Document:

Date:        June 19, 2007

To:          GTJ RATE CAP LLC
             444 Merrick Road
             Lynbrook, NY 11563

             Documentation Contact: Paul Cooper
             Telephone: 1-516-887-8900
             Telefax:      1-516-887-8901

Cc:          Chris Lammie
             Chatham Financial Corporation
             235 Whitehorse Lane
             Kennett Square, PA 19348
             T: 484.731.0008
             F: 610.925.3125

From:        SMBC Capital Markets, Inc. as Agent for SMBC
             Derivative Products Limited
             Derivative Products Group
             277 Park Avenue, Fifth Floor
             New York, New York 10172

cc:          Documentation Contact: Danny Boodram
             Telephone: 212-224-5066
             Telefax:     212-224-4959
             Email Address: confirms@smbc-cm.com

Re:          USD  54,500,000.00  Rate  Protection  Transaction  between  SMBC
             Derivative Products Limited ("Party A") and GTJ RATE CAP LLC
             ("Party B").

Our Reference Number: DPA609667

The purpose of this letter  agreement is to confirm the terms and  conditions of
the Interest Rate Cap Agreement  entered into between Party A and Party B on the
Trade Date  specified  below (the "Rate  Protection  Transaction").  This letter
agreement constitutes a "Confirmation" as referred to in the ISDA Form specified
below. This document  supersedes all previous  confirmations and amendments with
respect to the above referenced transaction.

     The parties agree that the Transaction to which this  Confirmation  relates
shall be governed by an ISDA Master  Agreement,  in the pre-printed  form of the
1992 ISDA Master Agreement  (Multicurrency-Cross  Border) published by ISDA (the
'ISDA Form'),  and that such ISDA Form, as amended,  supplemented or modified by
this  Confirmation,  is incorporated by reference herein and deemed to have been
entered  into by the  parties on or prior to the Trade  Date for the  purpose of
governing only the  Transaction  evidenced by this  Confirmation.  Copies of the
ISDA Form are available upon request.

     This Confirmation  incorporates by reference the definitions and provisions
contained in the 2000 ISDA Definitions (the  "Definitions")  as published by the
International Swaps and Derivatives Association, Inc. ("ISDA"). Such definitions

277 Park Avenue          PHONE: 212-224-5066
New York, NY 10172       FAX: 212-224-4959          Email: dboodram@smbc-cm.com

<PAGE>

and  provisions  are  incorporated  by  reference  herein.  In the  event of any
inconsistency  between this  Confirmation  and the Definitions or the ISDA Form,
this Confirmation will govern.

1. Notice to Counterparty.

Party A is solely  responsible for its contractual  obligations and commitments;
none of Sumitomo Mitsui Banking  Corporation,  SMBC Capital Markets,  Inc., SMBC
Capital Markets Limited, nor any other affiliate of Party A shall be responsible
for the contractual obligations or commitments of Party A.

Party  A is not a bank  and is  separate  from  any  affiliated  bank,  and  the
obligations of Party A are not deposits, are not insured by the United States of
America or any agency thereof, are not guaranteed by an affiliated bank, and are
not otherwise an obligation of an affiliated bank.

Party A is regulated by Financial Services  Authority.  The time of execution of
the transaction is available upon request.

2. Terms of Rate Protection Transaction.

Party A:                            SMBC Derivative Products Limited

Party B:                            GTJ RATE CAP LLC

Novation  Date:                     June 19, 2007

Novation Effective Date:            June 1, 2007

Termination Date:                   June 1, 2010

Notional Amount:                    USD 54,500,000.00

Floating Amounts:

Floating Rate Payer:                Party A

Initial Floating Rate
Calculation Period:                 The initial  Floating Rate  Calculation
                                    Period will be from and  including  the
                                    Novation   Effective  Date  up  to  but
                                    excluding  July 1, 2007,  with No Adjustment
                                    for Period End Dates

Floating Rate Calculation Periods:  The Floating Rate Calculation Periods will
                                    be the initial Floating Rate Calculation
                                    Period and thereafter, from and including
                                    the first (1st) day of each month to but
                                    excluding the first (1st) day of the follow-
                                    ing month and continuing up to but excluding
                                    the Termination Date, with No Adjustment
                                    for Period End Dates

Floating Rate Payer Payment Dates:  Every month on the (1st) calendar day of
                                    each month from and including July 1,
                                    2007 up to and including June 1, 2010;
                                    subject to adjustment in accordance with
                                    the Modified Following Business Day
                                    Convention

Floating Rate for the initial
calculation Period:                 5.32000% (per cent) per annum

<PAGE>

Floating Rate Option:               USD-LIBOR-BBA, however the reference to
                                    "London Banking Days" in the third line of
                                    the definition of "USD-LIBOR-BBA" as
                                    published in Section 7.1.(w).(xvii) of the
                                    Annex to the 2000 ISDA Definitions is re-
                                    placed by "New York and London Business
                                    Days"

Designated Maturity:                1 Month

Spread:                             Inapplicable

Floating Rate Day Count Fraction:   Actual/360

Reset Dates:                        The first (1st) calendar day of each month

Compounding:                        Inapplicable

Cap Rate:                           8.50000% (per cent) per annum

Business Days for Payments
by both parties:                    New York

Calculation Agent:                  SMBC Capital Markets, Inc. ("SMBC-CM"),
                                    acting as Agent for Party A, unless
                                    otherwise specified in a Confirmation in
                                    relation to the relevant Transaction.

     3. Additional Provisions.

(a) "Specified Entity" will not apply to Party A and will not apply to Party B.

(b)        Specified Transaction will have the meaning specified in Section 14
of the ISDA Form.

(c) The "Cross Default" provisions of Section 5(a)(vi) of the ISDA Form will not
apply to Party A or Party B.

(d) The "Credit Event Upon Merger"  provisions  of Section  5(b)(iv) of the ISDA
Form will not apply to Party A or Party B.

(e) The "Automatic Early Termination" provision of Section 6(a) of the ISDA Form
will not apply to Party A or Party B.

(f) Payments on Early  Termination.  For the purpose of Section 6(e) of the ISDA
Form:

     (i) Market  Quotation will apply;  provided,  however,  if Market Quotation
     cannot be determined, then Loss will apply.

     (ii) The Second Method will apply.

(g) "Termination Currency" means U.S. Dollars.

(h) "Additional  Termination  Event" will apply to Party A and will not apply to
Party B.

     The following shall constitute an Additional Termination Event:

<PAGE>

     If Party A's counterparty rating shall be downgraded below A+ by Standard &
     Poor's Ratings Services ("S&P"),  or below A1 by Moody's Investors Service,
     Inc. ("Moody's"), or either such rating is withdrawn, Party A must promptly
     give notice to Party B of such downgrade or withdrawal, and within five (5)
     Business  Days of such notice either enter into an  arrangement  to provide
     cash collateral to Party B or obtain a replacement  counterparty  who shall
     enter into a Confirmation  with Party B on substantially  the same terms as
     contained in this Confirmation.

     In each case such  arrangement  or such  replacement  counterparty  must be
     reasonably acceptable to Party B.

     Party  A's  failure  to comply  with  this  provision  will  constitute  an
     Additional  Termination  Event  in  which  case  Party A shall  be the sole
     Affected Party.

(i) Tax Representations:

     (a)  Payer  Representation.  For the  purposes of Section  3(e) of the ISDA
          Form, Party A and Party B each make the following representation:

          It is not required by any applicable  law, as modified by the practice
     of  any  relevant   governmental   revenue   authority,   of  any  Relevant
     Jurisdiction  to make any deduction or withholding for or on account of any
     Tax from any payment (other than interest  under Section 2(e),  6(d)(ii) or
     6(e) of the  ISDA  Form) to be made by it to the  other  party  under  this
     Confirmation.  In  making  this  representation,  it may rely  on:  (i) the
     accuracy of any representation  made by the other party pursuant to Section
     3(f) of the ISDA Form; (ii) the  satisfaction of the agreement of the other
     party  contained  in Section  4(a)(i) or 4(a)(iii) of the ISDA Form and the
     accuracy  and  effectiveness  of any  document  provided by the other party
     pursuant to Section  4(a)(i) or 4(a)(iii)  of the ISDA Form;  and (iii) the
     satisfaction  of the agreement of the other party contained in Section 4(d)
     of the ISDA Form.

     (b) Payee Representation.

     (i)  For the purposes of Section 3(f) of the ISDA Form, Party A and Party B
          each make the following representations:

          (1)  The following representation will apply to Party A:

               It is entering into the Transaction in the ordinary course of its
               trade as, and is,  either (I) a  recognized  U.K.  bank or (II) a
               recognized  U.K.  swaps  dealer (in either case (I) or (II),  for
               purposes of the United  Kingdom  Inland  Revenue extra  statutory
               concession  C17 on interest  and  currency  swaps dated March 14,
               1989),  and it will bring into account payments made and received
               in respect of the  Transaction in computing its income for United
               Kingdom tax purposes.

               (2) The following representation will apply to Party B:

               GTJ REIT Cap LLC is a limited liability company organized under
               the laws of the State of New York, with its principal place of
               business in the State of New York and its Taxpayer ID Number is
               26-0233671.

          (ii) Other Payee Representations: None.

     (j) Agreement to Deliver Documents.

     For the purposes of Section  4(a)(i) and (ii) of the ISDA Form,  each party
     agrees to deliver the following documents, as applicable:

     (a) Tax forms, documents or certificates to be delivered are: as needed.
<PAGE>

     (b) Other documents to be delivered are:
<TABLE>
<CAPTION>

  Party Required to       Form / Document / Certificate                           Date By Which To                Covered
  Deliver Document                                                                Be Delivered                     by 3(d)

===========================================================================================================================

<S>                      <C>                                                     <C>                                <C>
 Party A & Party B       Certificate of signing authority and specimen           Upon execution of and              Yes
                         signatures of each individual executing this            delivery of this
                         Confirmation                                            Confirmation

 Party A                 Certified copies of all corporate resolutions           Upon execution of and              Yes
                         authorizing the execution of this Confirmation          delivery of this
                                                                                 Confirmation

 Party A                 An opinion of counsel concerning this Confirmation      Upon execution and delivery        No
                                                                                      of this Confirmation

</TABLE>

(k) Addresses for Notices.

      Address for notices or communications to Party A:

      For the purpose of Section 12(a) of the ISDA Form:

      SMBC Derivative Products Limited
      99 Queen Victoria Street
      London EC4V 4EH
      UK
      Attention: Swaps Administration
      Facsimile No.:  (44 207) 786 1490
      Telephone No.: (44 207) 786 1400

      with a copy to:

      SMBC Capital Markets, Inc.
      c/o Derivative Products Group
      277 Park Avenue, Fifth Floor
      New York, New York 10172
      USA
      Attention: President
      Facsimile No.:  (212) 224-4959
                      (212) 224-5111 (for payment and reset notices)
      Telephone No.: (212) 224-5065

<PAGE>

      For the purposes of Section 5 and Section 6 of the ISDA Form:

      SMBC Capital Markets, Inc.
      277 Park Avenue, Fifth Floor
      New York, New York 10172
      USA
      Attention: President
      Facsimile No.:  (212) 224-4948
                      (212) 224-5111 (for payment and reset notices)
      Telephone No.: (212) 224-5021

      Address for notices or communications to Party B:

      For all purposes:

      GTJ REIT CAP LLC
      444 Merrick Road
      Lynbrook, NY 11563
      Attention: Paul Cooper
      Facsimile No.: (516) 887-8901
      Telephone No.: (516) 887-8900

      with a copy to:

      Chatham Financial Corporation
      235 Whitehorse Lane
      Kennett Square, Pennsylvania 19348
      USA
      Attention: Chris Lammie
      Facsimile No.:  (610) 925-3125
      Telephone No.: (484) 731-0008

(l)   Process Agent. For the purpose of Section 13(c) of the ISDA Form:

      Party A appoints as its Process Agent:

      SMBC Capital Markets, Inc.
      277 Park Avenue, Fifth Floor
      New York, New York 10172
      USA
      Attention: President
      Facsimile No.:   (212) 224-4948
                       (212) 224-5111 (for payment and reset notices)
      Telephone No.:   (212) 224-5020

     Party B appoints as its Process Agent:

     Not applicable

<PAGE>

(m) Offices.  The provisions of Section 10(a) of the ISDA Form will not apply to
this  Confirmation.  (n) Multibranch  Party. For the purpose of Section 10(c) of
the ISDA Form:

           Party A is not a Multibranch Party.

