
thereof; (D) the name and address of the beneficiary thereof; (E) the documents
to be presented by such beneficiary in case of any drawing thereunder; (F) the
full text of any certificate to be presented by such beneficiary in case of any
drawing thereunder; (G) the purpose and nature of the requested Letter of
Credit; and (H) such other matters as the Lender may reasonably require. In the
case of a request for an amendment of any outstanding Letter of Credit, such
Letter of Credit Application shall specify in form and detail reasonably
satisfactory to the Lender (W) the Letter of Credit to be amended; (X) the
proposed date of amendment thereof (which shall be a Business Day); (Y) the
nature of the proposed amendment; and (Z) such other matters as the Lender may
reasonably require. Additionally, Borrower shall furnish to the Lender such
other documents and information pertaining to such requested Letter of Credit
issuance or amendment, including any Issuer Documents, as the Lender may
reasonably require, which shall include all applicable documentation as would be
required to be delivered in connection with a Borrowing of a Loan in the same
amount as the requested Letter of Credit.

(b) So long as any applicable conditions contained in Section 2.20.2 shall be
satisfied, then, subject to the terms and conditions hereof, the Lender shall,
on the requested date, issue a Letter of Credit for the account of Borrower or
enter into the applicable amendment, as the case may be, in each case in
accordance with the Lender’s usual and customary business practices; provided
that Lender shall not be required to issue a Letter of Credit, if immediately
after the issuance of such Letter of Credit, the aggregate principal amount of
all outstanding Loans and Swingline Loans, together with the aggregate amount of
all L/C Obligations, would exceed the Commitment at such time or the Borrowing
Base.

(c) If Borrower so requests in any applicable Letter of Credit Application, the
Lender may, in its sole discretion, agree to issue a Letter of Credit that has
automatic extension provisions (each, an “Auto-Extension Letter of Credit”);
provided that any such Auto-Extension Letter of Credit must permit the Lender to
prevent any such extension at least once in each twelve-month period (commencing
with the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a day (the “Non-Extension Notice Date”)
in each such twelve-month period to be agreed upon at the time such Letter of
Credit is issued. Unless otherwise directed by the Lender, Borrower shall not be
required to make a specific request to the Lender for any such extension. The
Lender shall not permit any such extension if the Lender has determined that it
would not be permitted, or would have no obligation, at such time to issue such
Letter of Credit in its revised form (as extended) under the terms hereof.

(d) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the Lender shall also deliver to Borrower a true and complete copy of
such Letter of Credit or amendment.

 

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2.4.3 Drawings and Reimbursements. Upon receipt from the beneficiary of any
Letter of Credit of any notice of a drawing under such Letter of Credit, the
Lender shall notify Borrower thereof. Not later than 3:00 p.m. on the first
Business Day following the date Borrower receives notice of any payment by the
Lender under a Letter of Credit (each such date, an “Honor Date”), Borrower
shall reimburse the Lender in an amount equal to the amount of such drawing. If
Borrower fails to so reimburse the Lender by such time, the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), Borrower shall be deemed to
have requested a Loan to be disbursed on the Honor Date in an amount equal to
the Unreimbursed Amount, without regard to the minimum and multiples specified
in Section 2.4.2 for the principal amount of Loans, but subject to the amount of
the unutilized portion of the Commitment. Any notice given by Lender pursuant to
this Section 2.4.3 may be given by telephone if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.

2.4.4 Obligations Absolute. The obligation of Borrower to reimburse the Lender
for each drawing under each Letter of Credit and to repay each L/C Borrowing
shall be absolute, unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following:

(a) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;

(b) the existence of any claim, counterclaim, setoff, defense or other right
that the Guarantor, Borrower or any Subsidiary may have at any time against any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), the Lender or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;

(c) any draft, demand, certificate or other document presented under such Letter
of Credit proving to be forged or fraudulent, or proving to be invalid or
insufficient in any material respect, or any statement therein being untrue or
inaccurate in any material respect; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under such Letter
of Credit;

(d) any payment by the Lender under such Letter of Credit against presentation
of a draft or certificate that does not strictly comply with the terms of such
Letter of Credit; provided that the payment by the Lender does not constitute
gross negligence or willful misconduct of the Lender or its agents or employees;
or any payment made by the Lender under such Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the
benefit of creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any applicable Insolvency Proceedings;
or

(e) any consequence arising from causes beyond the control of Lender.

 

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Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with Borrower’s instructions or other irregularity, Borrower shall
immediately notify the Lender. Borrower shall be conclusively deemed to have
waived any such claim against the Lender and its correspondents unless such
notice is given as aforesaid.

2.4.5 Letter of Credit Fees. Borrower shall pay to Lender a Letter of Credit fee
(the “Letter of Credit Fee”) for each Letter of Credit equal to (i) the
Applicable Margin for Eurodollar Loans, as determined by, the REIT’s
Consolidated Leverage Ratio at the time of determination and in the amount set
forth opposite the indicated Consolidated Leverage Ratio in the grid set forth
on Schedule V, times (ii) the daily amount available to be drawn under such
Letter of Credit. For purposes of computing the daily amount available to be
drawn under any Letter of Credit, the amount of such Letter of Credit shall be
determined in accordance with Section 2.4.8. Letter of Credit Fees shall be due
and payable quarterly in arrears commencing on the first Quarterly Date to occur
after the Effective Date; provided that all such fees shall be payable on the
date on which the Commitments terminate and any such fees accruing after the
date on which the Commitments terminate shall be payable on demand.
Notwithstanding anything to the contrary contained herein, while any Event of
Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

2.4.6 Documentary and Processing Charges Payable to Lender. Borrower shall pay
directly to the Lender for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs and charges, of
the Lender relating to Letters of Credit as from time to time in effect. Such
customary fees and standard costs and charges are due and payable on demand and
are nonrefundable.

2.4.7 Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control subject to the terms of the International Standby Practices 1998, and
any subsequent official revision thereof or the Uniform Customs and Practice for
Documentary Credits (2007 Revision), International Chamber of Commerce
Publication No. 600, and any subsequent official revision.

2.4.8 Computation of Daily Amount. Unless otherwise specified herein, the amount
of a Letter of Credit at any time shall be deemed to be the stated amount of
such Letter of Credit in effect at such time; provided, however, that with
respect to any Letter of Credit that, by its terms or the terms of any Issuer
Document related thereto, provides for one or more automatic increases in the
stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all
such increases, whether or not such maximum stated amount is in effect at such
time.

2.4.9 Cash Collateral for Letters of Credit.

(a) Certain Credit Support Events. If as of the expiration or termination of the
Commitment, any L/C Obligations for any reason remain outstanding, or if the
Borrower shall be required to provide Cash Collateral pursuant to Section 8.2.2,
Borrower shall immediately Cash Collateralize all L/C Obligations in an amount
equal to 105% thereof. Borrower shall also Cash Collateralize the L/C
Obligations to the extent required pursuant to Section 2.9.3.

 

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(b) Grant of Security Interest. Borrower hereby grants to (and subjects to the
control of) Lender, and agrees to maintain, a first priority security interest
in all Cash Collateral provided pursuant to Section 2.4.9(a), deposit accounts
and all balances therein, and all other property so provided as collateral
pursuant hereto, and in all proceeds of the foregoing, all as security for the
obligations to which such Cash Collateral may be applied pursuant to clause
(c) below. If at any time Lender determines that Cash Collateral is subject to
any right or claim of any Person other than Lender as herein provided, or that
the total amount of such Cash Collateral is less than the amount required,
Borrower will, promptly upon demand by Lender, pay or provide to Lender
additional Cash Collateral in an amount sufficient to eliminate such deficiency.
All Cash Collateral (other than credit support not constituting funds subject to
deposit) shall be maintained in blocked, non-interest bearing deposit accounts
at Lender. Borrower shall pay on demand therefor from time to time all customary
account opening, activity and other administrative fees and charges in
connection with the maintenance and disbursement of Cash Collateral.

(c) Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided by Borrower hereunder in respect of Letters
of Credit or other L/C Obligations shall be held and applied to the satisfaction
of the specific L/C Obligations and other obligations for which the Cash
Collateral was so provided, prior to any other application of such property as
may be provided for herein, except as provided in Section 2.9.3. If any amount
remains on deposit as Cash Collateral after all Letters of Credit have either
been fully drawn or expired, when the Unreimbursed Amount and all L/C
Obligations equal zero, the remaining amount of the Cash Collateral shall be
applied to the other Obligations, in the order for payments or recoveries upon
the Loans, as provided in this Agreement, or if no Obligations (other than
contingent indemnification obligations) are outstanding, to the Borrower.

2.5 Funding of Borrowings. Provided that the conditions to the advance of the
applicable Borrowing set forth herein are satisfied, Lender will make such Loans
available to Borrower by either promptly crediting the amounts so received, in
like funds, to an account of Borrower maintained with Lender and designated by
Borrower in the applicable Borrowing Request or, upon the request by Borrower in
the applicable Borrowing Request, disbursing such amounts as designated by
Borrower in the applicable Borrowing Request, on the proposed date of such
Borrowing.

2.6 Interest Elections.

2.6.1 Elections by Borrower for Borrowings. Each Borrowing initially shall be of
the Interest Period specified in the applicable Borrowing Request. Thereafter,
Borrower may elect to convert such Borrowing to a Borrowing of a different
Interest Period or to continue such Borrowing as a Borrowing of the same
Interest Period, as provided in this Section. Borrower may elect different
options with respect to different portions of the affected Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.

 

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2.6.2 Notice of Elections. To make an election pursuant to this Section,
Borrower shall notify Lender of such election in a written notice signed by
Borrower (which signed written notice may be delivered via facsimile or email
transmission to the numbers and/or email addresses set forth in Section 2.3.1)
by the time that a Borrowing Request would be required under Section 2.3.1 if
Borrower were requesting a Borrowing to be made on the effective date of such
election.

2.6.3 Information in Interest Election Requests. Each telephonic and written
Interest Election Request shall specify the following information in compliance
with Section 2.2:

(a) the Borrowing to which such Interest Election Request applies and, if
different options are being elected with respect to different portions thereof,
the portions thereof to be allocated to each resulting Borrowing (in which case
the information to be specified pursuant to clause (iii) of this paragraph shall
be specified for each resulting Borrowing);

(b) the Interest Period therefore after giving effect to such election; and

(c) the effective date of the election made pursuant to such Interest Election
Request, which shall be a Business Day.

2.6.4 Failure to Elect; Events of Default. If Borrower fails to deliver a timely
Interest Election Request with respect to a Eurodollar Borrowing prior to the
end of the Interest Period applicable thereto, then, unless Borrower has advised
Lender at least three (3) Business Days prior to the end of the applicable
Interest Period that such Borrowing will be repaid as provided herein, at the
end of such Interest Period such Borrowing shall be continued as a one (1) month
Eurodollar Borrowing based upon an Adjusted LIBOR Rate determined as of two
(2) Business Days prior to the commencement of such new Interest Period.
Notwithstanding any contrary provision hereof, if an Event of Default has
occurred and is continuing and Lender so notifies Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing by Borrower may be
continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to a Base Rate Borrowing at the end of the Interest
Period applicable thereto.

2.7 Termination and Conversion of the Commitments.

2.7.1 Voluntary Termination or Conversion. Borrower may, at any time terminate
all or any portion of the Commitments. Any such termination and/or conversion
shall be irrevocable and permanent. Notwithstanding the foregoing, Borrower may
not reduce the Commitment below $25,000,000.00 unless Borrower is terminating
the Commitment in full.

2.7.2 Notice of Voluntary Termination or Conversion. Borrower shall notify
Lender of any election to terminate or convert the Commitments or Loans under
Section 2.7.1 at least three (3) Business Days prior to the effective date of
such termination or reduction, specifying the amount of such election and the
effective date thereof. Each notice delivered by Borrower pursuant to this
Section shall be irrevocable provided that a notice of termination of the
Commitments delivered by Borrower may state that such notice is conditioned upon
the effectiveness of other credit facilities or the receipt of proceeds from a
sale of a Real Property, in which case such notice may be revoked by Borrower
within ninety (90) days of the delivery of such notice (by notice from Borrower
to Lender on or prior to the specified effective date) if such condition is not
satisfied.

 

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2.8 Repayment of Loans; Evidence of Debt.

2.8.1 Repayment. Borrower hereby unconditionally promises to pay to (i) the
Lender the outstanding principal amount of the Loans on the Maturity Date and
(ii) to the Lender the then unpaid principal amount of each Swingline Advance in
accordance with the time periods set forth in Section 2.14.1; provided that on
each date that any Borrowing is made, the Borrower shall repay all Swingline
Loans then outstanding.

2.8.2 Manner of Payment. Prior to any repayment of any Borrowings hereunder,
Borrower shall select the Borrowing or Borrowings to be paid and shall notify
Lender of such selection in writing signed by Borrower (which signed written
notice may be delivered via facsimile or email transmission to the numbers
and/or email addresses set forth in Section 2.3.1) not later than 11:00 a.m.,
New York City time, three (3) Business Days before the scheduled date of such
repayment in the case of a Eurodollar Borrowing and one (1) Business Day before
the scheduled date of such repayment in the case of a Base Rate Borrowing;
provided that each repayment of Borrowings shall be applied to repay any
outstanding Base Rate Borrowings of Borrower before any other Borrowings of
Borrower. If Borrower fails to make a timely selection of the Borrowing or
Borrowings to be repaid or prepaid, such payment shall be applied, first, to pay
any outstanding Base Rate Borrowings of Borrower and, second, to other
Borrowings of Borrower in the order of the remaining duration of their
respective Interest Periods (the Borrowing with the shortest remaining Interest
Period to be repaid first). Each payment of a Borrowing shall be applied first
to repay any Swingline Loan, as applicable, and second, to repay any outstanding
Loans (other than any Swingline Loan) without reduction of the Commitment.
Whenever any payment due hereunder shall be stated to be due on a day that is
not a Business Day, such payment shall be made on the first Business Day
thereafter. All such payments shall be made irrespective of, and without any
deduction, set-off or counterclaim whatsoever and are payable without relief
from valuation and appraisement laws and with all costs and charges incurred in
the collection or enforcement thereof, including attorneys’ fees and court
costs. All payments (other than the initial funding of the Loan) by Lender shall
be made to not later than 11:00 a.m. New York City time on the day such payment
is due, by deposit to such account as Lender may designate by written notice to
Borrower.

2.8.3 Taxes. Any and all payments by Borrower hereunder and under the other Loan
Documents or any Secured Swap Agreement shall be made free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on Lender’s income, and franchise taxes imposed on
Lender by the law or regulation of any Governmental Authority (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to in this Section 2.8.3 as “Applicable
Taxes”). If Borrower shall be required by law to deduct any Applicable Taxes
from or in respect of any sum payable hereunder to Lender, the following shall
apply: (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.8.3), Lender receives an amount equal to the
sum it would have received had no such deductions been made, (ii) Borrower shall
make such

 

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deductions and (iii) Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
Payments pursuant to this Section 2.8.3 shall be made within ten (10) days after
the date Lender makes written demand therefor.

2.9 Prepayment of Loans.

2.9.1 Optional Prepayments. Subject to the payment of any amounts required by
Section 2.12 hereof, Borrower shall have the right at any time and from time to
time to prepay any Borrowing in whole or in part without fees or penalty,
subject to the requirements of this Section; provided that Borrower shall notify
Lender in writing signed by Borrower of any optional prepayment hereunder (which
signed written notice may be delivered via facsimile or email transmission to
the numbers and/or email addresses set forth in Section 2.3.1) (i) in the case
of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, three (3) Business Days before the date of prepayment or (ii) in the
case of prepayment of a Base Rate Borrowing, not later than 11:00 a.m., New York
City time, one (1) Business Day before the date of prepayment. Each such notice
shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid and whether the
prepayment is to be applied to prepay outstanding Loans or an outstanding
Swingline Loan; provided that, if a notice of prepayment is given in connection
with a conditional notice of termination of the Commitments as contemplated by
Section 2.7 or is otherwise conditioned upon the effectiveness of other credit
facilities or the receipt of proceeds from a sale of a Real Property, then such
notice of prepayment may be revoked if such notice of termination is revoked (in
the case of a notice of termination of Commitments, in accordance with
Section 2.7). Each partial prepayment of any Borrowing shall be in an amount
that would be permitted in the case of a Borrowing of the same Type as provided
in Section 2.2, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied to repay
(i) all outstanding Loans (other than Swingline Loans) ratably, or (ii) any
Swingline Loans, as applicable. Prepayments shall be accompanied by (A) accrued
interest to the extent required by Section 2.11 and (B) any payments due
pursuant to Section 2.12, and shall be made in the manner specified in
Section 2.8.2.

2.9.2 Mandatory Prepayments.

(a) If, on any day (a “Prepayment Trigger Date”), the Credit Exposure exceed the
Borrowing Base (including as a consequence of an Exclusion Event or a reduction
in the total Commitment), then Borrower shall prepay Loans or, if required
below, Cash Collateralize Letters of Credit in the amount of such excess.
Amounts to be applied pursuant to this paragraph to the partial prepayment of
Loans or to Cash Collateralize Letters of Credit shall be applied, first, to
repay any Swingline Loan, second, to reduce outstanding Loans (other than any
Swingline Loan) (with no reduction of the Commitment), and third, to Cash
Collateralize Letters of Credit, as applicable.

(b) Borrower shall pay all Loans and Cash Collateralize all Letters of Credit
immediately upon the occurrence of any of the following events:

(i) the Maturity Date; or

(ii) the acceleration of the Loans upon an Event of Default as provided in
Article VIII.

 

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Each such mandatory prepayment pursuant to clause (b)(ii) shall be applied,
first, to repay any Swingline Loan, second, to reduce outstanding Loans (other
than any Swingline Loan) without reducing the Commitment, and third, to Cash
Collateralize Letters of Credit.

Prepayments pursuant to this Section 2.9.2 shall be accompanied by (i) accrued
interest to the extent required by this Section 2.9 or Section 2.11 and (ii) any
payments due pursuant to Section 2.12, and shall be made in the manner specified
in Section 2.8.2.

2.9.3 Application of Cash Collateral. Lender shall have the right, but not the
obligation, at any time after the acceleration of the Loans upon an Event of
Default as provided in Article VIII, with the consent of the Lender, to apply
all sums used to Cash Collateralize Letters of Credit pursuant to this Agreement
towards the repayment of the Loans, in such order and in such manner as Lender
shall elect in its sole and absolute discretion, so long as such repayment is
applied, first, to repay any Swingline Loans, and second, to repay any
outstanding Loans (other than any Swingline Loan).

2.10 Fees.

2.10.1 Unused Commitment Fee. On each Quarterly Date from and after June 30,
2014 and on the Maturity Date, Borrower agrees to pay to Lender, in arrears, an
unused commitment fee, which shall be equal to the following:

(a) the product of:

(i) the unused amount of the Commitment (excluding amounts drawn for these
purposes and any amounts drawn as Swingline Loans) for each day during the
calendar quarter in which such Quarterly Date or Maturity Date falls and

(ii) a rate per annum, for each such day, of (i) 0.25% if such unused amounts of
the Commitment are less than fifty (50%) of the total Commitment amount or
(ii) 0.35% if such unused amounts of the Commitment are equal to or in excess of
fifty percent (50%) of the total Commitment amount.

All unused commitment fees shall begin to accrue on the Effective Date and shall
be computed on the basis of a year of 360 days and shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).

2.10.2 Payment of Fees. All fees payable hereunder shall be paid on the dates
due, in immediately available funds, to Lender. Fees paid shall not be
refundable under any circumstances.

2.11 Interest.

2.11.1 Base Rate Loans. The Loans comprising each Base Rate Borrowing shall bear
interest at the Base Rate plus the Applicable Margin as determined by,
Borrower’s Consolidated Leverage Ratio at the time of determination and in the
amount set forth opposite the indicated Consolidated Leverage Ratio in the grid
set forth on Schedule V.

 

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2.11.2 Eurodollar Loans. The Loans comprising each Eurodollar Borrowing shall
bear interest at the Adjusted LIBOR Rate for the Interest Period in effect for
such Borrowing plus the Applicable Margin as determined by, Borrower’s
Consolidated Leverage Ratio at the time of determination and in the amount set
forth opposite the indicated Consolidated Leverage Ratio in the grid set forth
on Schedule V.

2.11.3 Default Interest. Notwithstanding the foregoing, at any time during the
continuance of an Event of Default, all amounts payable hereunder and under the
Loan Documents shall bear interest, after as well as before judgment, (i) in
respect to overdue Obligations other than Letter of Credit fees at a rate per
annum equal to the interest rate applicable to each such amount pursuant to this
Agreement plus two percent (2.0%) per annum, (ii) in respect of overdue Letter
of Credit Fees, the rate otherwise applicable thereto plus two percent
(2.0%) per annum (each such sum being the applicable “Default Rate”), or
(iii) the maximum interest rate permissible by applicable Legal Requirements if
the applicable Default Rate is greater than such interest rate.

2.11.4 Payment of Interest. Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and upon termination of the
Commitment; provided that (i) interest accrued pursuant to paragraph (c) of this
Section shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan, accrued interest on the principal amount repaid or
prepaid shall be payable on the date of such repayment or prepayment and
(iii) in the event of any conversion of any Eurodollar Borrowing prior to the
end of the current Interest Period therefor, accrued interest on such Borrowing
shall be payable on the effective date of such conversion.

2.11.5 Computation. All interest hereunder shall be computed on the basis of a
year of 360 days, and in each case shall be payable for the actual number of
days elapsed (including the first day but excluding the last day). The
applicable Base Rate, LIBOR Rate or Adjusted LIBOR Rate shall be determined by
Lender, and such determination shall be conclusive absent manifest error.

2.11.6 Restatement of Consolidated Leverage Ratio. If, as a result of any
restatement of or other adjustment to the financial statements of the REIT or
for any other reason, the REIT, Borrower, or Lender determine that (i) the
Consolidated Leverage Ratio as reported as of the most recent calendar quarter
for which reporting has been provided by the REIT or Borrower pursuant to
Section 4.1 hereof was inaccurate at any time in respects that would have
required a higher Applicable Margin to be paid, then Borrower shall be obligated
to pay to Lender, within three (3) Business Days after demand by Lender (or,
after the commencement of an Insolvency Proceeding with respect to any Credit
Party, automatically and without further action by Lender), an amount equal to
the excess of the amount of interest and fees that should have been paid for
such period over the amount of interest and fees actually paid for such period
or (ii) the Consolidated Leverage Ratio as reported as of the most recent
calendar quarter for which reporting has been provided by the REIT or Borrower
pursuant to Section 4.1 hereof was inaccurate at any time in respects that would
have required a lower Applicable

 

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Margin to be paid, then Borrower shall be entitled to a credit against any
payments subsequently due to Lender under this Agreement in an amount equal to
the difference between the amount of interest and fees that were actually paid
for such period and the amount of interest and fees that should have been paid
for such period. This paragraph shall not limit the rights of Lender under this
Agreement. Borrower’s obligations under this paragraph shall survive the
termination of the Commitments and the repayment of all Obligations hereunder.

2.12 Break Funding Payments. In the event of (a) the payment of any principal of
any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of
any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto, or (c) the failure to borrow, convert or prepay any Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
notice may be revoked under Section 2.9.1 or is revoked in accordance herewith),
then, in any such event, Borrower shall compensate Lender for the actual,
out-of-pocket loss, cost and expense attributable to such event. In the case of
a Eurodollar Loan, such loss, cost or expense to Lender shall be deemed to
include an amount determined by Lender to be the excess, if any, of (i) the
amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the LIBOR Rate that would have been applicable
to such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which Lender would bid
were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the Eurodollar market. A
certificate of Lender setting forth any amount or amounts that Lender is
entitled to receive pursuant to this Section shall be delivered to Borrower and
shall be conclusive absent manifest error. Borrower shall pay Lender the amount
shown as due on any such certificate within thirty (30) days after receipt
thereof.

2.13 Use of Proceeds. The OP and the REIT shall use the proceeds of the Loans
solely for (a) to fund property-level working capital expenditures, (b) to fund
future acquisitions of Real Property and related assets and contract deposits
due in connection therewith (to the extent not permitted hereunder), (c) to fund
any closing costs, fees and expenses due in connection with this Agreement
including, without limitation, amounts due under Section 4.31.1(c); (d) for
other legal purposes in furtherance of the foregoing and (e) for general
corporate purposes of the REIT (including, without limitation, redemption of
issued and outstanding shares and redemption of , all in accordance with, and
subject to the limitations and restrictions contained in, Organizational
Documents of the Credit Parties.

2.14 Swingline Loans.

2.14.1 Agreement to Make Swingline Loans. Subject to the terms and conditions
set forth herein, the Lender agrees to make Swingline Loans to Borrower from
time to time, in an aggregate principal amount at any time outstanding that will
not result in (i) the aggregate principal amount of outstanding Swingline Loans
exceeding $5,000,000 or (ii) the Credit Exposure exceeding the total Commitment;
provided that the Lender shall not be required to make a Swingline Loan to
refinance an outstanding Swingline Loan. Swingline Loans shall not be
outstanding for more than ten (10) days during any calendar month. Within the
foregoing limits and subject to the terms and conditions set forth herein,
Borrower may borrow, prepay and reborrow Swingline Loans. Each Swingline Loan
shall be a Base Rate Loan.

 

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2.14.2 Notice of Swingline Loans by Borrower. To request a Swingline Loan,
Borrower shall notify Lender of such request in writing, not later than 12:00
noon, New York City time, on the day of a proposed Swingline Loan. Each such
notice shall be irrevocable and shall specify the requested date (which shall be
a Business Day) and amount of the requested Swingline Loan. Subject to the terms
and conditions set forth herein, the Lender agrees to make each Swingline Loan
available to Borrower either by means of a credit to the general deposit account
of Borrower with the Lender or, at the request of Borrower, by disbursing the
proceeds of the Swingline Loan to the Borrower, (or, in the case of a Swingline
Loan made to finance the reimbursement of an L/C Borrowing as provided in
Section 2.4.3, by remittance to the Lender) in either case on the requested date
of such Swingline Loan by 3:00 p.m. New York City time.

2.14.3 Repayment of Swingline Loans. Borrower agrees to repay each Swingline
Loan within 5 Business Days after the date such Swingline Loan was made;
provided, that the proceeds of a Swingline Loan may not be used to pay a
Swingline Loan. Notwithstanding the foregoing, Borrower shall repay the entire
outstanding principal amount of, and all accrued but unpaid interest on, the
Swingline Loans on the Maturity Date (or such earlier date as Lender and
Borrower may agree in writing). In lieu of demanding repayment of any
outstanding Swingline Loan from Borrower, Lender may, on behalf of Borrower
(which hereby irrevocably directs Lender to act on its behalf), make a Borrowing
of Loans that are Base Rate Loans in an amount equal to the principal balance of
such Swingline Loan.

2.15 Extension of Maturity Date.

2.15.1 Not less than sixty (60) days and no earlier than one hundred eighty
(180) days prior to the original Maturity Date, Borrower may request in writing
that Lender extend the Maturity Date (if not previously terminated) to April 8,
2017 (the end of such period and such date being the “Extended Maturity Date”).

2.15.2 Lender agrees that the Maturity Date of the Loans shall be extended
following a request from Borrower pursuant to Section 2.15.1 above subject to
satisfaction of the following terms and conditions:

(a) no Default or Event of Default shall have occurred and be continuing on the
date of such extension and after giving effect thereto;

(b) the ratio of the outstanding balance of the Borrowing Base Debt to Borrowing
Base Asset Value is no more than fifty percent (50%);

(c) the Debt Service Coverage Ratio is no less than 1.50 to 1.00;

(d) the Debt Yield is no less than twelve percent (12%);

(e) in connection with each extension of the original Maturity Date pursuant to
clause (a) or (b) above, Borrower shall, on the original Maturity Date, pay to
Lender an extension fee equal to 0.25% of the Commitment;

 

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(f) Each Credit Party shall deliver to Lender a Certificate executed on behalf
of such Credit Party (with respect to the Solvency of any such Credit Party both
before and after giving effect to such extension) and a certificate of each
Credit Party dated as of the original Maturity Date, signed by a Responsible
Officer (i) certifying and attaching the resolutions adopted by such Person
approving or consenting to such extension and updated financial projections for
such Credit Party through the Extended Maturity Date, and (ii) certifying that,
before and after giving effect to such extension, (A) the representations and
warranties contained in this Agreement and the other Loan Documents are true and
correct in all material respects on and as of such date, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they are true and correct as of the date of such extension,
provided, that any representation or warranty which is qualified by materiality
or “material adverse effect” or similar language shall be true and correct in
all respects, and (B) no Default or Event of Default exists; and all of the
certifications contained in each of the foregoing certificates shall be true and
correct; and

(g) Borrower shall have paid any costs or expenses incurred by Lender with
respect to such extension and the documents to be delivered in connection
therewith.

Notwithstanding the foregoing, the Borrower shall have the option to, prior to
the original Maturity Date hereunder, to make a principal payment in an amount
such that after giving effect to such reduction, Borrower would be in compliance
with the foregoing conditions.

2.15.3 Late Payment Charge. Unless waived by Lender in writing, if any Principal
(other than any Principal due on the Maturity Date), interest or other sum due
under any Loan Document is not paid by Borrower on the date on which it is due,
Borrower shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the maximum amount permitted by applicable
Legal Requirements (the “Late Payment Charge”), in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment. Such
amount shall be secured by the Loan Documents.

2.16 Swap Agreements.

2.16.1 Borrower shall be permitted to hedge the floating interest expense of the
Loan for of the Loan by (i) maintaining one or more swap agreements (as defined
in 11 U.S.C. § 101 )with the Lender or its Affiliate (a “Secured Swap
Agreement”), or (ii) one or more rate cap or “swap agreements” (as defined in 11
U.S.C. §101) with another financial institution approved by Lender in writing (a
“Third Party Swap Agreement”), upon terms and subject to such conditions as
shall be acceptable to Lender (or if such transactions are pursuant to a Third
Party Swap Agreement, all upon terms and subject to such conditions as shall be
approved by the Lender in writing).

2.16.2 All of Borrower’s obligations under any Secured Swap Agreement shall be
secured by the lien of the Mortgages and the other Loan Documents on a pari
passu basis with the Loan and other sums evidenced or secured by the Loan
Documents. Borrower’s interest in any Secured Swap Agreement or Third Party Swap
Agreement shall be assigned to Lender pursuant to documentation satisfactory to
Lender in form and substance, and, in the case of any

 

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Third Party Swap Agreement, the counterparty to such Third Party Swap Agreement
must have executed and delivered to Lender an acknowledgment of such assignment,
which acknowledgment includes such counterparty’s agreement to (a) pay directly
into the Deposit Account all sums payable by such counterparty pursuant to the
Third Party Swap Agreement and (b) provide Lender with the ability to cure any
Borrower defaults under such Third Party Swap Agreement and to maintain such
Third Party Swap Agreement in full force and effect after the occurrence of any
Borrower default or other termination event thereunder caused by Borrower, and
shall otherwise be satisfactory to Lender in form and substance.

