Exhibit
10.1

     

    
      

    

     

    EXCHANGE
AGREEMENT

     

    among

     

    BRT
REALTY TRUST

     

    and

     

    TABERNA
PREFERRED FUNDING IV, LTD.,

     

    TABERNA
PREFERRED FUNDING V, LTD.,

     

    and

     

    TABERNA
PREFERRED FUNDING VI, LTD.

     

    Dated as
of May 26, 2009

     

    
      
        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXCHANGE
AGREEMENT

     

    THIS
EXCHANGE AGREEMENT, dated as of May 26, 2009 (this “Agreement”), is entered into
by and among BRT REALTY TRUST, a Massachusetts business trust (the “Company”) and TABERNA
PREFERRED FUNDING IV, LTD. (“Taberna IV”), TABERNA
PREFERRED FUNDING V, LTD. (“Taberna V”) and TABERNA PREFERRED
FUNDING VI, LTD. (“Taberna VI”, and together
with Taberna IV and Taberna V, collectively, “Taberna”).

     

    RECITAL:

     

    A.           Reference
is made to (i) that certain Junior Subordinated Indenture dated as of March 21,
2006 (the “March
Indenture”) and (ii) that certain Junior Subordinated Indenture dated as
of April 27, 2006 (the “April
Indenture” and together with the March Indenture, the “Existing Indentures”), each by
and between the Company and The Bank of New York Mellon Trust Company, National
Association (“BNYMTC”)
(as successor to JPMorgan Chase Bank, National Association, as trustee, the
“Existing Indenture
Trustee”).

     

    B.           Reference
is made to (i) that certain Amended and Restated Trust Agreement dated as of
March 21, 2006 (the “March
Trust Agreement”) and (ii) that certain Amended and Restated Trust
Agreement dated as of April 27, 2006 (the “April Trust Agreement” and
together with the March Trust Agreement, the “Trust Agreements”), each by
and among the Company, as depositor, BNYMTC, as property trustee (the “Property Trustee”), BNY Mellon
Trust of Delaware (as successor to Chase Bank USA, National Association), as
Delaware trustee (the “Delaware
Trustee”), the respective administrative trustees named therein and other
parties thereto.

     

    C.           BRT
Realty Trust Statutory Trust I (“Trust I”) is the holder of the
Junior Subordinated Note due 2036 in the original principal amount of
$25,774,000 issued by the Company pursuant to the March Indenture (“Subordinated Note
I”).

     

    D.           BRT
Realty Trust Statutory Trust II (“Trust II” and, together with
Trust I, the “Trusts”)
is the holder of the Junior Subordinated Note due 2036 in the original principal
amount of $30,928,000 issued by the Company pursuant to the April Indenture
(“Subordinated Note II”
and together with Subordinated Note I, the “Existing Subordinated
Notes”).

     

    E.           Taberna
IV and Taberna VI are the holders of Preferred Securities in the original
aggregate principal amount of $25,000,000 issued by Trust I pursuant to the
March Trust Agreement, copies of which are attached hereto as Exhibit A-1 (the
“Trust I Preferred
Securities”).

     

    F.           Taberna
V and Taberna VI are the holders of Preferred Securities in the original
aggregate principal amount of $30,000,000 issued by Trust II pursuant to the
April Trust Agreement, copies of which are attached hereto as Exhibit A-2 (the
“Trust II Preferred
Securities” and together with the Trust I Preferred Securities, the
“Original Preferred
Securities”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    G.           Simultaneously
herewith, the Company and The Bank of New York Mellon (“BNYM”), as trustee (the “New Indenture Trustee”), have
entered into that certain Junior Subordinated Indenture (the “New Indenture”) pursuant to
which Company proposes to issue Fifty-Eight Million Three Hundred Thousand
Dollars ($58,300,000) in aggregate principal amount of the Junior Subordinated
Notes due April 30, 2036 of the Company as follows (collectively, the “Securities”):

     

    
      	
               
      

            	
              (i)

            	
              Junior
      Subordinated Note due 2036 in the original principal amount of $25,837,000
      issued by the Company to Taberna IV, a copy of which is attached hereto as
      Exhibit B-1 (“Note
      1”);

            


    

     

    
      	
               
      

            	
              (ii)

            	
              Junior
      Subordinated Note due 2036 in the original principal amount of $15,900,000
      issued by the Company to Taberna V, a copy of which is attached hereto as
      Exhibit B-2 (“Note
      2”); and

            


    

     

    
      	
               
      

            	
              (iv)

            	
              Junior
      Subordinated Note due 2036 in the original principal amount of $16,563,000
      issued by the Company to Taberna VI, a copy of which is attached hereto as
      Exhibit B-3 (“Note
      3”).

            


    

     

    H.           On
the terms and subject to the conditions set forth in this Agreement, the Company
and Taberna have agreed to exchange the Original Preferred Securities for the
Securities.

     

    NOW,
THEREFORE, in consideration of the mutual agreements and subject to the terms
and conditions herein set forth, the parties hereto agree as
follows:

     

    
      13.        
 Definitions. 
This Agreement, the New Indenture and the Securities are collectively referred
to herein as the “Operative
Documents.”  All other capitalized terms used but not defined
in this Agreement shall have the respective meanings ascribed thereto in the New
Indenture.  The following terms shall have the following
meanings:

    

     

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

     

    “April Indenture” has the
meaning set forth in the Recitals.

     

    “April Trust Agreement” has the
meaning set forth in the Recitals.

     

    “Bankruptcy Code” means the
Bankruptcy Reform Act of 1978, 11 U.S.C. §§101 et seq., as amended.

     

    “Benefit Plan” means an
“employee benefit plan” (as defined in ERISA) that is subject to Title I of
ERISA, a “plan” as defined in Section 4975 of the Code or any entity whose
assets include (for purposes of U.S. Department of Labor Regulations Section
2510.3-101 or otherwise for purposes of Title I of ERISA or Section 4975 of the
Code) the assets of any such “employee benefit plan” or “plan.”

     

    “BNYM” has the meaning set
forth in the Recitals.

     

    
      
        
        

      

      
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    “BNYMTC” has the meaning set
forth in the Recitals.

     

    “CDO Trustee” has the meaning
set forth in Section 2(b)(i).

     

    “CERCLA” has the meaning set
forth in Section 4(kk).

     

    “Code” means the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
under it.

     

    “Closing Date” has the meaning
set forth in Section 2(b).

     

    “Closing Room” has the meaning
set forth in Section 2(b).

     

    “Company” has the meaning set
forth in the introductory paragraph hereof.

     

    “Company Counsel” has the
meaning set forth in Section 3(b).

     

    “Commission” has the meaning
set forth in Section 4(u).

     

    “Delaware Trustee” has the
meaning set forth in the Recitals.

     

    “Environmental Law” has the
meaning set forth in Section 4(kk). “Environmental Laws” shall have
the correlative meaning.

     

    “Equity Interests” means with
respect to any Person (a) if such a Person is a partnership, the partnership
interests (general or limited) in a partnership, (b) if such Person is a limited
liability company, the membership interests in a limited liability company and
(c) if such Person is a corporation, the shares or stock interests (both common
stock and preferred stock) in a corporation.

     

    “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated under it.