           Party B is not a Multibranch Party.

(o) Credit Support Document. Details of any Credit Support Document:

     With respect to Party A, Credit Support Document means: none.

     With respect to Party B, Credit Support Document means: none.

(p) Credit Support  Provider.

     With respect to Party A, Credit Support  Provider means: none.

     With respect to Party B, Credit Support Provider means: none.

(q)  Governing  Law.  This  Agreement  will  be  governed  by and  construed  in
     accordance  with the laws of the State of New York  (without  reference  to
     choice of law doctrine).

(r)  Netting of  Payments.  Subparagraph  (ii) of Section  2(c) of the ISDA Form
     will apply to this  Transaction in each case starting from the date of this
     Confirmation.

(s)  "Affiliate" will have the meaning specified in Section 14 of the ISDA Form,
     provided that Party A shall have,  or be deemed to have, no Affiliates  for
     the purposes of this Confirmation.

(t)  Waiver of Jury Trial. Each party waives, to the fullest extent permitted by
     applicable  law, any right it may have to a trial by jury in respect of any
     suit,  action,  or proceeding  relating to this  Confirmation or any Credit
     Support Document.  Each party (1) certifies that no representative,  agent,
     or  attorney  of  the  other  party  or any  Credit  Support  Provider  has
     represented,  expressly or  otherwise,  that such other party would not, in
     the  event  of such a suit,  action  or  proceeding,  seek to  enforce  the
     foregoing waiver and (2) acknowledges that it and the other party have been
     induced to enter into this  Confirmation and provide for any Credit Support
     Document,  as  applicable,  by, among other things,  the mutual waivers and
     certifications in this Section.

(u)  The  parenthetical  clause in Section  4(a)(iii)  of the ISDA Form will not
     apply to either Party A or Party B.

(v)  For the purpose of Section 6(e), Set-off will not apply.  Additionally,  in
     consideration  of the  execution  and  delivery  hereof by Party A, Party B
     waives, as it may apply to Party A only, any applicable right to Set-off or
     similar  right to withhold  payment set forth in the Interest Rate Currency
     Exchange  Agreement or similar  master  agreement  between Party B and SMBC
     Capital Markets, Inc.

(w)   Notification of Recording of Telephone Conversations. Each party hereby
      notifies the other that telephone conversations between the parties will
      be recorded, and each party consents to such recording and to such
      recording being produced in evidence in court proceedings.

(x)  Fully-paid Transactions.

<PAGE>

(i)  The condition  precedent in Section  2(a)(iii)(1) of the ISDA Form does not
     apply to a payment and  delivery  owing by a party if the other party shall
     have  satisfied  in full all its  payment  or  delivery  obligations  under
     Section  2(a)(i)  of the ISDA Form and shall at the  relevant  time have no
     further  payment or delivery  obligations,  whether  absolute or contingent
     under Section 2(a)(i) of the ISDA Form.

(ii) Notwithstanding  the  terms of  Section  5 and 6 of the ISDA Form if at any
     time and so long as one of the  parties to this  Confirmation  ("X")  shall
     have  satisfied  in full all its payment  and  delivery  obligations  under
     Section  2(a)(i)  of the ISDA  Form and  shall at the time  have no  future
     payment or delivery obligations,  whether absolute or contingent under such
     Section,  then  unless  the  other  party  ("Y") is  required  pursuant  to
     appropriate  proceedings  to return  to X or  otherwise  returns  to X upon
     demand of X any portion of any such payment or delivery, (a) the occurrence
     of an event  described  in Section  5(a) of the ISDA Form with respect to X
     any Credit  Support  Provider of X or any  Specified  Entity of X shall not
     constitute an Event of Default or a Potential Event of Default with respect
     to X as the  Defaulting  Party and (b) Y shall be entitled to  designate an
     Early  Termination  Date  pursuant  to Section 6 of the ISDA Form only as a
     result of the occurrence of a Termination Event set forth in either Section
     (5)(b)(i)  or 5(b)(ii) of the ISDA Form with  respect to Y as the  Affected
     Party or (ii)  Section  5(b)(iii) of the ISDA Form with respect to Y as the
     Burdened Party.

(iii) This agreement (including,  without limitation, the ISDA Form incorporated
     herein for the purpose of governing only the Transaction  evidenced by this
     Confirmation)   shall  govern  only  the  Transaction   evidenced  by  this
     Confirmation.

(y) Additional Representations.  Section 3(a) of the ISDA Form is hereby amended
by the  deletion of "and" at the end of  sub-clause  (iv),  the  insertion  of a
semicolon in place at the end of sub-clause  (v) thereof and the addition of the
following new subclauses:

     (vi) Agency.  It is entering into this  Confirmation and the Transaction as
     principal and not as agent of any person;

     (vii) Non-Reliance.  It is acting for its own account, and has made its own
     independent  decisions to enter into the  Transaction and as to whether the
     Transaction is appropriate or proper for it based upon its own judgment and
     upon  advice  from such  advisors  as it has  deemed  necessary.  It is not
     relying  on any  communication  (written  or  oral) of the  other  party as
     investment advice or as a recommendation to enter into the Transaction;  it
     being understood that information and explanations related to the terms and
     conditions of a Transaction shall not be considered  investment advice or a
     recommendation to enter into the Transaction.  No communication (written or
     oral)  received  from the other party shall be deemed to be an assurance or
     guarantee as to the expected results of the Transaction;

     (viii) Assessment and Understanding.  It is capable of assessing the merits
     of and understanding (on its own behalf or through independent professional
     advice),  and understands and accepts,  the terms,  conditions and risks of
     the Transaction.  It is also capable of assuming, and assumes, the risks of
     the Transaction;

     (ix) Status of Parties. The other party is not acting as a fiduciary for or
     an advisor to it in respect of the Transaction; and

     (x) Eligible Contract Participant. It is an "eligible contract participant"
     as defined in the U.S. Commodity Exchange Act.

(z) Collateral  Assignment.  Party A consents to a collateral assignment of this
Confirmation and the transaction  evidenced thereby (if requested) and agrees to
execute separate consents as may be reasonably  requested by the parties to such
agreements.

<PAGE>

(aa) Assignment.  Upon  prepayment,  in  whole  or in  part,  of the  underlying
     financing,  Party B can assign its position in the transaction (in whole or
     in part) to any other  third party with Party A's  consent,  which will not
     unreasonably be withheld or delayed.

4. Payment Instructions.

      Payments to Party A of USD amounts:

      Depository:
      ABA Routing No.:
      Address:
      In Favor Of:
      Account No.:

     Please  contact  Larry  Weissblum of our  Operations  Group if you have any
     questions   concerning   SMBC   Derivative   Products   Limited's   payment
     instructions   referenced   above   (Telephone:    212-224-5061;   Telefax:
     212-224-5111).

     Payments to Party B of USD amounts:

     Depository:                       PLEASE ADVISE
     In Favor Of:

5.   Counterparts.   This   Confirmation  may  be  executed  in  any  number  of
     counterparts,  each of which shall  constitute an original and all of which
     together shall constitute one and the same agreement and may be executed by
     facsimile.

<PAGE>

Please  confirm  that  the  foregoing  correctly  sets  forth  the  terms of the
agreement  between you and us by executing this Confirmation and returning it to
the documentation contact above.

Yours Sincerely,

Party A:

By:  SMBC DERIVATIVE PRODUCTS LIMITED

By:  SMBC Capital Markets, Inc.
Its: Agent

By:
    --------------------------------
     Name:   Larry Weissblum
     Title:     Senior Vice President

By:
    --------------------------------
     Name:  Danny Boodram
     Title:    Vice President

Party B:

 By:  GTJ RATE CAP LLC

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

<PAGE>
(Multicurrency--Cross Border)

                                      ISDA
                  International Swap Dealers Association, Inc.

                                MASTER AGREEMENT

                      dated as of .........................

.........................................and   ..................................
have entered and/or anticipate  entering into one or more  transactions  (each a
"Transaction")  that are or will be  governed by this  Master  Agreement,  which
includes the schedule (The  Schedule"),  and the documents and other  confirming
evidence (each a "Confirmation")  exchanged between the parties confirming those
Transactions.

Accordingly, the parties agree as follows:--

1.  Interpretation

(a)  Definitions.  The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.

(b) Inconsistency.  In the event of any inconsistency  between the provisions of
the Schedule and the other  provisions  of this Master  Agreement,  the Schedule
will prevail.  In the event of any  inconsistency  between the provisions of any
Confirmation   and  this  Master  Agreement   (including  the  Schedule),   such
Confirmation will prevail for the purpose of the relevant Transaction.

(c) Single Agreement.  All Transactions are entered into in reliance on the fact
that this Master Agreement and all Confirmations form a single agreement between
the  parties  (collectively  referred to as this  "Agreement"),  and the parties
would not otherwise enter into any Transactions.

2. Obligations

(a) General Conditions.

     (i) Each  party  will make  each  payment  or  delivery  specified  in each
     Confirmation  to be made by it,  subject  to the other  provisions  of this
     Agreement.

     (ii) Payments  under this  Agreement will be made on the due date for value
     on  that  date  in the  place  of the  account  specified  in the  relevant
     Confirmation   or  otherwise   pursuant  to  this   Agreement,   in  freely
     transferable funds and in the manner customary for payments in the required
     currency. Where settlement is by delivery (that is, other than by payment),
     such  delivery  will be made  for  receipt  on the due  date in the  manner
     customary for the relevant  obligation  unless  otherwise  specified in the
     relevant Confirmation or elsewhere in this Agreement.

     (iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
     the  condition  precedent  that no Event of Default or  Potential  Event of
     Default with respect to the other party has occurred and is continuing, (2)
     the condition  precedent that no Early  Termination  Date in respect of the
     relevant  Transaction has occurred or been  effectively  designated and (3)
     each other applicable condition precedent specified in this Agreement.

       Copyright (C) 1992 by International Swap Dealers Association, Inc.

<PAGE>

(b) Change of  Account.  Either  party may change its  account  for  receiving a
payment  or  delivery  by giving  notice to the other  party at least five Local
Business Days prior to the  scheduled  date for the payment or delivery to which
such change  applies unless such other party gives timely notice of a reasonable
objection to such change.

(c) Netting. If on any date amounts would otherwise be payable:--

    (i) in the same currency; and

    (ii) in respect of the same Transaction,

by each party to the other,  then, on such date, each party's obligation to make
payment of any such amount will be  automatically  satisfied and discharged and,
if the  aggregate  amount that would  otherwise  have been  payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party,  replaced by an  obligation  upon the party by whom the larger  aggregate
amount  would  have been  payable  to pay to the other  party the  excess of the
larger aggregate amount over the smaller aggregate amount.

The parties may elect in respect of two or more  Transactions  that a net amount
will be  determined  in respect of all  amounts  payable on the same date in the
same  currency  in  respect of such  Transactions,  regardless  of whether  such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation  by specifying  that  subparagraph  (ii) above
will not apply to the Transactions  identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such  Transactions from such date). This election may
be  made  separately  for  different  groups  of  Transactions  and  will  apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.

(d) Deduction or Withholding for Tax.

     (i) Gross-up.  All payments  under this  Agreement will be made without any
     deduction or withholding for or on account of any Tax unless such deduction
     or  withholding  is  required  by any  applicable  law,  as modified by the
     practice of any relevant governmental revenue authority, then in effect. If
     a party is so required to deduct or withhold, then that party ("X") will:--

          (1) promptly notify the other party ("Y") of such requirement;

          (2) pay to the  relevant  authorities  the full amount  required to be
          deducted  or  withheld  (including  the  full  amount  required  to be
          deducted or withheld from any  additional  amount paid by X to Y under
          this Section 2(d)) promptly upon the earlier of determining  that such
          deduction or  withholding  is required or  receiving  notice that such
          amount has been assessed against Y;

          (3) promptly  forward to Y an official  receipt (or a certified copy),
          or other  documentation  reasonably  acceptable to Y,  evidencing such
          payment to such authorities; and

          (4) if such Tax is an Indemnifiable  Tax, pay to Y, in addition to the
          payment to which Y is otherwise  entitled under this  Agreement,  such
          additional  amount  as is  necessary  to  ensure  that the net  amount
          actually received by Y (free and clear of Indemnifiable Taxes, whether
          assessed  against  X or Y) will  equal  the full  amount Y would  have
          received had no such deduction or withholding been required.  However,
          X will not be required to pay any additional amount to Y to the extent
          that it would not be required to be paid but for:--

               (A) the  failure  by Y to comply  with or perform  any  agreement
               contained in Section 4(a)(i), 4(a)(iii) or 4(d); or

               (B) the failure of a representation made by Y pursuant to Section
               3(f) to be accurate and true unless such  failure  would not have
               occurred but for (I) any action taken by a taxing  authority,  or
               brought  in a court of  competent  jurisdiction,  on or after the
               date on  which a  Transaction  is  entered  into  (regardless  of
               whether  such action is taken or brought  with respect to a party
               to this Agreement) or (II) a Change in Tax Law.