2.16.3 Borrower shall promptly execute and deliver to Lender such confirmations
and agreements as may be requested by Lender in connection with any Secured Swap
Agreement.

2.16.4 Subject to the express obligations of Lender or any Affiliate thereof
with respect to any Secured Swap Agreement, Borrower agrees that Lender shall
not have any obligation, duty or responsibility to Borrower or any other Person
by reason of, or in connection with, any Secured Swap Agreement or Third Party
Swap Agreement (including any duty to provide or arrange any Secured Swap
Agreement or Third Party Swap Agreement, to consent to any mortgage or pledge of
the Property or any portion thereof as security for Borrower’s performance of
its obligations under any Third Party Swap Agreement, or to provide any credit
or financial support for the obligations of Borrower or any other Person
thereunder or with respect thereto). No Secured Swap Agreement or Third Party
Swap Agreement shall alter, impair, restrict, limit or modify in any respect the
obligation of Borrower to pay interest on the Loan as and when the same becomes
due and payable in accordance with the provisions of the Loan Documents.

2.16.5 All payments made by the counterparty to any Third Party Swap Agreement
entered into with any financial institution other than Lender, and approved by
Lender in writing, shall be deposited into one of the Accounts.

2.16.6 Any Secured Swap Agreements are independent agreements governed by the
written provisions thereof, which shall remain in full force and effect
unaffected by any repayment, prepayment, acceleration, reduction, increase or
change in the terms of the Loan, except as otherwise expressly provided in such
Secured Swap Agreement, and any payoff statement from Lender relating to the
Loan shall not apply to such Secured Swap Agreement except as otherwise
expressly provided in such payoff statement.

2.16.7 Notwithstanding anything to the contrary contained herein, (i) no Secured
Swap Obligations shall be paid (including, without limitation, through the
exercise of rights of setoff or the realization upon any collateral pledged to
Lender) with amounts received from any Non-Qualifying Party under its Guaranty
(including sums received as a result of the exercise of remedies with respect to
such Guaranty) or from the proceeds of any Non-Qualifying Party’s collateral if
such Secured Swap Obligations would constitute Excluded Swap Obligations as to
such Non-Qualifying Party; provided, however, that to the extent possible, and
not inconsistent with applicable law, appropriate adjustments shall be made with
respect to payments and/or the proceeds of collateral from Borrower and/or
Guarantors, if they are Eligible Contract Participants with respect to such
Secured Swap Obligations, to preserve the allocation to

 

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Borrower’s obligations otherwise set forth herein, and (ii) none of the
collateral pledged by Borrower or Guarantor shall secure any Excluded Swap
Obligations with respect to Borrower or Guarantor.

2.17 Increased Costs.

(a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended by, Lender;

(ii) impose on Lender any other condition affecting this Agreement or the Loan
or participation therein;

(iii) subject Lender to any taxes on its loans, loan principal, letters of
credit, commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto; or

(iv) impose on Lender or the Loan interbank market any other condition, cost or
expense affecting this Agreement or the Loan.

and the result of any of the foregoing shall be to increase the cost to Lender
of making or maintaining any Loan (or of maintaining its obligation to make any
Loan) or to reduce the amount of any sum received or receivable by Lender
hereunder (whether of principal, interest or any other amount), then the
Borrower will pay to Lender such additional amount or amounts as will compensate
Lender for such additional costs incurred or reduction suffered.

(b) If Lender reasonably determines that any Change in Law regarding capital or
liquidity requirements has or would have the effect of reducing the rate of
return on Lender’s capital or on the capital of Lender’s holding company, if
any, as a consequence of this Agreement or the Loan to a level below that which
Lender or Lender’s holding company could have achieved but for such Change in
Law (taking into consideration Lender’s policies and the policies of Lender’s
holding company with respect to capital adequacy), then from time to time the
Borrower will pay to Lender such additional amount or amounts as will compensate
Lender or Lender’s holding company for any such reduction suffered.

(c) A certificate of Lender setting forth the amount or amounts necessary to
compensate Lender or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay Lender the
amount shown as due on any such certificate within ten (10) days after receipt
thereof.

(d) Failure or delay on the part of Lender to demand compensation pursuant to
this Section shall not constitute a waiver of Lender’s right to demand such
compensation; provided that Borrower shall not be required to compensate Lender
pursuant to this Section for any increased costs or reductions suffered more
than 270 days prior to the date Lender notifies Borrower of the Change in Law
giving rise to such increased costs or reductions and of Lender’s

 

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intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the 270
day period referred to above shall be extended to include the period of
retroactive effect thereof).

2.18 Deposit Unavailable. In the event, and on each occasion, that (a) Lender
shall have reasonably determined that dollar deposits in the principal amounts
of the Loan are not generally available to Lender in the London interbank
market, for such periods and amounts then outstanding hereunder or that
reasonable means do not exist for ascertaining the LIBOR Rate, or (b) Lender
determines that the rate at which such dollar deposits are being offered will
not adequately and fairly reflect the cost to Lender of maintaining the Loan at
LIBOR during such Interest Period, Lender shall, as soon as practicable
thereafter, give written notice of such determination to Borrower. In the event
of such determination, until the circumstances giving rise to such notice no
longer exist, the Loan shall bear interest at the Base Rate.

2.19 Illegality. If on or after the date of this Agreement, the adoption of any
applicable Legal Requirements, rule or regulation, or any change in any
applicable Legal Requirements, rule or regulation, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Lender (or its LIBOR lending office) with any request
or directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for
Lender (or its LIBOR lending office) to maintain the Loan to Borrower, Lender
shall designate a different LIBOR lending office if such designation will make
it possible for Lender to maintain the Loan and will not, in the reasonable
judgment of Lender, be otherwise disadvantageous to Lender. If Lender shall
determine that it may not lawfully continue to maintain the Loan at LIBOR to
maturity and shall so specify same in a written notice to Borrower’, the Loan
shall bear interest at the Base Rate.

2.20 Closing Conditions/Credit Event.

2.20.1 Effective Date. The obligations of the Lender to make the initial advance
of any Loan hereunder shall not become effective until the date (the “Closing
Date”) on which (i) Lender shall have received each of the following documents
and (ii) each of the other conditions listed below is satisfied, the
satisfaction of such conditions to be satisfactory to Lender in form and
substance:

(a) Agreement. From each party hereto either (i) a counterpart of this Agreement
signed on behalf of such party or (ii) written evidence satisfactory to Lender
(which may include either an electronic transmission of a .pdf of a signed
signature page to this Agreement or a telecopy transmission of a signed
signature page to this Agreement) that such party has signed a counterpart of
this Agreement.

(b) Notes. The Note duly completed and executed by Borrower for Lender.

(c) Opinion of Counsel to Borrower. A favorable written opinion (addressed to
Lender and dated the Effective Date) of counsel for the Credit Parties, covering
such matters relating to the Credit Parties, the Transactions and this Agreement
as Lender shall reasonably request (and each of the Credit Parties hereby
instructs such counsel to deliver such opinion to the Lender).

 

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(d) Organizational Documents. Such documents and certificates as Lender or its
counsel may reasonably request relating to the organization, existence and good
standing of the Credit Parties, the authorization of the Transactions, and any
other matters relevant hereto, all in form and substance reasonably satisfactory
to Lender, including the Organizational Documents of such Persons, as amended,
modified or supplemented through the Effective Date, certified to be true,
correct and complete by a Responsible Officer of Borrower and Guarantor,
respectively, as of the Effective Date.

(e) Security Documents. Each of the Security Documents, duly executed and
delivered by each Credit Party that is a party thereto. In addition, Borrower
shall have taken such other action (including delivering to Lender, for filing,
appropriately completed and duly executed copies of Uniform Commercial Code
financing statements) as Lender shall have reasonably requested in order to
perfect the security interests created pursuant to the Security Documents other
than the Mortgage.

(f) Financial Information. Lender shall have received all available financial
information with respect to the Credit Parties reasonably requested by it.

(g) Consents. Copies of all consents, licenses and approvals, if any, required
in connection with the execution, delivery and performance by the Credit
Parties, and the validity and enforceability, of the Loan Documents, or in
connection with any of the Transactions contemplated thereby, and such consents,
licenses and approvals shall be in full force and effect in all material
respects.

(h) UCC Searches. Satisfactory reports of UCC (collectively, the “UCC
Searches”), tax lien, judgment and litigation searches conducted by a search
firm reasonably acceptable to Lender with respect to the Collateral and the
Credit Parties, in each of the locations reasonably requested by Lender.

(i) Borrowing Base Properties. Such materials and information with respect to
the initial Borrowing Base Properties as Lender shall reasonably require,
including title updates and copies of Borrower’s existing environmental reports,
engineering reports in Borrower’s possession, custody or reasonable control, and
Appraisals, and such other materials and information as would be required in
connection with the addition of a property to the Borrowing Base pursuant to
Article X.

(j) Other Documents. Such other documents as Lender may reasonably request.

The obligation of Lender to make its initial extension of credit hereunder is
also subject to the payment by the Credit Parties of such fees, expenses and
other consideration as the Credit Parties shall have agreed to pay to any Lender
in connection herewith, including all fees required pursuant to the Fee Letter
and the reasonable and documented fees and expenses of Riemer & Braunstein LLP,
counsel to Lender, in connection with the negotiation, preparation, execution
and delivery of this Agreement and the other Loan Documents and the extensions
of credit hereunder (to the extent that statements for such fees and expenses
have been delivered to the Credit Parties).

 

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Lender shall notify the Credit Parties of the Effective Date, and such notice
shall be conclusive and binding.

2.20.2 General Conditions. The obligation of Lender to make a Loan or to issue
or extend any Letter of Credit on the occasion of any Borrowing (including,
without limitation, any Borrowing that occurs upon the Effective Date) is
subject to the satisfaction of the following conditions:

(a) receipt by Lender of a Borrowing Request and Borrowing Base Certificate
pursuant to Section 2.3.1;

(b) immediately after such Borrowing or issuance the Credit Exposure will not
exceed the Borrowing Base;

(c) the representations and warranties of Borrower contained in this Agreement
and the representations and warranties of Borrower and Guarantor in the other
Loan Documents shall be true and correct in all material respects on and as of
the date of such Borrowing or issuance both before and after giving effect to
the making of such Loans, except to the extent that any representation or
warranty relates to an earlier date, in which case such representation or
warranty shall be true and correct as of such earlier date;

(d) at the time of and immediately after giving effect to such Borrowing or
issuance, no Default shall have occurred and be continuing; and

(e) receipt by Lender of a completed Borrowing Base Certificate dated the date
that the applicable request for Borrowing or issuance of a Letter of Credit is
given pursuant to Section 2.3.1 which shall be true and correct as of the date
of such applicable Borrowing or issuance.

Each Borrowing shall be deemed to constitute a representation and warranty by
each Credit Party on the date thereof as to the matters specified in the
preceding sentence.

 

3. REPRESENTATIONS AND WARRANTIES

Each Guarantor and Borrower represents and warrants to (and, where applicable,
agrees with) Lender as of the date hereof and as of the date of each Borrowing
that:

3.1 Organization; Special Purpose. Each Credit Party is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, has all requisite corporate, partnership or limited liability
company, as the case may be, power and authority to own its property and assets
and to carry on its business as now conducted and is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required. Each Borrower is a Special Purpose Entity. All of the outstanding
Equity Interests in each Borrower have been validly issued, and are fully paid
and non-assessable and are owned by the OP free and clear of all Liens other
than the Liens arising under the Pledge Agreement.

 

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The corporate capital and ownership structure of the Credit Parties and their
respective Subsidiaries (as of the most recent update of such schedule) is as
described in Schedule IV. The REIT has no Subsidiaries except as disclosed in
Schedule IV. The REIT currently has REIT Status and has maintained REIT Status
on a continuous basis since its initial election to be taxed as a real estate
investment trust for U.S. federal income tax purposes. Borrower is not an
association taxable as a corporation under the Code.

3.2 Proceedings; Enforceability. Each Credit Party has taken all necessary
action to authorize the execution, delivery and performance of the Loan
Documents. The Loan Documents have been duly executed and delivered by the
Credit Parties and constitute legal, valid and binding obligations of each
Credit Party enforceable against such Credit Party in accordance with their
respective terms, subject to applicable bankruptcy, insolvency and similar laws
affecting rights of creditors generally, and general principles of equity. The
Loan Documents are not subject to, and no Credit Party has asserted, any right
of rescission, set-off, counterclaim or defense, including the defense of usury.
No exercise of any of the terms of the Loan Documents, or any right thereunder,
will render any Loan Document unenforceable.

3.3 No Conflicts. The Transactions (a) do not require any consent or approval
of, registration or filing with, or any other action by, any Governmental
Authority, except for (i) such as have been obtained or made and are in full
force and effect and (ii) filings and recordings in respect of the Liens created
pursuant to the Security Documents, (b) will not violate any applicable Legal
Requirements or regulation or the Organizational Documents of any Credit Party
or any order of any Governmental Authority, (c) will not violate or result in a
default under any Organizational Document, material indenture, agreement or
other instrument binding upon any Credit Party or any of their Assets, or give
rise to a right thereunder to require any payment to be made by any such Person,
and (d) except for the Liens created pursuant to the Security Documents, will
not result in the creation or imposition of any Lien (other than, in connection
with Liens on Real Property, any Permitted Encumbrances) on any asset of any
Credit Party.

3.4 Litigation. There are no actions, suits or other proceedings at law or in
equity by or before any Governmental Authority now pending or threatened against
or affecting Borrower, Guarantor, the Manager or the Borrowing Base Properties,
which, if adversely determined, might materially adversely affect the condition
(financial or otherwise) or business of Borrower (including the ability of
Borrower to carry out its obligations under the Loan Documents), Guarantor,
Manager or the use, value, condition or ownership of the Borrowing Base
Properties.

3.5 Agreements. No Credit Party is a party to any agreement or instrument or
subject to any restriction which might adversely affect Borrower or the
Borrowing Base Properties, or Borrower’s business, properties, operations or
condition, financial or otherwise. Borrower is not in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Permitted Encumbrance or any other
agreement or instrument to which it is a party or by which it or the Borrowing
Base Properties are bound.

3.6 Title. Each applicable Borrower has good record and marketable title in fee
simple to, or valid leasehold interests pursuant to an Approved Ground Lease in,
all of the

 

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Borrowing Base Properties owned by it and all other real property necessary in
the ordinary conduct of its business, free and clear of all Liens except the
Permitted Encumbrances. To the extent a Borrowing Base Property is leased by a
Borrower pursuant to an Approved Ground Lease, (i) such lease is in full force
and effect and remains unmodified except as disclosed to the Lender and as is
permitted under this Agreement; (ii) no rights in favor of the applicable
Borrower lessee have been waived, canceled or surrendered; (iii) all rental and
other charges due and payable thereunder have been paid in full (except to the
extent such payment is not yet overdue or are subject to dispute in good faith);
(iv) no Borrower or other Consolidated Entity is in default under or has
received any notice of default with respect to such Approved Ground Lease;
(v) no lessor under such a ground lease is in default thereunder; (vi) a true
and correct copy of such ground lease (together with any amendments,
modifications, restatements or supplements thereof), and of the current address
for the lessor to which all notices and payments under such lease are to be
addressed, has been delivered to the Lender; (vii) no material rights in favor
of the applicable Borrower lessee have been waived, canceled or surrendered;
(viii) no Borrower or other Consolidated Entity is in default under or has
received any notice of default with respect to such Approved Ground Lease;
(ix) to such Borrower’s knowledge, there exists no adverse claims as to such
Borrower’s title or right to possession of the leasehold premises referenced
therein; (x) such Borrower lessee has delivered to the lessor thereunder notice
of the encumbrance of its interest in favor of Lender pursuant to the applicable
Mortgage; and (xi) if such Approved Ground Lease is a sub-lease, each of the
representations and warranties contained in clauses (i) through (x) above are
true and correct both as to such Approved Ground Lease and as to each superior
lease to such sublease (as if each reference therein to “such lease” or “ground
lease” were to mean and refer to such superior lease, and as if each reference
therein to the lessee (or Borrower as lessee) or lessor were to mean and refer
to the lessee and lessor, respectively, under each such superior lease). All
transfer taxes, deed stamps, intangible taxes or other amounts in the nature of
transfer taxes required to be paid by Borrower or any other Person under
applicable Legal Requirements in connection with the transfer of the Borrowing
Base Property to Borrower have been paid. The Mortgage when properly recorded in
the appropriate records, together with any UCC Financing Statements required to
be filed in connection therewith, will create (i) a valid, perfected first
priority lien on the Borrower’s interest in each Borrowing Base Property and
(ii) valid and perfected first priority security interests in and to, and
perfected collateral assignments of, all personalty (including the Leases), all
in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances. The Permitted Encumbrances do not materially
adversely affect the value, operation or use of any Borrowing Base Property, or
Borrower’s ability to repay the Loan. No Condemnation or other proceeding has
been commenced or, to Borrower’s best knowledge, is contemplated with respect to
all or part of any Borrowing Base Property or for the relocation of roadways
providing access to each Borrowing Base Property. There are no claims for
payment for work, labor or materials affecting the any Borrowing Base Property
which are or may become a Lien prior to, or of equal priority with, the Liens
created by the Loan Documents. There are no outstanding options to purchase or
rights of first refusal affecting all or any portion of any Borrowing Base
Property. The survey for each Borrowing Base Property which has been delivered
to Lender does not fail to reflect any material matter affecting each Borrowing
Base Property or the title thereto. All of the Improvements included in
determining the appraised value of the Borrowing Base Properties lie wholly
within the boundaries and building restriction lines of the applicable Borrowing
Base Property, and no improvement on an adjoining property encroaches upon any
Borrowing Base

 

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Property, and no easement or other encumbrance upon any Borrowing Base Property
encroaches upon any of the Improvements, except those insured against by the
Title Insurance Policy. Each parcel comprising each Borrowing Base Property is a
separate tax lot and is not a portion of any other tax lot that is not a part of
the Property. There are no pending or proposed special or other assessments for
public improvements or otherwise affecting any Borrowing Base Property, or any
contemplated improvements to any Borrowing Base Property that may result in such
special or other assessments.

Each Credit Party has good title to all its real and personal property material
to its business, except for any defects that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. Each
Credit Party owns, or is licensed to use, all trademarks, trade names,
copyrights, patents and other intellectual property material to its business,
and the use thereof by such Credit Party does not infringe upon the rights of
any other Person, except for any defects of title or infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

3.7 No Bankruptcy Filing. No Credit Party is contemplating either the filing of
a petition by it under any state or federal bankruptcy or insolvency law or the
liquidation of all or a major portion of its property (a “Bankruptcy
Proceeding”), and no Credit Party has any knowledge of any Person contemplating
the filing of any such petition against any Credit Party. In addition, neither
Borrower nor any principal nor Affiliate of Borrower has been a party to, or the
subject of a Bankruptcy Proceeding for the past ten years.

3.8 Full and Accurate Disclosure. No statement of fact made by any Credit Party
in any Loan Documents contains any untrue statement of a material fact or omits
to state any material fact necessary to make statements contained therein not
misleading. There is no material fact presently known to any Credit Party that
has not been disclosed to Lender which adversely affects, or, as far as such
Credit Party can foresee, might adversely affect, any Borrowing Base Property or
the business, operations or condition (financial or otherwise) of any Credit
Party. All financial data, including the statements of cash flow and income and
operating expense, that have been delivered to Lender in respect of each Credit
Party and each Borrowing Base Property (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of such
Credit Party and such Borrowing Base Property as of the date of such reports,
and (iii) to the extent prepared by an independent certified public accounting
firm, have been prepared in accordance with GAAP consistently applied throughout
the periods covered, except as disclosed therein. No Credit Party has contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments,
unrealized or anticipated losses from any unfavorable commitments or any
liabilities or obligations not expressly permitted by this Agreement. Since the
date of such financial statements, there has been no materially adverse change
in the financial condition, operations or business of any Credit Party or any
Borrowing Base Property from that set forth in said financial statements.

3.9 Tax Filings. Borrower, the REIT and the Subsidiaries thereof have filed all
Federal and other material tax returns and reports required to be filed. All tax
returns filed by Borrower, the REIT and their Subsidiaries are complete and
correct in all material respects. Borrower, the REIT and their Subsidiaries have
paid all Federal and other material Taxes, assessments, fees and other
governmental charges for which they are liable (whether or not

 

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reflected on any tax returns) and have fully satisfied any Taxes, assessments,
fees, and other governmental charges levied or imposed upon them or their income
or assets or otherwise due and payable, except those which are being contested
in good faith by appropriate proceedings and for which adequate reserves have
been provided in accordance with GAAP and no Notice of Lien has been filed or
recorded. There is no proposed Tax assessment against Borrower, the REIT or any
Subsidiary thereof which would, if the assessment were made, have a Material
Adverse Effect or (a) material adverse effect with respect to the financial
condition or the operations of any Borrowing Base Property, (b) material adverse
effect on the Borrowing Base Asset Value of any Borrowing Base Property, or
(c) material adverse effect on the ownership of any Borrowing Base Property. In
addition, Borrower, the REIT and the Subsidiaries thereof have no primary,
secondary or other liability for Taxes of any kind arising with respect to any
individual, trust, corporation, partnership or other entity (other than
Borrower, the REIT, and the Subsidiaries) as to which Borrower, the REIT or any
Subsidiary thereof is directly or indirectly liable for Taxes of any kind
incurred by such individual or entity either as a transferee, or pursuant to
Code section 1.1502-6, or pursuant to any other Legal Requirement. Neither the
REIT, nor Borrower nor any Subsidiary thereof is (nor has it ever been) a party
to any tax sharing agreement. As of the Effective Date, each Credit Party’s true
and correct U.S. taxpayer identification number is set forth on Schedule IV.

3.10 ERISA.

3.10.1 No Consolidated Entity has any employees as of the Effective Date.

3.10.2 No Consolidated Entity is or will be an “employee benefit plan,” as
defined in Section 3(3) of ERISA, (ii) none of the assets of any Credit Party
constitutes or will constitute “plan assets” of one or more such plans within
the meaning of the Plan Asset Regulation, (iii) no Consolidated Entity is or
will be a “governmental plan” within the meaning of Section 3(32) of ERISA, and
(iv) transactions by or with any Consolidated Entity are not and will not be
subject to state statutes regulating investment of, and fiduciary obligations
with respect to, governmental plans. As of the Effective Date, no Borrower, nor
any member of the Controlled Group maintains, sponsors or contributes to a
“defined benefit plan” (within the meaning of Section 3(35) of ERISA) or a
“multiemployer pension plan” (within the meaning of Section 3(37)(A) of ERISA).

3.10.3 Neither the Transactions nor the use of the Commitment will constitute a
nonexempt prohibited transaction (as such term is defined in Section 4975 of the
Code or Section 406 of ERISA) that could subject any Secured Party to any Tax or
penalty on prohibited transactions imposed under Section 4975 of the Code or
Section 502(i) of ERISA or any similar state law.

3.11 Compliance. Each Borrower and Borrowing Base Property and the use thereof
comply in all material respects with all applicable Legal Requirements
(including with respect to parking and applicable zoning and land use laws,
regulations and ordinances). No Borrower is in default nor aware of any pending
or actual violation of any order, writ, injunction, decree or demand of any
Governmental Authority, the violation of which might materially adversely affect
the condition (financial or otherwise) or business of any Borrower. In the event
that all or any part of the Improvements are destroyed or damaged, said
Improvements can be legally

 

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reconstructed to their condition prior to such damage or destruction, and
thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits. No legal proceedings are pending or, to the
knowledge of Borrower, threatened with respect to the zoning of any Borrowing
Base Property. Neither the zoning nor any other right to construct, use or
operate the Borrowing Base Property is in any way dependent upon or related to
any property other than the Borrowing Base Property. All certifications,
permits, licenses and approvals, including certificates of completion and
occupancy permits required for the legal use, occupancy and operation of each
Borrowing Base Property (collectively, the “Licenses”), have been obtained and
are in full force and effect. The use being made of each Borrowing Base Property
is in conformity with the certificate of occupancy issued for such Borrowing
Base Property and all other restrictions, covenants and conditions affecting
such Borrowing Base Property.

3.12 Contracts. There are no service, maintenance or repair contracts affecting
any Borrowing Base Property that are not terminable on one month’s notice or
less without cause and without penalty or premium, unless approved by Lender in
writing. All service, maintenance or repair contracts affecting any Borrowing
Base Property have been entered into at arms-length in the ordinary course of
the applicable Borrower’s business and provide for the payment of fees in
amounts and upon terms comparable to existing market rates.

3.13 Federal Reserve Regulations; Investment Company Act. No part of the
proceeds of the Loan will be used for the purpose of purchasing or acquiring any
“margin stock” within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System or for any other purpose that would be inconsistent
with such Regulation U or any other regulation of such Board of Governors, or
for any purpose prohibited by Legal Requirements or any Loan Document. Borrower
is not (i) an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended;
(ii) a “holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of either a “holding company” or a “subsidiary company” within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or
(iii) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

3.14 Easements; Utilities and Public Access. All easements, cross easements,
licenses, air rights and rights-of-way or other similar property interests
(collectively, “Easements”), if any, necessary for the full utilization of the
Improvements for their intended purposes have been obtained, and are in full
force and effect without default thereunder. The Property has rights of access
to public ways and is served by water, sewer, sanitary sewer and storm drain
facilities adequate to service it for its intended uses. All public utilities
necessary or convenient to the full use and enjoyment of each Borrowing Base
Property are located in the public right-of-way abutting such Borrowing Base
Property, and all such utilities are connected so as to serve each Borrowing
Base Property without passing over other property absent a valid easement. All
roads necessary for the use of each Borrowing Base Property for its current
purpose have been completed and dedicated to public use and accepted by all
Governmental Authorities.

3.15 Physical Condition. Except as set forth in the Property Condition Reports
obtained by Lender in connection with this Agreement, each Borrowing Base
Property, including

 

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all Improvements, parking facilities, systems, Equipment and landscaping, are in
good condition, order and repair in all material respects; there exists no
structural or other material defect or damages to any Borrowing Base Property,
whether latent or otherwise. No Borrower has received notice from any insurance
company or bonding company of any defect or inadequacy in any Borrowing Base
Property, or any part thereof, which would adversely affect its insurability or
cause the imposition of extraordinary premiums or charges thereon or any
termination of any policy of insurance or bond. No portion of any Borrowing Base
Property is located in an area as identified by the Federal Emergency Management
Agency as an area having special flood hazards, unless otherwise disclosed in
writing to Lender. The Improvements have suffered no material casualty or damage
which has not been fully repaired and the cost thereof fully paid.

3.16 Borrowing Base Properties. Each Real Property listed on Schedule I fully
qualifies as a Borrowing Base Property. With respect to each Borrowing Base
Property (including each Real Property which shall be added as a Borrowing Base
Property in accordance with the terms hereof, whether upon the Effective Date or
pursuant to Article X:

(a) Other than Permitted Encumbrances, there are no claims for payment for work,
labor or materials affecting any Borrowing Base Property which are or may become
a Lien prior to, or of equal priority with, the Liens created by the Loan
Documents.

(b) Each Borrowing Base Property is being, and will continue to be, used
exclusively for one or more of the uses permitted pursuant to
Section 10.1.2(iii) and in accordance with such Section 10.1.2(iii), and other
appurtenant and related uses;

(c) All material certifications, permits, licenses and approvals, including
without limitation, certificates of completion and occupancy permits, required
for the legal use, occupancy and operation of each Borrowing Base Property have
been obtained and are in full force and effect. The Borrower shall (or cause the
applicable Subsidiary to) keep and maintain all material certifications,
permits, licenses and approvals, in full force and effect. The use being made of
each Borrowing Base Property is in material conformity with any applicable
certificate of occupancy issued for such Borrowing Base Property.

(d) (i) As of the Closing Date, and except as disclosed in any estoppel
certificate delivered to the Lender, the rent rolls delivered pursuant to
Section 4.1.4 are true, correct and complete in all material respects and the
Leases referred to thereon are all valid and in full force and effect; (ii) the
Leases (including modifications thereto) are in writing, and there are no oral
agreements with respect thereto; (iii) the copies of each of the Leases (if any)
delivered to the Lender are true, correct and complete in all material respects
and have not been modified (or further modified); (iv) to the knowledge of any
Credit Party, no defaults exist under any of the Leases by any party (including
any guarantor) thereto that, individually or in the aggregate with respect to
all such defaults that could reasonably be expected to have a (a) material
adverse effect with respect to the financial condition or the operations of such
Borrowing Base Property, (b) material adverse effect on the Borrowing Base Asset
Value of such Borrowing Base Property, (c) material adverse effect on the
ownership of such Borrowing Base Property, or that would involve more than
$1,000,000 or take longer than three (3) months to repair or remediate, and, as
of the Effective Date, to the knowledge of any Credit Party, no material default
exists under any of the Leases; (v) no Credit Party has any knowledge of any

 

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presently effective notice of termination or notice of default given by any
tenant in writing under any other Leases that individually or in the aggregate
could reasonably be expected to have a (a) material adverse effect with respect
to the financial condition or the operations of such Borrowing Base Property,
(b) material adverse effect on the Borrowing Base Asset Value of such Borrowing
Base Property, (c) material adverse effect on the ownership of such Borrowing
Base Property, or that would involve more than $1,000,000 or take longer than
three (3) months to repair or remediate; (vi) no Credit Party has made any
presently effective assignment or pledge of any of the Leases, the rents or any
interests therein except to the Lender; (vii) no tenant or other party has an
option or right of first refusal to purchase all or any portion of any Borrowing
Base Property; (viii) no tenant has the right to terminate any Lease prior to
expiration of the stated term of such Lease (except as a result of counterparty
breach, casualty, condemnation or other customary basis of a right to
terminate); and (ix) no tenant has prepaid more than one month’s rent in advance
(except for bona fide security deposits and estimated payments of operating
expenses, Taxes and other pass-throughs paid by tenants pursuant to their Leases
not prepaid more than one month prior to the date such estimated payments are
due or prepayments of rent made in the ordinary course of business).