     

    “Exchange” has the meaning set
forth in Section 2(b).

     

    “Exchange Act” has the meaning
set forth in Section 4(i).

     

    “Existing Indentures” has the
meaning set forth in the Recitals.

     

    “Existing Indenture Trustee”
has the meaning set forth in the Recitals.

     

    “Existing Subordinated Notes”
has the meaning set forth in the Recitals.

     

    “Financial Statements” has the
meaning set forth in Section 4(v).

     

    “GAAP” has the meaning set
forth in Section 4(v).

     

    “Governmental Entities” has the
meaning set forth in Section 4(n).

     

    
      
        
        

      

      
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    “Governmental Licenses” has the
meaning set forth in Section 4(q).

     

    “Hazardous Materials” has the
meaning set forth in Section 4(kk).

     

    “Holder” has the meaning set
forth in the New Indenture.

     

    “Impairment” means any claim,
counterclaim, setoff, defense, action, demand, litigation (including
administrative proceedings or derivative actions), encumbrance, right (including
expungement, avoidance, reduction, contractual or equitable subordination, or
otherwise) or defect.

     

    “Indemnified Party” has the meaning set
forth in Section 8(a).  “Indemnified Parties” shall
have the correlative meaning.

     

    “Investment Company Act” has
the meaning set forth in Section 4(i).

     

    “Interim Financial Statements”
has the meaning set forth in Section 4(v).

     

    “Lien” has the meaning set
forth in Section 4(n).

     

    “March Indenture” has the
meaning set forth in the Recitals.

     

    “March Trust Agreement” has the
meaning set forth in the Recitals.

     

    “Material Adverse Effect” means
a material adverse effect on the condition (financial or otherwise), earnings,
business, liabilities or assets of the Company and its Significant Subsidiaries
taken as a whole; provided, however, that none of
the matters disclosed (i) in the Company’s Form 10-K for the fiscal year ended
September 30, 2008, (ii) Form 10-Q for the quarterly periods ended December 31,
2008 or March 31, 2009, (iii) Form 8-k filed on May 8, 2009 or (iv) Schedule 1 hereto
shall be deemed to constitute a Material Adverse Effect.

     

    “Material Adverse Change” has
the meaning set forth in Section 3(d)(ii).

     

    “New Indenture” has the meaning
set forth in the Recitals.

     

    “New Indenture Trustee” has the
meaning set forth in the Recitals.

     

    “Note 1” has the meaning set
forth in the Recitals.

     

    “Note 2” has the meaning set
forth in the Recitals.

     

    “Note 3” has the meaning set
forth in the Recitals.

     

    “Original Preferred Securities”
has the meaning set forth in the Recitals.

     

    “Properties” has the meaning
set forth in Section 4(jj).

     

    “Property Trustee” has the
meaning set forth in the Recitals.

     

    
      
        
        

      

      
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    “Regulation D” has the meaning
set forth in Section 4(g).

     

    “REIT” has the meaning set
forth in Section 4(cc).

     

    “Repayment Event” has the
meaning set forth in Section 4(n).

     

    “Rule 144A(d)(3)” has the
meaning set forth in Section 4(i).

     

    “Securities” has the meaning
set forth in the Recitals.

     

    “Securities Act” means the
Securities Act of 1933, 15 U.S.C. §§77a et seq., as amended, and
the rules and regulations promulgated under it.

     

    “Significant Subsidiary” has
the meaning as set forth in Securities and Exchange Commission
Regulation S-X.

     

    “Significant Subsidiaries”
means, collectively, each and every Significant Subsidiary.

     

    “Subordinated Note I” has the
meaning set forth in the Recitals.

     

    “Subordinated Note II” has the
meaning set forth in the Recitals.

     

    “Taberna” has the meaning set
forth in the introductory paragraph hereof.

     

    “Taberna IV” has the meaning
set forth in the introductory paragraph hereof.

     

    “Taberna V” has the meaning set
forth in the introductory paragraph hereof.

     

    “Taberna VI” has the meaning
set forth in the introductory paragraph hereof.

     

    “Taberna Entities” or “Taberna Holders” shall mean
Taberna IV, Taberna V and Taberna VI.

     

    “Tax” has the meaning set forth
in Section 4(dd).

     

    “Taxes” has the meaning set
forth in Section 4(dd).

     

    “Tax Returns” has the meaning
set forth in Section 4(dd).

     

    “Third Party Fees” has the
meaning set forth in Section 5(m).

     

    “Third Party Fees Payment” has
the meaning set forth in Section 7.

     

    “Trust I” has the meaning set
forth in the Recitals.

     

    “Trust II” has the meaning set
forth in the Recitals.

     

    “Trust I Preferred Securities”
has the meaning set forth in the Recitals.

     

    
      
        
        

      

      
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    “Trust II Preferred Securities”
has the meaning set forth in the Recitals.

     

    “Trust Agreements” has the
meaning set forth in the Recitals.

     

    “Trusts” has the meaning set
forth in the Recitals.

     

    
      	
               
      

            	
              14.

            	
              Exchange
      of Original Preferred Securities for
Securities.

            


    

     

    (a)           The
Company agrees to issue the Securities in accordance with the New Indenture and
has requested that Taberna accept such Securities in exchange for the Original
Preferred Securities, and Taberna hereby accepts such Securities in exchange for
the Original Preferred Securities upon the terms and conditions set forth
herein.

     

    (b)           The
closing of the exchange contemplated herein (the “Exchange”) shall occur at the
offices of Duane Morris, LLP in New York, New York (the “Closing Room”), or such other
place as the parties hereto shall agree, at 11:00 a.m. New York time, on May 26,
2009 or such later date as the parties may agree (such date and time of delivery
the “Closing Date”). The
Company and Taberna hereby agree that the Exchange will occur in accordance with
the following requirements:

     

     (i)           Taberna
Capital Management, LLC (as collateral manager for each of the Taberna Entities)
shall have delivered an issuer order instructing each trustee (in each such
capacity, a “CDO
Trustee”) under the applicable indenture pursuant to which such CDO
Trustee serves as trustee for any of the Taberna Entities, as applicable, to
exchange the Original Preferred Securities for the Securities.

     

     (ii)           The
Original Preferred Securities and the Securities shall have been delivered to
the Closing Room, copies of which Original Preferred Securities and Securities
shall have previously been made available for inspection, if so
requested.

     

     (iii)           The
Company shall have directed the New Indenture Trustee to authenticate the
Securities and deliver them to the applicable CDO Trustee, as follows:
(i) Note 1 to Taberna IV, (ii) Note 2 to Taberna V, and (iii) Note 3 to
Taberna VI.

     

     (iv)           The
New Indenture Trustee shall have authenticated the Securities in accordance with
the terms of the New Indenture and delivered them as provided
above.

     

     (v)           The
Property Trustee, on behalf of each of the Trusts, shall have obtained the
Original Preferred Securities and shall promptly thereafter, if requested by the
Company, cancel the Original Preferred Securities.