                                         2

<PAGE>

         (ii) Liability. If:--

               (1) X is  required  by any  applicable  law,  as  modified by the
               practice of any relevant governmental revenue authority,  to make
               any deduction or  withholding  in respect of which X would not be
               required  to  pay  an  additional   amount  to  Y  under  Section
               2(d)(i)(4);

               (2) X does not so deduct or withhold; and

               (3) a  liability  resulting  from such Tax is  assessed  directly
               against X,

          then,  except to the  extent Y has  satisfied  or then  satisfies  the
          liability resulting from such Tax, Y will promptly pay to X the amount
          of such liability  (including any related liability for interest,  but
          including any related  liability for penalties only if Y has failed to
          comply with or perform any  agreement  contained  in Section  4(a)(i),
          4(a)(iii) or 4(d)).

(e) Default  Interest;  Other  Amounts.  Prior to the  occurrence  or  effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment  obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after  judgment) on the overdue  amount to the other party on
demand in the same  currency as such  overdue  amount,  for the period from (and
including)  the  original  due date for payment to (but  excluding)  the date of
actual  payment,  at the Default  Rate.  Such interest will be calculated on the
basis of daily  compounding and the actual number of days elapsed.  If, prior to
the occurrence or effective  designation of an Early Termination Date in respect
of  the  relevant  Transaction,  a  party  defaults  in the  performance  of any
obligation  required to be settled by  delivery,  it will  compensate  the other
party on demand if and to the extent  provided for in the relevant  Confirmation
or elsewhere in this Agreement.

3. Representations

Each party represents to the other party (which  representations  will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the  representations in Section 3(f), at all times until the
termination of this Agreement) that:--

(a) Basic Representations.

     (i) Status. It is duly organised and validly existing under the laws of the
     jurisdiction of its  organisation or  incorporation  and, if relevant under
     such laws, in good standing;

     (ii)  Powers.  It has the power to  execute  this  Agreement  and any other
     documentation relating to this Agreement to which it is a party, to deliver
     this Agreement and any other documentation  relating to this Agreement that
     it is required by this Agreement to deliver and to perform its  obligations
     under this  Agreement and any  obligations  it has under any Credit Support
     Document  to which it is a party  and has  taken  all  necessary  action to
     authorise such execution, delivery and performance;

     (iii) No Violation or Conflict. Such execution, delivery and performance do
     not violate or conflict with any law applicable to it, any provision of its
     constitutional  documents,  any  order or  judgment  of any  court or other
     agency  of  government  applicable  to it or  any  of  its  assets  or  any
     contractual restriction binding on or affecting it or any of its assets;

     (iv)  Consents.  All  governmental  and other consents that are required to
     have been  obtained  by it with  respect  to this  Agreement  or any Credit
     Support  Document to which it is a party have been obtained and are in full
     force and effect and all conditions of any such consents have been complied
     with; and

     (v)  Obligations  Binding.  Its  obligations  under this  Agreement and any
     Credit Support Document to which it is a party constitute its legal,  valid
     and binding  obligations,  enforceable in accordance with their  respective
     terms  (subject  to  applicable  bankruptcy,  reorganisation,   insolvency,
     moratorium  or similar  laws  affecting  creditors'  rights  generally  and
     subject,  as  to  enforceability,   to  equitable   principles  of  general
     application (regardless of whether enforcement is sought in a proceeding in
     equity or at law)).

                                     3
<PAGE>

(b) Absence of Certain Events. No Event of Default or Potential Event of Default
or, to its knowledge,  Termination  Event with respect to it has occurred and is
continuing  and no such  event or  circumstance  would  occur as a result of its
entering into or performing its  obligations  under this Agreement or any Credit
Support Document to which it is a party.

(c) Absence of Litigation. There is not pending or, to its knowledge, threatened
against it or any of its Affiliates any action,  suit or proceeding at law or in
equity or before any court,  tribunal,  governmental body, agency or official or
any arbitrator that is likely to affect the legality, validity or enforceability
against it of this  Agreement  or any Credit  Support  Document to which it is a
party or its ability to perform its  obligations  under this  Agreement  or such
Credit Support Document.

(d)  Accuracy of  Specified  Information.  All  applicable  information  that is
furnished in writing by or on behalf of it to the other party and is  identified
for the purpose of this  Section  3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.

(e) Payer Tax Representation.  Each representation  specified in the Schedule as
being made by it for the purpose of this Section 3(e) is accurate and true.

(f) Payee Tax Representations. Each representation specified in the Schedule as
being made by it for the purpose of this Section 3(f) is accurate and true.

4. Agreements

Each party  agrees with the other that,  so long as either party has or may have
any  obligation  under this  Agreement or under any Credit  Support  Document to
which it is a party:--

(a) Furnish  Specified  Information.  It will  deliver to the other party or, in
certain  cases under  subparagraph  (iii) below,  to such  government  or taxing
authority as the other party reasonably directs:--

     (i) any forms,  documents or certificates relating to taxation specified in
     the Schedule or any Confirmation;

     (ii) any other documents specified in the Schedule or any Confirmation; and

     (iii) upon reasonable demand by such other party, any form or document that
     may be required or  reasonably  requested in writing in order to allow such
     other party or its Credit  Support  Provider  to make a payment  under this
     Agreement or any applicable  Credit Support  Document without any deduction
     or  withholding  for or on  account  of any Tax or with such  deduction  or
     withholding  at a reduced  rate (so long as the  completion,  execution  or
     submission  of such form or document  would not  materially  prejudice  the
     legal or commercial position of the party in receipt of such demand),  with
     any  such  form or  document  to be  accurate  and  completed  in a  manner
     reasonably  satisfactory  to such other party and to be executed  and to be
     delivered with any reasonably required certification,

in each case by the date specified in the Schedule or such  Confirmation  or, if
none is specified, as soon as reasonably practicable.

(b) Maintain  Authorisations.  It will use all reasonable efforts to maintain in
full force and effect all consents of any  governmental  or other authority that
are required to be obtained by it with  respect to this  Agreement or any Credit
Support  Document to which it is a party and will use all reasonable  efforts to
obtain any that may become necessary in the future.

(c)  Comply  with  Laws.  It will  comply  in all  material  respects  with  all
applicable  laws and  orders to which it may be  subject if failure so to comply
would  materially  impair  its  ability to perform  its  obligations  under this
Agreement or any Credit Support Document to which it is a party.

(d) Tax Agreement.  It will give notice of any failure of a representation  made
by it under  Section 3(f) to be accurate and true promptly upon learning of such
failure.

(e)  Payment  of Stamp Tax.  Subject  to  Section  11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or  performance of this
Agreement by a jurisdiction in which it is incorporated,

                                      4

<PAGE>

organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located  ("Stamp Tax  Jurisdiction")  and will indemnify the other party against
any Stamp Tax levied or imposed  upon the other party or in respect of the other
party's  execution  or  performance  of this  Agreement  by any such  Stamp  Tax
Jurisdiction  which is not also a Stamp Tax  Jurisdiction  with  respect  to the
other party.

5. Events of Default and Termination Events

(a) Events of Default. The occurrence at any time with respect to a party or, if
applicable, any Credit Support Provider of such party or any Specified Entity of
such party of any of the following  events  constitutes  an event of default (an
"Event of Default") with respect to such party:--

     (i) Failure to Pay or Deliver.  Failure by the party to make, when due, any
     payment  under this  Agreement or delivery  under  Section  2(a)(i) or 2(e)
     required to be made by it if such  failure is not remedied on or before the
     third  Local  Business  Day after  notice of such  failure  is given to the
     party;

     (ii)  Breach of  Agreement.  Failure by the party to comply with or perform
     any agreement or  obligation  (other than an obligation to make any payment
     under this Agreement or delivery  under Section  2(a)(i) or 2(e) or to give
     notice of a Termination  Event or any agreement or obligation under Section
     4(a)(i),  4(a)(iii) or 4(d)) to be complied  with or performed by the party
     in  accordance  with this  Agreement  if such failure is not remedied on or
     before  the  thirtieth  day after  notice of such  failure  is given to the
     party;

     (iii) Credit Support Default.

          (1) Failure by the party or any Credit Support  Provider of such party
          to comply with or perform any  agreement or  obligation to be complied
          with or performed by it in accordance with any Credit Support Document
          if such failure is continuing  after any  applicable  grace period has
          elapsed;

          (2) the expiration or  termination of such Credit Support  Document or
          the failing or ceasing of such Credit  Support  Document to be in full
          force and effect for the  purpose of this  Agreement  (in either  case
          other than in accordance with its terms) prior to the  satisfaction of
          all  obligations  of such party under each  Transaction  to which such
          Credit Support  Document  relates  without the written  consent of the
          other party; or

          (3) the party or such Credit Support Provider  disaffirms,  disclaims,
          repudiates or rejects, in whole or in part, or challenges the validity
          of, such Credit Support Document;

     (iv) Misrepresentation. A representation (other than a representation under
     Section  3(e) or (f)  made or  repeated  or  deemed  to have  been  made or
     repeated by the party or any Credit Support  Provider of such party in this
     Agreement or any Credit Support  Document  proves to have been incorrect or
     misleading in any material  respect when made or repeated or deemed to have
     been made or repeated;

     (v) Default under  Specified  Transaction.  The party,  any Credit  Support
     Provider of such party or any applicable Specified Entity of such party (1)
     defaults  under a Specified  Transaction  and,  after giving  effect to any
     applicable notice  requirement or grace period,  there occurs a liquidation
     of, an acceleration of obligations  under, or an early termination of, that
     Specified Transaction,  (2) defaults, after giving effect to any applicable
     notice  requirement or grace period,  in making any payment or delivery due
     on the last payment,  delivery or exchange date of, or any payment on early
     termination of, a Specified  Transaction (or such default  continues for at
     least  three  Local  Business  Days  if  there  is  no  applicable   notice
     requirement or grace period) or (3)  disaffirms,  disclaims,  repudiates or
     rejects,  on whole or in part, a Specified  Transaction  (or such action is
     taken by any person or entity  appointed  or empowered to operate it or act
     on its behalf);

     (vi) Cross  Default.  If "Cross  Default" is  specified  in the Schedule as
     applying to the party, the occurrence or existence of (1) a default,  event
     of default or other similar condition or event (however

                                    5

<PAGE>

          described) in respect of such party,  any Credit  Support  Provider of
          such party or any applicable  Specified Entity of such party under one
          or more agreements or instruments  relating to Specified  Indebtedness
          of any of them  (individually  or collectively) in an aggregate amount
          of not less than the applicable  Threshold Amount (as specified in the
          Schedule) which has resulted in such Specified  Indebtedness becoming,
          or becoming  capable at such time of being  declared,  due and payable
          under such agreements or  instruments,  before it would otherwise have
          been due and  payable  or (2) a default  by such  party,  such  Credit
          Support   Provider  or  such   Specified   Entity   (individually   or
          collectively)  in making one or more  payments on the due date thereof
          in an  aggregate  amount  of not less  than the  applicable  Threshold
          Amount under such  agreements or  instruments  (after giving effect to
          any applicable notice requirement or grace period);

          (vii) Bankruptcy. The party, any Credit Support Provider of such party
          or any applicable Specified Entity of such party:--