(e) No portion of any Borrowing Base Property is located in a flood hazard area
as designated by the Federal Emergency Management Agency or, if in a flood zone,
flood insurance (or other flood casualty protection acceptable to the Lender) is
maintained therefor in full compliance with the provisions hereof and all
applicable Legal Requirements.

(f) None of the Borrowing Base Properties have been affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that has not previously been repaired or
that, either individually or in the aggregate, could reasonably be expected to
have a (a) material adverse effect with respect to the financial condition or
the operations of such Borrowing Base Property, (b) material adverse effect on
the Borrowing Base Asset Value of such Borrowing Base Property, or (c) material
adverse effect on the ownership of such Borrowing Base Property, or that would
involve more than $1,000,000 or take longer than three (3) months to repair or
remediate.

In the event that any of the representations or warranties set forth in this
Section 3.16 are inaccurate in any material respect with respect to any
Borrowing Base Property, it shall constitute a Default only in the event that
Borrower, if required by the Lender, has not removed such Borrowing Base
Property in accordance with Section 10.3 within ninety (90) days following
delivery to the Borrower of written notice of such breach.

3.17 Fraudulent Transfer. Borrower has not entered into the Loan or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor, and
Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower’s assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower’s total probable liabilities, including subordinated,
unliquidated, disputed or contingent liabilities, including the maximum amount
of its contingent liabilities or its debts as such debts become absolute and
matured. Borrower’s assets do not and, immediately following the execution and
delivery of the Loan Documents and each advance of

 

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proceeds of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur debts and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such debts as they mature (taking into account the timing and amounts to be
payable on or in respect of obligations of Borrower).

3.18 Purchase Options. No Borrowing Base Property nor any part thereof is
subject to any purchase options or other similar rights in favor of third
parties.

3.19 Management Agreement. The Management Agreement is in full force and effect.
There is no default, breach or violation existing thereunder, and no event has
occurred (other than payments due but not yet delinquent) that, with the passage
of time or the giving of notice, or both, would constitute a default, breach or
violation thereunder, by either party thereto.

3.20 Hazardous Substances. Except as disclosed in the Environmental Report (as
defined in the Environmental Indemnity) (i) no Borrowing Base Property is in
violation of any Legal Requirement pertaining to or imposing liability or
standards of conduct concerning environmental regulation, contamination or
clean-up, including the Comprehensive Environmental Response, Compensation and
Liability Act, the Resource Conservation and Recovery Act, the Emergency
Planning and Community Right-to-Know Act of 1986, the Hazardous Substances
Transportation Act, the Solid Waste Disposal Act, the Clean Water Act, the Clean
Air Act, the Toxic Substance Control Act, the Safe Drinking Water Act, the
Occupational Safety and Health Act, any state super-lien and environmental
clean-up statutes (including with respect to Toxic Mold), any local law
requiring related permits and licenses and all amendments to and regulations in
respect of the foregoing laws (collectively, “Environmental Laws”); (ii) the
Property is not subject to any Regulatory Actions (as defined in the
Environmental Indemnity) relating to hazardous, toxic and/or dangerous
substances, toxic mold or fungus of a type that may pose a risk to human health
or the environment or would negatively impact the value of any Borrowing Base
Property (“Toxic Mold”) or any other substances or materials which are included
under or regulated by Environmental Laws (collectively, “Hazardous Substances”);
(iii) to the best of each Borrower’s knowledge, after due inquiry no prior or
current owner, tenant, subtenant, occupant or operator of any Borrowing Base
Property has engaged in any Environmental Activity (as defined in the
Environmental Indemnity) which violates any Environmental Laws; (iv) to the best
of each Borrower’s knowledge, after due inquiry, no Hazardous Substances are
present in, on or under any nearby real property which could migrate to or
otherwise affect any Borrowing Base Property; (v) to the best of each Borrower’s
knowledge, after due inquiry, no Toxic Mold is on or about any Borrowing Base
Property which requires remediation; (vi) to the best of each Borrower’s
knowledge after due inquiry, no Tanks (as defined in the Environmental
Indemnity) no underground storage tanks exist on any Borrowing Base Property and
no Borrowing Base Property has ever been used as a landfill; and (vii) there
have been no environmental or engineering investigations, studies, audits, tests
reviews or other analyses conducted by are in the possession of any Credit Party
or their respective Affiliates in relation to the Property that have not been
previously delivered to Lender; and (viii) each Borrower has delivered to Lender
a true, complete and correct copy of the Environmental Report with respect to
each Borrowing Base Property.

 

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3.21 Name; Principal Place of Business. No Borrower uses or will use any trade
name and has not done and will not do business under any name other than its
actual name set forth herein. The principal place of business of each Borrower
is its primary address for notices as set forth in Section 6.1, and no Borrower
has any other place of business.

3.22 Other Debt. There is no indebtedness with respect to any Borrowing Base
Property or any excess cash flow or any residual interest therein, whether
secured or unsecured, other than Permitted Encumbrances and Indebtedness
permitted under Section 5.4.

3.23 Insurance. Each Credit Party currently maintains all insurance that is
required to be maintained by Section 7.1.1.

3.24 Own Behalf; For Own Account. The OP confirms that it is acting on its own
behalf and for its own benefit and on behalf of the REIT and each Borrower. The
Loan has been requested by Borrower, and the proceeds of the Loan shall be
utilized by Borrower, for its own account.

3.25 Anti-Money Laundering/International Trade Law Compliance.

(a) No Covered Entity (i) is a Sanctioned Person; (ii) has any of its assets in
a Sanctioned Country or in the possession, custody or control of a Sanctioned
Person; or (iii) does business in or with, or derives any of its operating
income from investments in or transactions with, any Sanctioned Country or
Sanctioned Person in violation of any law, regulation, order or directive
enforced by any Compliance Authority.

(b) The proceeds of the Loan will not be used to fund any operations in, finance
any investments or activities in, or, make any payments to, a Sanctioned Country
or Sanctioned Person in violation of any law, regulation, order or directive
enforced by any Compliance Authority.

(c) The funds used to repay the Loan are not derived from any unlawful activity.

(d) Each Covered Entity is in compliance with, and no Covered Entity engages in
any dealings or transactions prohibited by, any laws of the United States,
including but not limited to any Anti-Terrorism Laws.

(e) Each Credit Party covenants and agrees that it shall immediately notify
Lender in writing upon the occurrence of a Reportable Compliance Event.

(f) As used herein: “Anti-Terrorism Laws” means any laws relating to terrorism,
trade sanctions programs and embargoes, import/export licensing, money
laundering, or bribery, all as amended, supplemented or replaced from time to
time; “Compliance Authority” means each and all of the (a) U.S. Treasury
Department/Office of Foreign Assets Control, (b) U.S. Treasury
Department/Financial Crimes Enforcement Network, (c) U.S. State
Department/Directorate of Defense Trade Controls, (d) U.S. Commerce
Department/Bureau of Industry and Security, (e) U.S. Internal Revenue Service,
(f) U.S. Justice Department, and (g) U.S. Securities and Exchange Commission;
“Covered Entity” means Borrower, its affiliates and

 

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subsidiaries, all guarantors, pledgors of collateral, all owners of the
foregoing (excluding the shareholders of the REIT), and all brokers or other
agents of Borrower acting in any capacity in connection with the Loan;
“Reportable Compliance Event” means that any Covered Entity becomes a Sanctioned
Person, or is indicted, arraigned, investigated or custodially detained, or
receives an inquiry from regulatory or law enforcement officials, in connection
with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or
self-discovers facts or circumstances implicating any aspect of its operations
with the actual or possible violation of any Anti-Terrorism Law; “Sanctioned
Country” means a country subject to a sanctions program maintained by any
Compliance Authority; and “Sanctioned Person” means any individual person,
group, regime, entity or thing listed or otherwise recognized as a specially
designated, prohibited, sanctioned or debarred person or entity, or subject to
any limitations or prohibitions (including but not limited to the blocking of
property or rejection of transactions), under any order or directive of any
Compliance Authority or otherwise subject to, or specially designated under, any
sanctions program maintained by any Compliance Authority.

3.26 Security Interests and Liens.

3.26.1 The Security Documents create, as security for the Obligations, valid and
enforceable, first priority security interests in and to all of the respective
Collateral, perfected in accordance with the terms of the Pledge, as to the
Pledge, and perfected as of recording, to the extent permitted in accordance
with the terms hereof, as to the Mortgages, in favor of the Lender, except as
enforceability may be limited by applicable Insolvency Proceeding, or general
principles of equity, whether such enforceability is considered in a proceeding
in equity or at law. Other than in connection with (i) any future change in such
a Credit Party’s name or the location in which Borrower is organized or
registered or (ii) with respect to the Liens of the Mortgages, recording of the
Mortgages in accordance with the terms hereof, no further recordings or filings
are or will be required in connection with the creation, perfection or
enforcement of such security interests and Liens, other than the filing of
continuation statements in accordance with applicable Legal Requirements.

3.26.2 The OP has no Subsidiaries other than those disclosed on Schedule IX, and
all of the outstanding Equity Interests in such Subsidiaries have been validly
issued, are fully paid and nonassessable and are owned by OP free and clear of
all Liens other than the Liens arising under the Pledge Agreement.

3.26.3 The OP has no equity investments in any other corporation or entity other
than the Borrower except as (i) set forth on Schedule IV, or (ii) as may
hereafter be disclosed to the Lender on a schedule attached to a Borrowing
Request, Borrowing Base Certificate or Compliance Certificate submitted to the
Lender.

3.26.4 All of the outstanding Equity Interests in each Borrower have been
validly issued, and are fully paid and nonassessable and are owned by Borrower
free and clear of all Liens other than the Liens arising under the Pledge.

3.26.5 The corporate capital and ownership structure of the REIT, the OP and
their respective Subsidiaries is as described in Schedule IV. The REIT and the
OP have no Subsidiaries except as disclosed in Schedule IV.

 

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3.26.6 No Borrower has outstanding any securities convertible into or
exchangeable for its Equity Interests nor does any such Borrower have
outstanding any rights to subscribe for or to purchase or any options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to
its Equity Interests.

All of the representations and warranties in this Article 3 and elsewhere in the
Loan Documents (i) shall survive the funding and repayment of the Loan and
(ii) shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.

 

4. COVENANTS

Until the Commitments have expired or been terminated, all Obligations shall
have been paid in full, and all L/C Obligations shall equal zero, each Guarantor
and Borrower covenants and agrees with the Secured Parties that:

4.1 Financial Statements and Other Information. Each of the REIT and Borrower
shall furnish to Lender:

4.1.1 as soon as available, but in any event within ninety (90) days after the
end of each fiscal year of the REIT (or, if earlier, within fifteen (15) days
after the filing of the same with the Securities and Exchange Commission), a
copy of the audited consolidated balance sheet of the REIT and its Subsidiaries
as of the end of such year and the related consolidated statements of
operations, stockholders’ equity (where applicable) and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the
previous year, and accompanied by the opinion of a nationally-recognized
independent public accounting firm stating that such consolidated financial
statements present fairly the financial position for the periods indicated, in
conformity with GAAP applied on a basis consistent with prior years which shall
not be subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit; provided, however,
that the obligations to deliver the financial statements described in this
Section 4.1.1 may be satisfied by furnishing to the Lender a copy of its annual
report on Form 10-K in respect of such fiscal year together with the financial
statements required to be attached thereto, provided REIT is required to file
such annual report on Form 10-K with the Securities and Exchange Commission and
such filing is actually made;

4.1.2 as soon as available, but not later than forty five (45) days after the
end of each of the first three (3) fiscal quarters of each fiscal year (or, if
earlier, within fifteen (15) days after the date required to be filed with the
SEC), a copy of the unaudited consolidated balance sheet of the REIT and its
Subsidiaries as of the end of such quarter and the related consolidated
statements of operations, stockholders’ equity (where applicable) and cash flows
for the period commencing on the first day and ending on the last day of such
quarter, and accompanied by a certificate signed by a Responsible Officer
stating that such financial statements are complete and correct and present
fairly the financial position for the periods indicated, in conformity with GAAP
for interim financial statements applied on a basis consistent with prior
quarters; provided, however, that the obligations to deliver the financial
statements described in this

 

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Section 4.1.2 may be satisfied by furnishing to the Lender a copy of its annual
report on Form 10-Q in respect of such fiscal year together with the financial
statements required to be attached thereto, provided REIT is required to file
such annual report on Form 10-Q with the Securities and Exchange Commission and
such filing is actually made;

4.1.3 (i) within sixty (60) days after the end of each fiscal quarter and
(ii) upon any Borrowing Base Addition or Borrowing Base Removal in accordance
with Section 10.3, a Borrowing Base Certificate reflecting the results from the
operations during such fiscal quarter or after giving effect to such Borrowing
Base Addition or Borrowing Base Removal, respectively;

4.1.4 concurrently with the delivery of the financial statements referred to in
Sections 4.1.1 and 4.1.2 above, a rent roll with respect to the Borrowing Base
Properties and operating statements for the trailing four (4) quarters for the
Borrowing Base Properties accompanied by a certificate signed by a Responsible
Officer certifying that the information contained therein is complete and
correct to the knowledge of Borrower;

4.1.5 concurrently with the delivery of the financial statements referred to in
Sections 4.1.1 and 4.1.2 above, a compliance certificate, substantially in the
form of Exhibit B, signed by a Responsible Officer of Borrower and of REIT
(i) stating that, to the best of such officers’ knowledge, each of the Credit
Parties, during such period, has observed or performed in all material respects
all of its covenants and other agreements, and satisfied in all material
respects every condition contained in this Agreement and the other Loan
Documents to be observed, performed or satisfied by it, and that such officers
have no knowledge of any Default or Event of Default except as specified in such
certificate; (ii) showing in detail the calculations supporting such statement
for such period in respect of the covenants in Section 5.1; and (iii) showing in
detail the calculation of the Borrowing Base for such period on an
asset-by-asset basis. Notwithstanding anything to the contrary contained herein
and without limiting the Lender’s other rights and remedies, if such certificate
is not provided on the due date therefor, Borrower shall be prohibited from any
further Borrowings and from requesting the issuance of any further Letters of
Credit under this Agreement until such certificate is provided;

4.1.6 promptly upon Lender’s written request and in any event within five
(5) Business Days after the same are available, copies of any report, proxy
statement, financial statement, periodical or special report which the REIT
files with the Securities and Exchange Commission or any successor or similar
Governmental Authority;

4.1.7 promptly after the same are received, copies of all reports which the
independent certified public accountants of Borrower or the REIT deliver to
Borrower or the REIT; and

4.1.8 such additional financial and other information as Lender may from time to
time reasonably request.

4.2 Notices of Material Events. Other than matters disclosed in writing to
Lender on or before the date hereof, each Credit Party shall promptly (and in no
event later than ten (10) days after any such Credit Party has knowledge of the
same) notify Lender of:

(a) Default; Event of Default. The occurrence of any Default or Event of
Default;

 

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(b) Litigation. The commencement of, or any material development in, any
litigation, arbitration or proceeding affecting Borrower, the REIT, Guarantor or
any Subsidiary (i) in which the amount of damages claimed is $10,000,000 or
more, (ii) which, if adversely determined, would reasonably be expected to have
a Material Adverse Effect or to have a (a) material adverse effect with respect
to the financial condition or the operations of any Borrowing Base Property,
(b) material adverse effect on the Borrowing Base Asset Value of any Borrowing
Base Property, (c) material adverse effect on the ownership of any Borrowing
Base Property, (iii) in which the relief sought is an injunction or other stay
of the performance of any Loan Document or (iv) required to be reported to the
Securities and Exchange Commission pursuant to the Exchange Act;

(c) Environmental Matters. (i) Any enforcement, cleanup, removal or other
governmental or regulatory actions instituted or threatened in writing against
any Credit Party or any of their Properties pursuant to any applicable
Environmental Laws that would be expected to result in a liability to any of
them in excess of the Remediation Threshold, and (ii) any environmental
condition of the Properties of Borrower, the REIT, or any Subsidiary that could
reasonably be anticipated to cause such Properties (or any portion thereof) to
be subject to any material restrictions on ownership, occupancy, transferability
or use under any applicable Environmental Laws;

(d) Legal Compliance. Any material written notice received from any Governmental
Authority asserting that any Borrowing Base Property is not in compliance with
any Requirements of Law; and

(e) Exclusion Events. Promptly and in any event within five (5) Business Days
after Borrower or Guarantor obtains actual knowledge of the occurrence of an
Exclusion Event, a notice setting forth the Exclusion Event.

Each notice pursuant to this section shall be accompanied by a written
statement, signed by a Responsible Officer, setting forth details of the
occurrence referred to therein and the provisions of this Agreement affected,
and stating what action Borrower or the REIT proposes to take with respect
thereto. Each notice under Section 4.2(a) shall describe with particularity the
clause or provision of this Agreement or other Loan Document that has been
breached or violated.

4.3 Existence. Each Credit Party shall (i) do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its existence,
rights, and franchises, (ii) continue to engage in the business presently
conducted by it, (iii) obtain and maintain all Licenses, and (iv) qualify to do
business and remain in good standing under the laws of each jurisdiction, in
each case as and to the extent required for the ownership, maintenance,
management and operation of the Borrowing Base Properties.

4.4 Taxes and Other Charges. Each of the Guarantor and Borrower shall, and shall
cause each Subsidiary to, pay and discharge as the same shall become due and
payable and otherwise comply with, all their respective obligations and
liabilities, including (a) all Tax

 

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liabilities, assessments and governmental charges or levies upon it or its Real
Properties, unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by the REIT, Borrower or such Person, (b) all lawful claims which, if unpaid,
would by law become a Lien upon its Real Properties (other than, in connection
with any Real Property, Permitted Exceptions), including Real Properties
constituting Collateral, (c) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness, and (d) all Contractual Obligations, provided that
no such payment need be made nor obligation observed if the failure to do so
could not reasonably be expected to have a Material Adverse Effect.

4.5 Access to Borrowing Base Properties. Borrower shall permit agents,
representatives, consultants and employees of Lender to inspect any Borrowing
Base Property or any part thereof at reasonable hours upon reasonable advance
notice.

4.6 Repairs; Maintenance and Compliance; Alterations.

4.6.1 Repairs; Maintenance and Compliance. Borrower shall at all times maintain,
preserve and protect all franchises and trade names, and Borrower shall cause
each Borrowing Base Property to be maintained in a good and safe condition and
repair and shall not remove, demolish or alter the Improvements or Equipment
(except for alterations performed in accordance with Section 4.6.2 and normal
replacement of Equipment with Equipment of equivalent value and functionality).
Borrower shall promptly comply with all Legal Requirements and immediately cure
properly any violation of a Legal Requirement. Borrower shall notify Lender in
writing within one Business Day after Borrower first receives notice of any such
non-compliance. Borrower shall promptly repair, replace or rebuild any part of
any Borrowing Base Property that becomes damaged, worn or dilapidated and shall
complete and pay for any Improvements at any time in the process of construction
or repair.

4.6.2 Alterations. Borrower may, without Lender’s consent, perform alterations
to the Improvements and Equipment which (i) do not constitute a Material
Alteration, (ii) do not adversely affect Borrower’s financial condition or the
value or Net Operating Income of any Borrowing Base Property, (iii) are in the
ordinary course of Borrower’s business, and (iv) do not materially change or
impact the use or zoning of, or access to, any Borrowing Base Property or reduce
the parking ratio thereof. Borrower shall not perform any Material Alteration
without Lender’s prior written consent, which consent shall not be unreasonably
withheld or delayed; provided, however, that Lender may, in its sole and
absolute discretion, withhold consent to any alteration the cost of which is
reasonably estimated to exceed $1,000,000 (as determined by Lender in its
reasonable discretion). Lender may, as a condition to giving its consent to a
Material Alteration, require that Borrower deliver to Lender security for
payment of the cost of such Material Alteration in an amount equal to 125% of
the cost of the Material Alteration as estimated by Lender. Upon substantial
completion of the Material Alteration, Borrower shall provide evidence
satisfactory to Lender that (i) the Material Alteration was constructed in
accordance with applicable Legal Requirements and substantially in accordance
with plans and specifications approved by Lender (which approval shall not be
unreasonably withheld or delayed), (ii) all contractors, subcontractors,
materialmen and professionals who provided work, materials or services in
connection with the Material Alteration have been paid in full and have

 

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delivered unconditional releases of lien and (iii) all material Licenses
necessary for the use, operation and occupancy of the Material Alteration (other
than those which depend on the performance of tenant improvement work) have been
issued. Borrower shall reimburse Lender upon demand for all out-of-pocket costs
and expenses (including the reasonable fees of any architect, engineer or other
professional engaged by Lender) incurred by Lender in reviewing plans and
specifications or in making any determinations necessary to implement the
provisions of this Section 4.6.2.

4.7 Performance of Other Agreements. Borrower shall observe and perform in all
material respects, each and every term to be observed or performed by it
pursuant to the terms of any agreement or instrument affecting or pertaining to
any Borrowing Base Property, including the Loan Documents.

4.8 Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender
with respect to, and permit Lender, at its option, to participate in, any
proceedings before any Governmental Authority which may in any way materially
and adversely affect the rights of Lender under any Loan Document.

4.9 Further Assurances. Each Credit Party shall, at Borrower’s sole cost and
expense, (i) execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the Debt and/or for the better and more effective
carrying out of the intents and purposes of the Loan Documents, as Lender may
reasonably require from time to time; and (ii) upon Lender’s request therefor
given from time to time after the occurrence of any Default or Event of Default
pay for (a) reports of UCC, federal tax lien, state tax lien, judgment and
pending litigation searches with respect to any Credit Party and (b) searches of
title to any Borrowing Base Property, each such search to be conducted by search
firms reasonably designated by Lender in each of the locations reasonably
designated by Lender.

4.10 Environmental Matters.

4.10.1 Hazardous Substances. So long as a Borrower owns or is in possession of
any Borrowing Base Property, Borrower shall (i) keep such Borrowing Base
Property free from Hazardous Substances (to the extent the same are in violation
of any Environmental Law(s) and in compliance with all Environmental Laws,
(ii) promptly notify Lender if Borrower shall become aware that (A) any
Hazardous Substance is on or near the such Borrowing Base Property in violation
of Environmental Laws, (B) such Borrowing Base Property is in violation of any
Environmental Laws or (C) any condition on or near such Borrowing Base Property
shall pose a threat to the health, safety or welfare of humans and (iii) remove
such Hazardous Substances and/or cure such violations and/or remove such
threats, as applicable, as required by law (or as shall be required by Lender in
the case of removal which is not required by law, but in response to the
reasonable opinion of a licensed hydrogeologist, licensed environmental engineer
or other qualified environmental consulting firm engaged by Lender (“Lender’s
Consultant”), promptly after Borrower becomes aware of same, at Borrower’s sole
expense. Nothing herein shall prevent Borrower from recovering such expenses
from any other party that may be liable for such removal or cure.

 

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4.10.2 Environmental Monitoring.

(a) Borrower shall give prompt written notice to Lender of (i) any proceeding or
inquiry by any party (including any Governmental Authority) with respect to the
presence of any Hazardous Substance on, under, from or about any Borrowing Base
Property, (ii) all claims made or threatened by any third party (including any
Governmental Authority) against Borrower or any Borrowing Base Property or any
party occupying any Borrowing Base Property relating to any loss or injury
resulting from any Hazardous Substance, and (iii) Borrower’s discovery of any
occurrence or condition on any real property adjoining or in the vicinity of any
Borrowing Base Property that could cause such Borrowing Base Property to be
subject to any investigation or cleanup pursuant to any Environmental Law. Upon
becoming aware of the presence of mold or fungus at any Borrowing Base Property,
Borrower shall (i) promptly undertake an investigation to identify the source(s)
of such mold or fungus and shall develop and implement an appropriate
remediation plan to eliminate the presence of any Toxic Mold, (ii) perform or
cause to be performed all acts reasonably necessary for the remediation of any
Toxic Mold (including taking any action necessary to clean and disinfect any
portions of the applicable Borrowing Base Property affected by Toxic Mold,
including providing any necessary moisture control systems at the applicable
Borrowing Base Property), and (iii) provide evidence reasonably satisfactory to
Lender of the foregoing. Borrower shall permit Lender to join and participate
in, as a party if it so elects, any legal or administrative proceedings or other
actions initiated with respect to the Property in connection with any
Environmental Law or Hazardous Substance, and Borrower shall pay all reasonable
attorneys’ fees and disbursements incurred by Lender in connection therewith.
Without limiting the foregoing, the Borrower shall supply the Lender with
(a) copies of the results of the “tank tightness” tests for the underground
storage tanks located on properties at 23-85 87th Street, East Elmhurst, NY and
114-15 Guy Brewer Boulevard, Jamaica, NY within sixty (60) days of the date
hereof, and (b) copies of all environmental correspondence and reports generated
during the investigation & remediation of the Borrowing Base Properties when
such correspondence and/or reports is/are provided to the New York State
Department of Environmental Conservation (NYSDEC).

(b) Upon Lender’s request and at Lender’s expense, at any time and from time to
time, Borrower shall provide Lender, without any liability on the part of
Lender, an environmental site inspection or environmental audit report, or any
update of such assessment or report of each Borrowing Base Property prepared by
a licensed hydrogeologist, licensed environmental engineer or qualified
environmental engineering firm approved by Lender in scope, form and content
reasonably satisfactory to Lender, assessing the presence or absence of
Hazardous Substances on, in or near such Borrowing Base Property and the
potential cost in connection with any Remediation (as defined in the
Environmental Indemnity); provided, however, if Lender, in its good faith
judgment determines that a Release or Violation exists, such environmental
inspection or audit, then the cost and expense of such audit or inspection shall
be paid by Borrower. Such inspections and audit may include soil borings and
ground water monitoring. If Borrower fails to provide any such inspection or
audit within 30 days after such request, Lender may order same, and subject to
the rights of tenants at any such Borrowing Base Property. Borrower hereby
grants to Lender and its employees and agents access to each Borrowing Base
Property and a license to undertake such inspection or audit.

 

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(c) If any environmental site assessment report prepared in connection with such
inspection or audit recommends that an operations and maintenance plan be
implemented for any Hazardous Substance, whether such Hazardous Substance
existed prior to the ownership of any Borrowing Base Property by Borrower, or
presently exists or is reasonably suspected of existing, Borrower shall cause
such operations and maintenance plan to be prepared and implemented at its
expense upon request of Lender, and with respect to any Toxic Mold, Borrower
shall take all action necessary to clean and disinfect any portions of the
Improvements affected by Toxic Mold in or about the Improvements, including
providing any necessary moisture control systems at the applicable Borrowing
Base Property. If any investigation, site monitoring, containment, cleanup,
removal, restoration or other work of any kind is reasonably necessary under an
applicable Environmental Law (“Remedial Work”), Borrower shall commence all such
Remedial Work within thirty (30) days after written demand by Lender and
thereafter diligently prosecute to completion all such Remedial Work within such
period of time as may be required under applicable Legal Requirements. All
Remedial Work shall be performed by licensed contractors approved in advance by
Lender and under the supervision of a consulting engineer approved by Lender.
All costs of such Remedial Work shall be paid by Borrower, including Lender’s
reasonable attorneys’ fees and disbursements incurred in connection with the
monitoring or review of such Remedial Work. If Borrower does not timely commence
and diligently prosecute to completion the Remedial Work, Lender may (but shall
not be obligated to) cause such Remedial Work to be performed at Borrower’s
expense. Notwithstanding the foregoing, Borrower shall not be required to
commence such Remedial Work within the above specified time period: (x) if
prevented from doing so by any Governmental Authority, (y) if commencing such
Remedial Work within such time period would result in Borrower or such Remedial
Work violating any Environmental Law, or (z) if Borrower, at its expense and
after prior written notice to Lender, is contesting by appropriate legal,
administrative or other proceedings, conducted in good faith and with due
diligence, the need to perform Remedial Work. Borrower shall have the right to
contest the need to perform such Remedial Work, provided that, (1) Borrower is
permitted by the applicable Environmental Laws to delay performance of the
Remedial Work pending such proceedings, (2) neither the applicable Borrowing
Base Property nor any part thereof or interest therein will be sold, forfeited
or lost if Borrower fails to promptly perform the Remedial Work being contested,
and if Borrower fails to prevail in contest, Borrower would thereafter have the
opportunity to perform such Remedial Work, (3) Lender would not, by virtue of
such permitted contest, be exposed to any risk of any civil liability for which
Borrower has not furnished additional security as provided in clause (4) below,
or to any risk of criminal liability, and neither the applicable Borrowing Base
Property nor any interest therein would be subject to the imposition of any Lien
for which Borrower has not furnished additional security as provided in clause
(4) below, as a result of the failure to perform such Remedial Work and
(4) Borrower shall have furnished to Lender additional security in respect of
the Remedial Work being contested and the loss or damage that may result from
Borrower’s failure to prevail in such contest in such amount as may be
reasonably requested by Lender but in no event less than one hundred twenty-five
percent (125%) of the cost of such Remedial Work as estimated by Lender or
Lender’s Consultant and any loss or damage that may result from Borrower’s
failure to prevail in such contest. Notwithstanding the foregoing, to the extent
any tenant under a Lease is required to perform the obligations of Borrower
under this Section 4.10.2(d), Borrower shall be deemed in compliance with this
Section 4.10.2(c) if such tenant undertakes and completes such obligations in
accordance with the applicable Lease.

(d) Borrower shall not install or permit to be installed on any Borrowing Base
Property any underground storage tank in violation of any Environmental Law.

 

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4.10.3 O & M Program. In the event any environmental report delivered to Lender
in connection with the Loan recommends the development of or continued
compliance with an operation and maintenance program for any Borrowing Base
Property (including, without limitation, with respect to the presence of
asbestos and/or lead-based paint) (“O & M Program”), Borrower shall develop (or
continue to comply with, as the case may be) such O & M Program and shall,
during the term of the Loan, including any extension or renewal thereof, comply
in all material respects with the terms and conditions of the O & M Program.
Notwithstanding the foregoing, to the extent any tenant under a Lease is
required to perform the obligations of Borrower under this Section 4.10.3,
Borrower shall be deemed in compliance with this Section 4.10.3 if such tenant
undertakes and completes such obligations in accordance with the applicable
Lease.

4.11 Title to the Property. Each Borrower will warrant and defend the title to
any Borrowing Base Property owned by such Borrower, and the validity and
priority of all Liens granted or otherwise given to Lender under the Loan
Documents, subject only to Permitted Encumbrances, against the claims of all
Persons.