     

     (vi)           Simultaneously
with the occurrence of the events described in subsections (iv) and (v) hereof,
(A) each Taberna Entity holding the applicable Original Preferred Securities
irrevocably transfers, assigns, grants and conveys free and clear of any Lien,
restriction on transfer of sale, or adverse claim of any other kind whatsoever
to the Company all of each such Taberna Entity’s right, title and interest in,
to and under the applicable Original Preferred Securities and (B) each Taberna
Entity shall be entitled to all of the rights, title and interest of a Holder of
the Securities under the terms of the Securities, the New Indenture and any
other Operative Documents.

     

    
      
        
        

      

      
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    (vii)         The
Company shall have paid to each of BNYMTC and BNYM all of each such entity’s
reasonable legal fees, costs and other expenses in connection with the Exchange,
as well as all other accrued and unpaid fees, costs and expenses under the
Existing Indentures and the Trust Agreements, if any.

     

    (viii)        The
Company shall have paid to the Trustee, for application upon the Original
Preferred Securities and for distribution to the applicable Taberna Entities
holding such Original Preferred Securities pursuant to the terms of the Existing
Indentures, all accrued interest for the period commencing on the most recent
interest payment date under the Original Preferred Securities and continuing
through and including April 30, 2009.

     

    (ix)           The
Company shall have paid to each Taberna Entity the applicable interest payment
for the Interest Period commencing on May 1, 2009 as required by the applicable
Note.

     

    
      15.         Conditions
Precedent.  The
obligations of the parties under this Agreement are subject to the following
conditions precedent:

    

     

    (a)           The
representations and warranties contained herein shall be accurate as of the date
of delivery of the Securities.

     

    (b)           (i)
Milbank, Tweed, Hadley & McCloy LLP, counsel for the Company (the “Company Counsel”), shall have
delivered an opinion, dated the Closing Date, addressed to each of the Taberna
Entities as Holders and to the New Indenture Trustee, in substantially the form
set out in Annex
A-I hereto; (ii) in-house counsel for the Company (the “In-House Counsel”) shall have
delivered an opinion, dated the Closing Date, addressed to the Taberna Entities
as Holders and the New Indenture Trustee, in substantially the form set out in
Annex A-II
hereto; and (iii) and the Company shall have furnished to the Taberna Entities
as Holders and to the New Indenture Trustee a certificate signed by the
Company’s Chief Executive Officer, President, any Executive Vice President,
Chief Financial Officer, or Treasurer, dated the Closing Date, addressed to the
Taberna Entities as Holders and to the New Indenture Trustee, in substantially
the form set out in Annex B
hereto.  In rendering their opinions, the Company Counsel and In-House
Counsel may rely as to factual matters upon certificates or other documents
furnished by officers, directors and trustees of the Company and by government
officials; provided,
however, that copies of any such certificates or documents are delivered
to the Taberna Entities as Holders and by and upon such other documents as such
counsel may, in its reasonable opinion, deem appropriate as a basis for the
Company Counsel’s or the In-House Counsel’s opinion.  The Company
Counsel and In-House Counsel may specify the jurisdictions in which they are
admitted to practice and that they are not admitted to practice in any other
jurisdiction and are not experts in the law of any other
jurisdiction.

     

    (c)           The
Taberna Entities shall have received the opinion of Gardere Wynne Sewell LLP,
special counsel for the New Indenture Trustee, dated as of the Closing Date,
addressed to the Taberna Entities as Holders of the Securities and their
successors and assigns, in substantially the form set out in Annex C
hereto.


    
      
         


      

      
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    (d)           The
Company shall have furnished to the Taberna Entities as Holders of the
Securities a certificate of the Company, signed by the Chief Executive Officer,
President or an Executive Vice President, and the Chief Financial Officer,
Treasurer or Assistant Treasurer of the Company, in their capacities as such,
dated as of the Closing Date, as to (i) and (ii) below:

     

    (i)  
         the representations and
warranties in this Agreement and the New Indenture are true and correct on and
as of the Closing Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date; and

     

    (ii)           since
the date of the latest Interim Financial Statements, there has been no material
adverse change in the condition (financial or other), earnings, business or
assets of the Company and its subsidiaries, taken as a whole, whether or not
arising from transactions occurring in the ordinary course of business (a “Material Adverse
Change”).

     

    (e)           Prior
to the Closing Date, the Company shall have furnished to the Taberna Entities as
Holders of the Securities and their counsel such further information,
certificates and documents as the Taberna Entities as Holders of the Securities
or such counsel may reasonably request.

     

    If any of
the conditions specified in this Section 3 shall not have been fulfilled
when and as provided in this Agreement, or if any of the opinions, certificates
and documents mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Taberna Entities as Holders
of the Securities or their counsel, this Agreement and any obligations of
Taberna hereunder, whether as holders of the Original Preferred Securities or as
prospective Holders of the Securities, may be canceled at, or at any time prior
to, the Closing Date by Taberna.  Notice of such cancellation shall be
given to the Company in writing or by telephone and confirmed in writing, or by
e-mail or facsimile.

     

    If any of
the conditions specified in this Section 3 shall not have been fulfilled
when and as provided in this Agreement, or if any of the opinions, certificates
and documents mentioned above or elsewhere in this Agreement shall not be
reasonably satisfactory in form and substance to the Company or its counsel,
this Agreement and any obligations of the Company hereunder may be canceled at,
or at any time prior to, the Closing Date by the Company.  Notice of
such cancellation shall be given to Taberna in writing or by telephone and
confirmed in writing, or by e-mail or facsimile.

     

    Each
certificate signed by any officer of the Company and delivered to the Taberna
Entities as Holders of the Securities or the Taberna Entities’ counsel in
connection with the Operative Documents and the transactions contemplated hereby
and thereby shall be deemed to be a representation and warranty of the Company
and not by such officer in any individual capacity.


    
      
         


      

      
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      16.         Representations
and Warranties of the Company.  The
Company represents and warrants to, and agrees with each of the Taberna
Entities, as holders of the Original Preferred Securities and as the Holders of
the Securities, as follows:

    

     

    (a)           It
(i) is duly organized and validly existing under the laws of its jurisdiction of
organization or incorporation, (ii) is in good standing under such laws and
(iii) has full power and authority to execute, deliver and perform its
obligations under this Agreement and the other Operative Documents.

     

    (b)           It
is an “accredited investor” as defined in Rule 501 under the Securities Act.
Without characterizing the Original Preferred Securities as a “security” within
the meaning of applicable securities laws, it is not acquiring the Original
Preferred Securities with a view towards the sale or distribution thereof in
violation of the Securities Act.

     

    (c)           None
of the Securities, the New Indenture, or the Exchange is or may be subject to
any Impairment.  The Company has no current intention to initiate any
bankruptcy or insolvency proceedings.  The Company (i) has not
entered into the Exchange or any Operative Documents with the actual intent to
hinder, delay, or defraud any creditor and (ii) received reasonably
equivalent value in exchange for its obligations under the Operative Documents.
None of the Securities, the New Indenture, or the Exchange, is or may be void or
voidable as an actual or constructive fraudulent transfer or as a preferential
transfer.