               (1)  is  dissolved  (other  than  pursuant  to  a  consolidation,
               amalgamation  or merger);  (2) becomes  insolvent or is unable to
               pay its  debts  or fails  or  admits  in  writing  its  inability
               generally  to pay its  debts  as they  become  due;  (3)  makes a
               general  assignment,  arrangement or composition  with or for the
               benefit  of its  creditors;  (4)  institutes  or  has  instituted
               against it a  proceeding  seeking a  judgment  of  insolvency  or
               bankruptcy or any other relief under any bankruptcy or insolvency
               law or  other  similar  law  affecting  creditors'  rights,  or a
               petition is presented for its winding-up or liquidation,  and, in
               the  case  of any  such  proceeding  or  petition  instituted  or
               presented  against it, such proceeding or petition (A) results in
               a judgment of  insolvency  or bankruptcy or the entry of an order
               for  relief  or the  making  of an order  for its  winding-up  or
               liquidation  or (B)  is  not  dismissed,  discharged,  stayed  or
               restrained  in each  case  within 30 days of the  institution  or
               presentation  thereof;  (5)  has  a  resolution  passed  for  its
               winding-up,   official  management  or  liquidation  (other  than
               pursuant to a consolidation,  amalgamation or merger);  (6) seeks
               or  becomes  subject  to  the  appointment  of an  administrator,
               provisional liquidator, conservator, receiver, trustee, custodian
               or other similar official for it or for all or substantially  all
               its assets;  (7) has a secured  party take  possession  of all or
               substantially  all  its  assets  or  has a  distress,  execution,
               attachment, sequestration or other legal process levied, enforced
               or sued on or  against  all or  substantially  all its assets and
               such secured party maintains  possession,  or any such process is
               not dismissed,  discharged,  stayed or  restrained,  in each case
               within 30 days thereafter;  (8) causes or is subject to any event
               with  respect  to it  which,  under  the  applicable  laws of any
               jurisdiction,  has an  analogous  effect  to  any  of the  events
               specified  in clauses  (1) to (7)  (inclusive);  or (9) takes any
               action in furtherance  of, or indicating its consent to, approval
               of, or acquiescence in, any of the foregoing acts; or

          (viii)  Merger  Without  Assumption.  The party or any Credit  Support
          Provider of such party  consolidates  or  amalgamates  with, or merges
          with or into,  or transfers  all or  substantially  all its assets to,
          another entity and, at the time of such  consolidation,  amalgamation,
          merger or transfer:--

               (1) the resulting, surviving or transferee entity fails to assume
               all the obligations of such party or such Credit Support Provider
               under this Agreement or any Credit  Support  Document to which it
               or its predecessor was a party by operation of law or pursuant to
               an agreement  reasonably  satisfactory to the other party to this
               Agreement; or

               (2) the benefits of any Credit  Support  Document  fail to extend
               (without  the consent of the other party) to the  performance  by
               such resulting, surviving or transferee entity of its obligations
               under this Agreement.

(b) Termination  Events.  The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event  specified  below  constitutes  an  Illegality if the
event is specified  in (i) below,  a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified  in (iii) below,  and
if specified to be applicable, a Credit Event

                                   6

<PAGE>

Upon Merger if the event is  specified  pursuant to (iv) below or an  Additional
Termination Event if the event is specified pursuant to (v) below:--

          (i)  Illegality.  Due to  the  adoption  of,  or any  change  in,  any
          applicable  law after the date on which a Transaction is entered into,
          or due to the promulgation of, or any change in, the interpretation by
          any  court,   tribunal  or   regulatory   authority   with   competent
          jurisdiction  of any  applicable  law  after  such  date,  it  becomes
          unlawful  (other  than as a result of a breach by the party of Section
          4(b)) for such party (which will be the Affected Party):--

               (1) to perform any absolute or  contingent  obligation  to make a
               payment  or  delivery  or to  receive a payment  or  delivery  in
               respect of such  Transaction or to comply with any other material
               provision of this Agreement relating to such Transaction; or

               (2) to perform,  or for any Credit Support Provider of such party
               to perform,  any contingent or other  obligation  which the party
               (or such Credit  Support  Provider) has under any Credit  Support
               Document relating to such Transaction;

          (ii) Tax Event. Due to (x) any action taken by a taxing authority,  or
          brought in a court of competent jurisdiction,  on or after the date on
          which a Transaction is entered into (regardless of whether such action
          is taken or brought with respect to a party to this  Agreement) or (y)
          a Change in Tax Law,  the party  (which  will be the  Affected  Party)
          will, or there is a substantial  likelihood  that it will, on the next
          succeeding  Scheduled Payment Date (1) be required to pay to the other
          party an additional  amount in respect of an  Indemnifiable  Tax under
          Section  2(d)(i)(4) (except in respect of interest under Section 2(e),
          6(d)(ii)  or 6 (e)) or (2)  receive a payment  from which an amount is
          required to be deducted or withheld for or on account of a Tax (except
          in respect of interest  under Section  2(e),  6(d)(ii) or 6(e)) and no
          additional  amount is required to be paid in respect of such Tax under
          Section  2(d)(i)(4) (other than by reason of Section  2(d)(i)(4)(A) or
          (B));

          (iii) Tax Event Upon Merger.  The party (the "Burdened  Party") on the
          next succeeding  Scheduled Payment Date will either (1) be required to
          pay an  additional  amount in  respect of an  Indemnifiable  Tax under
          Section  2(d)(i)(4) (except in respect of interest under Section 2(e),
          6(d)(ii)  or 6(e)) or (2)  receive a payment  from which an amount has
          been deducted or withheld for or on account of any  Indemnifiable  Tax
          in  respect  of  which  the  other  party  is not  required  to pay an
          additional  amount (other than by reason of Section  2(d)(i)(4)(A)  or
          (B)),  in  either  case  as a  result  of  a  party  consolidating  or
          amalgamating  with,  or merging with or into, or  transferring  all or
          substantially  all its assets to,  another  entity  (which will be the
          Affected  Party)  where  such  action  does  not  constitute  an event
          described in Section 5(a)(viii);

          (iv)  Credit  Event  Upon  Merger.  If "Credit  Event Upon  Merger" is
          specified in the Schedule as applying to the party,  such party ("X"),
          any Credit Support Provider of X or any applicable Specified Entity of
          X  consolidates  or  amalgamates  with,  or  merges  with or into,  or
          transfers all or  substantially  all its assets to, another entity and
          such  action  does  not  constitute  an  event  described  in  Section
          5(a)(viii) but the  creditworthiness  of the  resulting,  surviving or
          transferee  entity is  materially  weaker  than that of X, such Credit
          Support  Provider  or  such  Specified  Entity,  as the  case  may be,
          immediately  prior  to  such  action  (and,  in such  event,  X or its
          successor or transferee, as appropriate,  will be the Affected Party);
          or

          (v)  Additional  Termination  Event.  If any  "Additional  Termination
          Event" is specified in the Schedule or any  Confirmation  as applying,
          the  occurrence of such event (and, in such event,  the Affected Party
          or  Affected  Parties  shall  be  as  specified  for  such  Additional
          Termination Event in the Schedule or such Confirmation).

(c) Event of Default and  Illegality.  If an event or  circumstance  which would
otherwise  constitute  or give rise to an Event of Default also  constitutes  an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.

                                      7

<PAGE>

6. Early Termination

(a) Right to Terminate  Following  Event of Default.  If at any time an Event of
Default  with  respect to a party (the  "Defaulting  Party") has occurred and is
then continuing,  the other party (the "Non-defaulting  Party") may, by not more
than 20 days notice to the  Defaulting  Party  specifying  the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions.  If, however,
"Automatic  Early  Termination"  is  specified  in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur  immediately  upon the  occurrence  with  respect to such party of an
Event of Default  specified in Section  5(a)(vii)(1),  (3),  (5), (6) or, to the
extent  analogous  thereto,  (8), and as of the time  immediately  preceding the
institution  of the  relevant  proceeding  or the  presentation  of the relevant
petition upon the  occurrence  with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).

(b) Right to Terminate Following Termination Event.

     (i) Notice. If a Termination Event occurs, an Affected Party will, promptly
     upon becoming aware of it, notify the other party, specifying the nature of
     that  Termination  Event and each Affected  Transaction  and will also give
     such other  information about that Termination Event as the other party may
     reasonably require.

     (ii) Transfer to Avoid  Termination  Event.  If either an Illegality  under
     Section  5(b)(i)(1)  or a Tax Event  occurs and there is only one  Affected
     Party,  or if a Tax Event Upon Merger occurs and the Burdened  Party is the
     Affected  Party,  the Affected  Party will,  as a condition to its right to
     designate  an  Early  Termination  Date  under  Section  6(b)(iv),  use all
     reasonable  efforts  (which  will not  require  such party to incur a loss,
     excluding immaterial, incidental expenses) to transfer within 20 days after
     it gives notice under Section 6(b)(i) all its rights and obligations  under
     this  Agreement in respect of the Affected  Transactions  to another of its
     Offices or Affiliates so that such Termination Event ceases to exist.

     If the  Affected  Party is not able to make  such a  transfer  it will give
     notice  to the  other  party  to that  effect  within  such 20 day  period,
     whereupon  the other party may effect such a transfer  within 30 days after
     the notice is given under Section 6(b)(i).

     Any such transfer by a party under this Section 6(b)(ii) will be subject to
     and conditional  upon the prior written  consent of the other party,  which
     consent  will not be withheld if such other  party's  policies in effect at
     such time would permit it to enter into transactions with the transferee on
     the terms proposed.

     (iii) Two Affected Parties.  If an Illegality under Section 5(b)(i)(1) or a
     Tax Event  occurs and there are two Affected  Parties,  each party will use
     all  reasonable  efforts to reach  agreement  within 30 days  after  notice
     thereof is given under Section 6(b)(i) on action to avoid that  Termination
     Event.

     (iv) Right to Terminate. If:--

          (1) a transfer  under Section  6(b)(ii) or an agreement  under Section
          6(b)(iii),  as the case may be, has not been  effected with respect to
          all Affected Transactions within 30 days after an Affected party gives
          notice under Section 6(b)(i); or

          (2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger
          or an Additional  Termination Event occurs, or a Tax Event Upon Merger
          occurs and the Burdened Party is not the Affected Party,

     either party in the case of an  Illegality,  the Burdened Party in the case
     of a Tax Event Upon Merger,  any Affected  Party in the case of a Tax Event
     or an  Additional  Termination  Event if there  is more  than one  Affected
     Party, or the party which is not the Affected Party in the case of a Credit
     Event Upon Merger or an Additional  Termination  Event if there is only one
     Affected  Party may, by not more than 20 days notice to the other party and
     provided that the relevant Termination Event is then

                                     8

<PAGE>

     continuing,  designate  a day not  earlier  than  the day  such  notice  is
     effective  as  an  Early  Termination  Date  in  respect  of  all  Affected
     Transactions.

(c) Effect of Designation.

     (i) If notice  designating an Early Termination Date is given under Section
     6(a)  or  (b),  the  Early  Termination  Date  will  occur  on the  date so
     designated,  whether or not the  relevant  Event of Default or  Termination
     Event is then continuing.

     (ii) Upon the occurrence or effective  designation of an Early  Termination
     Date, no further  payments or deliveries  under Section  2(a)(i) or 2(e) in
     respect of the  Terminated  Transactions  will be required to be made,  but
     without prejudice to the other provisions of this Agreement. The amount, if
     any,  payable in respect of an Early  Termination  Date shall be determined
     pursuant to Section 6(e).

(d) Calculations.

     (i)  Statement.  On or as  soon as  reasonably  practicable  following  the
     occurrence  of  an  Early  Termination  Date,  each  party  will  make  the
     calculations  on its part,  if any,  contemplated  by Section 6(e) and will
     provide to the other party a statement (1) showing,  i n reasonable detail,
     such  calculations  (including  all relevant  quotations and specifying any
     amount  payable under Section 6(e)) and (2) giving  details of the relevant
     account to which any amount  payable to it is to be paid. In the absence of
     written confirmation from the source of a quotation obtained in determining
     a Market Quotation,  the records of the party obtaining such quotation will
     be conclusive evidence of the existence and accuracy of such quotation.

     (ii)  Payment  Date.  An amount  calculated  as being due in respect of any
     Early  Termination  Date under Section 6(e) will be payable on the day that
     notice  of the  amount  payable  is  effective  (in the  case  of an  Early
     Termination  Date which is  designated or occurs as a result of an Event of
     Default) and on the day which is two Local  Business  Days after the day on
     which notice of the amount  payable is  effective  (in the case of an Early
     Termination  Date which is designated as a result of a Termination  Event).
     Such  amount  will be paid  together  with (to the extend  permitted  under
     applicable law) interest  thereon (before as well as after judgment) in the
     Termination  Currency,  from (and including) the relevant Early Termination
     Date to (but  excluding)  the date such amount is paid,  at the  Applicable
     Rate.  Such interest  will be calculated on the basis of daily  compounding
     and the actual number of days elapsed.