4.12 Special Purpose Entity. Each Borrower shall at all times be a Special
Purpose Entity. No Borrower shall, directly or indirectly make any change,
amendment or modification to its organizational documents, or otherwise take any
action which could result in such Borrower not being a Special Purpose Entity. A
“Special Purpose Entity” shall have the meaning set forth on Schedule VI hereto.

4.13 Change in Business or Operation of Property. Borrower shall not purchase or
own any real property other than the Borrowing Base Properties and shall not
enter into any line of business other than the ownership and operation of the
Borrowing Base Properties, or make any material change in the scope or nature of
its business objectives, purposes or operations, or undertake or participate in
activities other than the continuance of its present business or terminate such
business for any reason whatsoever (other than temporary cessation in connection
with renovations to the Borrowing Base Properties).

4.14 Debt Cancellation. Borrower shall not cancel or otherwise forgive or
release any claim or debt (other than termination of Leases in accordance
herewith) owed to Borrower by any Person, except for adequate consideration and
in the ordinary course of Borrower’s business.

4.15 Affiliate Transactions. Borrower shall not enter into, or be a party to,
any transaction with an Affiliate of Borrower or any of the members of Borrower
except in the ordinary course of business and on terms which are fully disclosed
to Lender in advance and are no less favorable to Borrower or such Affiliate
than would be obtained in a comparable arm’s-length transaction with an
unrelated third party. Lender hereby consents to the GTJ Management Agreement.

4.16 Zoning. Borrower shall not initiate or consent to any zoning
reclassification of any portion of a Borrowing Base Property or seek any
variance under any existing zoning

 

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ordinance or use or permit the use of any portion of the Borrowing Base
Properties in any manner that could result in such use becoming a non-conforming
use under any zoning ordinance or any other applicable land use law, rule or
regulation, without the prior consent of Lender.

4.17 No Joint Assessment. Borrower shall not suffer, permit or initiate the
joint assessment of the Borrowing Base Properties (i) with any other real
property constituting a tax lot separate from the Borrowing Base Properties, and
(ii) with any portion of the Borrowing Base Properties which may be deemed to
constitute personal property, or any other procedure whereby the lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to the Borrowing Base Properties.

4.18 Principal Place of Business. Borrower shall not change its principal place
of business or chief executive office without first giving Lender thirty
(30) days’ prior notice.

4.19 Change of Name, Identity or Structure. Borrower shall not change its name,
identity (including its trade name or names) or Borrower’s corporate,
partnership or other structure without notifying Lender of such change in
writing at least thirty (30) days prior to the effective date of such change
and, in the case of a change in Borrower’s structure, without first obtaining
the prior written consent of Lender. Borrower shall execute and deliver to
Lender, prior to or contemporaneously with the effective date of any such
change, any financing statement or financing statement change required by Lender
to establish or maintain the validity, perfection and priority of the security
interest granted herein. At the request of Lender, Borrower shall execute a
certificate in form satisfactory to Lender listing the trade names under which
Borrower intends to operate the Borrowing Base Properties, and representing and
warranting that Borrower does business under no other trade name with respect to
the Borrowing Base Properties. The REIT shall maintain REIT Status.

4.20 Licenses. Borrower shall not Transfer any License required for the
operation of the Borrowing Base Properties.

4.21 Compliance with Restrictive Covenants, Etc. Borrower will not enter into,
modify, waive in any material respect or release any Easements, restrictive
covenants or other Permitted Encumbrances, or suffer, consent to or permit the
foregoing, without Lender’s prior written consent, which consent may be granted
or denied in Lender’s sole discretion.

4.22 ERISA.

(1) No Credit Party shall engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.

(2) (1) No Credit Party shall maintain, sponsor, contribute to or become
obligated to contribute to, or suffer or permit any ERISA Affiliate of a Credit
Party to, maintain, sponsor, contribute to or become obligated to contribute to,
any Plan or any Welfare Plan or permit the assets of a Credit Party to become
“plan assets,” whether by operation of law or under regulations promulgated
under ERISA.

 

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(3) Each Credit Party shall deliver to Lender such certifications or other
evidence from time to time throughout the Term, as requested by Lender in its
sole discretion, that (A) no Credit Party is not and does not maintain an
“employee benefit plan” as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, or a “governmental plan” within the meaning of Section 3(3) of
ERISA; (B) no Credit Party is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(C) the assets of Borrower do not constitute “plan assets” within the meaning of
29 C.F.R. Section 2510.3-101.

4.23 Liens. Without Lender’s prior written consent, Borrower shall not create,
incur, assume, permit or suffer to exist any Lien on all or any portion of a
Borrowing Base Property or any direct or indirect legal or beneficial ownership
interest in Borrower, except Liens in favor of Lender and Permitted
Encumbrances, unless such Lien is bonded (per Legal Requirements that result in
the release of such Liens as against the Property) or discharged within thirty
(30) days after Borrower first receives notice of such Lien.

4.24 Expenses. Borrower shall pay or reimburse Lender (in connection with
expenses described in clauses (iii), (vii), (ix), (x) and (xi) below, upon
receipt of notice from the applicable party for all reasonable out-of-pocket
costs and expenses (including reasonable attorneys’ fees and disbursements)
incurred by Lender in connection with the Loan, including (i) the preparation,
negotiation, execution and delivery of the Loan Documents and the consummation
of the transactions contemplated thereby and all the costs of furnishing all
opinions by counsel for Borrower; (ii) Borrower’s and Lender’s ongoing
performance under and compliance with the Loan Documents, including confirming
compliance with environmental and insurance requirements; (iii) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications of or under any Loan Document and any other
documents or matters requested by Lender; (iv) filing and recording of any Loan
Documents; (v) title insurance, surveys, inspections and appraisals required
under Section 2.20 and subsequent to the Closing Date to the extent the cost of
the same is expressly stated herein as the responsibility of Borrower; (vi) the
creation, perfection or protection of Lender’s Liens in the Property and the
Cash Management Accounts (including fees and expenses for title and lien
searches, intangibles taxes, personal property taxes, Mortgage, recording taxes,
due diligence expenses, travel expenses, accounting firm fees, costs of
appraisals, environmental reports and Lender’s Consultant, surveys and
engineering reports); (vii) enforcing or preserving any rights in response to
third party claims or the prosecuting or defending of any action or proceeding
or other litigation, in each case against, under or affecting Borrower, the Loan
Documents, the Property, or any other security given for the Loan; (viii) legal
advice with respect to the rights or responsibilities of the parties under the
Loan Documents; (ix) any unsuccessful “lender liability” suit or claim brought
against Lender; (x) any claim or suit brought against Lender arising under any
Environmental Laws; and (xi) enforcing any obligations of or collecting any
payments due from Borrower under any Loan Document or with respect to the
Property or in connection with any refinancing or restructuring of the Loan in
the nature of a “work-out”, or any insolvency or bankruptcy proceedings. Any
costs and expenses due and payable by Borrower hereunder which are not paid by
Borrower within ten (10) days after demand shall accrue interest at the Default
Rate and may be paid from any amounts in the Accounts, with notice thereof to
Borrower. The obligations and liabilities of Borrower under this Section 4.24
shall survive the Term and the exercise by Lender of any of its rights or
remedies under the Loan Documents, including the acquisition of the Property by
foreclosure or a conveyance in lieu of foreclosure.

 

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4.25 Indemnity. Borrower shall defend, indemnify and hold harmless Lender and
each of its Affiliates and their respective successors and assigns, including
the directors, officers, partners, members, shareholders, participants,
employees, professionals and agents of any of the foregoing and each other
Person, if any, who Controls Lender, its Affiliates or any of the foregoing
(each, an “Indemnified Party”), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of counsel for an Indemnified Party in
connection with the assertion of any claim, loss, demand, damages, penalties,
liabilities or any investigative, administrative or judicial proceeding
commenced or threatened, whether or not Lender shall be designated a party
thereto, court costs and costs of appeal at all appellate levels, investigation
and laboratory fees, consultant fees and litigation expenses), that may be
imposed on, incurred by, or asserted against any Indemnified Party
(collectively, the “Indemnified Liabilities”) in any manner, relating to or
arising out of or by reason of the Loan, including: (i) any breach by Borrower
of its obligations under, or any misrepresentation by Borrower Contained in, any
Loan Document; (ii) the use or intended use of the proceeds of the Loan;
(iii) any information provided by or on behalf of Borrower, or contained in any
documentation approved by Borrower; (iv) ownership of the Mortgage, the Property
or any interest therein, or receipt of any Rents; (v) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about the
Property or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (vi) any use, nonuse or condition in, on or
about the Property or on adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (vii) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Property; (viii) the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release, or threatened release of any Hazardous Substance
on, from or affecting the Property; (ix) any personal injury (including wrongful
death) or property damage (real or personal) arising out of or related to such
Hazardous Substance; (x) any lawsuit brought or threatened, settlement reached,
or government order relating to such Hazardous Substance; (xi) any violation of
the Environmental Laws which is based upon or in any way related to such
Hazardous Substance, including the costs and expenses of any Remedial Work;
(xii) any failure of the Property to comply with any Legal Requirement;
(xiii) any claim by brokers, finders or similar persons claiming to be entitled
to a commission in connection with the Loan, any Lease or other transaction
involving the Property or any part thereof, or any liability asserted against
Lender with respect thereto; and (xiv) the claims of any lessee of any portion
of the Property or any Person acting through or under any lessee or otherwise
arising under or as a consequence of any Lease; provided, however, that Borrower
shall not have any obligation to any Indemnified Party hereunder to the extent
that it is finally judicially determined that such Indemnified Liabilities arise
from the gross negligence, illegal acts, fraud or willful misconduct of such
Indemnified Party. Any amounts payable to any Indemnified Party by reason of the
application of this paragraph shall be payable on demand and shall bear interest
at the Default Rate from the date loss or damage is sustained by any Indemnified
Party until paid. The obligations and liabilities of Borrower under this
Section 4.25 shall survive the Term and the exercise by Lender of any of its
rights or remedies under the Loan Documents, including the acquisition of the
Property by foreclosure or a conveyance in lieu of foreclosure. The foregoing
indemnity shall not apply to the extent any of the Indemnified Liabilities arise
out of the act or omission of any of the Indemnified Parties.

 

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4.26 Patriot Act Compliance. (a) Each Credit Party shall comply with the Patriot
Act (as defined below) and all applicable requirements of governmental
authorities having jurisdiction over such Credit Party and the Property,
including those relating to money laundering and terrorism. Lender shall have
the right to audit each Credit Party’s compliance with the Patriot Act and all
applicable requirements of governmental authorities having jurisdiction over
Borrower and the Property, including those relating to money laundering and
terrorism. In the event that Borrower fails to comply with the Patriot Act or
any such requirements of governmental authorities, then Lender may, at its
option, cause Borrower to comply therewith and any and all reasonable costs and
expenses incurred by Lender in connection therewith shall be secured by the
Mortgage and the other Loan Documents and shall be immediately due and payable.
For purposes hereof, the term “Patriot Act” means the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT ACT) Act of 2001, as the same may be amended from time to
time, and corresponding provisions of future laws.

(b) The Patriot Act and federal regulations issued with respect thereto require
all financial institutions to obtain, verify and record certain information that
identifies individuals or business entities which open an “account” with such
financial institution. Consequently, Lender may from time-to-time request, and
Borrower shall provide to Lender, Borrower’s name, address, tax identification
number and/or such other identification information as shall be necessary for
Lender to comply with federal law. An “account” for this purpose may include,
without limitation, a deposit account, cash management service, a transaction or
asset account, a credit account, a loan or other extension of credit, and/or
other financial services product.

(c) No Credit Party nor any owner of a direct or indirect interest in any Credit
Party (a) is listed on any Government Lists, (b) is a Prohibited Person, (c) has
been previously indicted for or convicted of any felony involving a crime or
crimes of moral turpitude, or (d) is currently under investigation by any
governmental authority for alleged criminal activity.

4.27 Borrower Accounts. Each Borrower shall maintain all of its accounts
(collectively, the “Accounts”, which term shall include, without limitation, the
Mortgage Tax Reserve Account) with the Lender with automatic debit of monthly
payments due to Lender pursuant to both the Loan Documents and any Secured Swap
Agreement until the Debt has been repaid in full. Further, with respect to the
Guarantor deposit accounts, each Guarantor will endeavor to make reasonable
efforts to open and maintain a portion of such accounts at with the Lender.

4.28 Security Deposits. Borrower shall keep and hold all security deposits under
Leases in accordance with applicable Legal Requirements and in a separately
designated account under Borrower’s control at the Lender (and in the case of a
letter of credit, assigned with full power of attorney and executed sight drafts
to Lender) so that the security deposits shall not be commingled with any other
funds of Borrower. During the continuance of an Event of Default, Borrower
shall, upon Lender’s request, if permitted by applicable Legal Requirements,
turn over to Lender the security deposits (and any interest theretofore earned
thereon) under Leases, to be held by Lender in a subaccount (the “Security
Deposit Account”) subject to the terms of the Leases. Security deposits held in
the Security Deposit Account will be released by Lender upon notice from
Borrower together with such evidence as Lender may reasonably request that such

 

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security deposit is required to be returned to a tenant pursuant to the terms of
a Lease or may be applied as Rent pursuant to the rights of Borrower under the
applicable Lease. Any letter of credit or other instrument that Borrower
receives in lieu of a cash security deposit under any Lease entered into after
the date hereof shall (i) be maintained in full force and effect in the full
amount unless replaced by a cash deposit as hereinabove described and (ii) if
permitted pursuant to any Legal Requirements, name Lender as payee or mortgagee
thereunder (or at Lender’s option, be fully assignable to Lender).

4.29 Mortgage Tax Reserve Amount. Upon the determination by the Lender to record
any Mortgage as provided under Section 4.31.1(c) below, the Borrower hereby
irrevocably authorizes the Lender to advance all or any portion of the Mortgage
Tax Reserve Amount to be applied by the Lender to the payment of recording
charges, mortgage or documentary stamp taxes, title premium charges or other
charges due in connection with the recording of the Mortgages.

4.30 Grant of Security Interest; Application of Funds. As security for payment
of the Debt and the performance by Borrower of all other terms, conditions and
provisions of the Loan Documents, Borrower hereby pledges and assigns to Lender,
and grants to Lender a security interest in, all Borrower’s right, title and
interest in and to all Rents and in and to all payments to or monies held in the
Accounts. Borrower hereby grants to Lender a continuing security interest in,
and agrees to hold in trust for the benefit of Lender, all Rents in its
possession prior to the (i) payment of such Rents to Lender or (ii) deposit of
such Rents into an Account. Borrower shall not, without obtaining the prior
written consent of Lender, further pledge, assign or grant any security interest
in any Accounts, or permit any Lien to attach thereto, or any levy to be made
thereon, or any UCC Financing Statements, except those naming Lender as the
secured party, to be filed with respect thereto. This Agreement is, among other
things, intended by the parties to be a security agreement for purposes of the
UCC. Upon the occurrence and during the continuance of an Event of Default,
Lender may apply any sums in any Account (except the Security Deposit Account,
which shall be governed by the provisions of Section 4.31 above) in any order
and in any manner as Lender shall elect in Lender’s discretion without seeking
the appointment of a receiver and without adversely affecting the rights of
Lender to foreclose the Lien of the Mortgage or exercise its other rights under
the Loan Documents. Except as otherwise required by applicable law, the Accounts
shall not constitute trust funds and may be commingled with other monies held by
Lender. All interest which accrues on the funds in any Account shall accrue for
the benefit of Borrower and shall be taxable to Borrower and shall be added to
and disbursed in the same manner and under the same conditions as the principal
sum on which said interest accrued.

4.31 Collateral Matters; Liens and Security Interest.

4.31.1 To secure performance by Borrower and Guarantor of their Obligations:

(a) OP has granted to Lender an exclusive, perfected first priority security
interest and Lien in and to all of the outstanding Equity Interests now or
hereafter held by OP in each Borrower pursuant to the Pledge;

 

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(b) In connection with the replacement of any of the Borrowing Base Properties
or Borrowing Base Addition pursuant to Article 10 hereof, OP shall be required
to deliver an additional Pledge and the other Loan Documents as required by the
terms of such Article 10.

(c) Borrower has granted to Lender an exclusive, separate mortgage lien on each
of the Borrowing Base Properties pursuant to the applicable Mortgages, which
upon recordation thereof shall be first priority, perfected mortgage Liens and
which Mortgages shall be, upon the execution and delivery thereof to Lender,
effective and legally binding but such Mortgages shall not be recorded until
after a Default or Event of Default occurs, at which time Lender is hereby
irrevocably and unconditionally authorized to (i) cause each such Mortgage to be
recorded in the appropriate records, together with any UCC Financing Statements
required to be filed in connection therewith, and to take any other steps it
deems necessary or appropriate in order to perfect Lender’s first priority
mortgage lien in and to the Borrowing Base Properties and (ii) take such steps
as Lender may require to perfect collateral assignments of all personalty, all
in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances. All mortgage, recording, stamp, intangible or
other similar Taxes required to be paid by Borrower or any other Person under
applicable Legal Requirements in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any Mortgage
(all of which are Indemnified Taxes hereunder) shall be paid by Borrower
immediately when due.

(d) In connection with the addition of any property to the Borrowing Base
pursuant to Article 10 hereof (including the initial Borrowing Base Properties
as of the Effective Date), Borrower shall be required to deliver to Lender a
Mortgage as required by the terms of such Article 10, to be held by Lender on
the same terms as required by subsection (c) above hereof.

(e) From time to time upon the reasonable request of Lender, Borrower shall
promptly deliver the Mortgages, dated a then-current date, to Lender, each
re-executed by the respective Borrower and newly acknowledged, it being
expressly understood that, notwithstanding any requirement by a Governmental
Authority or pursuant to any Legal Requirement that a mortgage must be recently
acknowledged to be recorded, the Mortgages originally delivered to Lender shall
continue to grant to Lender a first priority mortgage lien in and to the
Borrowing Base Properties.

(f) Upon recordation of any Mortgage in accordance with the terms hereof,
Borrower shall deliver to Lender, a title insurance policy insuring such
Mortgage, and such co-insurance and/or re-insurance as Lender may reasonably
require. The title insurance policy insuring each Mortgage shall be in form and
substance reasonably satisfactory to Lender. Borrower shall pay for reasonable
and documented fees and expenses for Lender’s title insurance policy, title and
lien searches, intangibles taxes, personal property taxes, recording fees and
due diligence expenses.

(g) For the avoidance of doubt, the Mortgages shall not be recorded if no
Default or Event of Default has occurred and is then continuing but each
Mortgage shall, as of the date of each such Mortgage and at all times while it
is held by Lender pursuant hereto, (i)

 

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nonetheless be effective and (ii) upon recordation thereof in accordance with
the terms hereof grant to Lender a first priority mortgage lien in and to the
Borrowing Base Property described therein, which shall be subject to no
exceptions other than Permitted Encumbrances.

(h) Borrower shall deliver such security agreements, financing statements,
assignments and other Security Documents (all of which shall be deemed part of
the Security Documents), in form and substance reasonably satisfactory to
Lender, as Lender may reasonably request from time to time for the purpose of
granting to, or maintaining or perfecting in favor of, the Lender, first and
exclusive security interests in the Equity Interests of the Borrower and when
required hereunder, the Mortgages, together with other reasonable assurances as
to the enforceability and priority of the Lender’s Liens and assurances of due
recording and documentation of copies of the Security Documents, as Lender may
reasonably require to avoid material impairment of the Liens and security
interests granted or purported to be granted pursuant to this Agreement.

4.31.2 Each of Guarantor and Borrower shall cause (i) all Real Property
interests related to the Borrowing Base Properties, (ii) all personal property
(including, without limitation, any and all construction drawings, construction
plans and architectural renderings relating thereto) owned by the Borrower, to
the extent applicable and relating to any Borrowing Base Properties (other than
vehicles subject to certificates of title) and (iii) all of the Pledged
Interests to, in each case, be subject at all times to first priority,
perfected, as to the Pledge, and perfected and title insured as of recording in
accordance with the terms hereof, as to the Mortgages and, in the case of the
Real Property interest in each Borrowing Base Property (whether leased or
owned), Liens in favor of Lender at all times as required pursuant to this
Agreement and the Loan Documents, to secure the Obligations pursuant to the
terms and conditions of the Security Documents or, with respect to any such
property acquired subsequent to the Effective Date, such other additional
security documents as Lender shall request and as it shall then be entitled to
obtain hereunder and under the Loan Documents, subject in any case only to
Permitted Encumbrances;

4.31.3 With respect to any Collateral described in the foregoing Section 4.31.2
Borrower and OP shall deliver, or shall use commercially reasonable efforts to
cause any other Person to deliver, such other documentation as Lender may
reasonably request in connection with the foregoing, including, without
limitation, appropriate UCC-1 financing statements, real estate title insurance
policies, surveys, environmental reports in Borrower’s or Guarantor’s
possession, custody or control, landlord’s waivers, certified resolutions and
other organizational and authorizing documents of such Person, favorable
opinions of counsel to such Person (which shall cover, among other things, the
legality, validity, binding effect and enforceability of the documentation
referred to above and, at all times as required pursuant to this Agreement and
the Loan Documents, the perfection of the Lender’s Liens thereunder), all in
form, content and scope satisfactory to Lender;

4.31.4 Each of the Guarantors and Borrower shall indemnify and/or reimburse (as
applicable) Lender for any and all reasonable and out-of-pocket costs, expenses,
losses, claims, fees or other amounts paid or incurred by the Lender to the
extent paid or incurred in connection with the filing or recording of any
documents, agreement or instruments related to the Collateral, the protection of
any of the Collateral, its rights and interests therein or the Borrower’s or
OP’s

 

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underlying rights and interests therein or the enforcement of any of its other
rights with respect to the Collateral; provided, that the reimbursement and
indemnity obligations set forth in this clause (c) shall be in addition to and
in furtherance of all other reimbursement or indemnity obligations of the
Guarantor, the Borrower or any of their respective Subsidiaries referenced
herein or in any other Loan Document.

4.31.5 Each of the Guarantor and Borrower shall pay all Taxes, charges, filing,
registration and recording fees, excises and levies payable with respect to the
Notes or the Liens created or secured by the Loan Documents, other than Excluded
Taxes. If there shall be enacted any Law (i) affecting any Lien on any Borrowing
Base Property, or (ii) changing existing Laws of taxation of mortgages, deeds of
trust, security deeds, or debts secured by real property, or changing the manner
of collecting any such Taxes, Guarantor and Borrower shall promptly pay to
Lender, on demand, all Taxes, costs and charges for which the Lender is or may
be liable as a result thereof (other than Excluded Taxes); however, if such
payment would be prohibited by Law or would render the Loans usurious, then
instead of collecting such payment, Lender may declare all amounts owing under
the Loan Documents to be immediately due and payable.

 

5. NEGATIVE COVENANTS

Until the Commitments have expired or terminated, the principal of and interest
on each Loan and all Unreimbursed Amounts and fees payable hereunder have been
paid in full, and all L/C Obligations shall equal zero, each of the Guarantor
and Borrower covenants and agrees with the Lender that:

5.1 Financial Covenants.

5.1.1 Borrower. The REIT and Borrower shall not permit:

(a) The Credit Exposure at any time to exceed fifty percent (50%) of the
Borrowing Base Asset Values of all Borrowing Base Properties;

(b) The Debt Service Coverage Ratio for any fiscal quarter to be less than
1.50:1.00;

(c) The Debt Yield as of quarter end to be less than twelve percent (12%).

5.1.2 REIT. The REIT agrees as follows:

(a) Consolidated Leverage Ratio. The Consolidated Leverage Ratio of the REIT and
its consolidated Subsidiaries shall not exceed sixty percent (60%) at any time;
provided, however, that if, on any date, the Consolidated Leverage Ratio exceeds
sixty percent (60%), there shall be a sixty (60) day grace period to cure such
breach provided that (i) the REIT delivers written notice of the failure to
comply with such ratio within three (3) Business Days after a Responsible
Officer of the REIT obtains knowledge of such failure; (ii) at all times during
such grace period, such ratio does not exceed sixty-five percent (65%); (iii) on
the tenth (10th) Business Day following the commencement of such grace period,
and on each tenth (10th) Business Day thereafter through the end of such grace
period, the REIT shall deliver to the Lender an officer’s certificate of a
Responsible Officer that certifies as to the amount of the

 

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Consolidated Leverage Ratio as of such date, which certificate shall be
accompanied by calculations in respect thereof in such detail as may be
satisfactory to the Lender and shall be in form and substance satisfactory to
the Lender, and (iv) such grace period shall only be available a maximum of five
(5) times throughout the term of the Loans, and no more than two (2) times in
any four (4) consecutive calendar quarters. The foregoing grace period shall
immediately terminate in the event that any of the conditions in clause (i),
(ii), (iii) or (iv) is not satisfied, time being of the essence.

(b) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio of the REIT and
its consolidated Subsidiaries for the most recent fiscal quarter shall not be
less than 1.50:1.00.

(c) Tangible Net Worth. The Tangible Net Worth of OP shall not be less than the
sum of (i) $150,000,000 plus (ii) an amount equal to eighty-five percent
(85%) of Net Equity Proceeds by reason of the issuance and sale, from and after
the Effective Date, of Equity Interests of the REIT, including upon any
conversion of debt securities of the REIT, the Borrower and their respective
Subsidiaries into such Equity Interests.

(d) Recourse Indebtedness Ratio. The ratio, expressed as a percentage, of
(i) Indebtedness of either Guarantor that is Recourse (excluding the
Indebtedness under this Agreement and the Loan Documents and Indebtedness under
customary carve out guaranties) to (ii) Total Asset Value shall not exceed ten
percent (10%) as of the end of the most recently ended fiscal quarter.

(e) Secured Leverage Ratio. The ratio, expressed as a percentage, of (i) the
Secured Indebtedness of the Consolidated Group to (ii) Total Asset Value shall
not exceed sixty percent (60%) as of the end of the most recently ended fiscal
quarter.

(f) Unhedged Variable Rate Indebtedness. The ratio, expressed as a percentage,
of (i) the Indebtedness of the REIT and its consolidated Subsidiaries that is
Variable Rate Indebtedness (exclusive of the Indebtedness under this Agreement
and the Loan Documents) to (ii) Total Asset Value shall not exceed twenty-five
percent (25%) as of the end of the most recently ended fiscal quarter.

(g) Restricted Payments. The REIT shall not, directly or indirectly, and shall
not permit any member of the Consolidated Group, directly or indirectly, to pay
any Restricted Payment, except (a) the REIT may make the Restricted Payments in
respect of its Equity Interests to the extent not prohibited below in this
Section, (b) the OP, the Borrower and each direct Subsidiary of the REIT may
make Restricted Payments to the REIT in order for the REIT to make payments that
are not prohibited below in this Section, (c) the REIT may declare and make
dividend payments or other Restricted Payments payable solely in the capital
stock of the REIT so long as no Change of Control shall result therefrom,
(d) REIT, Borrower and each Subsidiary may make cash payments in lieu of the
issuance of fractional shares in connection with the exercise of warrants,
options or other securities convertible into or exchangeable for Equity
Interests of REIT, Borrower or any Subsidiary, (e) Borrower and REIT may
purchase, redeem or otherwise acquire Equity Interests issued by it solely with
the proceeds received from either (i) the Loan or (ii) the substantially
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Interests or other Equity Interests provided that such purchase, redemption or
acquisition is limited to the amount of such proceeds so received, (f) REIT may
redeem Equity Interests in the OP in accordance with the Organization Documents
of the OP, and (g) REIT or Borrower may, and Borrower may make dividends or
distributions to REIT, to allow REIT do make, any (i) cash settlement payments
and (ii) any cash interest payments, in each case in accordance with the terms
of any series of convertible Indebtedness of REIT or the Borrower and issued by
REIT or Borrower and otherwise permitted hereunder. Notwithstanding the
foregoing, the REIT may, for any given fiscal quarter or consecutive fiscal
quarters, make Restricted Payments in cash to the holders of its Equity
Interests during such fiscal quarter or quarters in an amount that would not
exceed the greater of (1) so long as no Default or Event of Default exists or
would result therefrom, the FFO Distribution Allowance for such quarter or
quarters or (2) so long as no Default or Event of Default as described in
Section 8.1(a), 8.1(i), or 8.1(j) shall exist or would result therefrom and
neither the Loans shall not become due and payable (whether upon stated maturity
or acceleration or otherwise), the amount necessary for the REIT to maintain
REIT Status.

5.1.3 Provisions relative to the Calculation of Total Asset Value. For purposes
of the calculation of Total Asset Value under this Agreement:

(a) The Appraised Value of any Borrowing Base Property the value of which is
included in the calculation of Total Asset Value shall be determined in
accordance with the other applicable provisions of this Agreement, including,
without limitation, Section 10.1.2.

(b) Borrower may elect to require the determination of Total Asset Value to be
based upon the Estimated Values of the Included Properties or the Appraised
Value of each Included Properties only once per fiscal quarter, in connection
with the delivery by Borrower to Lender of the Compliance Certificate that is
due to be delivered during such fiscal quarter, and such election shall be made
on an “all or none” basis such that, if Borrower elects to require such
determination to be based on Appraised Values, such election must be made as to
all Included Properties, and if Borrower elects to require such determination to
be based on Estimated Values, such election must be made as to all Included
Properties (provided, however, that in the event that Borrower obtains an
updated Appraisal pursuant to Section 10.1.2 Borrower shall be permitted to
require that such determination be made on the basis of such updated Appraised
Value); and provided, further, that if the Appraised Value of one or more
Included Properties cannot be calculated solely because Appraisals have been
ordered but have not yet been delivered for such Included Properties as required
hereby, the Included Property Asset Value may nonetheless be determined
according to the Estimated Value of each such affected Included Property and the
Appraised Value of all other Included Properties until such time as an Appraisal
for such affected Included Property has been obtained as provided herein.

(c) With respect to the calculation of Total Asset Value, if the REIT, Borrower
or any of their Subsidiaries have made Investments in Assets of the types
referred to in Sections 5.14.2 through 5.14.5 that have values that exceed the
portion of the Total Asset Value that Investments in Assets of those types are
permitted to have pursuant to Sections 5.14.2 through 5.14.5, then the Total
Asset Value shall be calculated without regard to the portion of the values of
those Investments that exceed the portion of the Total Asset Value that
Investments in Assets of those types are permitted to have pursuant to Sections
5.14.2 through 5.14.5.