     

    (d)           It
(i) is a sophisticated entity with respect to matters such as the Exchange, (ii)
has such knowledge and experience, and has made investments of a similar nature,
so as to be aware of the risks and uncertainties inherent in the Exchange and
(iii) has independently and without reliance upon the Taberna Entities as
Holders of the Securities, Taberna Capital Management, LLC or the Trustee or any
of their affiliates, and based on such information as it has deemed appropriate,
made its own analysis and decision to enter into this Agreement, except that it
has relied upon the Taberna Entities’ express representations, warranties,
covenants and agreements in this Agreement.  The Company acknowledges
that none of the Taberna Entities as Holders of the Securities, Taberna Capital
Management, LLC or Trustee or any of their affiliates has given it any
investment advice, credit information or opinion on whether the Exchange is
prudent.

     

    (e)           It
has not engaged any broker, finder or other entity acting under the authority of
it or any of its affiliates that is entitled to any broker’s commission or other
fee in connection with the transaction for which Taberna, any Taberna Entity,
Trustee or any of their affiliates could be responsible.

     

    (f)           Intentionally
omitted.

     

    (g)           Neither
the Company nor any of its “Affiliates” (as defined in Rule 501(b) of
Regulation D (“Regulation
D”) under the Securities Act (as defined below)), nor any person acting
on its or their behalf, has, directly or indirectly, made offers or sales of any
security, or solicited offers to buy any security, under circumstances that
would require the registration of any of the Securities under the Securities
Act.


    
      
         


      

      
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    (h)           Neither
the Company nor any of its Affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer or sale of any
of the Securities.

     

    (i)           The
Securities (i) are not and have not been listed on a national securities
exchange registered under Section 6 of the Securities Exchange Act of 1934,
as amended (the “Exchange
Act”), or quoted on a U.S. automated inter-dealer quotation system and
(ii) are not of an open-end investment company, unit investment trust or
face-amount certificate company that are, or are required to be, registered
under Section 8 of the Investment Company Act of 1940, as amended (the
“Investment Company
Act”), and the Securities otherwise satisfy the eligibility requirements
of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“Rule 144A(d)(3)”).

     

    (j)           Neither
the Company nor any of its Affiliates, nor any person acting on its or their
behalf, has engaged, or will engage, in any “directed selling efforts” within
the meaning of Regulation S under the Securities Act with respect to the
Securities.

     

    (k)           The
Company is not, and immediately following consummation of the transactions
contemplated hereby, will not be, an “investment company” or an entity
“controlled” by an “investment company,” in each case within the meaning of
Section 3(a) of the Investment Company Act.

     

    (l)           Each
of this Agreement and the New Indenture and the consummation of the transactions
contemplated herein and therein have been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered by the Company,
and, assuming due authorization, execution and delivery by Taberna and/or the
Trustee, as applicable, will be a legal, valid and binding obligation of the
Company enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity.

     

    (m)          The
Securities have been duly authorized by the Company and, on the Closing Date,
will have been duly executed and delivered to the Trustee for authentication in
accordance with the New Indenture and, when authenticated in the manner provided
for in the New Indenture and delivered to the Taberna Entities in exchange for
the Original Preferred Securities, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the New Indenture,
enforceable against the Company in accordance with their terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity.


    
      
         


      

      
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    (n)           Neither
the issue of the Securities and exchange of the Securities for the Original
Preferred Securities, nor the execution and delivery of and compliance with the
Operative Documents by the Company, nor the consummation of the transactions
contemplated herein or therein, (i) will conflict with or constitute a violation
or breach of (x) the charter or bylaws or similar organizational documents of
the Company or any subsidiary of the Company or (y) any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
governmental authority, agency or instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or their
respective properties or assets (collectively, the “Governmental Entities”), (ii)
will conflict with or constitute a violation or breach of, or a default or
Repayment Event (as defined below) under, or result in the creation or
imposition of any mortgage, pledge, security interest, restriction, charge,
claim, lien, equity or other encumbrance or adverse claim of any kind (each, a
“Lien”) upon any
property or assets of the Company or any of its subsidiaries pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which (A) the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or (B) any of the property or assets of
any of them is subject, or any judgment, order or decree of any court,
Governmental Entity or arbitrator, except, in the case of clause (i)(y) or this
clause (ii), for such conflicts, breaches, violations, defaults, Repayment
Events (as defined below) or Liens which (X) would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents and (Y) would not, singly or in the aggregate, have a
Material Adverse Effect or (iii) will require the consent, approval,
authorization or order of any court or Governmental Entity.  As used
herein, a “Repayment
Event” means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of its subsidiaries
prior to its scheduled maturity.

     

    (o)           The
Company has all requisite power and authority to own, lease and operate its
properties and assets and conduct the business it transacts and proposes to
transact, and is duly qualified to transact business and is in good standing in
each jurisdiction where the nature of its activities requires such
qualification, except where the failure of the Company to be so qualified would
not, singly or in the aggregate, have a Material Adverse Effect.

     

    (p)           The
Company has no subsidiaries that are material to its business, financial
condition or earnings, other than those Significant Subsidiaries listed in Schedule 4(p)
attached hereto (which Schedule 4(p)
includes each of the Company’s Significant Subsidiaries).  Each
Significant Subsidiary is a corporation, partnership or limited liability
company duly and properly incorporated or organized or formed, as the case may
be, validly existing and in good standing under the laws of the jurisdiction in
which it is chartered or organized or formed, with all requisite corporate power
and authority to own, lease and operate its properties and conduct the business
it transacts.  Each Significant Subsidiary is duly qualified to
transact business as a foreign corporation, partnership or limited liability
company, as applicable, and is in good standing in each jurisdiction where the
nature of its activities requires such qualification, except where the failure
to be so qualified would not, singly or in the aggregate, have a Material
Adverse Effect.  No Significant Subsidiary of the Company (other than
a taxable REIT subsidiary, if any) is currently prohibited, directly or
indirectly, under any agreement or other instrument, other than as required by
applicable law, to which it is a party or is subject, from paying any dividends
to the Company, from making  any other distribution on such
Significant Subsidiary’s capital stock or other Equity Interests, from repaying
to the Company any loans or advances to such Significant Subsidiary from the
Company or from transferring any of such Significant Subsidiary’s properties or
assets to the Company or any other subsidiary of the Company.


    
      
         


      

      
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    (q)           The
Company and each of the Company’s subsidiaries hold all necessary approvals,
authorizations, orders, licenses, consents, registrations, qualifications,
certificates and permits (collectively, the “Governmental Licenses”) of and
from Governmental Entities necessary to conduct their respective businesses as
now being conducted, and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Governmental License, except where the failure to be so licensed or
approved or the receipt of an unfavorable decision, ruling or finding, would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity or the failure of such Governmental Licenses to be in full force and
effect, would not, singly or in the aggregate, have a Material Adverse Effect;
and the Company and its subsidiaries are in compliance with all applicable laws,
rules, regulations, judgments, orders, decrees and consents, except where the
failure to be in compliance would not, singly or in the aggregate, have a
Material Adverse Effect.

     

    (r)           All
of the issued and outstanding Equity Interests of the Company and each of its
subsidiaries are validly issued, fully paid and non-assessable; all of the
issued and outstanding Equity Interests of each consolidated subsidiary of the
Company is owned by the Company, directly or through subsidiaries, free and
clear of any Lien, claim, or equitable right; and none of the issued and
outstanding Equity Interests of the Company or any subsidiary was issued in
violation of any preemptive or similar rights arising by operation of law, under
the charter or by-laws of such entity or under any agreement to which the
Company or any of its subsidiaries is a party.