(e) Payments on Early  Termination.  If an Early  Termination  Date occurs,  the
following  provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the  "First  Method"  or the  "Second  Method".  If the  parties  fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The  amount,  if any,  payable  in  respect  of an  Early  Termination  Date and
determined pursuant to this Section will be subject to any Set-off.

     (i) Events of Default.  If the Early Termination Date results from an Event
     of Default:--

          (1) First Method and Market Quotation.  If the First Method and Market
          Quotation apply,  the Defaulting Party will pay to the  Non-defaulting
          Party  the  excess,  if a  positive  number,  of  (A)  the  sum of the
          Settlement Amount (determined by the Non-defaulting  Party) in respect
          of the Terminated Transactions and the Termination Currency Equivalent
          of the Unpaid Amounts owing to the  Non-defaulting  Party over (B) the
          Termination  Currency  Equivalent  of the Unpaid  Amounts owing to the
          Defaulting Party.

          (2) First  Method and Loss.  If the First  Method and Loss apply,  the
          Defaulting Party will pay to the  Non-defaulting  Party, if a positive
          number, the Non-defaulting Party's Loss in respect of this Agreement.

          (3)  Second  Method  and Market  Quotation.  If the Second  Method and
          Market Quotation apply, an amount will be payable equal to (A) the sum
          of the Settlement Amount (determined by the

                                     9
<PAGE>

          Non-defaulting  Party) in respect of the Terminated  Transactions  and
          the Termination Currency Equivalent of the Unpaid Amounts owing to the
          Non-defaulting  Party less (B) the Termination  Currency Equivalent of
          the Unpaid Amounts owing to the Defaulting  Party. If that amount is a
          positive   number,   the   Defaulting   Party   will  pay  it  to  the
          Non-defaulting  Party; if it is a negative number,  the Non-defaulting
          Party will pay the  absolute  value of that  amount to the  Defaulting
          Party.

          (4) Second Method and Loss.  If the Second  Method and Loss Apply,  an
          amount will be payable  equal to the  Non-defaulting  Party's  Loss in
          respect of this Agreement.  If that amount is a positive  number,  the
          Defaulting Party will pay it to the  Non-defaulting  Party; if it is a
          negative number, the Non-defaulting  Party will pay the absolute value
          of that amount to the Defaulting Party.

     (ii)  Termination  Events.  If the Early  Termination  Date  results from a
     Termination Event:--

          (1) One Affected  Party.  If there is one Affected  Party,  the amount
          payable will be determined in accordance with Section  6(e)(i)(3),  if
          Market  Quotation  applies,  or Section  6(e)(i)(4),  if Loss applies,
          except that, in either case, references to the Defaulting Party and to
          the  Non-defaulting  Party  will be  deemed  to be  references  to the
          Affected  Party  and  the  party  which  is not  the  Affected  Party,
          respectively,  and if Loss applies and fewer than all Transactions are
          being  terminated,   Loss  shall  be  calculated  in  respect  of  all
          Terminated Transactions.

          (2) Two Affected Parties. If there are two Affected Parties:--

               (A) if Market  Quotation  applies,  each party will  determine  a
               Settlement Amount in respect of the Terminated Transactions,  and
               an amount will be payable equal to (I) the sum of (a) one-half of
               the difference  between the  Settlement  Amount of the Party with
               the higher  Settlement  Amount ("X") and the Settlement Amount of
               the party  with the  lower  Settlement  Amount  ("Y") and (b) the
               Termination  Currency Equivalent of the Unpaid Amounts owing to X
               less  (II) the  Termination  Currency  Equivalent  of the  Unpaid
               Amounts owing to Y; and

               (B) if Loss  applies,  each  party  will  determine  its  Loss in
               respect of this Agreement (or, if fewer than all the Transactions
               are being terminated,  in respect of all Terminated Transactions)
               and an amount will be payable equal to one-half of the difference
               between  the Loss of the party with the higher Loss ("X") and the
               Loss of the party with the lower Loss ("Y").

          If the amount payable is a positive  number, Y will pay it to X; if it
          is a negative  number, X will pay the absolute value of that amount to
          Y.

     (iii)  Adjustment  for  Bankruptcy.   In   circumstances   where  an  Early
     Termination Date occurs because  "Automatic Early  Termination"  applies in
     respect of a party,  the amount  determined under this Section 6(e) will be
     subject to such  adjustments  as are  appropriate  and  permitted by law to
     reflect  any  payments or  deliveries  made by one party to the other under
     this  Agreement  (and  retained by such other party) during the period from
     the  relevant  Early  Termination  Date to the date for payment  determined
     under Section 6(d)(ii).

     (iv)  Pre-Estimate.  The parties agree that if Market Quotation  applies an
     amount recoverable under this Section 6(e) is a reasonable  pre-estimate of
     loss and not a penalty.  Such amount is payable for the loss of bargain and
     the loss of  protection  against  future  risks  and  except  as  otherwise
     provided in this  Agreement  neither  party will be entitled to recover any
     additional damages as a consequence of such losses.

                                  10

<PAGE>

7. Transfer

Subject  to  Section  6(b)(ii),  neither  this  Agreement  nor any  interest  or
obligation  in or under this  Agreement  may be  transferred  (whether by way of
security or otherwise) by either party without the prior written  consent of the
other party, except that:--

(a)  a  party  may  make  such  a  transfer  of  this  Agreement  pursuant  to a
consolidation  or amalgamation  with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and

(b) a party may make such a transfer  of all or any part of its  interest in any
amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be void.

8. Contractual Currency

(a) Payment in the Contractual Currency.  Each payment under this Agreement will
be made in the relevant  currency  specified in this  Agreement for that payment
(the  "Contractual  Currency").  To the extent  permitted by applicable law, any
obligation to make payments  under this  Agreement in the  Contractual  Currency
will not be discharged or satisfied by any tender in any currency other than the
Contractual  Currency,  except to the extent such  tender  results in the actual
receipt by the party to which payment is owed, acting in a reasonable manner and
in good faith in  converting  the  currency  so  tendered  into the  Contractual
Currency,  of the full amount in the Contractual Currency of all amounts payable
in respect of this  Agreement.  If for any reason the amount in the  Contractual
Currency so  received  falls  short of the amount in the  Contractual  Currently
payable in respect of this  Agreement,  the party  required  to make the payment
will, to the extent permitted by applicable law, immediately pay such additional
amount in the  Contractual  Currency as may be necessary to  compensate  for the
shortfall.  If for any reason the amount in the Contractual Currency so received
exceeds  the  amount in the  Contractual  Currency  payable  in  respect of this
Agreement,  the party  receiving the payment will refund  promptly the amount of
such excess.

(b)  Judgments.  To the extent  permitted by applicable  law, if any judgment or
order  expressed in a currency other than the  Contractual  Currency is rendered
(i) for the payment of any amount owing in respect of this  Agreement,  (ii) for
the payment of any amount  relating to any early  termination in respect of this
Agreement  or (iii) in respect of a judgment  or order of another  court for the
payment  of any  amount  described  in (i) or  (ii)  above,  the  party  seeking
recovery,  after recovery in full of the aggregate amount to which such party is
entitled  pursuant  to the  judgment  or  order,  will be  entitled  to  receive
immediately  from the other party the amount of any shortfall of the Contractual
Currency  received  by such  party as a  consequence  of sums paid in such other
currency  and  will  refund  promptly  to the  other  party  any  excess  of the
Contractual  Currency  received by such party as a  consequence  of sums paid in
such other  currency if such shortfall or such excess arises or results from any
variation  between  the rate of exchange  at which the  Contractual  Currency is
converted  into the  currency of the  judgment or order for the purposes of such
judgment or order and the rate of  exchange at which such party is able,  acting
in a reasonable  manner and in good faith in  converting  the currency  received
into the Contractual  Currency,  to purchase the  Contractual  Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange  payable in connection  with the purchase of or conversion  into the
Contractual Currency.

(c) Separate  Indemnities.  To the extent  permitted by  applicable  law,  these
indemnities  constitute  separate  and  independent  obligations  from the other
obligations in this  Agreement,  will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof  being  made for any other  sums  payable  in  respect of this
Agreement.

(d) Evidence of Loss.  For the purpose of this Section 8, it will be  sufficient
for a party to  demonstrate  that it would  have  suffered  a loss had an actual
exchange or purchase been made.

                                11

<PAGE>

9. Miscellaneous

(a) Entire  Agreement.  This  Agreement  constitutes  the entire  agreement  and
understanding  of the parties with respect to its subject  matter and supersedes
all oral communication and prior writings with respect thereto.

(b)  Amendments.  No  amendment,  modification  or  waiver  in  respect  of this
Agreement will be effective unless in writing  (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.

(c)  Survival  of  Obligations.  Without  prejudice  to  Section  2(a)(iii)  and
6(c)(ii),  the  obligations of the parties under this Agreement will survive the
termination of any Transaction.

(d)  Remedies  Cumulative.  Except as  provided in this  Agreement,  the rights,
powers,  remedies and  privileges  provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.

(e) Counterparts and Confirmations.

     (i) This Agreement (and each amendment,  modification and waiver in respect
     of it)  may  be  executed  and  delivered  in  counterparts  (including  by
     facsimile transmission), each of which will be deemed an original.

     (ii) The parties  intend  that they are legally  bound by the terms of each
     Transaction  from the moment they agree to those terms  (whether  orally or
     otherwise). A Confirmation shall be entered into as soon as practicable and
     may be executed  and  delivered  in  counterparts  (including  by facsimile
     transmission)  or be created by an exchange of telexes or by an exchange of
     electronic messages on an electronic  messaging system,  which in each case
     will be  sufficient  for all purposes to evidence a binding  supplement  to
     this  Agreement.  The  parties  will  specify  therein or  through  another
     effective  means that any such  counterpart,  telex or  electronic  message
     constitutes a Confirmation.

(f) No Waiver of Rights.  A failure or delay in exercising  any right,  power or
privilege  in respect of this  Agreement  will not be  presumed  to operate as a
waiver,  and a single or partial exercise of any right,  power or privilege will
not be presumed to preclude any subsequent or further  exercise,  of that right,
power or privilege or the exercise of any other right, power or privilege.

(g)  Headings.  The  headings  used in this  Agreement  are for  convenience  of
reference  only and are not to affect  the  construction  of or to be taken into
consideration in interpreting this Agreement.

10. Offices; Multibranch Parties

(a) If Section  10(a) is specified in the Schedule as applying,  each party that
enters into a  Transaction  through an Office other than its head or home office
represents to the other party that,  notwithstanding the place of booking office
or jurisdiction of  incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office.  This  representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.

(b)  Neither  party may change the Office  through  which it makes and  receives
payments  or  deliveries  for the  purpose of a  Transaction  without  the prior
written consent of the other party.

(c) If a party  is  specified  as a  Multibranch  Party  in the  Schedule,  such
Multibranch  Party  may  make and  receive  payments  or  deliveries  under  any
Transaction  through any Office listed in the Schedule,  and the Office  through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.

11. Expenses

A Defaulting Party will, on demand,  indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses,  including legal fees and
Stamp  Tax,  incurred  by such  other  party by  reason of the  enforcement  and
protection of its rights under this Agreement or any Credit Support Document

                                  12

<PAGE>

to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.

12. Notices

(a)  Effectiveness.  Any  notice  or  other  communication  in  respect  of this
Agreement  may be given in any manner set forth below  (except  that a notice or
other  communication  under  Section  5 or 6  may  not  be  given  by  facsimile
transmission  or  electronic  messaging  system) to the  address or number or in
accordance  with the  electronic  messaging  system  details  provided  (see the
Schedule) and will be deemed effective as indicated:--

     (i) if in writing and delivered in person or by courier,  on the date it is
     delivered;

     (ii) if sent by telex, on the date the recipient's answerback is received;

     (iii) if sent by facsimile  transmission,  on the date that transmission is
     received by a  responsible  employee of the  recipient  in legible form (it
     being  agreed that the burden of proving  receipt will be on the sender and
     will  not  be met  by a  transmission  report  generated  by  the  sender's
     facsimile machine);

     (iv) if sent by certified or registered mail (airmail,  if overseas) or the
     equivalent (return receipt  requested),  on the date that mail is delivered
     or its delivery is attempted; or

     (v) if sent by electronic  messaging  system,  on the date that  electronic
     message is received,

unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.