 

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5.1.4 Provision Relative to Calculation of certain Financial Covenants. For the
purpose of calculating the Estimated Values and covenants set forth in this
Section 5.1 that contain calculations dependent upon the Adjusted Borrowing Base
Net Operating Income or Adjusted Net Operating Income of any Asset, and in
connection with any related definitions set forth in Section 1.01 that are used
in such calculations, to the extent any such covenant (or definition) references
a trailing four (4) fiscal quarters calculation methodology, but a particular
Asset that is included as part of the calculation has not been owned by the
applicable Person for such four (4) fiscal quarters, the Adjusted Borrowing Base
Net Operating Income or Adjusted Net Operating Income of the Applicable Asset
shall be annualized, based on the Adjusted Borrowing Base Net Operating Income
or Adjusted Net Operating Income, respectively, of such Asset for the applicable
quarters during its period of ownership.

5.2 Liens. Each Credit Party shall not create, incur, assume or permit to exist
any Lien or Negative Pledge (other than (i) the Lien of the Security Documents
and (ii) in connection with any Borrowing Base Property, any Permitted
Encumbrances) on (a) the Assets constituting the Borrowing Base Properties,
(b) the legal or beneficial interest in any Borrower or (c) the other Collateral
for the Loans and Obligations.

5.3 Fundamental Changes.

5.3.1 Mergers, Consolidations, Disposal of Assets, Etc. No Credit Party shall
merge or consolidate, or liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution), terminate, discontinue its business or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of its business or property, whether now
or hereafter acquired, except that, so long as no Event of Default has occurred
and is continuing or would result therefrom: (i) any Credit Party may dispose of
a Property owned by such Credit Party in the ordinary course of business and for
fair value; provided that if such Property is a Borrowing Base Property, then
Borrower shall have complied with Section 10.3; and (ii) REIT may, directly or
indirectly, merge or consolidate with any other Person so long as (A) REIT shall
be the survivor thereof; (B) REIT shall have given Lender at least 30 days’
prior written notice of such consolidation or merger; (C) REIT shall have
provided to Lender all documentation and other information that the Lender
requests in order to comply with its ongoing obligations under applicable “know
your customer” and anti-money laundering rules and regulations, including the
Patriot Act; (D) the Lender has not advised REIT that such merger or
consolidation would result in a violation of any concentration or lending limits
applicable by law or regulation applicable to Lender; (E) immediately prior
thereto, and immediately thereafter and after giving effect thereto, no Default
or Event of Default has occurred or would result therefrom; and (F) at the time
of consummation of the merger, Borrower shall have delivered to Lender a
Compliance Certificate, calculated on a pro forma basis based on information
then available to the Borrower, evidencing the continued compliance by the
Credit Parties with the terms and conditions of this Agreement and the other
Loan Documents, including without limitation, the financial covenants contained
in Section 5.1, after giving effect to such consolidation or merger (each of
clause (i) - (ii), a “Fundamental Change”). Nothing in this Section shall be
deemed to prohibit (i) subject to Section 10.3, the leasing of all or portions
of Assets in the ordinary course of business for occupancy by the tenants
thereunder, or (ii) subject to compliance with the provisions of Article 10
hereof, the sale of Assets in the ordinary course of Borrower’s business.

 

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5.3.2 Restriction on Amendments. At least twenty (20) days prior to amending (or
causing or permitting to be amended), modifying or waiving any of the provisions
of any of the Organizational Documents of any Credit Party in any material
respect, the REIT shall deliver a written notice (the “Proposed Modification
Notice”) to Lender setting forth the specific details of the proposed amendment,
modification and/or waiver (each, a “Proposed Modification”). Any Proposed
Modification which will materially and adversely affect the Lender will require
the prior written consent of Lender, which consent shall not be unreasonably
withheld, conditioned, or delayed; provided, however, that Lender’s consent in
its sole and absolute discretion shall be required for any Proposed Modification
which would materially and adversely affect the Lender, including a modification
that would adversely affect the Collateral for the Loans or repayment of any of
the Obligations. Neither Borrower nor Guarantor will change its chief executive
office or place of organization unless the applicable party shall have provided
Lender with thirty (30) days’ prior written notice of such change (but in any
event, within the period required pursuant to the UCC) and there shall have been
taken such action, reasonably satisfactory to Lender, as may be necessary to
maintain the security interest in, and the Liens upon, the Collateral granted
under the Security Documents at all times fully perfected, as to the Pledge, and
perfected as of recording in accordance with the terms hereof, as to the
Mortgages, and in full force and effect.

5.4 Indebtedness. Borrower and Guarantor shall not create, incur, assume, suffer
to exist, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness except (a) Indebtedness incurred pursuant to this
Agreement, (b) Trade Payables, and (c) as to Guarantor, other Indebtedness
provided the Guarantor shall remain in compliance with the covenants set forth
in Section 5.1 after giving effect to such Indebtedness.

5.5 Transactions with Affiliates; Joint Ventures.

5.5.1 Transactions with Affiliates. No Credit Party shall enter into any
transaction with any Affiliate of REIT or of any such Person, except (a) as
expressly permitted by this Agreement, or (b) in the ordinary course of business
and pursuant to the reasonable requirements of the business of such Person,
(c) reasonable and customary fees paid to, and indemnification arrangements
with, members of the board of directors (or similar governing body) of any of
the Credit Parties or the issuance of directors’ or nominees’ qualifying shares,
(d) compensation and indemnification arrangements for directors (or equivalent),
officers and employees of REIT, Borrower and the Subsidiaries, including
retirement, health, option and other benefit plans, bonuses, performance-based
incentive plans, and other similar forms of compensation, the granting of Equity
Interests to directors (or equivalent), officers and employees of REIT, Borrower
and the Subsidiaries in connection with the implementation of any such
arrangement, and the funding of any such arrangement, (e) Restricted Payments
permitted under Section 5.1(g), (f) Investments permitted under Section 5.14 and
(g) transactions between or among Borrower and the Subsidiaries permitted under
Section 5.3 not involving any other Affiliate; in each case, upon fair and
reasonable terms no less favorable to such Person than would obtain in a
comparable arm’s-length transaction with a Person not such an Affiliate.

5.5.2 Joint Ventures. No Borrower shall enter into any joint venture or other
co-ownership relationship for any Asset with any Person.

 

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5.6 Restrictive Agreements. No Credit Party shall directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon the ability of such Credit
Party to create, incur or permit to exist any Lien or Negative Pledge (other
than, in connection with any Real Property, any Permitted Encumbrances) upon any
of the Collateral.

5.7 Fiscal Year; Fiscal Quarters. No Credit Party shall change its fiscal year
or any of its fiscal quarters, without Lender’s prior written consent, which
consent shall not be unreasonably withheld, conditioned, or delayed.

5.8 Employees. No Credit Party shall employ or engage any employees at any time
unless such employees are engaged by a Credit Party in connection with such
Credit Party’s normal business operations or in the ordinary course of owning
and operating any Property and with the prior written consent of the Lender
(which consent shall not be unreasonably withheld or delayed).

5.9 ERISA. (a) No Credit Party shall take any action, or omit to take any
action, which would (i) cause any of such Credit Party’s Assets to be subject to
Title I of ERISA and/or Section 4975 of the Code or (ii) cause the transactions
contemplated by the Loan Documents to be a nonexempt prohibited transaction (as
such term is defined in Section 4975 of the Code or Section 406 of ERISA) that
could subject Lender, on account of any Loan or execution of the Loan Documents
hereunder, to any tax or penalty on prohibited transactions imposed under
Section 4975 of the Code or Section 502(i) of ERISA.

(b) During the term of the Loans, no Credit Party shall maintain, sponsor or
become obligated to contribute to a “defined benefit plan” (within the meaning
of Section 3(35) of ERISA) or a Multiemployer Plan.

5.10 Asset Sales. No Credit Party shall transfer, voluntarily, by operation of
law or otherwise, any Borrowing Base Property other than in compliance with the
requirements for Borrowing Base Removal set forth in Section 10.3.2. No Credit
Party shall transfer, voluntarily, by operation of law or otherwise, any Asset
other than a Borrowing Base Property during the occurrence of any Event of
Default or at any other time if such transfer would cause any Credit Party to be
in violation of any of the covenants set forth in Section 5.1; provided,
however, that the following transfers or other dispositions shall not be
prohibited: (i) transfers or dispositions with respect to Assets other than
Borrowing Base Properties during the continuance of an Event of Default in the
event that a purchase and sale agreement has been entered into for any such
Asset with a Person that is not an Affiliate of Borrower and upon arms’-length
terms and all of the sales proceeds therefrom are immediately after such sale
delivered to Lender to be applied toward repayment of the Loans and other
Obligations then due and owing, with any remaining amount to be returned to
Borrower; (ii) transfers or dispositions of obsolete or worn out property,
whether now owned or hereafter acquired, in the ordinary course of business;
(iii) transfers or dispositions of inventory in the ordinary course of business;
(iv) any transfer of real property due to condemnation and (v) transfers or
dispositions permitted by Section 5.3.

 

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5.11 Prohibited Transfers; REIT Covenants.

5.11.1 Transfers of Guarantor Equity Interest. The REIT shall not (i) transfer,
voluntarily, involuntarily, by operation of law or otherwise, all or any part of
its direct or indirect Equity Interest in the OP or Borrower in any respect that
would result in a Change of Control without the prior written consent of Lender,
in its sole and absolute discretion; (ii) cause, permit or suffer to exist any
Lien, whether directly or indirectly, upon all or any portion of its interest in
OP or Borrower or any rights to distributions therefrom, or grant any Negative
Pledge with respect thereto; or (iii) fail for any reason whatsoever, whether
voluntarily or involuntarily, to be own and control the sole general partner of
OP.

5.11.2 Transfers of Equity Interests. Except in connection with a Borrowing Base
Removal in accordance with Section 10, OP shall not transfer, voluntarily,
involuntarily, by operation of law or otherwise, all or any part of its Equity
Interest in any Borrower without the prior written consent of Lender, in its
sole and absolute discretion.

5.11.3 Principal Subsidiary. The REIT shall not undertake any act, acquire any
Investment, enter into any transaction, dispose of any asset or otherwise cause
or permit any transaction to occur whereby Borrower ceases to be the principal
Subsidiary of the REIT through which the REIT directly or indirectly holds all
or substantially all of its Assets.

5.12 Management Fees. No Credit Party shall pay property management or similar
fees in connection with the Transactions, provided that the foregoing shall not
prohibit Borrower from paying management, investment advisory fees or similar
fees in connection with the management of the Borrowing Base Properties.

5.13 Status. Each Borrower shall not fail to at all times maintain its status as
a Special Purpose Entity.

5.14 Line of Business; Investments. The REIT shall not, nor shall the REIT
permit any of its Subsidiaries to, enter into or acquire any Investment other
than, or engage in any material line of business substantially different from,
Investments in Real Properties (to the extent permitted hereunder and in
accordance with this Agreement) which are used as offices, retail space, and
multifamily housing, parking or distribution facilities or any combination
thereof, and any business activities substantially related or incidental
thereto. The REIT shall not, nor shall it permit any of its Subsidiaries to,
make any Investments, or engage in any business, other than:

5.14.1 Investments by the REIT or the OP in Real Properties (to the extent
permitted hereunder and in accordance with this Agreement) which are used as
offices, retail space, multifamily housing, parking facilities (so long as they
are operated by a third-party operator) or distribution facilities which meet
the conditions set forth in Section 10.1.2(v) hereof, or any combination
thereof, and any business activities substantially related or incidental
thereto;

5.14.2 Investments by the REIT or the OP in non-wholly owned subsidiaries and
unconsolidated Affiliates; provided that such Investments shall not collectively
exceed fifteen percent (15%) of Total Asset Value;

 

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5.14.3 Investments by the REIT or the OP in undeveloped or unimproved Real
Property; provided that such Investments in the aggregate for the REIT shall not
collectively exceed five percent (5%) of Total Asset Value; and

5.14.4 Investments by the REIT or the OP in underdeveloped, partially
constructed, or partially improved Real Property; provided that such Investments
in the aggregate for the REIT, shall not collectively exceed ten percent
(10%) of Borrower’s Total Asset Value;

5.14.5 Investments by the REIT or the OP in loans secured, in whole or in part,
by a first-lien mortgage or deed of trust upon Real Property, provided that such
investments in the aggregate for the REIT shall not collectively exceed ten
percent (10%) of Total Asset Value;

5.14.6 Investments in the form of cash or Cash Equivalents or other short term
liquid Investments approved by Lender;

5.14.7 Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, provided that such Investments in the aggregate for
the REIT and its Subsidiaries shall not collectively exceed five percent (5%) of
Total Asset Value;

5.14.8 Investments by the REIT or the OP permitted under applicable law in the
publicly traded Equity Interests of real estate investment trust or other real
estate companies conducting business, services or activities substantially
similar or related to those engaged in by the REIT and its Subsidiaries on the
Effective Date not to at any time exceed five percent (5%) of Total Asset Value;
and

5.14.9 Investments by the REIT or the OP (i) in the ordinary course of business
constituting 100% of the Equity Interests in any Person the assets of which
(other than immaterial assets) constitute real property assets and which
Investments do not constitute or include the assumption of Indebtedness of such
Person or a Guarantee or Indebtedness of such Person (in each case other than
Non-Recourse Indebtedness) or (ii) constituting all of the Equity Interests in
any other Person so long as (A) unless the assets of such Person (other than
immaterial assets) constitute real property assets which are otherwise permitted
to be acquired by the REIT under this Section 5.14, Borrower shall have given
Lender at least thirty (30) days’ prior written notice of such Investment,
(B) immediately prior thereto, and immediately thereafter and after giving
effect thereto, no Default or Event of Default has occurred or would resulted
therefrom, and (C) prior to consummating such Investment, Borrower shall have
delivered to Lender a Compliance Certificate, calculated on a pro forma basis
based on information then available to Borrower, evidencing the continued
compliance by the Loan Parties with the financial covenants contained in
Section 5.1, after giving effect to such Investment.

Notwithstanding anything to the contrary herein, the aggregate amount of the
Investments described in clauses (5.14.2) through (5.14.5) above shall not
exceed in the aggregate for the REIT, Borrower, or Guarantors twenty percent
(20%) of Total Asset Value.

 

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5.15 Zoning. Borrower shall not, without the Lender’s prior written consent,
seek, make, suffer, consent to or acquiesce in any material change or variance
in any zoning or land use laws or other conditions of any Borrowing Base
Property or any portion thereof. The Borrower shall not use or permit the use of
any portion of any Borrowing Base Property in any manner that could result in
such use becoming a non-conforming use under any zoning or land use law or any
other Laws, or amend or modify any agreements relating to zoning or land use
matters or permit the joinder or merger of lots for zoning, land use or other
purposes, without the prior written consent of Lender, which consent shall not
be unreasonably withheld, delayed or conditioned provided that such change could
not reasonably be expected to adversely affect the value of such Borrowing Base
Property. Further, without the Lender’s prior written consent, the Borrower
shall not file or subject any part of any Borrowing Base Property to any
declaration of condominium or co-operative or convert any part of any Borrowing
Base Property to a condominium, co-operative or other direct or indirect form of
multiple ownership and governance.

5.16 Borrowing Base Properties; Ground Leases. Each of the REIT and Borrower
shall not, nor shall it permit any other Credit Party to, directly or
indirectly:

5.16.1 use or occupy or conduct any activity on, or knowingly permit the use or
occupancy of or the conduct of any activity on any Borrowing Base Properties by
any tenant, in any manner which violates any Legal Requirement or which could
reasonably be expected to have a (a) material adverse effect with respect to the
financial condition or the operations of such Borrowing Base Property,
(b) material adverse effect on the Borrowing Base Asset Value of such Borrowing
Base Property, (c) material adverse effect on the ownership of such Borrowing
Base Property, or which makes void, voidable, or cancelable any insurance then
in force with respect thereto or makes the maintenance of insurance in
accordance with the requirements hereof commercially unreasonable (including by
way of increased premium);

5.16.2 Without the prior written consent of Lender (which consent shall not be
unreasonably withheld or delayed), (i) impose any material easement, restrictive
covenant, or encumbrance upon any Borrowing Base Property, (ii) execute or file
any subdivision plat or condominium declaration affecting any Borrowing Base
Property;

5.16.3 Without the prior consent of Lender, surrender the leasehold estate
created by any Approved Ground Lease or terminate or cancel any Approved Ground
Lease or materially modify, change, supplement, alter, or amend any Approved
Ground Lease, either orally or in writing; or

5.16.4 Enter into any Contractual Obligations related to any Borrowing Base
Property providing for the payment of a management fee (or any other similar
fee) to anyone other than a Credit Party if, with respect thereto, Lender has
reasonably required that such fee be subordinated to the Obligations in a manner
reasonably satisfactory to Lender, and a reasonably acceptable subordination
agreement has not yet been obtained.

 

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6. NOTICES AND REPORTING

6.1 Notices.

6.1.1 All notices, consents, approvals and requests required or permitted
hereunder or under any other Loan Document (a “Notice”) shall be given in
writing and shall be effective for all purposes if delivered by a nationally
recognized overnight delivery service (such as Federal Express) or, with respect
to routine or administrative notices (but specifically excluding notices of
Default, Events of Default or acceleration of the Loan) by electronic mail, in
each case addressed as follows (or to such other address or Person as a party
shall designate from time to time by notice to the other party): If to Lender:
Michael J. Sleece, Senior Vice President, Capital One, N.A., 280 Park Avenue,
23rd Floor, New York, New York 10017, with a copy to: Kevin J. Lyons, Esquire,
Riemer & Braunstein LLP, Three Center Plaza, Boston, Massachusetts 02108; if to
Borrower: c/o Paul Cooper, Chief Executive Officer, GTJ REIT, Inc., 60 Hempstead
Avenue, Suite 718, West Hempstead, New York 11552, with a copy to: Christine A.
McGuinness, Esquire, Schiff Hardin LLP, 666 Fifth Avenue, Suite 1700, New York,
New York 10103. A notice shall be deemed to have been given: in the case of hand
delivery, at the time of delivery; in the case of registered or certified mail,
when delivered or the first attempted delivery on a Business Day; in the case of
overnight delivery, upon the first attempted delivery on a Business Day; or, in
the case of electronic mail, as set forth in Section 6.1.3 below.

6.1.2 Lender or Borrower may, in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

6.1.3 Unless Lender otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient, at its e-mail address as described in the foregoing clause
(i), of notification that such notice or communication is available and
identifying the website address therefor; provided that, for both clauses
(i) and (ii) above, if such notice, email or other communication is not sent
during the normal business hours of the recipient, such notice or communication
shall be deemed to have been sent at the opening of business on the next
business day for the recipient.

 

7. INSURANCE; CASUALTY; AND CONDEMNATION

7.1 Insurance.

7.1.1 Coverage. Borrower, at its sole cost, for the mutual benefit of Borrower
and Lender, shall obtain and maintain during the Term the following policies of
insurance:

(a) Property insurance insuring against loss or damage customarily included
under so called “all risk” or “special form” policies including fire, lightning,
vandalism, and malicious mischief, boiler and machinery and, if required by
Lender, flood and/or earthquake

 

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coverage and subject to subsection (j) below, coverage for damage or destruction
caused by the acts of “Terrorists” (or such policies shall have no exclusion
from coverage with respect thereto) and such other insurable hazards as, under
good insurance practices, from time to time are insured against for other
property and buildings similar to the premises in nature, use, location, height,
and type of construction. Such insurance policy shall also insure for ordinance
of law coverage, costs of demolition, costs to rebuild any undamaged portion
that needs to be destroyed, then rebuilt to law and code, and increased cost of
construction in amounts satisfactory to Lender. Each such insurance policy shall
(i) be in an amount equal to the lesser of (A) 100% of the then replacement cost
of the Improvements without deduction for physical depreciation and (B) the
unpaid Principal, (ii) have deductibles no greater than the lesser of $10,000 or
5% of Net Operating Income per occurrence, (iii) be paid annually in advance and
(iv) be on a replacement cost basis and contain either no coinsurance or, if
coinsurance, an agreed amount endorsement, and shall cover, without limitation,
all tenant improvements and betterments that Borrower is required to insure on a
replacement cost basis. Lender shall be named Mortgagee and Loss Payee on a
Standard Mortgagee Endorsement.

(b) Flood insurance if any part of a subject Borrowing Base Property is located
in an area now or hereafter designated by the Federal Emergency Management
Agency as a Zone “A” & “V” Special Hazard Area, or such other Special Hazard
Area, in amounts required by Lender in its sole discretion, whether as a result
of the recordation of any Mortgage or otherwise.

(c) Rental loss and/or business interruption insurance (i) with Lender being
named as “Mortgagee and Lender Loss Payee”, (ii) in an amount equal to one
hundred percent (100%) of the projected gross Rents from the subject Borrowing
Base Property during the event that caused the loss of income; and
(iii) containing an extended period of indemnity endorsement which provides that
after the physical loss to the subject Borrowing Base Property has been
repaired, the continued loss of income will be insured until such income either
returns to the same level it was at prior to the loss, or the expiration of
eighteen (18) months from the date that the subject Borrowing Base Property is
repaired or replaced and operations are resumed, whichever first occurs, and
notwithstanding that the policy may expire prior to the end of such period. (The
policy may be structured with an 18-month period of indemnity or a 12-month
period of indemnity with a 6-month extended period of indemnity.) The amount of
such insurance shall be increased from time to time during the Term as and when
the estimated or actual Rents increase.

(d) During any period of repair or restoration, builder’s “all-risk” insurance
on the so called completed value basis in an amount equal to not less than the
full insurable value of the subject Borrowing Base Property, against such risks
(including fire and extended coverage and collapse of the Improvements to agreed
limits) as Lender may request, in form and substance acceptable to Lender.

(e) Comprehensive boiler and machinery insurance covering all mechanical and
electrical equipment against physical damage, rent loss and improvements loss
and covering, without limitation, all tenant improvements and betterments that
Borrower is required to insure pursuant to the lease on a replacement cost basis
and in an amount equal to 100% of the full replacement cost of the Improvements
on each Borrowing Base Property (without any deduction for depreciation).

 

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(f) Coverage to compensate for ordinance of law the cost of demolition, the cost
to rebuild any undamaged portion that needs to be destroyed, then rebuilt to law
and code, and the increased cost of construction in an amount satisfactory to
Lender.

(g) Public liability insurance, including (i) “Commercial General Liability
Insurance”, (ii) “Owned”, “Hired” and “Non Owned Auto Liability”; and
(iii) umbrella liability coverage for personal injury, bodily injury, death,
accident and property damage, such insurance providing in combination no less
than containing minimum limits per occurrence of $1,000,000 and $2,000,000 in
the aggregate for any policy year with no deductible or self insured retention;
together with at least $5,000,000 excess and/or umbrella liability insurance for
any and all claims. The policies described in this subsection shall also include
coverage for elevators, escalators, independent contractors, “Contractual
Liability” (covering, to the maximum extent permitted by law, Borrower’s
obligation to indemnify Lender as required under this Agreement and the other
Loan Documents), “Products” and “Completed Operations Liability” coverage.

(h) Worker’s compensation and disability insurance with respect to any employees
of Borrower, as required by any Legal Requirement.

(i) Such other insurance (including, but not limited to, environmental liability
insurance, earthquake insurance, sinkhole insurance, mine subsidence insurance
and windstorm insurance) as may from time to time be reasonably required by
Lender in order to protect its interests.

(j) Notwithstanding anything in subsection (a) above to the contrary, Borrower
shall be required to obtain and maintain coverage in its property insurance
Policy (or by a separate Policy) against loss or damage by terrorist acts in an
amount equal to 100% of the “Full Replacement Cost” of each subject Borrowing
Base Property; provided that such coverage is available. In the event that such
coverage with respect to terrorist acts is not included as part of the “all
risk” property policy required by subsection (a) above, Borrower shall,
nevertheless be required to obtain coverage for terrorism (as stand alone
coverage) in an amount equal to 100% of the “Full Replacement Cost” of each
Borrowing Base Property; provided that such coverage is commercially available.
Borrower shall obtain the coverage required under this subsection (j) from a
carrier which otherwise satisfies the rating criteria specified in Section 7.1.2
(a “Qualified Carrier”) or in the event that such coverage is not available from
a Qualified Carrier, Borrower shall obtain such coverage from the highest rated
insurance company providing such coverage.

7.1.2 Policies. All policies of insurance (the “Policies”) required pursuant to
Section 7.1.1 shall (i) be issued by companies approved by Lender and licensed
to do business in the State, with a claims paying ability rating of A or better
by S&P (and the equivalent by any other Rating Agency) (provided, however for
multi-layered policies, (A) if four (4) or less insurance companies issue the
Policies, then at least 75% of the insurance coverage represented by the
Policies must be provided by insurance companies with a claims paying ability
rating of A or better by S&P (and the equivalent by any other Rating Agency),
with no carrier below BBB (and the equivalent by any other Rating Agency) or
(B) if five (5) or more insurance companies

 

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issue the Policies, then at least 60% of the insurance coverage represented by
the Policies must be provided by insurance companies with a claims paying
ability rating of A or better by S&P (and the equivalent by any, other Rating
Agency), with no carrier below BBB (and the equivalent by any other Rating
Agency), and a rating of AX or better in the current Best’s Insurance Reports;
(ii) name Lender and its successors and/or assigns as their interest may appear
as the mortgagee (in the case of property insurance), loss payee (in the case of
business interruption/loss of rents coverage) and an additional insured (in the
case of liability insurance); (iii) contain (in the case of property insurance)
a Non-Contributory Standard Mortgagee Clause and a Lender’s Loss Payable
Endorsement, or their equivalents, naming Lender as the person to which all
payments made by such insurance company shall be paid; (iv) contain a waiver of
subrogation against Lender; (v) be assigned and the originals thereof delivered
to Lender; (vi) contain such provisions as Lender deems reasonably necessary or
desirable to protect its interest, including (A) endorsements providing that
neither Borrower, Lender nor any other party shall be a co-insurer under the
Policies, (B) that Lender shall receive at least thirty (30) days’ prior written
notice of any modification, reduction or cancellation of any of the Policies,
(C) an agreement whereby the insurer waives any right to claim any premiums and
commissions against Lender, provided that the policy need not waive the
requirement that the premium be paid in order for a claim to be paid to the
insured and (D) providing that Lender is permitted to make payments to effect
the continuation of such policy upon notice of cancellation due to non-payment
of premiums; (vii) in the event any insurance policy (except for general public
and other liability and workers compensation insurance) shall contain breach of
warranty provisions, such policy shall provide that with respect to the interest
of Lender, such insurance policy shall not be invalidated by and shall insure
Lender regardless of (A) any act, failure to act or negligence of or violation
of warranties, declarations or conditions contained in such policy by any named
insured, (B) the occupancy or use of the premises for purposes more hazardous
than permitted by the terms thereof, or (C) any foreclosure or other action or
proceeding taken by Lender pursuant to any provision of the Loan Documents; and
(viii) be satisfactory in form and substance to Lender and approved by Lender as
to amounts, form, risk coverage, deductibles, loss payees and insureds. Borrower
shall pay the premiums for such Policies (the “Insurance Premiums”) as the same
become due and payable and furnish to Lender evidence of the renewal of each of
the Policies together with receipts for or other evidence of the payment of the
Insurance Premiums reasonably satisfactory to Lender. If Borrower does not
furnish such evidence and receipts at least thirty (30) days prior to the
expiration of any expiring Policy, then Lender may, but shall not be obligated
to, procure such insurance and pay the Insurance Premiums therefor, and Borrower
shall reimburse Lender for the cost of such Insurance Premiums promptly on
demand, with interest accruing at the Default Rate. Borrower shall deliver to
Lender a certified copy of each Policy within thirty (30) days after its
effective date. Within thirty (30) days after request by Lender, Borrower shall
obtain such increases in the amounts of coverage required hereunder as may be
reasonably requested by Lender, taking into consideration changes in the value
of money over time, changes in liability laws, changes in prudent customs and
practices, and the like.

7.2 Casualty.

7.2.1 Notice; Restoration. If a Borrowing Base Property is damaged or destroyed,
in whole or in part, by fire or other casualty (a “Casualty”), Borrower shall
give notice thereof to Lender within two (2) Business Days. Following the
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Borrower, regardless of whether insurance proceeds are available, shall promptly
proceed to restore, repair, replace or rebuild the subject Borrowing Base
Property in accordance with Legal Requirements to be of at least equal value and
of substantially the same character as prior to such damage or destruction.

7.2.2 Settlement of Proceeds. If a Casualty covered by any of the Policies (an
“Insured Casualty”) occurs where the loss does not exceed $1,000,000, provided
no Default or Event of Default has occurred and is continuing, Borrower may
settle and adjust any claim without the prior consent of Lender; provided such
adjustment is carried out in a competent and timely manner, and Borrower is
hereby authorized to collect and receipt for the insurance proceeds (the
“Proceeds”). In the event of an Insured Casualty where the loss equals or
exceeds $1,000,000, provided no Default or Event of Default has occurred and is
continuing, Borrower may settle and adjust any claim with the prior consent of
Lender, such consent not to be unreasonably withheld; provided such adjustment
is carried out in a competent and timely manner. In the event of an Insured
Casualty during an Event of Default (a “Significant Casualty”), Lender may, in
its sole discretion, settle and adjust any claim without the consent of Borrower
and agree with the insurer(s) on the amount to be paid on the loss, and the
Proceeds shall be due and payable solely to Lender and held by Lender in the
Casualty/Condemnation Account and disbursed in accordance herewith. If Borrower
or any party other than Lender is a payee on any check representing Proceeds
with respect to a Significant Casualty, Borrower shall immediately endorse, and
cause all such third parties to endorse, such check payable to the order of
Lender. Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
coupled with an interest, to endorse such check payable to the order of Lender.
The expenses incurred by Lender in the settlement, adjustment and collection of
the Proceeds shall become part of the Debt and shall be reimbursed by Borrower
to Lender upon demand. Notwithstanding anything to the contrary contained
herein, if in connection with a Casualty any insurance carrier makes a payment
under a property insurance Policy that Borrower proposes be treated as business
or rental interruption insurance, then, notwithstanding any designation (or lack
of designation) by the insurance carrier as to the purpose of such payment, as
between Lender and Borrower, such payment shall not be treated as business or
rental interruption insurance proceeds unless Borrower has demonstrated to
Lender’s satisfaction that the remaining net Proceeds that will be received from
the property insurance carriers are sufficient to pay 100% of the cost of fully
restoring the Improvements or, if such net Proceeds are to be applied to repay
the Debt in accordance with the terms hereof, that such remaining net Proceeds
will be sufficient to pay the Debt in full.