     

    (s)           Neither
the Company nor any of its subsidiaries is (i) in violation of its respective
charter or by-laws or similar organizational documents or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any such subsidiary is a
party or by which it or any of them may be bound or to which any of the property
or assets of any of them is subject, except, in the case of clause (ii), where
such violation or default would not, singly or in the aggregate, have a Material
Adverse Effect.

     

    (t)           There
is no action, suit or proceeding before or by any Governmental Entity,
arbitrator or court, domestic or foreign, now pending or, to the knowledge of
the Company after due inquiry, threatened against or affecting the Company or
any of its subsidiaries, except for such actions, suits or proceedings that, if
adversely determined, would not, singly or in the aggregate, adversely affect
the consummation of the transactions contemplated by the Operative Documents or
have a Material Adverse Effect; and the aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries is a
party or of which any of their respective properties or assets is subject,
including ordinary routine litigation incidental to the business, are not
expected to result in a Material Adverse Effect.

     

    (u)           The
accountants of the Company who certified the Financial Statements(defined below)
are independent public accountants of the Company and its subsidiaries within
the meaning of the Securities Act, and the rules and regulations of the
Securities and Exchange Commission (the “Commission”)
thereunder.


    
      
         


      

      
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    (v)           The
audited consolidated financial statements (including the notes thereto) and
schedules of the Company and its consolidated subsidiaries for the fiscal year
ended September 30, 2008 (the “Financial Statements”) and the
interim unaudited consolidated financial statements of the Company and its
consolidated subsidiaries for the quarter ended March 31, 2009 (the “Interim Financial Statements”)
provided to Taberna are the most recent publicly available audited and unaudited
consolidated financial statements of the Company and its consolidated
subsidiaries, respectively, and fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position
of the Company and its consolidated subsidiaries, and the results of operations
and changes in financial condition as of the dates and for the periods therein
specified, subject, in the case of Interim Financial Statements, to year-end
adjustments.  Such consolidated financial statements and schedules
have been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as otherwise noted therein and subject to normal
recurring adjustments in the ordinary course).

     

    (w)          Neither
the Company nor any of its subsidiaries has any material liability, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due,
including any liability for taxes (and there is no past or present fact,
situation, circumstance, condition or other basis for any present or future
action, suit, proceeding, hearing, charge, complaint, claim or demand against
the Company or any of its subsidiaries that could give rise to any such
liability), except for (i) liabilities set forth in the Financial
Statements or the Interim Financial Statements and (ii) normal fluctuations
in the amount of the liabilities referred to in clause (i) above occurring
in the ordinary course of business of the Company and all of its subsidiaries
since the date of the most recent balance sheet included in such Interim
Financial Statements.

     

    (x)           Since
the respective dates of the Financial Statements and the Interim Financial
Statements, there has not been (A) any Material Adverse Change or (B) any
dividend or distribution of any kind declared, paid or made by the Company on
any class of its Equity Interests.

     

    (y)           The
documents of the Company filed with the Commission in accordance with the
Exchange Act, from and including the commencement of the fiscal year covered by
the Company’s most recent Annual Report on Form 10-K, at the time they were or
hereafter are filed by the Company with the Commission, complied and will comply
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission thereunder, and, at the date of this Agreement
and on the Closing Date, do not and will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and other than such instruments,
agreements, contracts and other documents as are filed as exhibits to the
Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current
Reports on Form 8-K, there are no instruments, agreements, contracts or
documents of a character described in Item 601 of Regulation S-K promulgated by
the Commission to which the Company or any of its subsidiaries is a party that
are required to be so filed.  To the actual knowledge of the Chief
Financial Officer of the Company, except as set forth in Schedule 4(y), the
Company is in compliance with all currently applicable requirements of the
Exchange Act that were added by the Sarbanes-Oxley Act of 2002.


    
      
         


      

      
        - 13
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    (z)           No
labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is imminent, except those which
would not, singly or in the aggregate, have a Material Adverse
Effect.

     

    (aa)         No
filing with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than those that have
been made or obtained, is necessary or required for the performance by the
Company of its obligations under the Operative Documents, as applicable, or the
consummation by the Company of the transactions contemplated by the Operative
Documents.

     

    (bb)        The
Company and each of its subsidiaries has good and marketable title to all of its
respective real and personal property, in each case free and clear of all Liens
and defects, except for those securing debt in the ordinary course of its
business and that would not, singly or in the aggregate, have a Material Adverse
Effect; and all of the leases and subleases under which the Company or any of
its subsidiaries holds properties are in full force and effect, except where the
failure of such leases and subleases to be in full force and effect would not,
singly or in the aggregate, have a Material Adverse Effect, and neither the
Company nor any of its subsidiaries has any notice of any claim of any sort that
has been asserted by anyone adverse to the rights of the Company or any
subsidiary of the Company under any such leases or subleases, or affecting or
questioning the rights of such entity to the continued possession of the leased
or subleased premises under any such lease or sublease, except for such claims
that would not, singly or in the aggregate, have a Material Adverse
Effect.

     

    (cc)         To
the knowledge of the Company, commencing with its taxable year ending September
30, 2004, the Company has been, and upon the completion of the transactions
contemplated hereby, the Company will continue to be organized and operated in
conformity with the requirements for qualification and taxation as a REIT under
Sections 856 through 860 of the Code (for as long as the Board of Trustees of
the Company believes it is in the Company’s best interest to qualify as a REIT),
and the Company’s organizational structure and proposed method of operation will
enable it to continue to meet the requirements for qualification and taxation as
a REIT under the Code, and no actions have been taken (or not taken which are
required to be taken) which would cause such qualification to be
lost.  As long as the Board of Directors of the Company believes it is
in the Company’s best interests to qualify as a REIT, the Company expects to
continue to be organized and to operate in a manner so as to qualify as a REIT
in the taxable year ending September 30, 2009 and succeeding taxable
years.

     

    (dd)        The
Company and each Significant Subsidiary has timely and duly filed (or filed
extensions thereof (and which extensions are presently in effect)) all Tax
Returns (as defined below) required to be filed by them, except for any such Tax
Returns where the failure to have done so would not, singly or in the aggregate,
have a Material Adverse Effect, and all such Tax Returns are true, correct and
complete in all material respects.  The Company and each Significant
Subsidiary has timely and duly paid in full all Taxes (as defined below)
required to be paid pursuant to such, except for any Taxes that are being
contested in good faith.  There are no federal, state, or other Tax
audits or deficiency assessments proposed or pending with respect to the Company
or any of the Significant Subsidiaries, and no such audits or assessments are
threatened.  As used herein, the terms “Tax” or “Taxes” mean (i) all federal,
state, local, and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including any interest,
additions to tax, or penalties applicable thereto, imposed by any Governmental
Entity, and (ii) all liabilities in respect of such amounts arising as a result
of being a member of any affiliated, consolidated, combined, unitary or similar
group, as a successor to another person or by contract.  As used
herein, the term “Tax
Returns” means all federal, state, local, and foreign Tax returns,
declarations, statements, reports, schedules, forms, and information returns and
any amendments thereto filed or required to be filed with any Governmental
Entity.