(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.

13. Governing Law and Jurisdiction

(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--

     (i) submits to the jurisdiction of the English courts, if this Agreement is
     expressed  to  be  governed  by  English  law,  or  to  the   non-exclusive
     jurisdiction  of the courts of the State of New York and the United  States
     District  Court  located in the Borough of Manhattan  in New York City,  if
     this  Agreement is expressed to be governed by the laws of the State of New
     York; and

     (ii)  waives any  objection  which it may have at any time to the laying of
     venue of any Proceedings  brought in any such court,  waives any claim that
     such  Proceedings  have been brought in an  inconvenient  forum and further
     waives the right to object,  with  respect to such  Proceedings,  that such
     court does not have any jurisdiction over such party.

     Nothing in this Agreement precludes either party from bringing  Proceedings
     in any other  jurisdiction  (outside,  if this Agreement is expressed to be
     governed by English law, the Contracting States, as defined in Section 1(3)
     of the  Civil  Jurisdiction  and  Judgments  Act 1982 or any  modification,
     extension or re-enactment thereof for the time being in force) nor will the
     bringing  of  Proceedings  in any one or more  jurisdictions  preclude  the
     bringing of Proceedings in any other jurisdiction.

     (c) Service of Process.  Each party irrevocably  appoints the Process Agent
     (if any) specified opposite its name in the Schedule to receive, for it and
     on its behalf, service of process in any Proceedings. If for any

                                      13

<PAGE>

     reason any party's  Process Agent is unable to act as such, such party will
     promptly  notify the other  party and within 30 days  appoint a  substitute
     process  agent  acceptable  to the other  party.  The  parties  irrevocably
     consent to service of process  given in the manner  provided for notices in
     Section 12. Nothing in this Agreement will affect the right of either party
     to serve process in any other manner permitted by law.

     (d) Waiver of Immunities.  Each party  irrevocably  waives,  to the fullest
     extent permitted by applicable law, with respect to itself and its revenues
     and assets (irrespective of their use or intended use), all immunity on the
     grounds  of  sovereignty  or other  similar  grounds  from (i)  suit,  (ii)
     jurisdiction  of any court,  (iii) relief by way of  injunction,  order for
     specific  performance or for recovery of property,  (iv)  attachment of its
     assets  (whether before or after judgment) and (v) execution or enforcement
     of any judgment to which it or its  revenues or assets  might  otherwise be
     entitled  in  any  Proceedings  in  the  courts  of  any  jurisdiction  and
     irrevocably agrees, to the extent permitted by applicable law, that it will
     not claim any such immunity in any Proceedings.

14. Definitions

As used in this Agreement:--

"Additional Termination Event" has the meaning specified in Section 5(b).

"Affected Party" has the meaning specified in Section 5(b).

"Affected  Transactions"  means  (a)  with  respect  to  any  Termination  Event
consisting  of  an  Illegality,   Tax  Event  or  Tax  Event  Upon  Merger,  all
Transactions  affected by the occurrence of such Termination  Event and (b) with
respect to any other Termination Event, all Transactions.

"Affiliate"  means,  subject to the  Schedule,  in relation  to any person,  any
entity  controlled,  directly  or  indirectly,  by the  person,  any entity that
controls,  directly  or  indirectly,  the  person  or  any  entity  directly  or
indirectly under common control with the person. For this purpose,  "control" of
any entity or person  means  ownership  of a majority of the voting power of the
entity or person.

"Applicable Rate" means:--

(a) in respect of obligations  payable or deliverable  (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

(b) in respect of an  obligation  to pay an amount under  Section 6(e) of either
party from and after the date  (determined in accordance with Section  6(d)(ii))
on which that amount is payable, the Default Rate;

(c) in respect of all other  obligations  payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting  Party, the Non-default
Rate; and

(d) in all other cases, the Termination Rate.

"Burdened Party" has the meaning specified in Section 5(b).

"Change in Tax Law" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to, any law (or in the application or official
interpretation  of any  law)  that  occurs  on or after  the  date on which  the
relevant Transaction is entered into.

"consent"  includes  a  consent,  approval,  action,  authorisation,  exemption,
notice, filing, registration or exchange control consent.

"Credit Event Upon Merger" has the meaning specified in Section 5(b).

"Credit Support Document" means any agreement or instrument that is specified as
such in this Agreement.

"Credit Support Provider" has the meaning specified in the Schedule.

"Default  Rate"  means a rate per  annum  equal to the  cost  (without  proof or
evidence of any actual  cost) to the relevant  payee (as  certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.

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<PAGE>

"Defaulting Party" has the meaning specified in Section 6(a).

"Early  Termination  Date" means the date  determined in accordance with Section
6(a) or 6(b)(iv).

"Event of Default" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.

"Illegality" has the meaning specified in Section 5(b).

"Indemnifiable  Tax" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation  authority  imposing such
Tax and the  recipient  of such  payment or a person  related to such  recipient
(including,  without  limitation,  a connection  arising from such  recipient or
related person being or having been a citizen or resident of such  jurisdiction,
or being or having been organized,  present or engaged in a trade or business in
such  jurisdiction,  or having or having had a permanent  establishment or fixed
place of business in such  jurisdiction,  but  excluding  a  connection  arising
solely  from such  recipient  or  related  person  having  executed,  delivered,
performed  its  obligations  or  received a payment  under,  or  enforced,  this
Agreement or a Credit Support Document).

"law" includes any treaty, law, rule or regulation (as modified,  in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"lawful" and "unlawful" will be construed accordingly.

"Local Business Day" means,  subject to the Schedule,  a day on which commercial
banks are open for business  (including dealings in foreign exchange and foreign
currency  deposits) (a) in relation to any obligation under Section 2(a)(i),  in
the place(s) specified in the relevant Confirmation or, if not so specified,  by
reference, in this Agreement, (b) in relation to any other payment, in the place
where the  relevant  account is located  and,  if  different,  in the  principal
financial  centre,  if any, of the currency of such payment,  (c) in relation to
any notice or other  communication,  including notice contemplated under Section
5(a)(i),  in the city  specified  in the  address  for  notice  provided  by the
recipient  and, in the case of a notice  contemplated  by Section  2(b),  in the
place  where the  relevant  new  account is to be located and (d) in relation to
Section  5(a)(v)(2),  in the relevant  locations for performance with respect to
such Specified Transaction.

"Loss"  means,  with  respect  to  this  Agreement  or  one or  more  Terminated
Transactions,  as the  case  may  be,  and a  party,  the  Termination  Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case  expressed as a negative  number)
in connection  with this  Agreement or that  Terminated  Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the  election of such party but without  duplication,  loss or
cost  incurred  as a  result  of  its  terminating,  liquidating,  obtaining  or
reestablishing any hedge or related trading position (or any gain resulting from
any of them).  Loss  includes  losses  and costs (or  gains) in  respect  of any
payment or delivery  required to have been made (assuming  satisfaction  of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid  duplication,  if Section 6(e)(i)(1) or (3)
or  6(e)(ii)(2)(A)  applies.  Loss does not  include a  party's  legal  fees and
out-of-pocket  expenses referred to under Section 11. A party will determine its
Loss as of the relevant  Early  Termination  Date, or, if that is not reasonably
practicable,  as of the earliest date thereafter as is reasonably practicable. A
party  may (but need not)  determine  its Loss by  reference  to  quotations  of
relevant  rates or  prices  from one or more  leading  dealers  in the  relevant
markets.

"Market  Quotation" means,  with respect to one or more Terminated  Transactions
and a party  making  the  determination,  an amount  determined  on the basis of
quotations from Reference  Market-makers.  Each quotation will be for an amount,
if any, that would be paid to such party  (expressed as a negative number) or by
such party  (expressed as a positive  number) in  consideration  of an agreement
between such party  (taking into account any existing  Credit  Support  Document
with  respect  to the  obligations  of such  party)  and the  quoting  Reference
Market-maker to enter into a transaction (the  "Replacement  Transaction")  that
would have the effect of  preserving  for such party the economic  equivalent of
any payment or delivery  (whether  the  underlying  obligation  was  absolute or
contingent and assuming the satisfaction of each applicable condition precedent)
by the parties under Section 2(a)(i) in respect of such  Terminated  Transaction
or group of Terminated  Transactions  that would,  but for the occurrence of the
relevant Early Termination Date, have

                                     15

<PAGE>

been required  after that date.  For this purpose,  Unpaid Amounts in respect of
the  Terminated  Transaction  or  group  of  Terminated  Transactions  are to be
excluded but,  without  limitation,  any payment or delivery that would, but for
the relevant Early Termination Date, have been required  (assuming  satisfaction
of each applicable conditions precedent) after that Early Termination Date is to
be included. The Replacement  Transaction would be subject to such documentation
as such party and the  Reference  Market-maker  may, in good faith,  agree.  The
party  making the  determination  (or its agent)  will  request  each  Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (without  regard to different time zones) on or as soon as
reasonably  practicable  after the relevant Early  Termination Date. The day and
time as of which those  quotations  are to be obtained  will be selected in good
faith by the party obliged to make a  determination  under Section 6(e), and, if
each party is so obliged,  after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations,  without  regard to the  quotations  having the  highest  and lowest
values. If exactly three such quotations are provided, the Market Quotation will
be the quotation remaining after disregarding the highest and lowest quotations.
For this  purpose,  if more than one  quotation  has the same  highest  value or
lowest value,  then one of such quotations  shall be disregarded.  If fewer than
three  quotations are provided,  it will be deemed that the Market  Quotation in
respect  of such  Terminated  Transaction  or group of  Terminated  Transactions
cannot be determined.

"Non-default  Rate" means a rate per annum equal to the cost  (without  proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.

"Non-defaulting Party" has the meaning specified in Section 6(a).

"Office" means a branch or office of a party,  which may be such party's head or
home office.

"Potential Event of Default" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.

"Reference  Market-makers"  means four leading  dealers in the  relevant  market
selected  by the party  determining  a Market  Quotation  in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an  extension  of credit  and (b) to the  extent  practicable,  from  among such
dealers having an office in the same city.

"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.

"Schedule  Payment  Date"  means a date on which a payment or  delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"Set-off" means set-off, offset,  combination of accounts, right of retention or
withholding  or  similar  right or  requirement  to which the payer of an amount
under Section 6 is entitled or subject  (whether  arising under this  Agreement,
another contract,  applicable law or otherwise) that is exercised by, or imposed
on, such payer.

"Settlement  Amount"  means,  with respect to a party and any Early  Termination
Date, the sum of:--

(a) the  Termination  Currency  Equivalent  of the  Market  Quotations  (whether
positive or negative)  for each  Terminated  Transaction  or group of Terminated
Transactions for which a Market Quotation is determined; and

(b) such party's Loss (whether positive or negative and without reference to any
Unpaid  Amounts)  for  each  Terminated   Transaction  or  group  of  Terminated
Transactions  for which a Market Quotation cannot be determined or would not (in
the  reasonable  belief  of  the  party  making  the  determination)  produce  a
commercially reasonable result.

"Specified Entity" has the meaning specified in the Schedule.

                                 16

<PAGE>

"Specified Indebtedness" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.

"Specified  Transaction"  means,  subject to the Schedule,  (a) any  transaction
(including an agreement with respect thereto) now existing or hereafter  entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable  Specified  Entity of such party) and the other party to
this  Agreement  (or any Credit  Support  Provider  of such  other  party or any
applicable  Specified  Entity  of  such  other  party)  which  is  a  rate  swap
transaction,  basis swap,  forward rate transaction,  commodity swap,  commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option,  foreign  exchange  transaction,  cap  transaction,  floor
transaction, collar transaction, currency swap transaction,  cross-currency rate
swap transaction,  currency option or any other similar  transaction  (including
any option with respect to any of these  transactions),  (b) any  combination of
these  transactions  and (c) any other  transaction  identified  as a  Specified
Transaction in this Agreement or the relevant confirmation.

"Stamp Tax" means any stamp, registration, documentation or similar tax.