7.3 Condemnation.

7.3.1 Notice; Restoration. Borrower shall give Lender written Notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding affecting any Borrowing Base Property (a “Condemnation”) within two
(2) Business Days of actual constructive notice thereof, and shall deliver to
Lender copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a Condemnation, Borrower, regardless of whether an
Award is available, shall promptly proceed to restore, repair, replace or
rebuild the subject Borrowing Base Property in accordance with Legal
Requirements to the extent practicable to be of at least equal value and of
substantially the same character (and to have the same utility) as prior to such
Condemnation.

 

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7.3.2 Collection of Award. Lender is hereby irrevocably appointed as Borrower’s
attorney-in-fact, exercisable during an Event of Default, coupled with an
interest, with exclusive power to collect, receive and retain any award or
payment in respect of a Condemnation (an “Award”) and, during an Event of
Default, to make any compromise, adjustment or settlement in connection with
such Condemnation. Notwithstanding any Condemnation (or any transfer made in
lieu of or in anticipation of such Condemnation), Borrower shall continue to pay
the Debt at the time and in the manner provided for in the Loan Documents, and
the Debt shall not be reduced unless and until any Award shall have been
actually received and applied by Lender to expenses of collecting the Award and
to discharge of the Debt. Lender shall not be limited to the interest paid on
the Award by the condemning authority but shall be entitled to receive out of
the Award interest at the rate or rates provided in the Note. If the subject
Borrowing Base Property is sold, through foreclosure or otherwise, prior to the
receipt by Lender of such Award, Lender shall have the right, whether or not a
deficiency judgment on the Note shall be recoverable or shall have been sought,
recovered or denied, to receive all or a portion of the Award sufficient to pay
the Debt (except to the extent the purchase of such Borrowing Base Property is
entitled to receive the same). Borrower shall cause any Award that is payable to
Borrower to be paid directly to Lender. Lender shall hold such Award in the
Casualty/Condemnation Account and disburse such Award in accordance with the
terms hereof.

7.4 Application of Proceeds or Award.

7.4.1 Application to Restoration. If an Insured Casualty or Condemnation occurs
where (i) in the reasonable judgment of Lender, the subject Borrowing Base
Property can be restored within six months, and prior to six months before the
scheduled Maturity Date and prior to the expiration of the rental or business
interruption insurance with respect thereto, to the subject Borrowing Base
Property’s pre-existing condition and utility as existed immediately prior to
such Insured Casualty or Condemnation and to an economic unit not less valuable
and not less useful than the same was immediately prior to the Insured Casualty
or Condemnation, and after such restoration will adequately secure the Debt
(ii) less than (x) thirty percent (30%), in the case of an Insured Casualty or
(y) fifteen percent (15%), in the case of a Condemnation, of the rentable area
of the Improvements has been damaged, destroyed or rendered unusable as a result
of such Insured Casualty or Condemnation; (iii) Leases demising in the aggregate
at least sixty-five (65%) of the total rentable space in the subject Borrowing
Base Property and in effect as of the date of the occurrence of such Insured
Casualty or Condemnation remain in full force and effect during and after the
completion of the Restoration (hereinafter defined); and (iv) no Default or
Event of Default shall have occurred and be then continuing, then the Proceeds
or the Award, as the case may be (after reimbursement of any expenses incurred
by Lender), shall be applied to reimburse Borrower for the cost of restoring,
repairing, replacing or rebuilding the subject Borrowing Base Property (the
“Restoration”), in the manner set forth herein. Borrower shall commence and
diligently prosecute such Restoration. Notwithstanding the foregoing, in no
event shall Lender be obligated to apply the Proceeds or Award to reimburse
Borrower for the cost of Restoration unless, in addition to satisfaction of the
foregoing conditions, both (x) Borrower shall pay (and if required by Lender,
Borrower shall deposit with Lender in advance) all costs of such Restoration in
excess of the net amount of the Proceeds or the Award made available pursuant to
the terms hereof; and (y) Lender shall have received evidence reasonably
satisfactory to it that during the period of the Restoration, the Rents will be
at least equal to the sum of the operating expenses and Debt Service and other
reserve payments required hereunder, as reasonably determined by Lender.

 

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7.4.2 Application to Debt. Except as provided in Section 7.4.1, any Proceeds
and/or Award may, at the option of Lender in its discretion, be applied to the
payment of (i) accrued but unpaid interest on the Note, (ii) the unpaid
Principal and (iii) other charges due under the Note and/or any of the other
Loan Documents, or applied to reimburse Borrower for the cost of any
Restoration, in the manner set forth in Section 7.4.3.

7.4.3 Procedure for Application to Restoration. If Borrower is entitled to
reimbursement out of the Proceeds or an Award held by Lender, such Proceeds or
Award shall be disbursed from time to time from the Casualty/Condemnation
Account upon Lender being furnished with (i) evidence satisfactory to Lender of
the estimated cost of completion of the Restoration, (ii) a fixed price or
guaranteed maximum cost construction contract for Restoration satisfactory to
Lender, (iii) prior to the commencement of Restoration, all immediately
available funds in addition to the Proceeds or Award that in Lender’s judgment
are required to complete the proposed Restoration, (iv) such architect’s
certificates, waivers of lien, contractor’s sworn statements, title insurance
endorsements, bonds, plats of survey, permits, approvals, licenses and such
other documents and items as Lender may reasonably require and approve in
Lender’s discretion, and (iv) all plans and specifications for such Restoration,
such plans and specifications to be approved by Lender prior to commencement of
any work. Lender may, at Borrower’s expense, retain a consultant to review and
approve all requests for disbursements, which approval shall also be a condition
precedent to any disbursement. No payment made prior to the final completion of
the Restoration shall exceed ninety percent (90%) of the value of the work
performed from time to time; funds other than the Proceeds or Award shall be
disbursed prior to disbursement of such Proceeds or Award; and at all times, the
undisbursed balance of such Proceeds or Award remaining in the hands of Lender,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Lender by or on behalf of Borrower for that purpose, shall be at
least sufficient in the reasonable judgment of Lender to pay for the cost of
completion of the Restoration, free and clear of all Liens or claims for Lien.
Provided no Default or Event of Default then exists, any surplus that remains
out of the Proceeds held by Lender after payment of such costs of Restoration
shall be paid to Borrower. Any surplus that remains out of the Award received by
Lender after payment of such costs of Restoration shall, in the discretion of
Lender, be retained by Lender and applied to payment of the Debt or returned to
Borrower.

 

8. DEFAULTS

8.1 Events of Default. An “Event of Default” shall exist with respect to the
Loan if any of the following shall occur:

(a) Borrower shall fail to (i) pay as and when due and payable any principal on
any of the Loans or Obligations (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), or (ii) pay when due any
interest on any of the Loans or Obligations or (iii) pay when due any fees or
any other amount payable hereunder or under any other Loan Document, and such
failure to pay interest, fees or such other amounts described in clause (ii) or
(iii) shall continue for five (5) days after written notice thereof has been
given to Borrower by Lender;

 

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(b) any of the Taxes are not paid when due, subject to Borrower’s right to
contest Taxes in accordance with Section 4.4;

(c) the Policies are not kept in full force and effect, or are not delivered to
Lender upon request;

(d) a Change of Control occurs;

(e) any representation or warranty made by Borrower or Guarantor or in any Loan
Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished by Borrower or Guarantor in
connection with any Loan Document, shall be false or misleading in any material
respect as of the date the representation or warranty was made;

(f) Borrower breaches any covenant contained in Sections 5.1, 5.2, 5.3, 5.4,
5.4, 5.5, 5.11, or 5.14;

(g) except as expressly permitted hereunder, the actual or threatened
alteration, improvement, demolition or removal of all or any portion of the
Improvements without the prior written consent of Lender;

(h) a default by any Credit Party under any Secured Swap Agreement or Third
Party Swap Agreement that results in a termination of the same;

(i) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of any Credit Party or its debts, or of a substantial part of its
assets, under any Insolvency Proceeding or (ii) the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for any Credit
Party or for a substantial part of its assets, and, in any such case, such
proceeding or petition shall continue undismissed for a period of ninety (90) or
more days or an order or decree approving or ordering any of the foregoing shall
be entered;

(j) any Credit Party shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any
Insolvency Proceeding, (ii) consent to the institution of, or fail to contest in
a timely and appropriate manner, any proceeding or petition described in
Section 8.1(i), (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for such
Credit Party or for a substantial part of its assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;

(k) any Credit Party shall admit in writing its inability to pay its debts as
they become due;

 

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(l) one or more judgments for the payment of money in an aggregate amount in
excess of $20,000,000 shall be rendered against any Consolidated Entity alone or
any combination thereof, and the same shall remain undischarged for a period of
forty-five (45) consecutive days during which either (i) execution shall not be
effectively stayed or bonded or (ii) a reputable insurance company has not
accepted liability therefor (other than requiring payment of the applicable
deductible);

(m) any Consolidated Entity (A) fails to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise),
after the expiration of any applicable grace periods, in respect of any
Indebtedness or Contingent Obligation (other than Indebtedness hereunder and
Indebtedness under Swap Contracts) having an aggregate principal amount
(including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or (B) fails to observe
or perform any other agreement or condition relating to any such Indebtedness or
Contingent Obligation or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event occurs, the effect of which
default or other event is to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Contingent Obligation (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to be demanded
or to become due or to be repurchased, prepaid, defeased or redeemed
(automatically or otherwise), or an offer to repurchase, prepay, defease or
redeem such Indebtedness to be made, prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; provided that this clause (j) shall not apply to any redemption,
conversion or settlement of any convertible Indebtedness of REIT or the Borrower
(and cash in lieu of fractional shares or units) pursuant to its terms unless
such redemption, conversion or settlement results from a default thereunder or
an event of a type that otherwise constitutes an Event of Default or the
required amount payable in respect of such redemption, conversion or settlement
is not timely paid;

(n) the written assertion by any Governmental Authority against any Consolidated
Entity of (or there shall have been asserted against any Consolidated Entity)
any claims or liabilities, whether accrued, absolute or contingent, based on or
arising from the generation, storage, transport, handling or disposal of
Hazardous Materials by such Consolidated Entity or any of its Subsidiaries or
predecessors that, in the reasonable judgment of Lender, are reasonably likely
to be determined adversely to such Consolidated Entity, and the amount thereof
(either individually or in the aggregate) will have a Material Adverse Effect
(insofar as such amount is payable by such Consolidated Entity but after
deducting any portion thereof that is reasonably expected to be paid by other
creditworthy Persons jointly and severally liable therefor);

(o) subject to the provisions of Article X, the Liens created by the Security
Documents shall at any time not constitute a valid and perfected Lien, as to the
Pledge, or a valid and perfected Lien as of the time of recording to the extent
permitted herein, on the collateral intended to be covered thereby (to the
extent perfection by filing, registration, recordation or possession is required
herein or therein) in favor of Lender, free and clear of all other Liens (other
than Liens under the respective Security Documents and Permitted Encumbrances),
or, except for expiration, any of the Security Documents shall for whatever
reason be terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by any Credit Party;

 

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(p) any Guaranty shall for any reason be revoked or invalidated, or otherwise
cease to be in full force and effect, or any Guarantor shall unsuccessfully
contest in any manner the validity or enforceability thereof or deny that it has
any further liability or obligation thereunder;

(q) any Credit Party with ERISA investors who have made a capital contribution
shall fail or cease to qualify as a REOC or a VCOC or otherwise meet an
exception under the Plan Assets Regulations which would prevent the assets of
such Credit Party from being subject to Title I of ERISA and/or Section 4975 of
the Code;

(r) any event shall occur which gives rise to a nonexempt prohibited transaction
(as such term is defined in Section 4975 of the Code or Section 406 of ERISA)
involving any plan (as such term is defined in the Plan Asset Regulation) that
is a Consolidated Entity that could subject Lender, on account of any Loan or
any other transaction contemplated by the Loan Documents, to any Tax or penalty
on prohibited transactions imposed under Section 4975 of the Code or
Section 502(i) of ERISA;

(s) any writ or warrant of attachment or execution or similar process is issued
or levied against all or any material part of the Collateral or any Borrowing
Base Property or any of the other material assets of the REIT or the Borrower,
and is not released, vacated or fully bonded within thirty (30) days after its
issue or levy;

(t) a Change in Control shall occur;

(u) if (A) Borrower shall fail in the payment of any rent, additional rent or
other charge mentioned in or made payable by an Approved Ground Lease as and
when such rent or other charge is payable (unless waived by the landlord under
an Approved Ground Lease), (B) there shall occur any default by Borrower, as
tenant under an Approved Ground Lease, in the observance or performance of any
term, covenant or condition of an Approved Ground Lease on the part of Borrower,
to be observed or performed (unless waived by the landlord under an Approved
Ground Lease), (C) if any one or more of the events referred to in an Approved
Ground Lease shall occur which would cause the Ground Lease to terminate without
notice or action by the landlord under an Approved Ground Lease or which would
entitle the landlord to terminate an Approved Ground Lease and the term thereof
by giving notice to Borrower, as tenant thereunder (unless waived by the
landlord under an Approved Ground Lease), (D) if the leasehold estate created by
an Approved Ground Lease shall be surrendered or an Approved Ground Lease shall
be terminated or canceled for any reason or under any circumstances whatsoever
or (E) if any of the terms, covenants or conditions of an Approved Ground Lease
shall in any manner be modified, changed, supplemented, altered, or amended
without the consent of Lender of if Borrower fails to exercise any renewal
options under an Approved Ground Lease; or

(v) a default shall be continuing under any of the other terms, covenants or
conditions of this Agreement or any other Loan Document not otherwise specified
in this Section 8.1,

 

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for ten days after notice to Borrower (and Guarantor, if applicable) from
Lender, in the case of any default which can be cured by the payment of a sum of
money, or for thirty (30) days after notice from Lender in the case of any other
default; provided, however, that if such non-monetary default is susceptible of
cure but cannot reasonably be cured within such 30-day period, and Borrower (or
Guarantor, if applicable) shall have commenced to cure such default within such
30-day period and thereafter diligently and expeditiously proceeds to cure the
same, such 30-day period shall be extended for an additional period of time as
is reasonably necessary for Borrower (or Guarantor, if applicable) in the
exercise of due diligence to cure such default, such additional period not to
exceed sixty (60) days.

8.2 Remedies.

8.2.1 Acceleration. During the continuance of an Event of Default (other than an
Event of Default described in paragraph (i) or (j) of Section 8.1) and at any
time and from time to time thereafter, the obligation of Lender to advance
amounts hereunder may be immediately terminated (and shall be immediately
terminated upon the occurrence of an Event of Default described in paragraph
(i) or (j) of Section 8.1) in addition to any other rights or remedies available
to it pursuant to the Loan Documents or at law or in equity, Lender may take
such action, without notice or demand, that Lender deems advisable to protect
and enforce its rights against Borrower and in and to the Borrowing Base
Properties; including declaring the Debt to be immediately due and payable
(including unpaid interest, Default Rate interest, Late Payment Charges, and any
other amounts owing by Borrower), without notice or demand; and upon any Event
of Default described in paragraph (i) or (j) of Section 8.1, the Debt (including
unpaid interest, Default Rate interest, Late Payment Charges, and any other
amounts owing by Borrower) shall immediately and automatically become due and
payable, without notice or demand, and Borrower hereby expressly waives any such
notice or demand, anything contained in any Loan Document to the contrary
notwithstanding.

8.2.2 Remedies Cumulative. During the continuance of an Event of Default, all or
any one or more of the rights, powers, privileges and other remedies available
to Lender against Borrower under the Loan Documents or at law or in equity may
be exercised by Lender at any time and from time to time, whether or not all or
any of the Debt shall be declared, or be automatically, due and payable, and
whether or not Lender shall have commenced any foreclosure proceeding or other
action for the enforcement of its rights and remedies under any of the Loan
Documents. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its discretion, to the
fullest extent permitted by law, without impairing or otherwise affecting the
other rights and remedies of Lender permitted by law, equity or contract or as
set forth in the Loan Documents. Without limiting the generality of the
foregoing, Borrower agrees that if an Event of Default is continuing, (i) to the
extent permitted by applicable law, Lender is not subject to any “one action” or
“election of remedies” law or rule, (ii) all Liens and other rights, remedies or
privileges provided to Lender shall remain in full force and effect until Lender
has exhausted all of its remedies against the Borrowing Base Property, the
Mortgage has been foreclosed, the Borrowing Base Property has been sold and/or
otherwise realized upon in satisfaction of the Debt or the Debt has been paid in
full, and (iii) Lender may take any or all of the following actions, at the same
or different times: (i) terminate the Commitments and any obligations of the
Lender to issue, amend or renew Letters of Credit,

 

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(ii) declare the Loans and Obligations then outstanding to be due and payable in
whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans and Obligations so declared to be due and payable,
together with accrued interest thereon and all fees and other obligations of the
Credit Parties accrued hereunder, shall become due and payable immediately,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Credit Parties, (iii) record the Mortgages,
(iv) require that Borrower Cash Collateralize all outstanding Letters of Credit
(in an amount equal to 105% of the stated amount thereof), and (iv) exercise all
of the rights and remedies of the Lender, whether provided at law or in equity,
including its rights and remedies under this Agreement and/or the Security
Documents; and in case of any event with respect to the REIT or the Borrower
described in Section 8.1(i) or Section 8.1(j), (A) the obligation of the Lender
to issue, amend or renew Letters of Credit shall automatically terminate;
(B) the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Credit Parties accrued
hereunder, shall automatically become due and payable (such automatic events
being deemed an acceleration hereunder), without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Credit Parties,
(iii) Lender thereupon may record the Mortgages; (iv) Borrower shall
automatically be required to Cash Collateralize all outstanding Letters of
Credit (in an amount equal to 105% of the stated amount thereof), and (iv) all
of the rights and remedies of the Lender, whether provided at law or in equity,
including their rights and remedies under this Agreement and/or the Security
Documents, shall thereupon immediately be exercisable. The Loans are fully
recourse to the Borrower and the Guarantors, and Lender is expressly permitted
to enforce the liability and obligation of the Credit Parties to perform and
observe the obligations contained in the Loan Documents by any action or
proceeding wherein, without limitation, a money judgment or specific performance
shall be sought against any Credit Party, or any other appropriate action or
proceeding to enable the Lender to enforce and realize upon its interest and
rights under the Loan Documents or any other collateral that may be given to
Lender pursuant to the Loan Documents. To the extent permitted by applicable
Legal Requirements, nothing contained in any Loan Document shall be construed as
requiring Lender to resort to any portion of the Property for the satisfaction
of any of the Debt in preference or priority to any other portion, and Lender
may seek satisfaction out of the entire Property or any part thereof, in its
discretion.

8.2.3 Severance. Lender shall have the right from time to time to sever the Note
and the other Loan Documents into one or more separate notes, mortgages and
other security documents in such denominations and priorities of payment and
liens as Lender shall determine in its discretion for purposes of evidencing and
enforcing its rights and remedies. Borrower shall execute and deliver to Lender
from time to time, promptly after the request of Lender, a severance agreement
and such other documents as Lender shall request in order to effect the
severance described in the preceding sentence, all in form and substance
reasonably satisfactory to Lender. Borrower hereby absolutely and irrevocably
appoints Lender as its true and lawful attorney, coupled with an interest, in
its name and stead to make and execute all documents necessary or desirable to
effect such severance, Borrower ratifying all that such attorney shall do by
virtue thereof.

8.2.4 Delay. No delay or omission to exercise any remedy, right or power
accruing upon an Event of Default, or the granting of any indulgence or
compromise by Lender

 

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shall impair any such remedy, right or power hereunder or be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default shall not be construed to be a waiver of any subsequent Default
or Event of Default or to impair any remedy, right or power consequent thereon.
Notwithstanding any other provision of this Agreement, Lender reserves the right
to seek a deficiency judgment or preserve a deficiency claim in connection with
the foreclosure of the Mortgage to the extent necessary to foreclose on all or
any portion of the Property, the Rents, the Cash Management Accounts or any
other collateral.

8.2.5 Lender’s Right to Perform. If Borrower fails to perform any covenant or
obligation contained herein and such failure shall continue for a period of five
(5) Business Days after Borrower’s receipt of written notice thereof from
Lender, without in any way limiting Lender’s right to exercise any of its
rights, powers or remedies as provided hereunder, or under any of the other Loan
Documents, Lender may, but shall have no obligation to, perform, or cause
performance of, such covenant or obligation, and all costs, expenses,
liabilities, penalties and fines of Lender incurred or paid in connection
therewith shall be payable by Borrower to Lender upon demand and if not paid
shall be added to the Debt (and to the extent permitted under applicable Legal
Requirements, secured by the Mortgage and other Loan Documents) and shall bear
interest thereafter at the Default Rate. Notwithstanding the foregoing, Lender
shall have no obligation to send notice to Borrower of any such failure.

 

9. ASSIGNMENTS/PARTICIPATIONS

9.1 Assignments. Lender may with Borrower’s consent, which shall not be
unreasonably withheld, conditioned or delayed, assign to one or more Eligible
Assignee (each, an “Assignee”) all or any portion of its rights, interests and
obligations under this Agreement and the Note in minimum amounts of
$5,000,000.00 and on such other terms, as between Lender and each of its
Assignees, as Lender may deem reasonable and such Assignee shall assume such
rights, interests and obligations, pursuant to an Assignment and Assumption
Agreement executed by such Assignee and Lender in form and substance
satisfactory to Lender, provided that Borrower’s consent shall not be required
during the existence of an Event of Default. It is understood and agreed that,
notwithstanding anything to the contrary contained herein, Lender may at any
time pledge or assign all or any portion of its rights under this Agreement, the
Note and other Loan Documents to any of the twelve (12) Federal Reserve Banks
organized under §4 of the Federal Reserve Act, 12 U.S.C. §341. No such pledge or
the enforcement thereof shall release Lender from its obligations hereunder or
under any of the other Loan Documents. Upon execution and delivery of such an
instrument and payment by such Assignee to Lender of an amount equal to the
purchase price agreed between Lender and such Assignee, such Assignee shall be a
lender party to this Agreement and shall have all the rights, interests and
obligations of a lender with the amount of the Loan as set forth in such
Assignment and Assumption Agreement, and Lender shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Any such Assignment and Assumption
Agreement shall run to the benefit of Borrower and a copy thereof shall be
delivered by the Assignor to Borrower. Upon the consummation of any Assignment
and Assumption Agreement pursuant to this Section 9.1, Lender and Borrower shall
make appropriate arrangements so that, if required, new Notes are issued to the
Assignee (in the manner described below) and related amendments to the Loan
Documents are made and Lender

 

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shall record the Assignment and Assumption Agreement in the “Register”, as
hereinafter defined. No assignment or amendment executed in connection therewith
shall increase the Borrower’s obligations or responsibilities or diminish its
rights under the Loan Documents.

Lender shall maintain a copy of each Assignment and Assumption Agreement
delivered to it and a register or similar list (the “Register”) for the
recordation of the names and addresses of the lenders and principal amount of
the Loan owing to each lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and Borrower, Lender and
the Assignees may treat each Person whose name is recorded in the Register as a
lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Borrower and the Assignees at any reasonable time
and from time to time upon reasonable prior notice.

At the request of Lender and any such Assignee, Borrower shall issue one or more
new promissory notes, as applicable, to any such Assignee and, if Lender has
retained any of its rights and obligations hereunder following such assignment,
to Lender, which new promissory notes shall be issued in replacement of, but not
in discharge of, the liability evidenced by the promissory note held by Lender
prior to such assignment and shall reflect the amount of the respective
commitments and loans held by such Assignee and Lender after giving effect to
such assignment.

9.2 Participations. Lender may without Borrower’s consent grant to one or more
banks or other financial institutions (each, a “Participant”) participating
interests in the Loan in minimum amounts of $5,000,000.00. Any agreement
pursuant to which Lender may grant such a participating interest shall provide
that such Lender shall retain the sole right and responsibility to enforce the
obligations of Borrower hereunder, including, without limitation, the right to
exercise Lender’s rights hereunder to approve any amendment, modification or
waiver of any provision of this Agreement. Each Lender that sells a
participation shall, acting solely for this purpose as a non-fiduciary agent of
Borrower, maintain a register on which it enters the name and address of each
Participant and the principal amounts (and stated interest) of each
Participant’s interest in the Loans or other obligations under the Loan
Documents (the “Participant Register”); provided that no Lender shall have any
obligation to disclose all or any portion of the Participant Register (including
the identity of any Participant or any information relating to a Participant’s
interest in any commitments, loans, letters of credit or its other obligations
under any Loan Document) to any Person except to the extent that such disclosure
is necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose
name is recorded in the Participant Register as the owner of such participation
for all purposes of this Loan Agreement notwithstanding any notice to the
contrary

 

10. BORROWING BASE PROPERTIES

10.1 Borrowing Base Properties.

10.1.1 At all times, the Borrower shall maintain the Borrowing Base Properties
in accordance with this Article 10 and the other terms and conditions of the
Loan Documents.

 

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10.1.2 In addition to the other requirements that are set forth in the
definition of “Borrowing Base Property,” in order for a Real Property to qualify
as a Borrowing Base Property, it shall comply with the following conditions at
all times:

(a) Such Borrowing Base Property shall be wholly owned by a Borrower that
complies with the covenants and provisions of this Agreement relating to
Borrowers; provided, however, that a Borrowing Base Property may, with Lender’s
written consent, be leased to a Borrower under an Approved Ground Lease;

(b) The representations and warranties contained in Article 3 with respect to
Borrowing Base Properties shall at all times be true and correct with respect to
such Borrowing Base Property and such Borrowing Base Property shall be in
compliance with the covenants set forth in Section 10.3;

(c) Such Borrowing Base Property shall be an income producing, multi-family,
mixed-use, retail, distribution, parking, flex, industrial or office property,
provided that parking facilities shall be permitted only if operated by a
third-party operator and distribution facilities shall be permitted only to the
extent they meet the conditions set forth in clause (e) of this Section 10.1.2;

(d) At least eighty percent (80%) of the (x) units in any multi-family Borrowing
Base Property, and (y) net rentable square footage of any other type of
Borrowing Base Property (other than a parking facility), shall be subject to
executed Leases from tenants in occupancy who are not in default beyond the
expiration of all applicable notice and grace periods under their Lease and not
in bankruptcy (the “Occupancy Rate”); provided, however, that if (A) on any
date, the Occupancy Rate is less than eighty percent (80%), there shall be a
grace period of two (2) fiscal quarters to increase such occupancy provided that
(i) Borrower delivers written notice of the failure to comply with such
occupancy requirement within three (3) Business Days after a Responsible Officer
of Borrower obtains knowledge of such failure, and (ii) at all times during such
grace period, the Occupancy Rate does not fall below seventy percent (70%) at
any time and (B) on any date, the Occupancy Rate is less than seventy percent
(70%), there shall be a grace period of two (2) fiscal quarters (which shall be
concurrent with and not in addition to the two (2) fiscal quarter grace period
referred to in clause (A), above) to increase such occupancy provided that
(i) Borrower delivers written notice of the failure to comply with such
occupancy requirement within three (3) Business Days after a Responsible Officer
of Borrower obtains knowledge of such failure, (ii) at all times during such
grace period, the Occupancy Rate does not fall below fifty percent (50%) at any
time, and (iii) during the pendency of such grace period, the percentage
applicable in calculating the Value-Based Borrowing Base Limit for the
applicable Borrowing Base Property shall be reduced by fifty percent (50%);
thereafter, and in the event any Borrowing Base Property has an Occupancy Rate
below fifty percent (50%) at any time, such Borrowing Base Property shall be
removed from the Borrowing Base pursuant to Section 9.03;

(e) If such Borrowing Base Property is a distribution facility, it shall be an
Investment Grade Borrowing Base Property having at least eight (8) years
remaining on the term of the Lease to the applicable Investment Grade Tenant at
the time such facility is added to the Borrowing Base (excluding any extension
options) and where the applicable Investment Grade Tenant shall be in occupancy,
not in default beyond the expiration of all applicable notice and grace periods
under its Lease and not in bankruptcy;

 

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(f) If such Borrowing Base Property is a Single Tenant Asset, then the remaining
Lease term related thereto shall be no less than six (6) years (excluding any
extension options);

(g) An Appraisal shall be required for each Borrowing Base Property during the
term of this Agreement as follows: (A) within six (6) months prior to the
Effective Date (with respect to each initial Borrowing Base Property that is
added to the Borrowing Base upon the Effective Date, and (B) within six
(6) months prior to the date that any Borrowing Base Property is added to the
Borrowing Base in accordance with the Loan Documents (which respect to Borrowing
Base Properties added after the Effective Date), and that in each case that is
acceptable to Lender in its reasonable discretion, subject to the provisions of
Sections 10.1.2(viii) and (ix);

(h) For purposes of determining the Appraised Value of any Borrowing Base
Property hereunder, the most recent Appraisal thereof obtained by in accordance
with the terms hereof shall govern the determination of the Appraised Value
thereof; provided, however that if a new Appraisal is not required to be
obtained for such Borrowing Base Property pursuant to Section 10.1.2 until such
time as the new Appraisal shall have been obtained in accordance with this
Agreement, then the Borrowing Base Asset Value of such Borrowing Base Property
shall equal the lesser of the Acquisition Cost of such Borrowing Base Property
or the Estimated Value thereof.

(i) The survey for such Borrowing Base Property delivered to the Lender in
connection with this Agreement shall be prepared in accordance with the 2011
Minimum Standard Detail Requirements for ALTA/ASM Land Title Surveys. Except for
those matters reflected on such survey or in the title policy for such Borrowing
Base Property delivered to the Lender in connection with this Agreement or as
otherwise disclosed to the Lender, as of the date such Real Property is accepted
as a Borrowing Base Property, there shall not be any construction or
commencement of construction on such Borrowing Base Property of any new external
structures, or additions or extensions thereto, or other external improvements,
whether to existing structures or not. Except as may be disclosed on the surveys
delivered pursuant to this Agreement and in the title policy for such Borrowing
Base Property: (i) none of the material improvements comprising part of such
Borrowing Base Property shall be outside the boundaries of such Borrowing Base
Property (or building restriction or setback lines applicable thereto); (ii) no
material improvements on adjoining properties shall encroach upon such Borrowing
Base Property; and (iii) no material improvements comprising part of such
Borrowing Base Property shall encroach upon or violate any easements or any
other encumbrance upon such Borrowing Base Property, in each case other than
minor encumbrances which could not reasonably be expected to have a (x) material
adverse effect with respect to the financial condition or the operations of such
Borrowing Base Property, (y) material adverse effect on the Borrowing Base Asset
Value of such Borrowing Base Property, or (z) material adverse effect on the
ownership of such Borrowing Base Property.