    
      
         


      

      
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    (ee)         To
the knowledge of the Company, there are no rulemaking or similar proceedings
before the U.S. Internal Revenue Service or comparable federal, state, local or
foreign government bodies which involve or affect the Company or any subsidiary,
which, if the subject of an action unfavorable to the Company or any subsidiary,
could result in a Material Adverse Effect.

     

    (ff)          The
books, records and accounts of the Company and its subsidiaries accurately and
fairly reflect, in reasonable detail, the transactions in, and dispositions of,
the assets of, and the results of operations of, the Company and its
subsidiaries.  The Company and each of its subsidiaries maintains a
system of internal accounting controls to provide reasonable assurances that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.

     

    (gg)        The
Company and the Significant Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts in
all material respects as are customary in the businesses in which they are
engaged or propose to engage after giving effect to the transactions
contemplated hereby including but not limited to, real or personal property
owned or leased against theft, damage, destruction, act of vandalism and all
other risks customarily insured against.  All policies of insurance
and fidelity or surety bonds insuring the Company or any of the Significant
Subsidiaries or the Company’s or Significant Subsidiaries’ respective
businesses, assets, employees, officers and directors are in full force and
effect.  The Company and each of the Significant Subsidiaries are in
compliance with the terms of such policies and instruments in all material
respects. Neither the Company nor any Significant Subsidiary has reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a
Material Adverse Effect.  Within the past twelve months, neither the
Company nor any Significant Subsidiary has been denied any insurance coverage it
has sought or for which it has applied.


    
      
         


      

      
        - 15
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    (hh)        The
Company and its subsidiaries or any person acting on behalf of the Company and
its subsidiaries including, without limitation, any director, officer, agent or
employee of the Company or its subsidiaries has not, directly or indirectly,
while acting on behalf of the Company and its subsidiaries (i) used any
corporate, partnership, company or trust funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity;
(ii) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate, partnership, company or trust funds; (iii) violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other
unlawful payment.

     

    (ii)           The
information provided by the Company pursuant to the Operative Documents does
not, as of the date hereof, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.

     

    (jj)           Except
as would not, individually or in the aggregate, result in a Material Adverse
Effect, (i) the Company and its subsidiaries have been and are in material
compliance with applicable Environmental Laws (as defined below), (ii) none of
the Company, any of its subsidiaries or, to the best of the Company’s knowledge,
(a) any other owners of any of the real properties currently or previously
owned, leased or operated by the Company or any of its Significant Subsidiaries
(collectively, the “Properties”) at any time or
any other party, has at any time released (as such term is defined in CERCLA (as
defined below)) or otherwise disposed of Hazardous Materials (as defined below)
on, to, in, under or from the Properties other than in compliance with all
applicable Environmental Laws, (iii) neither the Company nor any of its
subsidiaries has used nor intends to use the Properties or any subsequently
acquired properties, other than in compliance with applicable Environmental
Laws, (iv) neither the Company nor any of its subsidiaries has received any
notice of, or have any knowledge of any occurrence or circumstance which, with
notice or passage of time or both, would give rise to a claim under or pursuant
to any Environmental Law with respect to the Properties, or their respective
assets or arising out of the conduct of the Company or its subsidiaries, (v)
none of the Properties are included or, to the best knowledge of the Company,
proposed for inclusion on the National Priorities List issued pursuant to CERCLA
by the United States Environmental Protection Agency or, to the best of the
Company’s knowledge, proposed for inclusion on any similar list or inventory
issued pursuant to any other Environmental Law or issued by any other
Governmental Entity, (vi) none of the Company, any of its subsidiaries or agents
or, to the best of the Company’s knowledge, any other person or entity for whose
conduct any of them is or may be held responsible, has generated, manufactured,
refined, transported, treated, stored, handled, disposed, transferred, produced
or processed any Hazardous Material at any of the Properties, except in
compliance with all applicable Environmental Laws, and has not transported or
arranged for the transport of any Hazardous Material from the Properties to
another property, except in compliance with all applicable Environmental Laws,
(vii) to the best of the Company’s knowledge, no lien has been imposed on the
Properties by any Governmental Entity in connection with the presence on or off
such Property of any Hazardous Material or with respect to an Environmental Law,
and (viii) none of the Company, any of its Significant Subsidiaries or, to the
best knowledge of the Company, any other person or entity for whose conduct any
of them is or may be held responsible, has entered into or been subject to any
consent decree, compliance order, or administrative order in connection with an
Environmental Law with respect to the Properties or any facilities or
improvements or any operations or activities thereon.


    
      
         


      

      
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    (kk)         As
used herein, “Hazardous
Materials” shall include, without limitation, any flammable materials,
explosives, radioactive materials, hazardous materials, hazardous substances,
hazardous wastes, toxic substances or related materials, asbestos, petroleum,
petroleum products and any hazardous material as defined by any federal, state
or local environmental law, statute, ordinance, rule or regulation,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675
(“CERCLA”), the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 5101-5127,
the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
§§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. §§ 11001-11050, the Toxic Substances Control Act, 15 U.S.C.
§§ 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. §§ 136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the
Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C.
§§ 1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26,
and the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678, and any
analogous state laws, as any of the above may be amended from time to time and
in the regulations promulgated pursuant to each of the foregoing (including
environmental statutes and laws not specifically defined herein) (individually,
an “Environmental Law”
and collectively, the “Environmental Laws”) or by any
Governmental Entity.

     

    Except as
expressly stated in this Agreement, the Company makes no representations or
warranties, express or implied, with respect to the Exchange, the Original
Preferred Securities, the Existing Indentures, or any other matter.

     

    
      17.         Representations
and Warranties of Taberna.  Each
Taberna Entity, for itself, represents and warrants to, and agrees with, the
Company as follows:

    

     

    (a)           It
is a company duly formed, validly existing and in good standing under the laws
of the jurisdiction in which it is organized with all requisite power and
authority to execute, deliver and perform its obligations under the Operative
Documents to which it is a party, to make the representations and warranties
specified herein and therein and to consummate the transactions contemplated in
the Operative Documents.

     

    (b)           This
Agreement and the consummation of the transactions contemplated herein has been
duly authorized by it and, on the Closing Date, will have been duly executed and
delivered by it and, assuming due authorization, execution and delivery by the
Company and Trustee of the Operative Documents to which each is a party, will be
a legal, valid and binding obligation of such Taberna Entity, enforceable
against such Taberna Entity in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and to general principles of equity.

     

    (c)           No
filing with, or authorization, approval, consent, license, order registration,
qualification or decree of, any Governmental Entity or any other Person, other
than those that have been made or obtained, is necessary or required for the
performance by such Taberna Entity of its obligations under this Agreement or to
consummate the transactions contemplated herein.  The performance by
such Taberna Entity of its obligations under this Agreement and the consummation
of the transactions contemplated herein will not conflict with or result in a
breach or violation of or constitute a default under any statute, agreement or
instrument, including its organizational documents, to which such Taberna Entity
is a party or by which it or its assets are bound and such Taberna Entity has
all right, power and authority to sell, transfer, exchange and deliver the
Original Preferred Securities to be exchanged by it hereunder.


    
      
         


      

      
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    (d)           It
is a “qualified purchaser” as such term is defined in Section 2(a)(51) of
the Investment Company Act.