"Tax" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest,  penalties and additions thereto) that is
imposed by any  government  or other taxing  authority in respect of any payment
under this Agreement other than a stamp, registration,  documentation or similar
tax.

"Tax Event" has the meaning specified in Section 5(b).

"Tax Event Upon Merger" has the meaning specified in Section 5(b).

"Terminated  Transactions"  means with respect to any Early Termination Date (a)
if resulting  from a  Termination  Event,  all Affected  Transaction  and (b) if
resulting from an Event of Default,  all Transactions (in either case) in effect
immediately  before  the  effectiveness  of the  notice  designating  that Early
Termination  Date (or, if "Automatic  Early  Termination"  applies,  immediately
before that Early Termination Date).

"Termination Currency" has the meaning specified in the Schedule.

"Termination Currency Equivalent" means, in respect of any amount denominated in
the Termination  Currency,  such Termination  Currency amount and, in respect of
any amount  denominated in a currency other than the  Termination  Currency (the
"Other  Currency"),  the amount in the  Termination  Currency  determined by the
party  making the  relevant  determination  as being  required to purchase  such
amount of such Other Currency as at the relevant Early  Termination Date, or, if
the relevant Market  Quotation or Loss (as the case may be), is determined as of
a later date, that later date,  with the Termination  Currency at the rate equal
to the spot exchange rate of the foreign  exchange  agent  (selected as provided
below) for the purchase of such Other Currency with the Termination  Currency at
or about  11:00  a.m.  (in the  city in which  such  foreign  exchange  agent is
located) on such date as would be customary for the determination of such a rate
for the  purchase  of such  Other  Currency  for  value  on the  relevant  Early
Termination  Date or that later date.  The foreign  exchange agent will, if only
one party is obliged to make a determination  under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.

"Termination Event" means an Illegality,  a Tax Event or a Tax event Upon Merger
or, if specified to be  applicable,  a Credit Event Upon Merger or an Additional
Termination Event.

"Termination  Rate" means a rate per annum equal to the  arithmetic  mean of the
cost (without  proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.

"Unpaid Amounts" owing to any party means,  with respect to an Early Termination
Date,  the  aggregate  of (a) in respect  of all  Terminated  Transactions,  the
amounts that became  payable (or that would have become  payable but for Section
2(a)(iii))  to such  party  under  Section  2(a)(i)  on or prior  to such  Early
Termination  Date and which remain unpaid as at such Early  Termination Date and
(b) in respect of each Terminated Transaction, for each obligation under Section
2(a)(i) which was (or would have been but for Section 2(a)(iii))  required to be
settled by delivery to such party on or prior to such Early Termination Date and
which has not been so settled as at such Early Termination Date, an amount equal
to the fair market

                                  17

<PAGE>

value of that which was (or would have been)  required to be delivered as of the
originally  scheduled  date for  delivery,  in each case  together  with (to the
extent  permitted  under  applicable  law)  interest,  in the  currency  of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but  excluding) such Early
Termination  Date,  at the  Applicable  Rate.  Such amounts of interest  will be
calculated  on the  basis of daily  compounding  and the  actual  number of days
elapsed. The fair market value of any obligation referred to in clause (b) above
shall be reasonably  determined  by the party obliged to make the  determination
under  Section 6(e) or, if each party is so obliged,  it shall be the average of
the  Termination  Currency  Equivalents  of the fair  market  values  reasonably
determined by both parties.

IN WITNESS  WHEREOF the parties have executed  this  document on the  respective
dates  specified  below with effect from the date specified on the first page of
this document.

...........................         .................................
     (Name of Party)                 (Name of Party)

By: ......................         By: .............................
       Name:                            Name:
       Title:                           Title:
       Date:                            Date:

                                     18LIBOR CAP SECURITY AGREEMENT

                            Dated as of June 30, 2007

                                       by

                                GTJ RATE CAP, LLC

                                    as Debtor

                                   in favor of

                   ING USA ANNUITY AND LIFE INSURANCE COMPANY,
                     ING LIFE INSURANCE AND ANNUITY COMPANY,
RELIASTAR LIFE INSURANCE COMPANY, and SECURITY LIFE OF DENVER INSURANCE COMPANY,

                               as Secured Parties
                               ------------------

                                   relating to

                                 LOAN AGREEMENT

                            Dated as of June 30, 2007

                                      among

                               GTJ REIT, INC., and
                        THE OTHER BORROWERS NAMED THEREIN

                                  as Borrowers

                                       and

                            THE LENDERS NAMED THEREIN

                                   as Lenders

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

1.       DEFINITIONS...........................................................1

2.       SECURITY..............................................................3

3.       TRANSFER OF COLLATERAL................................................3

4.       REPRESENTATIONS AND WARRANTIES........................................3

5.       FURTHER ASSURANCES....................................................4

6.       COVENANTS OF THE DEBTOR...............................................4

7.       THE SECURED PARTY AS THE DEBTOR'S ATTORNEY-IN-FACT....................5

8.       REMEDIES UPON DEFAULT.................................................5

9.       APPLICATION OF PROCEEDS...............................................6

10.      INDEMNITY AND EXPENSES................................................6

11.      DUTIES OF THE SECURED PARTY...........................................6

12.      AMENDMENTS; ETC.......................................................6

13.      CONTINUING SECURITY INTEREST..........................................7

14.      SECURITY INTEREST ABSOLUTE............................................7

15.      WAIVER OF MARSHALING..................................................8

16.      MISCELLANEOUS.........................................................8

         (a)      Notices......................................................8

         (b)      Successors and Assigns.......................................9

         (c)      Severability.................................................9

         (d)      Construction.................................................9

         (e)      Counterparts; Execution and Delivery by Facsimile or E-mail..9

         (f)      Waiver of Jury Trial........................................10

         (g)      Governing Law...............................................10

                                      -i-
<PAGE>

                          LIBOR CAP SECURITY AGREEMENT

     This  LIBOR  Cap  Security  Agreement,  dated  as of June  30,  2007  (this
"Agreement"), is by GTJ RATE CAP, LLC, a New York limited liability company (the
"Debtor"),  in favor of ING USA ANNUITY  AND LIFE  INSURANCE  COMPANY,  ING LIFE
INSURANCE AND ANNUITY COMPANY,  RELIASTAR LIFE INSURANCE  COMPANY,  and SECURITY
LIFE OF DENVER  INSURANCE  COMPANY,  as Lenders  and secured  parties  hereunder
(individually  and  collectively,  and including any other Persons that may from
time to time  become  Lenders  under and as defined in the Loan  Agreement,  the
"Secured Party").

                             Preliminary Statements:

     A. Concurrently  with the execution and delivery hereof,  GTJ REIT, INC., a
Maryland  corporation  (the  "Parent");  GREEN  ACQUISITION,  INC.,  a New  York
corporation;   TRIBORO  ACQUISITION,  INC.,  a  New  York  corporation;  JAMAICA
ACQUISITION, INC., a New York corporation;  165-25 147TH AVENUE, LLC, a New York
limited  liability  company;  49-19  ROCKAWAY BEACH  BOULEVARD,  LLC, a New York
limited liability company;  85-01 24TH AVENUE, LLC, a New York limited liability
company,  and 114-15 GUY BREWER  BOULEVARD,  LLC, a New York  limited  liability
company, as Borrowers, and the Lenders are entering into a Loan Agreement, dated
as of the date hereof (the "Loan Agreement"),  pursuant to which the Lenders may
make Loans to the Borrowers.

     B. The Debtor is an affiliate of the Borrowers and a special purpose entity
formed to facilitate the transactions contemplated by the Loan Agreement.

     C. The Debtor legally and beneficially owns the Collateral.

     D. To induce the Lenders to make Loans,  the Debtor desires to grant to the
Secured  Party a security  interest  in the  Collateral  to secure  the  Secured
Obligations, as provided herein.

                                   Agreement:

     In  consideration  of the  foregoing  and the mutual  agreements  set forth
below, and for other good and valuable  consideration,  the parties hereby agree
and covenant as follows:

1. Definitions.

     As used herein,  each following term has the respective  meaning  indicated
below, in the other agreement indicated below or in the Section or other part of
this Agreement indicated below:

     "Agreement" is defined in the introductory paragraph.

     "Bankruptcy  Code"  means the  United  States  Bankruptcy  Code (11  U.S.C.
Section 101 et seq.).

     "Borrowers" is defined in the Loan Agreement.

<PAGE>

     "Business Day" is defined in the Loan Agreement.

     "Collateral" means, collectively, all right title and interest of Debtor in
(1)  each  LIBOR  Cap  Agreement,  (2) any and all  proceeds  arising  from  the
foregoing,  including  without  limitation  proceeds  arising  from  the sale or
transfer of any of the foregoing,  and (3) any and all amounts from time to time
paid or payable under or in connection with any of the foregoing.

     "Debtor" is defined in the introductory paragraph.

     "Event of Default" is defined in the Loan Agreement.

     "Initial LIBOR Cap Agreement"  means the ISDA Master  Agreement dated as of
December 13, 2006,  between Parent and SMBC, as supplemented and modified by the
Schedule  thereto  of the same date and the  Confirmation  of the same date from
SMBC  Capital  Markets,  Inc.,  as Agent for SMBC,  to the Parent and having the
reference number DPA609667, all as assigned by Parent to Debtor with the written
consent of SMBC.

     "Lenders" is defined in the Loan Agreement.

     "LIBOR Cap  Agreements"  means the  Initial  LIBOR Cap  Agreement  and each
Replacement  LIBOR  Cap  Agreement,  as  any  such  agreement  may  be  amended,
supplemented or otherwise modified from time to time.

     "LIBOR Cap Counterparty" means SMBC and any other counterparty to any LIBOR
Cap Agreement and any of their respective successors, transferees or assigns.

     "Loan Agreement" is defined in the Preliminary Statements.

     "Loan Documents" is defined in the Loan Agreement.

     "Loans" is defined in the Loan Agreement.

     "Person" is defined in the Loan Agreement.

     "Debtor" is defined in the introductory paragraph.

     "Registered  Organization"  shall  have the  meaning  ascribed  thereto  in
Section 9-102(a)(70) of the UCC.

     "Replacement LIBOR Cap Agreement" means any Replacement LIBOR Cap Agreement
entered into in connection with the Loan Agreement.

     "Required Lenders" is defined in the Loan Agreement.

     "Secured Obligations" means all liabilities,  obligations,  or undertakings
owing by  Debtor  or any  Borrower  to the  Lenders  of any kind or  description
arising  out of or  outstanding  under,  advanced  or  issued  pursuant  to,  or
evidenced by any of the Loan Documents,  irrespective of whether for the payment
of money, whether direct or indirect,  absolute or contingent,  due or to become
due, voluntary or involuntary,  whether now existing or hereafter  arising,  and

                                      -2-
<PAGE>

including  all interest  (including  interest that accrues after the filing of a
case  under  the  Bankruptcy  Code)  and  any  and all  costs,  fees  (including
reasonable  attorneys'  fees),  and  expenses  that  Debtor or any  Borrower  is
required to pay pursuant to any of the foregoing, by law, or otherwise.

     "Secured Party" is defined in the introductory paragraph.

     "SMBC" means SMBC Derivative Products Limited.

     "UCC"  means the Uniform  Commercial  Code as in effect in the State of New
York or any other applicable jurisdiction.

2. Security.

     As  security  for  the  prompt  payment  and  performance  of  the  Secured
Obligations in full by the Borrowers when due,  whether at stated  maturity,  by
acceleration or otherwise  (including  amounts that would become due but for the
operation of the provisions of the Bankruptcy Code), the Debtor hereby grants to
the Secured Party a security  interest in all of the Debtor's right,  title, and
interest in and to the Collateral.

3. Transfer of Collateral.

     Upon the  occurrence  and  during  the  continuance  of an Event of Default
(after taking into account any  applicable  grace or cure  period),  the Secured
Party shall have the right,  at any time in its discretion and without notice to
the Debtor,  to transfer to the Secured  Party or any of its nominees any or all
of the Collateral.

4. Representations and Warranties.

     The Debtor represents, warrants, and covenants as follows:

     (a) The Debtor is a Registered  Organization,  organized  under the laws of
the State of New York.

     (b) All  information  herein or hereafter  supplied to the Secured Party or
any  Lender  by or on  behalf  of the  Debtor in  writing  with  respect  to the
Collateral  is,  or in the  case of  information  hereafter  supplied  will  be,
accurate and complete in all material respects.