 

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(j) All transfer taxes, deed stamps, intangible taxes or other amounts in the
nature of transfer taxes required to be paid by any Credit Party under
applicable legal requirements currently in effect in connection with the
transfer of such Borrowing Base Property to the Borrower, any transfer of a
controlling interest in the Borrower or the formation of the REIT, as
applicable, shall have been paid or will be paid prior to delinquency. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid by any Credit Party under applicable legal requirements currently in
effect in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Loan Documents, including,
without limitation, the Mortgage, shall have been paid prior to delinquency.

(k) The Borrower shall have delivered to Lender copies of all Leases and all
unrecorded easement agreements, reciprocal easement agreements, management
agreements and material agreements in Borrower’s possession or custody which
affect in any material respect the Borrower’s interest in such Borrowing Base
Property.

(l) Borrower shall have received no notice of any condemnation proceeding
involving such Borrowing Base Property or any portion thereof or parking
facility used in connection therewith, nor shall any portion of such Borrowing
Base Property or any parking facility used in connection therewith be damaged
due to fire or other casualty, except those proceedings or casualties that could
not reasonably be expected to materially interfere with the current use and
value of such Borrowing Base Property or to cause such property to otherwise no
longer qualify as a Borrowing Base Property.

(m) Such Borrowing Base Property shall have adequate rights of access to public
ways and is currently served by adequate electric, gas, water, sewer, sanitary
sewer and storm drain facilities. All public utilities necessary to the use and
enjoyment of such Borrowing Base Property as intended to be used and enjoyed
shall be located in the public right-of-way abutting such Borrowing Base
Property or in private easements or license areas benefitting such Borrowing
Base Property.

(n) No Credit Party shall have suffered, permitted or initiated the joint
assessment of such Borrowing Base Property with any other real property
constituting a tax lot separate and apart from the tax lot comprising such
Borrowing Base Property.

(o) As of the date of its inclusion as a Borrowing Base Property, such Borrowing
Base Property, including all buildings, improvements, parking facilities,
sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire
protection systems, electrical systems, equipment, elevators, exterior sidings
and doors, landscaping, irrigation systems and all structural components, shall
be in good condition, order and repair in all material respects subject to
reasonable and customary wear and tear; and there shall exist no structural or
other material defects or damages in such Borrowing Base Property, whether
latent or otherwise, and no Credit Party shall have received written notice from
any insurance company or bonding company of any defects or inadequacies in such
Borrowing Base Property, or any part thereof, which would, in either case,
adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.

 

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(p) The Borrower shall have delivered to the Lender a true and correct copy of
the Management Agreement that is in effect with respect to such Borrowing Base
Property. The Management Agreement with respect to such Borrowing Base Property
delivered to the Lender shall be the only Management Agreement related to such
Borrowing Base Property, and shall be in full force and effect with no default
or event of default, in either case beyond all applicable notice and grace
periods, existing thereunder.

(q) To the knowledge of Borrower, no portion of such Borrowing Base Property
shall have been purchased with proceeds of any illegal activity and no part of
the proceeds of any Credit Extension will be used in connection with any illegal
activity.

(r) The Borrowing Base Property must be located in New York, Connecticut, New
Jersey, Massachusetts, Rhode Island, Delaware, Maryland, Virginia, Pennsylvania,
Vermont, New Hampshire and Maine.

10.1.3 The Borrower hereby covenants and agrees with respect to any Borrowing
Base Property as follows:

(a) Leases. The Borrower shall not enter into, amend, modify, supplement or
terminate any Lease in excess of 25,000 square feet in any Borrowing Base
Property, without the prior written consent of Lender, other than
(A) modifications that do not affect the economic terms or length of the term of
such Lease, and (B) modifications that do not materially affect the obligations
of the applicable Borrower or the tenants thereunder (other than modifications
that would increase the obligations of any such tenant and are more favorable to
the applicable Borrower).

(b) Management Contracts. From and after the date the Mortgages have been
recorded, the Borrower shall obtain the prior written approval of Lender prior
to entering into any property management agreement or replacing or terminating
the property manager for any Borrowing Base Property.

10.1.4 In calculating the Value-Based Borrowing Base Limit and DSCR-Based
Borrowing Base Limit, unless Lender, in its sole and absolute discretion, shall
agree otherwise, the following requirements shall apply, and adjustments shall
be made to the Borrowing Base (calculated in accordance with the most recent
Borrowing Base Certificate delivered hereunder) in order for the amount of such
Borrowing Base to comply with the following requirements:

(a) Commencing with the 12 month anniversary after the Closing Date, Net
Operating Income from Alternative Use Properties can account for no more than
15% of the total Net Operating Income for the purpose of calculating the
Borrowing Base, with any Net Operating Income in excess of such limit being
excluded when calculating the Borrowing Base;

(b) commencing with the second (2nd) fiscal quarter after the Effective Date,
cash rent generated from any single tenant (or group of affiliated tenants) or
from any single distribution facility or parking facility shall not account for
more than twenty percent (20%) of the cash rent of the Borrowing Base assets in
the Borrowing Base measured for any period, whether for purposes of determining
the Estimated Values of the Borrowing Base Properties or for purposes of
determining the DSCR-Based Borrowing Base Limit (with any cash rent in

 

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excess of such limit being excluded when calculating the Estimated Values of the
Borrowing Base Properties or the DSCR-Based Borrowing Base Limit), except for
the lease of the City of New York with respect to the Borrowing Base Properties
located at (a) 49-19 Rockaway Beach Boulevard, Arverne, New York and (b) 114-15
Guy Brewer Boulevard, Jamaica, New York, so long as the City of New York
maintains an S&P rating of “A” or better;

(c) Commencing on the date that is twelve (12) months after the Effective Date,
the Borrowing Base Asset Value of any single Borrowing Base Property shall not
comprise more than 30% of the aggregate Borrowing Base Asset Values of all
Borrowing Base Properties, (with any Borrowing Base Asset Value of any single
Borrowing Base Property in excess of such limit being excluded when calculating
the aggregate Borrowing Base Asset Values of all Borrowing Base Properties);

(d) The Adjusted Borrowing Base Net Operating Income derived from Borrowing Base
Properties subject to an Approved Ground Lease shall not comprise more than ten
percent (10%) of the aggregate Adjusted Borrowing Base Net Operating Income of
all Borrowing Base Properties measured for any period, whether for purposes of
determining the Estimated Values of the Borrowing Base Properties or for
purposes of determining the DSCR-Based Borrowing Base Limit (with any Adjusted
Borrowing Base Net Operating Income in excess of such limit being excluded when
calculating the Estimated Values of the Borrowing Base Properties or the
DSCR-Based Borrowing Base Limit); and

(e) Annexed hereto as Schedule VII is the closing date calculation of the
Value-Based Borrowing Base Limit and DSCR-Based Borrowing Base Limit.

10.2 Exclusion Events. Notwithstanding anything contained herein to the
contrary, if any Real Property previously-qualifying as a Borrowing Base
Property ceases to meet the criteria for qualification as such, as set forth in
the definition of “Borrowing Base Property” (inclusive of the requirements of
Section 10.1.2), or if any of the following events shall occur:

10.2.1 any violation of Environmental Law with respect to such Borrowing Base
Property, or presence of Hazardous Materials on, about or under such Borrowing
Base Property, regardless of the time when it arose, which could reasonably be
expected to have a (a) material adverse effect with respect to the financial
condition or the operations of such Borrowing Base Property, (b) material
adverse effect on the Borrowing Base Asset Value of such Borrowing Base
Property, or (c) material adverse effect on the ownership of such Borrowing Base
Property, or that would involve more than $5,000,000 or take longer than six
(6) months to repair or remediate (measured from the date that all required
permits pertaining thereto have been obtained) or such repairs or remediation
would be completed after the Maturity Date;

10.2.2 (i) any default by any Borrower, as tenant under any applicable Approved
Ground Lease, in the observance or performance of any material term, covenant,
or condition of any applicable Approved Ground Lease on the part of such
Borrower to be observed or performed and said default is not cured following the
expiration of any applicable grace and notice periods therein provided, or
(ii) the leasehold estate created by any applicable Approved Ground Lease shall
be surrendered or (iii) any applicable Approved Ground Lease shall cease to be
in full force and effect or (iv) any applicable Approved Ground Lease shall be
terminated or

 

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canceled for any reason or under any circumstances whatsoever, or any of the
material terms, covenants or conditions of any applicable Approved Ground Lease
shall be modified, changed, supplemented, altered, or amended in any manner not
otherwise permitted hereunder without the consent of Lender; or

10.2.3 The improvements comprising a Borrowing Base Property have been damaged
(ordinary wear and tear excepted) and not repaired or are the subject of any
pending or, to any Credit Party’s knowledge, threatened condemnation or adverse
zoning proceeding, except as could not reasonably be expected to cause a
(a) material adverse effect with respect to the financial condition or the
operations of such Borrowing Base Property, (b) material adverse effect on the
Borrowing Base Asset Value of such Borrowing Base Property, (c) material adverse
effect on the ownership of such Borrowing Base Property, or to involve more than
$5,000,000 or take longer than six (6) months to repair or remediate (measured
from the date of receipt of insurance proceeds with respect to such damage or
event) or to be completed after the Maturity Date

(any such condition or event, an “Exclusion Event”) such property shall be
immediately removed from all financial covenant and Borrowing Base-related
calculations contained herein, and applicable provisions of Section 10.3.2 shall
apply. Any such property shall immediately cease to be a “Borrowing Base
Property” hereunder, Schedule I attached hereto shall be deemed to have been
immediately amended to remove such Real Property from the list of Borrowing Base
Properties and the Borrower shall be required, within five (5) Business Days
after such property ceases to qualify as a Borrowing Base Property, to satisfy
all of the conditions set forth in Section 10 with respect to a Borrowing Base
Removal with respect to such property; provided, however, that, if any Real
Property removed as a Borrowing Base Property as a result of an Exclusion Event
or because it ceases to meet the criteria for qualification as such, as set
forth in the definition of “Borrowing Base Property”, subsequently meets such
criteria for qualification, and provided that any applicable Exclusion Event
shall have been cured, repaired or remedied to the reasonable satisfaction of
Lender, such Real Property shall thereafter be included once again as a
Borrowing Base Property, provided that the conditions set forth in Section 10.3
(other than those which remain in effect from its prior inclusion as a Borrowing
Base Property) are satisfied.

10.3 Addition and Removal of Borrowing Base Properties. At any time after the
Effective Date hereof, Borrower shall have the right to cause one or more Real
Properties to be released as a Borrowing Base Property (a “Borrowing Base
Removal”) or to be added as a Borrowing Base Property (a “Borrowing Base
Addition”), provided that no Default or Event of Default shall exist or shall
result therefrom and that each of the following conditions are satisfied:

10.3.1 In connection with a Borrowing Base Addition (including addition of the
Real Properties listed on Schedule I as the initial Borrowing Base Properties on
the Effective Date), upon the satisfaction of the following conditions, Schedule
I attached hereto shall be deemed to have been immediately amended to add the
applicable Real Properties to the list of Borrowing Base Properties set forth
therein:

(a) At least thirty (30) days prior to the date on which Borrower intends for
the Borrowing Base Addition to occur, Borrower shall provide (or shall have
provided) to

 

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Lender (A) the Real Property location, (B) the Real Property purchase price,
(C) either (1) if either not yet acquired, directly or indirectly, or acquired
within six (6) months of Borrower’s intended date for the Borrowing Base
Addition to occur, pro forma revenues and expenses for the Real Property
breaking out the first ninety (90) days following the acquisition of such Real
Property and the existing occupancy level of the Real Property, along with the
applicable purchase and sale agreement, or (2) if such Real Property has been
owned, directly or indirectly, for more than six (6) months, then the financial
statements required pursuant to Sections 4.1.1 and 4.1.2 and (b) hereof, along
with the applicable deed, in each case reasonably acceptable to the Lender,
(D) UCC Searches relating to such Real Property;

(b) Immediately subsequent to the proposed Borrowing Base Addition, the REIT and
Borrower shall remain in compliance with the financial covenants contained in
Section 5.1;

(c) Such Real Property shall comply with the criteria for qualification as a
Borrowing Base Property as set forth in the definition of “Borrowing Base
Property” inclusive of the requirements of Section 10.1.2 hereof, and Borrower
shall have delivered to Lender a Borrowing Base Certificate and an officer’s
certificate of a Responsible Officer certifying as to the compliance of such
Real Property with such criteria and containing such detail in respect thereof
as Lender may require;

(d) Lender shall have received and approved (which approval shall not be
unreasonably withheld, conditioned, or delayed) all due diligence reasonably
required by Lender with respect to such Real Property, a title commitment if the
Real Property has not yet been acquired or a title policy if the Real Property
has been acquired and an updated title report if the Real Property has been
owned for more than six (6) months, an Appraisal, survey, engineering and Phase
I environmental site assessment reports (together with reliance letters in favor
of Lender with respect thereto or reports addressed directly to Lender), UCC
Searches and rent rolls;

(e) Lender shall have received and approved Organizational Documents with
respect to any new Borrower, which approval shall not be unreasonably withheld,
conditioned, or delayed;

(f) The OP shall execute and deliver to Lender a Pledge with respect to OP’s
Equity Interests in the new Borrower, substantially in the form of the Pledge
executed and delivered on the Effective Date;

(g) The applicable Borrower which owns the proposed Borrowing Base Property
shall, execute and deliver to Lender a Mortgage encumbering the proposed
Borrowing Base Addition in accordance with Section 4.31 hereof, substantially in
the form of the Mortgages executed and delivered on the Effective Date;

(h) Any new Borrower shall execute and deliver to Lender a Joinder Agreement;

(i) Lender shall have received (A) written opinions (in the form accepted as of
the Closing Date) from counsel for the Credit Parties covering the
enforceability, perfection

 

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and due authorization of the new Pledge, the Joinder Agreement and the new
Mortgage, and (1) in connection with any opinion of counsel delivered on behalf
of Borrower or Guarantor on the Effective Date, in form and substance
substantially similar to such opinion or (2) in connection with any opinion of
counsel not delivered on behalf of Borrower or Guarantor on the Effective Date,
such other matters as Lender shall reasonably request and (B) such financing
statements or other documents necessary in order to perfect the security
interest created pursuant to such new Pledge and Mortgage, if applicable, as
Lender shall reasonably request;

(j) If such Real Property is held pursuant to an Approved Ground Lease, Lender
shall have received true and correct copies of such Approved Ground Lease and
any guarantees thereof; and (ii) to the extent required by Lender in its
reasonable discretion, recognition agreements and estoppel certificates executed
by the lessor under such Approved Ground Lease, in form and content reasonably
satisfactory to Lender;

(k) Lender shall have received a current property conditions report performed by
an engineer reasonably satisfactory to Lender;

(l) Lender shall have received such additional information that Lender
reasonably requests in order to comply with its ongoing obligations under
applicable “know your customer” and anti-money laundering rules and regulations;

(m) The approval of Lender to the addition of such Real Property as a Borrowing
Base Property shall have been obtained; provided if Lender fails to consent or
reject the Borrower’s request for admission of such property to the Borrowing
Base within 30 days of receipt of all information and due diligence required
hereunder (including the Appraisal), Lender shall be deemed to have approved the
addition of such Real Property; and

(n) Borrower shall have deposited such additional amounts into the Mortgage Tax
Reserve Account as may be estimated by Lender to be necessary to cover recording
charges, title premiums, any applicable mortgage or documentary stamp taxes or
other costs that may be associated with the recording of the applicable Mortgage
encumbering such Real Property after the occurrence of a Default or Event of
Default.

10.3.2 In connection with a Borrowing Base Removal:

(a) Borrower shall deliver to the Lender a Borrowing Base Certificate that
reflects the removal of such property from the Borrowing Base;

(b) Upon the removal of any Borrowing Base Property, based upon the then most
recent information provided by Borrower to Lender pursuant to Section 4.1
hereof, and the Borrowing Base Certificate delivered pursuant to
Section 10.3.2(a), and after adjusting that information to exclude the Net
Operating Income and value attributable to the Borrowing Base Property to be so
removed, and recalculating the Value – Based Borrowing Base Limit and DSCR –
Based Borrowing Base Limit, the REIT and Borrower shall be in compliance with
the financial covenants contained in Section 5.1;

 

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(c) The Real Properties that remain in the Borrowing Base shall be in compliance
with the requirements in the definition of “Borrowing Base Property” and the
covenants set forth in Section 10.1.2 hereof;

(d) To the extent the Borrower is requesting a removal of an Initial Qualified
Property, the lender shall have granted its consent to such removal;

(e) Immediately subsequent to the proposed Borrowing Base Removal, and after
giving effect to the adjustments referenced in Section 10.3.2), Borrower shall
be in compliance with the prepayment covenants contained in Section 2.9.2.

Upon a Borrowing Base Removal in compliance with this Section 9.03(b), Lender
promptly shall release in writing the applicable Pledge of interests in the
Borrower that owns such removed Borrowing Base Property and the applicable
Borrower from the Loan Documents, shall return any Mortgage that was theretofore
delivered with respect to such Borrowing Base Property, and shall execute and
file all documents necessary to effectuate such releases, including, without
limitation, a termination of the UCC financing statement filed in connection
with the applicable Pledge.

 

11. MISCELLANEOUS

11.1 Full Recourse. The Loans are fully recourse to each of the Credit Parties,
and the Lender is expressly permitted to enforce the liability and obligation of
the Credit Parties to perform and observe the obligations contained in the Loan
Documents by any action or proceeding wherein, without limitation, a money
judgment or specific performance shall be sought against any Credit Party, or
any other appropriate action or proceeding to enable the Lender to enforce and
realize upon its interest and rights under the Loan Documents or any other
collateral that may be given to Lender pursuant to the Loan Documents.

11.2 Brokers and Financial Advisors. (a) Borrower hereby represents that it has
dealt with no financial advisors, brokers, underwriters, placement agents,
agents or finders in connection with the Loan other than M. Robert Goldman
(“Broker”) whose fees shall be paid by Borrower pursuant to a separate
agreement. Borrower shall indemnify and hold Lender harmless from and against
any and all claims, liabilities, costs and expenses (including attorneys’ fees,
whether incurred in connection with enforcing this indemnity or defending claims
of third parties) of any kind in any way relating to or arising from a claim by
any Person (including Broker) that such Person acted on behalf of Borrower in
connection with the transactions contemplated herein. The provisions of this
Section 11.2 shall survive the expiration and termination of this Agreement and
the repayment of the Debt.

(b) Notwithstanding anything in Section 11.2(a) above to the contrary, Borrower
hereby acknowledges that (i) at Lender’s sole discretion, Broker may receive
further consideration from Lender relating to the Loan or any other matter for
which Lender may elect to compensate Broker pursuant to a separate agreement
between Lender and Broker and (ii) Lender shall have no obligation to disclose
to Borrower the existence of any such agreement or the amount of any such
additional consideration paid or to be paid to Broker whether in connection with
the Loan or otherwise.

 

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11.3 Survival. This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Lender of the Loan and the execution and delivery to
Lender of the Note, and shall continue in full force and effect so long as any
of the Debt is unpaid or such longer period if expressly set forth in this
Agreement. All Borrower’s covenants and agreements in this Agreement shall inure
to the benefit of the respective legal representatives, successors and assigns
of Lender.

11.4 Lender’s Discretion. Whenever pursuant to this Agreement or any other Loan
Document, Lender exercises any right given to it to approve or disapprove, or
consent or withhold consent, or any arrangement or term is to be satisfactory to
Lender or is to be in Lender’s discretion, the decision of Lender to approve or
disapprove, to consent or withhold consent, or to decide whether arrangements or
terms are satisfactory or not satisfactory, or acceptable or unacceptable or in
Lender’s discretion shall (except as is otherwise specifically herein provided)
be in the sole discretion of Lender and shall be final and conclusive.

11.5 Governing Law.

(a) THIS AGREEMENT, THE NOTE AND THE LOAN DOCUMENTS WERE NEGOTIATED IN THE STATE
OF NEW YORK AND THE PROCEEDS OF THE NOTE DELIVERED PURSUANT HERETO WERE
DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS CREATED
PURSUANT TO THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO
THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT,
TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE
OF NEW YORK SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF ALL LOAN
DOCUMENTS AND THE DEBT. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND
EACH GUARANTOR HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY CLAIM TO ASSERT
THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND
THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.

(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER, GUARANTOR OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE INSTITUTED IN ANY FEDERAL
OR STATE COURT IN NEW YORK COUNTY, NEW YORKAND BORROWER AND EACH GUARANTOR
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY

 

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IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING. BORROWER AND EACH GUARANTOR (i) SHALL GIVE PROMPT NOTICE TO LENDER
OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (ii) MAY AT ANY TIME
AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN
NEW YORK CITY (WHICH OFFICE SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF
PROCESS), AND (iii) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED
AGENT CEASES TO HAVE AN OFFICE IN NEW YORK CITY OR IS DISSOLVED WITHOUT LEAVING
A SUCCESSOR.

11.6 Modification, Waiver in Writing. No modification, amendment, extension,
discharge, termination or waiver of any provision of this Agreement or of any
other Loan Document, nor consent to any departure by Borrower therefrom, shall
in any event be effective unless the same shall be in a writing signed by the
party against whom enforcement is sought, and then such waiver or consent shall
be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein, no notice to or demand on
Borrower shall entitle Borrower to any other or future notice or demand in the
same, similar or other circumstances. Neither any failure nor any delay on the
part of Lender in insisting upon strict performance of any term, condition,
covenant or agreement, or exercising any right, power, remedy or privilege
hereunder, or under any other Loan Document, shall operate as or constitute a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under any Loan Document, Lender shall
not be deemed to have waived any right either to require prompt payment when due
of all other amounts due under the Loan Documents, or to declare an Event of
Default for failure to effect prompt payment of any such other amount.

11.7 Trial by Jury. BORROWER 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 THE 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 BORROWER 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. EITHER PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
OTHER.

11.8 Headings/Exhibits. The Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose. The Exhibits attached hereto, are hereby
incorporated by reference as a part of the Agreement with the same force and
effect as if set forth in the body hereof.

11.9 Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable Legal
Requirements, but if any provision of this Agreement shall be prohibited by or
invalid under applicable Legal

 

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Requirements, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

11.10 Preferences. Upon the occurrence and continuance of an Event of Default,
Lender shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments by Borrower to any portion of the Debt. To the
extent Borrower makes a payment to Lender, or Lender receives proceeds of any
collateral, which is in whole or part subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
received, the Debt or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been
received by Lender. This provision shall survive the expiration or termination
of this Agreement and the repayment of the Debt.

11.11 Waiver of Notice. Borrower shall not be entitled to any notices of any
nature whatsoever from Lender except with respect to matters for which this
Agreement or any other Loan Document specifically and expressly requires the
giving of notice by Lender to Borrower and except with respect to matters for
which Borrower is not, pursuant to applicable Legal Requirements, permitted to
waive the giving of notice. Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which no Loan
Document specifically and expressly requires the giving of notice by Lender to
Borrower.

11.12 Remedies of Borrower. If a claim or adjudication is made that Lender or
any of its agents, has acted unreasonably or unreasonably delayed acting in any
case where by law or under any Loan Document, Lender or any such agent, as the
case may be, has an obligation to act reasonably or promptly, Borrower agrees
that neither Lender nor its agents shall be liable for any monetary damages, and
Borrower’s sole remedy shall be to commence an action seeking injunctive relief
or declaratory judgment. Any action or proceeding to determine whether Lender
has acted reasonably shall be determined by an action seeking declaratory
judgment. Borrower specifically waives any claim against Lender and its agents
with respect to actions properly taken by Lender or its agents on Borrower’s
behalf.

11.13 Prior Agreements. This Agreement and the other Loan Documents contain the
entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements,
understandings and negotiations among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other Loan
Documents.

11.14 Offsets, Counterclaims and Defenses. Borrower hereby waives the right to
assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents, or otherwise offset any
obligations to make payments required under the Loan Documents. Any assignee of
Lender’s interest in and to the Loan Documents shall take the same free and
clear of all offsets, counterclaims or defenses which Borrower may otherwise
have against any assignor of such documents, and no such offset, counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such documents, and any such right to
interpose or assert any such offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.

 

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11.15 Publicity. All news releases, publicity or advertising by Borrower or its
Affiliates through any media intended to reach the general public, which refers
to the Loan Documents, the Loan, Lender or any Affiliate of Lender, or a Loan
purchaser, shall be subject to the prior written approval of Lender, provided
the foregoing shall not apply to the required Securities and Exchange Commission
8K reporting of the Guarantor. Lender shall not have the right to issue any of
the foregoing without Borrower’s prior written approval.

11.16 Confidentiality. The Lender agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Lender on a nonconfidential basis
from a source other than the Borrower. For the purposes of this Section,
“Information” means all information received from any Credit Party relating to
the Credit Party or its business, other than any such information that is
available to the Lender on a nonconfidential basis prior to disclosure by any
Credit Party; provided that, in the case of information received from any Credit
Party after the date hereof, such information is clearly identified at the time
of delivery as confidential. Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.

11.17 No Usury. Borrower and Lender intend at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Lender to contract for, charge, take, reserve or receive a greater
amount of interest than under state law) and that this Section 11.17 shall
control every other agreement in the Loan Documents. If the applicable Legal
Requirements (state or federal) is ever judicially interpreted so as to render
usurious any amount called for under the Note or any other Loan Document, or
contracted for, charged, taken, reserved or received with respect to the Debt,
or if Lender’s exercise of the option to accelerate the maturity of the Loan or
any prepayment by Borrower results in Borrower having paid any interest in
excess of that permitted by applicable Legal Requirements, then it is Borrower’s
and Lender’s express intent that all excess amounts theretofore collected by
Lender shall be credited against the unpaid Principal and all other Debt (or, if
the Debt has been or would thereby be paid in full, refunded to Borrower), and
the provisions of the Loan Documents immediately be deemed reformed and the
amounts thereafter collectible thereunder reduced, without the

 

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necessity of the execution of any new document, so as to comply with applicable
Legal Requirements, but so as to permit the recovery of the fullest amount
otherwise called for thereunder. All sums paid or agreed to be paid to Lender
for the use, forbearance or detention of the Loan shall, to the extent permitted
by applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Loan until payment in full so that the rate or amount of
interest on account of the Debt does not exceed the maximum lawful rate from
time to time in effect and applicable to the Debt for so long as the Debt is
outstanding. Notwithstanding anything to the contrary contained in any Loan
Document, it is not the intention of Lender to accelerate the maturity of any
interest that has not accrued at the time of such acceleration or to collect
unearned interest at the time of such acceleration.

11.18 Conflict; Construction of Documents. In the event of any conflict between
the provisions of this Agreement and any of the other Loan Documents, the
provisions of this Agreement shall control. The parties hereto acknowledge that
each is represented by separate counsel in connection with the negotiation and
drafting of the Loan Documents and that the Loan Documents shall not be subject
to the principle of construing their meaning against the party that drafted
them.

11.19 No Third Party Beneficiaries. The Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in any Loan Document shall
be deemed to confer upon anyone other than the Lender and Borrower any right to
insist upon or to enforce the performance or observance of any of the
obligations contained therein.

11.20 Assignment. The Loan, the Note, the Loan Documents and/or Lender’s rights,
title, obligations and interests therein may be assigned by Lender and any of
its successors and assigns to any Person at any time in its discretion, in whole
or in part, whether by operation of law (pursuant to a merger or other successor
in interest) or otherwise. Upon such assignment, all references to Lender in
this Loan Agreement and in any Loan Document shall be deemed to refer to such
assignee or successor in interest and such assignee or successor in interest
shall thereafter stand in the place of Lender. Borrower may not assign its
rights, title, interests or obligations under this Loan Agreement or under any
of the Loan Documents.

11.21 Set-Off. If an Event of Default shall have occurred and be continuing,
Lender and its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by applicable Legal Requirements, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final, in whatever currency) at any time held, and other
obligations (in whatever currency) at any time owing, by Lender or any such
Affiliate, to or for the credit or the account of Borrower against any and all
of the obligations of Borrower now or hereafter existing under this Agreement or
any other Loan Document to Lender or its respective Affiliates, irrespective of
whether or not Lender or its Affiliate shall have made any demand under this
Agreement or any other Loan Document and although such obligations of Borrower
may be contingent or unmatured or are owed to a branch, office or Affiliate of
Lender different from the branch, office or Affiliate holding such deposit or
obligated on such indebtedness. The rights of Lender and its Affiliates under
this Section are in addition to other rights and remedies (including other
rights of setoff) that Lender or its Affiliates may have. Lender agrees to
notify Borrower and Lender promptly after any such setoff and application;
provided that the failure to give such notice shall not affect the validity of
such setoff and application.

 

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11.22 Keepwell in Respect of Swap Debt. Each Credit Party that is a Qualified
ECP Guarantor at the time any Borrower either becomes jointly and severally
liable for any Swap Obligations pursuant to the terms of this Agreement or
grants a mortgage, pledge or other security interest to secure Swap Obligations,
hereby jointly and severally, absolutely, unconditionally and irrevocably
undertakes to provide such funds or other support to each Borrower with respect
to such Swap Obligations as may be needed by such Borrower from time to time to
honor all of its obligations under the Loan Documents in respect of such Swap
Obligations (provided, however, that each Qualified ECP Guarantor shall only be
liable under this Section 11.21 for the maximum amount of such liability that
can be hereby incurred without rendering such Qualified ECP Guarantor’s
obligations under this Section 11.21 voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer, and not for any greater amount).
The obligations and undertakings of each Qualified ECP Guarantor under this
Section 11.21shall remain in full force and effect until the Obligations have
been indefeasibly paid and performed in full. Each Qualified ECP Guarantor
intends this Section 11.21 to constitute, and this Section 11.21 shall be deemed
to constitute, a “keepwell, support, or other agreement” for the benefit of,
each Borrower for all purposes of the Commodity Exchange Act.

11.23 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. This
Agreement shall become effective when it shall have been executed by Lender and
when Lender shall have received counterparts hereof that, when taken together,
bear the signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by facsimile or in electronic
(i.e., “pdf” or “tif”) format shall be effective as delivery of a manually
executed counterpart of this Agreement.

11.24 Limitation on Liability of Lender’s Officers, Employees. Any obligation or
liability whatsoever of Lender which may arise at any time under this Agreement
or any other Loan Document shall be satisfied, if at all, out of Lender’s
respective assets only. No such obligation or liability shall be personally
binding upon, nor shall resort for the enforcement thereof be had to, the
property of Lender’s shareholders, directors, officers, employees or agents,
regardless of whether such obligation or liability is in the nature of contract,
tort or otherwise.