     

    (e)           Taberna
IV and Taberna VI are the sole legal and beneficial owners of the Trust I
Preferred Securities and shall deliver the Trust I Preferred Securities free and
clear of any Lien or adverse claim of any other kind whatsoever.

     

    (f)           Taberna
V and Taberna VI are the legal and beneficial owners of the Trust II Preferred
Securities and shall deliver the Trust II Preferred Securities free and clear of
any Lien or adverse claim of any kind whatsoever.

     

    (g)           There
is no action, suit or proceeding before or by any Governmental Entity,
arbitrator or court, domestic or foreign, now pending or, to its knowledge,
threatened against or affecting it, except for such actions, suits or
proceedings that, if adversely determined, would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents.

     

    (h)           The
outstanding principal amount of its respective Original Preferred Securities is
the face amount as set forth in such Original Preferred Securities and as set
forth further on Exhibits A-1 and A-2.

     

    (i)
           It is
aware that the Securities have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or to
“U.S. persons” (as defined in Regulation S under the Securities Act) except in
accordance with Rule 903 of Regulation S under the Securities Act or
pursuant to an exemption from the registration requirements of the Securities
Act.

     

    (j)
           It is
an “accredited investor,” as such term is defined in Rule 501(a) of
Regulation D under the Securities Act.  It has not made any offers to
sell, or solicitations of any offers to buy, all or any portion of the Original
Preferred Securities in violation of any applicable securities
laws.

     

    (k)           Neither
it nor any of its Affiliates, nor any person acting on its or its Affiliate’s
behalf has engaged, or will engage, in any form of “general solicitation or
general advertising” (within the meaning of Regulation D under the Securities
Act) in connection with any offer or sale of the Securities.

     

    (l)  
         It understands and
acknowledges that (i) no public market exists for any of the Securities and that
it is unlikely that a public market will ever exist for the Securities, (ii) it
is acquiring the Securities for its own account, for investment and not with a
view to, or for offer or sale in connection with, any distribution thereof in
violation of the Securities Act or other applicable securities laws, subject to
any requirement of law that the disposition of its property be at all times
within its control and subject to its ability to resell such Securities pursuant
to an effective registration statement under the Securities Act or pursuant to
an exemption therefrom or in a transaction not subject thereto, and it agrees to
the legends and transfer restrictions applicable to the Securities contained in
the New Indenture, and (iii) it has had the opportunity to ask questions of, and
receive answers and request additional information from, the Company and is
aware that it may be required to bear the economic risk of an investment in the
Securities.


    
      
         


      

      
        - 18
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    (m)           It
has engaged third parties acting under its authority that are entitled to fees
and reimbursements of costs (the “Third Party Fees”) in
connection with this Agreement and the consummation of transactions contemplated
in this Agreement and the New Indenture for which the Company is responsible and
for which the Company has paid the Third Party Fees Payment (as defined
below).

     

    (n)           It
(i) is a sophisticated entity with respect to the Exchange, (ii) has such
knowledge and experience, and has made investments of a similar nature to the
transaction contemplated hereby, so as to be aware of the risks and
uncertainties inherent in the Exchange and (iii) has independently and without
reliance upon the Company or any of its affiliates, and based on such
information as it has deemed appropriate, made its own analysis and decision to
enter into this Agreement, except that it has relied upon the Company’s express
representations, warranties, covenants and agreements in the Operative Documents
and the other documents delivered by the Company in connection
therewith.

     

    Except as
expressly stated in this Agreement, each Taberna Entity makes no representations
or warranties, express or implied, with respect to the Exchange, the Original
Preferred Securities, the Existing Indentures, or any other matter.

     

    
      18.         Covenants
and Agreements of the Company.  The
Company agrees with Taberna and the Taberna Entities as
follows:

    

     

    (a)           During
the period from the date of this Agreement to the Closing Date, the Company
shall use its best efforts and take all action reasonably necessary or
appropriate to cause its representations and warranties contained in Section 4
hereof to be true as of the Closing Date and after giving effect to the
Exchange.

     

    (b)           The
Company will arrange for the qualification of the Securities for sale under the
laws of such jurisdictions as the Taberna Entities may designate and will
maintain such qualifications in effect so long as required for the sale of the
Securities.  The Company will promptly advise the Taberna Entities of
the receipt by the Company of any notification with respect to the suspension of
the qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.

     

    (c)           The
Company will not, nor will it permit any of its Affiliates or any person acting
on their behalf to, engage in any “directed selling efforts” within the meaning
of Regulation S under the Securities Act with respect to the
Securities.

     

    (d)           The
Company will not, and will not permit any of its Affiliates or any person acting
on its or their behalf to, directly or indirectly, make offers or sales of any
security, or solicit offers to buy any security, under circumstances that would
require the registration of any of the Securities under the Securities
Act.


    
      
         


      

      
        - 19
-

        
          

        

      

      
         


      

    


    (e)           The
Company will not, and will not permit any of its Affiliates or any person acting
on its or their behalf to, engage in any form of “general solicitation or
general advertising” (within the meaning of Regulation D) in connection with any
offer or sale of the any of the Securities.

     

    (f)           So
long as any of the Securities are outstanding, (i) the Securities shall not be
listed on a national securities exchange registered under Section 6 of the
Exchange Act or quoted in a U.S. automated inter-dealer quotation system and
(ii) the Company shall not be an open-end investment company, unit investment
trust or face-amount certificate company that is, or is required to be,
registered under Section 8 of the Investment Company Act, and, the
Securities shall otherwise satisfy the eligibility requirements of
Rule 144A(d)(3).

     

    (g)           At
Closing the Company shall furnish to the Taberna Entities and Taberna Capital
Management, LLC a duly completed and executed Officer’s Financial Certificate in
the form required pursuant to the New Indenture.

     

    (h)           The
Company will, during any period in which it is not subject to and in compliance
with Section 13 or 15(d) of the Exchange Act, or it is not exempt from such
reporting requirements pursuant to and in compliance with Rule 12g3-2(b)
under the Exchange Act, provide to each Holder of the Securities, upon the
request of such Holder, any information required to be provided by
Rule 144A(d)(4) under the Securities Act.  If the Company is
required to register under the Exchange Act, such reports filed in compliance
with Rule 12g3-2(b) shall be sufficient information as required
above.  This covenant is intended to be for the benefit of the Holders
of the Securities.

     

    (i)           The
Company will not, until one hundred eighty (180) days following the Closing
Date, without the Taberna Holders’ prior written consent, offer, sell, contract
to sell, grant any option to purchase or otherwise dispose of, directly or
indirectly, (i) any Securities or other securities substantially similar to
the Securities other than as contemplated by the New Indenture, if at all, (ii)
any other securities convertible into, or exercisable or exchangeable for, any
of the Securities or other securities substantially similar to the Securities or
(iii) any preferred securities, unless the Company provides the Taberna Holders
with an opinion of counsel (such counsel to have experience and sophistication
in the matters addressed in such opinion) addressed to the Taberna Holders
stating that any such offer, sale or other disposition will not result in the
Securities being integrated in a transaction that would require registration
under the Securities Act.

     

    (j)           The
Company will not identify any of the Indemnified Parties (as defined below) in a
press release or any other public statement without the prior written consent of
such Indemnified Party, unless such disclosure is required by applicable
statute, court of law, regulatory authority or securities
exchange.


    
      
         


      

      
        - 20
-

        
          

        

      

      
         


      

    


    
      19.         Payment
of Expenses.  In
addition to the obligations agreed to by the Company under Section 2(b)(vii)
herein, the Company agrees to pay all costs and expenses, exclusive of any
Taxes, incident to the performance of the obligations of the Company under this
Agreement, whether or not the transactions contemplated herein are consummated
or this Agreement is terminated, including all costs and expenses incident to
(i) the authorization, issuance, exchange and delivery of the Securities and any
taxes payable in connection therewith; (ii) the fees and expenses of counsel,
accountants and any other experts or advisors retained by the Company; and (iv)
the fees and all reasonable expenses of the New Indenture Trustee and any other
trustee or paying agent appointed under the Operative Documents, including the
fees and disbursements of counsel for such trustees.  The fees of the
New Indenture Trustee (excluding fees and disbursements of counsel) shall not
exceed the amounts set forth in that certain Fee Agreement dated as of the date
hereof between the Company and BNYM, executed in connection with this Agreement
and the New Indenture.  In addition, the Company has paid $550,000
(the “Third Party Fees
Payment”) to Taberna, or its designee(s), as payment for the Third Party
Fees.  In the event that Taberna determines not to consummate the
transactions contemplated herein otherwise than as a result of the Company’s
failure to comply with the terms or conditions of this Agreement, Taberna shall
return such amount to the Company promptly after such determination is
made.

    

     

    
      20.         Indemnification.  (a)  The
Company agrees to indemnify and hold harmless the Taberna Holders, Taberna,
Taberna Capital Management, LLC, Taberna Securities, LLC, and their respective
affiliates (collectively, the “Indemnified Parties”), the
Indemnified Parties’ respective directors, officers, employees and agents and
each person, if any, who controls the Indemnified parties within the meaning of
the Securities Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which the Indemnified Parties may
become subject, under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based on (i) any untrue statement or alleged untrue statement of a
material fact contained in any information or documents provided by or on behalf
of the Company, (ii) any omission or alleged omission to state a material fact
required to be stated or necessary to make the statements contained in any
information provided by the Company, in light of the circumstances under which
they were made, not misleading, or (iii) the breach or alleged breach of any
representation, warranty, or agreement of the Company contained
herein.  The Company agrees to reimburse each such Indemnified Party,
as incurred, for any legal or other expenses reasonably incurred by the
Indemnified Parties in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability that the Company may otherwise have.

    

     

    Promptly
after receipt by an Indemnified Party under this Section 8 of notice of the
commencement of any action, such Indemnified Party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 8,
promptly notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve the
indemnifying party from liability under paragraph (a) above unless and to the
extent that such failure results in the forfeiture by the indemnifying party of
material rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any Indemnified Party other than the
indemnification obligation provided in paragraph (a) above.  The
Indemnified Parties shall be entitled to appoint counsel to represent the
Indemnified Parties in any action for which indemnification is
sought.  An indemnifying party may participate at its own expense in
the defense of any such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the
Indemnified Party) also be counsel to the Indemnified Party.  In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all Indemnified Parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, unless an Indemnified Party
elects to engage separate counsel because such Indemnified Party believes that
its interests are not aligned with the interests of another Indemnified Party or
that a conflict of interest might result.  An indemnifying party will
not, without the prior written consent of the Indemnified Parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Parties
are actual or potential parties to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action,
suit or proceeding.


    
      
         


      

      
        - 21
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      21.         Representations
and Indemnities to Survive.  The
respective agreements, representations, warranties, indemnities and other
statements of the Company and/or its officers set forth in or made pursuant to
this Agreement will remain in full force and effect and will survive the
Exchange.  The provisions of Sections 7 and 8 shall survive the
termination or cancellation of this Agreement.

    

     

    
      22.         Holder
Representative.  The
Taberna Entities hereby appoint Taberna Capital Management, LLC as the Holder
Representative as defined in the Indenture.

    

     

    
      23.         Amendments.  This
Agreement may not be modified, amended, altered or supplemented, except upon the
execution and delivery of a written agreement by each of the parties
hereto.

    

     

    
      24.         Notices.  All
communications hereunder will be in writing and effective only on receipt, and
will be mailed, delivered by hand or courier or sent by facsimile and confirmed
or by any other reasonable means of communication, including by electronic mail,
to the relevant party at its address specified in Exhibit
C.

    

     

    
      25.         Successors
and Assigns.  This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns.  Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person other than the parties hereto and the affiliates, directors,
officers, employees, agents and controlling persons referred to in
Section 8 hereof and their successors, assigns, heirs and legal
representatives, any right or obligation hereunder.  None of the
rights or obligations of the Company under this Agreement may be assigned,
whether by operation of law or otherwise, without Taberna’s prior written
consent.  The rights and obligations of the Taberna Holders under this
Agreement may be assigned by the Taberna Holders without the Company’s consent;
provided that the assignee assumes the obligations of any such Taberna Holders
under this Agreement.

    

     

    
      26.         Applicable
Law.  THIS
AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW
(OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS
LAW).

    


    
      
         


      

      
        - 22
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      27.         Submission
to Jurisdiction.  ANY
LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR
ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE
STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE
BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.

    

     

    
      28.         Counterparts
and Facsimile.  This
Agreement may be executed by any one or more of the parties hereto in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same
instrument.  This Agreement may be executed by any one or more of the
parties hereto by facsimile.

    

     

    29.         Entire
Agreement.  This
Agreement constitutes the entire agreement of the parties to this Agreement and
supercedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter
hereof.

     

    [Signature Page Follows]


    
      
         


      

      
        - 23
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    IN
WITNESS WHEREOF, this Agreement has been entered into as of the date first
written above.

     

    
      
        
          	 
      	
                  BRT
      REALTY TRUST

                
	 
      	 
      	 
      
	 
      	
                  By:

                	
                  /s/ Mark H. Lundy

                
	 
      	 
      	
                  Mark
      H. Lundy

                
	 
      	 
      	
                  Senior
      Vice President

                


        

      

    

     

    (Signatures
continue on the next page)

     

    
      [BRT -
Signature Page to Exchange Agreement]

       

    

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    TABERNA,
AS HOLDERS OF THE ORIGINAL PREFERRED SECURITIES AND AS HOLDERS (AS DEFINED IN
THE NEW INDENTURE):

     

    
      
        	 
      	
                TABERNA
      PREFERRED FUNDING IV, LTD.

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ Alasdair Foster

              
	 
      	
                Name:
      Alasdair Foster

              
	 
      	
                Title:  
      Director

              
	 
      	 
      	 
      
	 
      	
                TABERNA
      PREFERRED FUNDING V, LTD.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Alasdair Foster

              
	 
      	
                Name:
      Alasdair Foster

              
	 
      	
                Title:  
      Director

              
	 
      	 
      	 
      
	 
      	
                TABERNA
      PREFERRED FUNDING VI, LTD.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/ Alasdair Foster

              
	 
      	
                Name:
      Alasdair Foster

              
	 
      	
                Title:  
      Director