11.25 Promotional Material. Borrower authorizes Lender to issue press releases,
advertisements and other promotional materials in connection with Lender’s own
promotional and marketing activities, and describing the basic terms of the Loan
consistent with information found on a “tombstone” and Lender’s participation in
the Loan. All references to Lender contained in any press release, advertisement
or promotional material issued by Borrower shall be approved in writing by
Lender in advance of issuance.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
duly executed by their duly authorized representatives, all as of the day and
year first above written.

 

BORROWER: 114-15 GUY BREWER BOULEVARD, LLC, a New York limited liability company
By:   GTJ Realty, LP, a Delaware limited partnership, its sole member   By:  
GTJ GP, LLC, a Maryland limited liability company, its general partner     By:  
GTJ REIT Inc., a Maryland corporation, its manager       By:  

LOGO [g710803ex10_1pg122a.jpg]

       

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

 

49-19 ROCKAWAY BEACH BOULEVARD, LLC, a New York limited liability company By:  
GTJ Realty, LP, a Delaware limited partnership, its sole member   By:   GTJ GP,
LLC, a Maryland limited liability company, its general partner     By:   GTJ
REIT Inc., a Maryland corporation, its manager       By:  

LOGO [g710803ex10_1pg122b.jpg]

       

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

[Signature Page to Loan Agreement]

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

612 WORTMAN AVENUE, LLC, a New York limited liability company By:   GTJ Realty,
LP, a Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a
Maryland limited liability company, its general partner     By:   GTJ REIT Inc.,
a Maryland corporation, its manager       By:  

LOGO [g710803ex10_1pg123a.jpg]

       

 

        Name:   Paul Cooper         Title:   Chief Executive Officer 23-85 87TH
STREET, LLC, a New York limited liability company By:   GTJ Realty, LP, a
Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a Maryland
limited liability company, its general partner     By:   GTJ REIT Inc., a
Maryland corporation, its manager       By:  

LOGO [g710803ex10_1pg123b.jpg]

       

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

 

[Signature Page to Loan Agreement]

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

GUARANTORS:

GTJ REIT, INC.,

a Maryland corporation

By:   LOGO [g710803ex10_1pg124a.jpg]  

 

  Name:   Paul Cooper   Title:   Chief Executive Officer

 

GTJ REALTY, LP,

a Delaware limited partnership

By:   GTJ GP, LLC, a Maryland limited liability company, its general partner  
By:   GTJ REIT Inc., a Maryland corporation, its manager     By:   LOGO
[g710803ex10_1pg124b.jpg]      

 

      Name:   Paul Cooper       Title:   Chief Executive Officer

 

[Signature Page to Loan Agreement]

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

LENDER: CAPITAL ONE, NATIONAL ASSOCIATION By:   LOGO [g710803ex10_1pg125.jpg]  

 

Name:   Frederick H. Denecke Title:   Senior Vice President

 

[Signature Page to Loan Agreement]

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

Schedule I

Closing Borrowing Base Properties

 

Owner:

  

Property Address:

612 Wortman Avenue, LLC    612 Wortman Avenue, Brooklyn, New York 49-19 Rockaway
Beach Boulevard, LLC    49-19 Rockaway Beach Boulevard, Arverne, New York 114-15
Guy Brewer Boulevard, LLC    114-15 Guy Brewer Boulevard, Jamaica, New York
23-85 87th Street, LLC    23-25 87th Street and 88-08 23rd Avenue, East
Elmhurst, New York

 

Schedule I – Page 1

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Schedule II

Original GTJ Properties

 

Owner:

  

Property Address:

165-25 147th Ave, LLC    165-25 147th Avenue, Jamaica, New York 49-19 Rockaway
Beach Boulevard, LLC    49-19 Rockaway Beach Boulevard, Arverne, New York 85-01
24th Ave, LLC    85-01 24th Avenue, East Elmhurst, New York 114-15 Guy Brewer
Boulevard, LLC    114-15 Guy Brewer Boulevard, Jamaica, New York 612 Wortman
Avenue LLC    612 Wortman Avenue, Brooklyn, New York 23-85 87th Street, LLC   
23-25 87th Street and 88-08 23rd Avenue, East Elmhurst, New York Farm Springs
Road LLC    8 Farm Springs Road, Farmington, Connecticut

 

Schedule II – Page 1

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Schedule III

Recently Contributed WU/Lighthouse Properties

(See attached)

 

Schedule III – Page 1

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

Recently Contributed GTJ Properties

 

Property Owner

  

Property Address

WU/LH 466 Bridgeport L.L.C.    466 Bridgeport Avenue, Shelton, CT Wu/LH 470
Bridgeport L.L.C.    470 Bridgeport Avenue, Shelton, CT Wu/LH 950 Bridgeport
L.L.C.    950 Bridgeport Avenue and 974 Bridgeport    Avenue, Milford, CT Wu/LH
12 Cascade L.L.C.    12 Cascade Boulevard, Orange, CT Wu/LH 15 Executive L.L.C.
   15 Executive Boulevard, Orange, CT WU/LH 35 Executive L.L.C.    35 Executive
Boulevard, Orange, CT WU/LH 15 Progress L.L.C.    15 Progress Drive, Shelton, CT
Wu/LH 22 Marsh Hill L.L.C.    22 Marsh Hill Road, Orange, CT Wu/LH 25 Executive
L.L.C.    25 Executive Boulevard, Orange, CT Wu/LH 269 Lambert L.L.C.    269
Lambert Road, Orange, CT Wu/LH 103 Fairview Park L.L.C.    103 Fairview Park
Drive, Elmsford, NY Wu/LH 412 Fairview Park L.L.C.    412 Fairview Park Drive,
Elmsford, NY Wu/LH 401 Fieldcrest L.L.C.    401 Fieldcrest Avenue, Elmsford, NY
Wu/LH 404 Fieldcrest L.L.C.    404 Fieldcrest Drive, Elmsford, NY Wu/LH 36
Midland L.L.C.    36 Midland Avenue, Port Chester, NY Wu/LH 100-110 Midland
L.L.C.    100-110 Midland Avenue, Port Chester, NY Wu/LH 112 Midland L.L.C.   
112 Midland Avenue, Port Chester, NY Wu/LH 199 Ridgewood L.L.C.    199 Ridgewood
Drive, Elmsford, NY Wu/LH 203 Ridgewood L.L.C.    203 Ridgewood Drive, Elmsford,
NY Wu/LH 8 Slater L.L.C.    8 Slater Street, Port Chester, NY Wu/LH 100 American
L.L.C.    100 American Road, Morris Plains, NJ Wu/LH 200 American L.L.C.    200
American Road, Morris Plains, NJ Wu/LH 300 American L.L.C.    300 American Road,
Morris Plains, NJ Wu/LH 400 American L.L.C.    400 American Road, Morris Plains,
NJ Wu/LH 500 American L.L.C.    500 American Road, Morris Plains, NJ

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

Schedule IV

Organizational Chart/Subsidiaries

(See attached)

 

Schedule IV – Page 1

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

UPREIT STRUCTURE CHART

LOGO [g710803ex10_1pg131.jpg]

 

* 16.67% of said interest is pledged to PNC Bank, National Association.

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

Schedule V

Applicable Margin Leverage Ratio Grid

 

Consolidated Leverage Ratio

   Applicable Margin for
Eurodollar Loans     Applicable Margin for
Base Rate Loans  

Less than 40%

     2.00 %      1.00 % 

Greater than or equal to 40% but less than 45%

     2.25 %      1.25 % 

Greater than or equal to 45% but less than 50%

     2.50 %      1.50 % 

Greater than or equal to 50% but less than 55%

     2.75 %      1.75 % 

Greater than or equal to 55% but less than 60%

     3.00 %      2.00 % 

Greater than or equal to 60%

     3.35 %      2.35 % 

 

Schedule V – Page 1

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Schedule VI

Special Purpose Entity Requirements

A “Special Purpose Entity” means a corporation, limited partnership or limited
liability company which at all times since its formation and at all times
thereafter, except to the extent approved by Lender in writing:

(i) was and will be organized solely for the purpose of owning the Property;

(ii) has not engaged and will not engage in any business unrelated to the
ownership of the Property;

(iii) has not had and will not have any assets other than those related to the;

(iv) has not engaged, sought or consented to and will not engage in, seek or
consent to any dissolution, winding up, liquidation, consolidation, merger,
asset sale (except as expressly permitted by this Agreement), transfer of
partnership or membership interests or the like, or amendment of its limited
partnership agreement, articles of incorporation, articles of organization,
certificate of formation or operating agreement (as applicable);

(v) has remained and will remain solvent and has maintained and will maintain
adequate capital in light of its contemplated business operations;

(vi) has not failed and will not fail to correct any known misunderstanding
regarding the separate identity of such entity;

(vii) has maintained and will maintain its accounts, books and records separate
from any other Person and will file its own tax returns;

(viii) has maintained and will maintain its books, records, resolutions and
agreements as official records;

(ix) has not commingled and will not commingle its funds or assets with those of
any other Person;

(x) has held and will hold its assets in its own name;

(xi) has conducted and will conduct its business in its name only, and has not
and will not use any trade name;

(xii) has maintained and will maintain its financial statements, accounting
records and other entity documents separate from any other Person;

(xiii) has paid and will pay its own liabilities, including the salaries of its
own employees, out of its own funds and assets;

 

Schedule VI – Page 1

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

(xiv) has observed and will observe all partnership, corporate or limited
liability company formalities, as applicable;

(xv) has maintained and will maintain an arm’s-length relationship with its
Affiliates;

(xvi) has and will have no indebtedness other than the Permitted Indebtedness;

(xvii) has not and will not assume or guarantee or become obligated for the
debts of any other Person or hold out its credit as being available to satisfy
the obligations of any other Person except for the Loan;

(xviii) has not and will not acquire obligations or securities of its partners,
members or shareholders;

(xix) has allocated and will allocate fairly and reasonably shared expenses,
including shared office space, and uses separate stationery, invoices and
checks;

(xx) except in connection with the Loan, has not pledged and will not pledge its
assets for the benefit of any other Person;

(xxi) has held itself out and identified itself and will hold itself out and
identify itself as a separate and distinct entity under its own name and not as
a division or part of any other Person;

(xxii) has maintained and will maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its individual
assets from those of any other Person;

(xxiii) has not made and will not make loans to any Person;

(xxiv) has not identified and will not identify its partners, members or
shareholders, or any Affiliate of any of them, as a division or part of it;

(xxv) has not entered into or been a party to, and will not enter into or be a
party to, any transaction with its partners, members, shareholders or Affiliates
except in the ordinary course of its business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arm’s-length transaction with an unrelated third party;

(xxvi) has and will have no obligation to indemnify its partners, officers,
directors, or members, as the case may be, or has such an obligation that is
fully subordinated to the Debt and will not constitute a claim against it if
cash flow in excess of the amount required to pay the Debt is insufficient to
pay such obligation; and

(xxvii) will consider the interests of its creditors in connection with all
corporate, partnership or limited liability company actions, as applicable.

 

Schedule VI – Page 2

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Schedule VII

Borrowing Base Calculations

114-15 Guy Brewer Boulevard, LLC, 49-19 Rockaway Beach Boulevard, LLC,

612 Wortman Avenue LLC, and 23-85 87th Street, LLC

“As Is’ Appraised Values:

 

114-15 Guy Brewer Boulevard

   $ 29,900,000   

49-19 Rockaway Beach Boulevard

   $ 10,900,000   

612 Wortman Avenue

   $ 37,700,000   

23-85 87th Street

   $ 42,000,000      

 

 

     $ 120,500,000   

Proforma Stabilized Net Operating Income as of Fiscal Year 2014:

 

Avis Rent A Car System, LLC

   $ 2,091,423   

The City of New York (114-15 Guy Brewer)

   $ 1,646,500   

The City of New York (49-19 Rockaway)

   $ 653,000   

Aqua Duck Flea Market LLC

   $ 639,483   

L&M Bus Corp.

   $ 865,729   

Metropolitan Paper Recycling, Inc.

   $ 265,918   

Motorcycle Safety School, Inc.

   $ 113,965      

 

 

     $ 6,276,018   

Covenant Requirements:

1) Maximum Borrowing Base Leverage of Not More Than 50.0% of Aggregate “As Is”
Appraised Values.

(Aggregate “As Is’ Appraised Values = $120,500,000 as of Date of Loan Closing;
Leverage Limitation of $60,250,000. Loan Commitment is $45,000,000, with
resultant Leverage of 37.34%.)

2) Minimum Borrowing Base Debt Service Coverage of at Least 1.50x.

(Aggregate Proforma Stabilized Net Operating Income for 2014 of $5,439,799 (Per
Restriction on Borrowing Base Net Operating Income) and Assumed Unsecured Debt
Service of $3,237,573 (Based on Assumed Unsecured Debt of $45,000,000 at 6.00%
and 30-Year Amortization). Resultant Coverage of 1.68x.)

3) Minimum Borrowing Base Debt Yield of at Least 12.00%.

(Aggregate Proforma Stabilized Net Operating Income for 2014 of $5,439,799 (Per
Restriction on Borrowing Base Net Operating Income) and Maximum Loan
Availability of $45,000,000. Resultant Debt Yield of 12.09%.)

 

Schedule VII – Page 1

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Borrowing Base Restrictions:

1) After Six Months from Date of Loan Closing, No Single Tenant Can Account for
More Than 20.0% of Borrowing Base Net Operating Income (NOI) (or $1,255,204),
Excluding The City of New York.

For Loan Availability Purposes at Date of Loan Closing, Capital One National
Association has Calculated the Restricted Borrowing Base NOI to be $5,439,799
Based on the Following Amounts:

 

Avis Rent A Car System, LLC

   $ 1,255,204      

($836,219 Reduction from 2014 NOI)

The City of New York (114-15 Guy Brewer)

   $ 1,646,500      

(Excluded)

The City of New York (49-19 Rockaway)

   $ 653,000      

(Excluded)

Aqua Duck Flea Market LLC

   $ 639,483      

L&M Bus Corp.

   $ 865,729      

Metropolitan Paper Recycling, Inc.

   $ 265,918      

Motorcycle Safety School, Inc.

   $ 113,965         

 

 

        $ 5,439,799      

2) After Twelve Months from Date of Loan Closing, No One Property Can Account
for More Than 30.0% of Borrowing Base Value (Value Derived from “As Is’
Appraisal Report).

3) After Twelve Months from Date of Loan Closing, No Alternative Use Property
Can Account for More Than 15.0% of Borrowing Base Net Operating Income (NOI) in
Determining the Minimum Borrowing Base Debt Service Coverage of 1.50x.

4) Minimum Occupancy of at Least 80.0% for Each Borrowing Base Property.

For Loan Availability Purposes at Date of Loan Closing, Capital One National
Association Acknowledges the Following Occupancy Rates for Properties Comprising
the Initial Borrowing Base:

 

114-15 Guy Brewer Boulevard

     100 % 

49-19 Rockaway Beach Boulevard

     100 % 

612 Wortman Avenue

     100 % 

23-85 87th Street

     100 % 

5) Each Single-Tenant Property Must Have a Remaining Lease term of at Least Six
Years from Date of Loan Closing.

For Loan Availability Purposes at Date of Loan Closing, Capital One National
Association Acknowledges the Following Single-Tenant Property Lease Expirations:

 

114-15 Guy Brewer Boulevard (The City of New York)    Expiration of 12-31-2027
49-19 Rockaway Beach Boulevard (The City of New York)    Expiration of
12-31-2027 23-85 87th Street (Avis Rent A Car System)    Expiration of
10-31-2023

 

Schedule VII – Page 2

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

6) If the Borrowing Base Includes a Property Defined as a Warehouse/Distribution
Facility, the Tenant Must Have an Investment Grade Rating and the Remaining
Lease Term Must be at Least Eight Years from Date of Inclusion Within the
Borrowing Base.

7) Properties Under Ground Leases Can Account for No More than 10.0% of
Borrowing Base Net Operating Income.

 

Schedule VII – Page 3

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Exhibit A

Loan Request

Form of Request for Advance

Capital One, National Association

 

        

 

        

Attention: [                    ]

Re: 114-15 GUY BREWER BOULEVARD, LLC, 49-19 ROCKAWAY BEACH BOULEVARD, LLC, 612
WORTMAN AVENUE, LLC, AND 23-85 87TH STREET, LLC, each a New York limited
liability company (“Borrower”)

Loan #                      (“Loan”)

Ladies and Gentlemen:

Pursuant to the terms of that certain Loan Agreement dated as of [            ,
2014 (the “Loan Agreement”), and the representations and warranties set forth
therein and herein, Borrower hereby submits a request for an advance as set
forth below. The form of Interest Rate Election Request for the Advance is
attached hereto. Capitalized terms have the same meanings as in the Loan
Agreement.

 

(a) the aggregate amount of the requested Borrowing $        ;

 

(b) the date of such Borrowing, which shall be a Business Day
                    ;

 

(c) the requested Borrowing shall be a Eurodollar Loan or a Base Rate Loan; and

 

(d) the location and number of Borrower’s account to which funds are to be
disbursed                     

This request for advance (“Request”) shall be deemed to be a representation by
Borrower and of the person/entity signing this Request (in the case of the
person/entity signing this Request, to person’s/entity’s knowledge) that (A) no
Default or Event of Default has occurred or will exist upon the making of this
requested disbursement; (B) the representations and warranties contained in the
Loan Agreement and in the other Loan Documents are, as of the date hereof, true,
correct and complete in all material respects; (C) all information set forth in
this Request, and on any exhibit attached hereto is true, correct and complete
in all material respects; and (D) all conditions precedent to the disbursement
to be made in connection with this Request as required under the Loan Agreement
and the other Loan Documents, have been satisfied.

[No further text on this page.]

 

Exhibit A – Page 1

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

This Request is submitted as of             , 20    .

 

BORROWER: 114-15 GUY BREWER BOULEVARD, LLC, a New York limited liability company
By:   GTJ Realty, LP, a Delaware limited partnership, its sole member   By:  
GTJ GP, LLC, a Maryland limited liability company, its general partner     By:  
GTJ REIT Inc., a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer 49-19
ROCKAWAY BEACH BOULEVARD, LLC, a New York limited liability company By:   GTJ
Realty, LP, a Delaware limited partnership, its sole member   By:   GTJ GP, LLC,
a Maryland limited liability company, its general partner     By:   GTJ REIT
Inc., a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

 

Exhibit A – Page 2

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

612 WORTMAN AVENUE, LLC, a New York limited liability company By:   GTJ Realty,
LP, a Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a
Maryland limited liability company, its general partner     By:   GTJ REIT Inc.,
a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer 23-85 87TH
STREET, LLC, a New York limited liability company By:   GTJ Realty, LP, a
Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a Maryland
limited liability company, its general partner     By:   GTJ REIT Inc., a
Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

 

Exhibit A – Page 3

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Exhibit B

Compliance Certificate

Form of Compliance Certificate

Financial Statement Date:             ,         

 

To: Capital One, National Association

Ladies and Gentlemen:

Reference is made to that certain Loan Agreement, dated [            ], 2014 (as
amended, modified, supplemented, extended, renewed or replaced from time to
time, the “Loan Agreement” the terms defined therein being used herein as
therein defined), among 114-15 GUY BREWER BOULEVARD, LLC, 49-19 ROCKAWAY BEACH
BOULEVARD, LLC, 612 WORTMAN AVENUE, LLC, AND 23-85 87TH STREET, LLC, each a New
York limited liability company (the “Borrower”) and Capital One, National
Association (“Lender”).

The undersigned, hereby certifies as of the date hereof that he/she is the
[            ] of Borrower, and that, as such, he/she is authorized to execute
and deliver this Certificate to Lender on the behalf of Borrower, and that:

[Use following paragraph I for fiscal year-end financial statements]

1. Borrower has delivered the year-end consolidated financial statements of
Borrower, required by Section 4.1.1 of the Loan Agreement for the fiscal year
ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section.

[Use following paragraph I for fiscal quarter-end financial statements]

1. Borrower has delivered the financial statements of Borrower required by
Section 4.2.2 of the Loan Agreement for the fiscal quarter ended as of the above
date. Such financial statements fairly present the financial condition, results
of operations and cash flows of Borrower in accordance with GAAP as at such date
and for such period, subject only to normal year-end audit adjustments and the
absence of footnotes.

2. The undersigned has reviewed and is familiar with the terms of the Loan
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and condition (financial or otherwise) of
Borrower during the accounting period covered by such financial statements.

3. A review of the activities of Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period Borrower performed and observed all their obligations
under the Loan Documents, and

 

Exhibit B – Page 1

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

[select one:]

[to the best knowledge of the undersigned, during such fiscal period Borrower
performed and observed each covenant and condition of the Loan Documents
applicable to it, and no Default has occurred and is continuing.]

—or—

[to the best knowledge of the undersigned, during such fiscal period the
following covenants or conditions have not been performed or observed and the
following is a list of each such Default and its nature and status:]

4. The representations and warranties of the Borrower contained in Section 3 of
the Loan Agreement, and any representations and warranties of the Borrower and
Guarantor that are contained in any document furnished at any time under or in
connection with the Loan Documents, are true and correct on and as of the date
hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date.

5. The financial covenant analyses and information set forth on Schedule 1
attached hereto are true and accurate on and as of the date of this Compliance
Certificate.

[Remainder of Page Intentionally Left Blank]

 

Exhibit B – Page 2

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

IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as
of

 

BORROWER: 114-15 GUY BREWER BOULEVARD, LLC, a New York limited liability company
By:   GTJ Realty, LP, a Delaware limited partnership, its sole member   By:  
GTJ GP, LLC, a Maryland limited liability company, its general partner     By:  
GTJ REIT Inc., a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer 49-19
ROCKAWAY BEACH BOULEVARD, LLC, a New York limited liability company By:   GTJ
Realty, LP, a Delaware limited partnership, its sole member   By:   GTJ GP, LLC,
a Maryland limited liability company, its general partner     By:   GTJ REIT
Inc., a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

 

Exhibit B – Page 3

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

612 WORTMAN AVENUE, LLC, a New York limited liability company By:   GTJ Realty,
LP, a Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a
Maryland limited liability company, its general partner     By:   GTJ REIT Inc.,
a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer 23-85 87TH
STREET, LLC, a New York limited liability company By:   GTJ Realty, LP, a
Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a Maryland
limited liability company, its general partner     By:   GTJ REIT Inc., a
Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

 

Exhibit B – Page 4

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

SCHEDULE 1

to the Compliance Certificate

($ in 000’s)

Statement Date:             , 20    

1. DETAILED CALCULATIONS TO BE ATTACHED

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

Exhibit C

Interest Rate Selection Request

Form of Interest Rate Election Request

 

To: Capital One, National Association

Ladies and Gentlemen:

Reference is made to that certain Loan Agreement dated as of [            , 2014
(as modified and in effect from time to time, the “Loan Agreement”) between the
undersigned and Capital One, National Association. Terms used but not defined in
this Interest Rate Election Request have the respective meanings assigned to
such terms in the Loan Agreement.

Pursuant to Section 2.3.1 of the Loan Agreement, for the Interest Period
beginning on [            ] 20[    ], the undersigned notifies you that it
hereby elects LIBOR contract rate with a:

 

  ¨ One month maturity

 

  ¨ Two month maturity

 

  ¨ Three month maturity

[Remainder of Page Intentionally Left Blank]

 

Exhibit C – Page 1

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

BORROWER: 114-15 GUY BREWER BOULEVARD, LLC, a New York limited liability company
By:   GTJ Realty, LP, a Delaware limited partnership, its sole member   By:  
GTJ GP, LLC, a Maryland limited liability company, its general partner     By:  
GTJ REIT Inc., a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper .         Title:   Chief Executive Officer

 

49-19 ROCKAWAY BEACH BOULEVARD, LLC, a New York limited liability company By:  
GTJ Realty, LP, a Delaware limited partnership, its sole member   By:   GTJ GP,
LLC, a Maryland limited liability company, its general partner     By:   GTJ
REIT Inc., a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

 

Exhibit C – Page 2

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

612 WORTMAN AVENUE, LLC, a New York limited liability company By:   GTJ Realty,
LP, a Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a
Maryland limited liability company, its general partner     By:   GTJ REIT Inc.,
a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

 

23-85 87TH STREET, LLC, a New York limited liability company By:   GTJ Realty,
LP, a Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a
Maryland limited liability company, its general partner     By:   GTJ REIT Inc.,
a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

 

Exhibit C – Page 3

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

Exhibit D

Form of Borrowing Base Certificate

 

Exhibit D – Page 1

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

FORM OF BORROWING BASE CERTIFICATE

 

TO:

  Capital One, National Association (“Lender”)

RE:

  Loan Agreement dated as of April 8, 2014 (as amended from time to time, the
“Loan Agreement”) among Lender, 114-15 Guy Brewer Boulevard, LLC, 49-19 Rockaway
Beach Boulevard, LLC, 612 Wortman Avenue, LLC and 23-85 87th Street, LLC, as
Borrowers (together with each other party that may become a Borrower thereto
(collectively, the “Borrowers”), and GTJ REIT, Inc. and GTJ Realty, LP, as
Guarantors

This Borrowing Base Certificate is submitted by Borrower to Lender pursuant to
the provisions of the Loan Agreement. Capitalized terms used herein which are
not otherwise specifically defined shall have the same meaning herein as in the
Loan Agreement.

Calculations of the Borrowing Base are set forth on the Certificates annexed
hereto.

The Borrower hereby further certifies, warrants and represents to the Lender
that: (i) to the best of the Borrower’s knowledge, the financial information
provided by the Borrower to the Lender herein is true and accurate in all
material respects; and (ii) to the best of the Borrower’s knowledge, an Event of
Default which is continuing has not occurred under the Loan Agreement or any of
the other Loan Documents.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

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

Executed as an instrument under seal as of the          day of             ,
20    .

 

BORROWER: 114-15 GUY BREWER BOULEVARD, LLC, a New York limited liability company
By:   GTJ Realty, LP, a Delaware limited partnership, its sole member   By:  
GTJ GP, LLC, a Maryland limited liability company, its general partner     By:  
GTJ REIT Inc., a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer 49-19
ROCKAWAY BEACH BOULEVARD, LLC, a New York limited liability company By:   GTJ
Realty, LP, a Delaware limited partnership, its sole member   By:   GTJ GP, LLC,
a Maryland limited liability company, its general partner     By:   GTJ REIT
Inc., a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

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

612 WORTMAN AVENUE, LLC, a New York limited liability company By:   GTJ Realty,
LP, a Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a
Maryland limited liability company, its general partner     By:   GTJ REIT Inc.,
a Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer 23-85 87TH
STREET, LLC, a New York limited liability company By:   GTJ Realty, LP, a
Delaware limited partnership, its sole member   By:   GTJ GP, LLC, a Maryland
limited liability company, its general partner     By:   GTJ REIT Inc., a
Maryland corporation, its manager       By:  

 

        Name:   Paul Cooper         Title:   Chief Executive Officer

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

Borrowing Base Calculation

(Attached)

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

Exhibit E

Joinder Agreement

THIS JOINDER AGREEMENT (“Joinder Agreement”) is executed as of             ,
20    , by                     , a                      (“Joining Party”), and
delivered to Capital One, National Association, as Agent, pursuant to §10.3.1(h)
of the Loan Agreement dated as of April 8, 2014, as from time to time in effect
(the “Loan Agreement”), among 114-15 Guy Brewer Boulevard, LLC, 49-19 Rockaway
Beach Boulevard, LLC, 612 Wortman Avenue, LLC, and 23-85 87th Street, LLC
(together with any other Borrowers that become a party to the Loan Agreement
pursuant to Section 10.3 thereof, each a “Borrower”, and collectively, the
“Borrowers”), GTJ Realty, LP, a Delaware limited liability company, and GTJ
REIT, Inc., a Maryland Corporation, as guarantors, and Capital One, National
Association (“Lender”). Terms used but not defined in this Joinder Agreement
shall have the meanings defined for those terms in the Loan Agreement.

RECITALS

A. Joining Party is required, pursuant to §10.3 of the Loan Agreement, to become
a Borrower under the Loan Agreement as a condition to effectuating a Borrowing
Base Addition.

B. Joining Party expects to realize direct and indirect benefits as a result of
the availability to Borrower of the credit facilities under the Loan Agreement.

NOW, THEREFORE, Joining Party agrees as follows:

AGREEMENT

1. Joinder. By this Joinder Agreement, Joining Party hereby becomes a “Borrower”
under the Loan Agreement and the other Loan Documents with respect to all the
Obligations of Borrower now or hereafter incurred under the Loan Agreement and
the other Loan Documents. Joining Party agrees that Joining Party is and shall
be bound by, and hereby assumes, all representations, warranties, covenants,
terms, conditions, duties and waivers applicable to a Borrower under the Loan
Agreement and the other Loan Documents.

2. Representations and Warranties of Joining Party. Joining Party represents and
warrants to Lender that, as of the Effective Date (as defined below), except as
disclosed in writing by Joining Party to Lender on or prior to the date hereof
and approved by the Lender in writing (which disclosures shall be deemed to
amend the Schedules and other disclosures delivered as contemplated in the Loan
Agreement), the representations and warranties contained in the Loan Agreement
and the other Loan Documents are true and correct in all material respects as
applied to Joining Party as a Borrower on and as of the Effective Date as though
made on that date. As of the Effective Date, all covenants and agreements in the
Loan Documents of Borrower are true and correct with respect to Joining Party
and no Default or Event of Default shall exist or might exist upon the Effective
Date in the event that Joining Party becomes a Borrower.

 

Exhibit E – Page 1

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

3. Joint and Several. Joining Party hereby agrees that, as of the Effective
Date, the Loan Documents heretofore delivered to Lender shall be a joint and
several obligation of Joining Party to the same extent as if executed and
delivered by Joining Party, and upon request by Lender, will promptly become a
party to the Loan Agreement to confirm such obligation.

4. Further Assurances. Joining Party agrees to execute and deliver such other
instruments and documents and take such other action, as the Lender may
reasonably request, in connection with the transactions contemplated by this
Joinder Agreement.

5. GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACTUAL OBLIGATION
UNDER, AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
RULES OF ANY JURISDICTION).

6. Counterparts. This Agreement may be executed in any number of counterparts
which shall together constitute but one and the same agreement.

7. The effective date (the “Effective Date”) of this Joinder Agreement is
            , 20    .

IN WITNESS WHEREOF, Joining Party has executed this Joinder Agreement under seal
as of the day and year first above written.

 

“JOINING PARTY”     , a   By:   Name:   Title:  

 

ACKNOWLEDGED: CAPITAL ONE, NATIONAL ASSOCIATION By: Its: [Printed Name and
Title]

 

Exhibit E – Page 2