     (c) The Debtor has  obtained all  consents  and has  delivered  all notices
required  under the Initial  LIBOR Cap  Agreement  and the  Debtor's  execution,
delivery  and  performance  of this  Agreement  will not  result in a default or
breach of the Initial LIBOR Cap Agreement.

     (d) The  Debtor is and will be the sole legal and  beneficial  owner of the
Collateral  (including  all  Collateral  acquired  by the Debtor  after the date
hereof) free and clear of any adverse  claim,  Lien, or other right,  title,  or
interest of any party, other than the Liens in favor of the Secured Party.

                                      -3-
<PAGE>

     (e) This Agreement  creates a valid security  interest in the Collateral in
favor of the Secured Party securing payment of the Secured Obligations.

5. Further Assurances.

     (a) The Debtor agrees that from time to time, at the expense of the Debtor,
the Debtor  will  promptly  execute and  deliver  all  further  instruments  and
documents,  and take all further  action  that may be  necessary  or  reasonably
desirable, or that the Secured Party may reasonably request, in order to perfect
and protect any security  interest  granted or purported to be granted hereby or
to enable the  Secured  Party to exercise  and  enforce its rights and  remedies
hereunder with respect to any Collateral. Without limiting the generality of the
foregoing,  the Debtor  will:  (i) at the  request of the  Secured  Party,  mark
conspicuously each of its records pertaining to the Collateral with a legend, in
form and substance reasonably satisfactory to the Secured Party, indicating that
such Collateral is subject to the security interest granted hereby; (ii) execute
any such instruments or notices, as may be necessary or reasonably desirable, or
as the Secured Party may  reasonably  request,  in order to perfect and preserve
the first priority security interests granted or purported to be granted hereby;
(iii)  allow  inspection  of the  Collateral  by the  Secured  Party or  Persons
designated  by the  Secured  Party;  and (iv) appear in and defend any action or
proceeding that may affect the Debtor's title to or the Secured Party's security
interest in the Collateral.

     (b) The Debtor  hereby  authorizes  the  Secured  Party to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral.  A carbon,  photographic,  or other  reproduction of
this  Agreement or any financing  statement  covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by law.

     (c) The Debtor will furnish to the Secured  Party,  upon the request of the
Secured Party such statements and schedules  further  identifying and describing
the Collateral  and such other reports in connection  with the Collateral as the
Secured Party may reasonably request.

6. Covenants of the Debtor.

     The Debtor shall:

     (a)  neither  change its  jurisdiction  of  organization  nor cease to be a
Registered Organization, in each case, without giving the Secured Party at least
30 days prior written notice thereof;

     (b) not enter into any agreement that  terminates,  amends,  supplements or
otherwise  modifies any LIBOR Cap  Agreement  without the Secured  Party's prior
written consent, which consent will not be unreasonably withheld;

     (c) upon receipt by the Debtor of any  material  notice,  report,  or other
communication  from a LIBOR Cap Counterparty  relating to all or any part of the
Collateral,  deliver such notice,  report or other  communication to the Secured
Party as soon as  practicable,  but in no event  later than five  Business  Days
following the receipt thereof by the Debtor.

                                      -4-
<PAGE>

7. The Secured Party as the Debtor's Attorney-in-Fact.

     The Debtor  hereby  irrevocably  appoints the Secured Party as the Debtor's
attorney-in-fact,  with full  authority in the place and stead of the Debtor and
in the name of the Debtor, the Secured Party or otherwise,  from time to time at
the Secured Party's discretion, to take any action and to execute any instrument
that the Secured Party may reasonably  deem necessary or advisable to accomplish
the  purposes of this  Agreement.  Secured  Party  agrees not to take any action
pursuant to this Section 7 unless an Event of Default shall have occurred and be
continuing.

8. Remedies upon Default.

     Upon the  occurrence  and  during  the  continuance  of an Event of Default
(after taking into account any applicable grace or cure period):

     (a) The  Secured  Party may  exercise  in  respect  of the  Collateral,  in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured  party on default  under the UCC
(irrespective  of whether the UCC applies to the affected items of  Collateral),
and the Secured Party may also without notice  (except as specified  below) sell
the  Collateral  or any part thereof in one or more parcels at public or private
sale, at any exchange,  broker's board or at any of the Secured  Party's offices
or elsewhere,  for cash, on credit or for future delivery, at such time or times
and at such price or prices and upon such other terms as the  Secured  Party may
deem  commercially  reasonable,  irrespective of the impact of any such sales on
the  market  price  of  the  Collateral.  To the  maximum  extent  permitted  by
applicable  law, the Secured  Party or any Lender may be the purchaser of any or
all of the Collateral at any such sale and shall be entitled, for the purpose of
bidding and making  settlement  or payment of the purchase  price for all or any
portion of the Collateral  sold at any such public sale, to use and apply all or
any part of the Secured Obligations as a credit on account of the purchase price
of any  Collateral  payable at such sale.  Each purchaser at any such sale shall
hold the property  sold  absolutely  free from any claim or right on the part of
the Debtor,  and the Debtor hereby  waives (to the extent  permitted by law) all
rights of  redemption,  stay, or appraisal that it now has or may at any time in
the future  have  under any rule of law or statute  now  existing  or  hereafter
enacted.  The Debtor agrees that, to the extent notice of sale shall be required
by law, at least ten calendar days notice to the Debtor of the time and place of
any  public  sale or the time  after  which a private  sale is to be made  shall
constitute reasonable notification.  The Secured Party shall not be obligated to
make any sale of Collateral  regardless of notice of sale having been given. The
Secured Party may adjourn any public sale from time to time by  announcement  at
the time and place fixed therefor, and such sale may, without further notice, be
made at the announced time and place to which it was so adjourned.

     (b) THE DEBTOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW: (i)
ANY  CONSTITUTIONAL  OR OTHER RIGHT TO A JUDICIAL  HEARING PRIOR TO THE TIME THE
SECURED PARTY  DISPOSES OF ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS
SECTION 8; (ii) ALL RIGHTS OF REDEMPTION,  STAY, OR APPRAISAL THAT IT NOW HAS OR
MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING
OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS

                                      -5-
<PAGE>

SECTION 8, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.

9. Application of Proceeds.

     Upon the  occurrence  and  during  the  continuance  of an Event of Default
(after taking into account any applicable  grace or cure period),  any cash held
by the Secured Party as Collateral and proceeds received by the Secured Party in
respect of any sale of,  collection  from, or other  realization upon all or any
part of the  Collateral  pursuant to the  exercise  by the Secured  Party of its
remedies as a secured  creditor  as provided in Section 8 shall be applied  from
time to time by the  Secured  Party as  follows:  first,  to the  payment of the
Secured  Party's and the Lenders'  reasonable  costs and expenses in  connection
with the Collateral,  including  reasonable  attorneys' fees and legal expenses;
second,  to the payment of all other Secured  Obligations  in such manner as the
Required Lenders may deem advisable;  and third,  the balance,  if any, to or at
the direction of the Debtor. The Debtor shall remain liable for any deficiency.

10. Indemnity and Expenses.

     The Debtor agrees:

     (a) To indemnify  and hold  harmless the Secured  Party and each Lender and
each of their  respective  officers,  directors,  managers,  employees,  agents,
professional  advisors  and  affiliates  from and  against  any and all  claims,
damages,  demands,  losses,  obligations,  judgments and liabilities  (including
reasonable  attorneys'  fees  and  expenses)  in any  way  arising  out of or in
connection with this Agreement or the Secured Obligations,  except to the extent
the same shall arise as a result of the gross  negligence or willful  misconduct
of the party seeking to be indemnified;

     (b) To pay and reimburse the  reasonable  costs and expenses of the Secured
Party and the Lenders referred to in Section 9.2 of the Loan Agreement; and

     (c) That the  provisions of this Section 10 shall survive the execution and
delivery of this Agreement, the repayment of any of the Secured Obligations, the
termination  of the  commitments of the Lenders under the Loan Agreement and the
termination of this Agreement or any other Loan Document.

11. Duties of the Secured Party.

     The powers  conferred on the Secured Party  hereunder are solely to protect
its interests in the  Collateral and shall not impose on it any duty to exercise
such powers.  Except as provided in Section  9-207 of the UCC, the Secured Party
shall have no duty with  respect to the  Collateral  or any  responsibility  for
taking any steps  necessary or advisable to preserve  rights against any Persons
with respect to any Collateral.

12. Amendments; etc.

     No amendment or waiver of any provision of this Agreement nor consent
to any departure by the Debtor herefrom shall in any event be effective unless
the same shall be in writing and signed by the Secured Party and consented to by

                                      -6-
<PAGE>

the Required Lenders, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No failure
on the part of the Secured Party to exercise, and no delay in exercising any
right under this Agreement, any other Loan Document, or otherwise with respect
to any of the Secured Obligations, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right under this Agreement, any other Loan
Document, or otherwise with respect to any of the Secured Obligations preclude
any other or further exercise thereof or the exercise of any other right. The
remedies provided for in this Agreement or otherwise with respect to any of the
Secured Obligations are cumulative and not exclusive of any remedies provided by
law.

13. Continuing Security Interest.

     This  Agreement  shall  create  a  continuing   security  interest  in  the
Collateral  and shall  remain in full  force and effect  until the  indefeasible
payment  in full of the  Secured  Obligations,  including  the  full  and  final
termination of any commitment to extend any financial  accommodations  under the
Loan  Agreement.   Upon  the  indefeasible   payment  in  full  of  the  Secured
Obligations,  including  the full and final  termination  of any  commitment  to
extend any  financial  accommodations  under the Loan  Agreement,  the  security
interests  granted  herein shall  automatically  terminate and all rights to the
Collateral shall revert to the Debtor.  Upon any such  termination,  the Secured
Party  will,  at the  Debtor's  expense,  execute and deliver to the Debtor such
documents as the Debtor shall reasonably  request to evidence such  termination.
Such  documents  shall  be  prepared  by the  Debtor  and  shall  be in form and
substance reasonably satisfactory to the Secured Party.

14. Security Interest Absolute.

     To the maximum  extent  permitted by law, all rights of the Secured  Party,
all security interests  hereunder,  and all obligations of the Debtor hereunder,
shall be absolute and unconditional irrespective of:

     (a) any lack of validity or  enforceability  of any agreement or instrument
relating to any of the Secured Obligations, including any of the Loan Documents;

     (b) any change in the time, manner, or place of payment of, or in any other
term of, all or any of the Secured Obligations, or any other amendment or waiver
of or any consent to any departure from any of the Loan Documents,  or any other
agreement or instrument relating thereto;

     (c) any exchange,  release,  or non-perfection of any other collateral,  or
any release or amendment or waiver of or consent to departure  from any guaranty
for all or any of the Secured Obligations; or

     (d) any other  circumstances  that  might  otherwise  constitute  a defense
available to, or a discharge of, the Debtor.

                                      -7-
<PAGE>

15. Waiver of Marshaling.

     Each of the Debtor and the Secured  Party  acknowledges  and agrees that in
exercising  any rights  under or with  respect to the  Collateral,  the  Secured
Party:  (a) is under no  obligation to marshal any  Collateral;  (b) may, in its
absolute discretion,  realize upon the Collateral in any order and in any manner
it so elects; and (c) may, in its absolute discretion, apply the proceeds of any
or all of the  Collateral  to the  Secured  Obligations  in any order and in any
manner it so elects. The Debtor and the Secured Party waive any right to require
the marshaling of any of the Collateral.

16. Miscellaneous.

     (a) Notices.

     All notices and  communications  provided for hereunder shall be in writing
and sent (i) by telecopy if the sender on the same day sends a  confirming  copy
of such notice by a recognized overnight delivery service (charges prepaid),  or
(ii) by  registered or certified  mail with return  receipt  requested  (postage
prepaid),  or (iii) by a recognized  overnight  delivery  service  (with charges
prepaid). Any such notice or must be sent:

          (i) if to the Debtor,  to GTJ Rate Cap, LLC, c/o GTJ REIT,  Inc.,  444
     Merrick Road, Lynbrook, NY 11563, Attention:  President, Telecopy No. (516)
     887-2029,  with a copy to Ruskin  Moscou  Faltischek,  P.C.,  1425  RexCorp
     Plaza, Uniondale, N.Y. 11556, Attention: Stuart M. Sieger, Esq., or at such
     other address as the Debtor shall have specified to each other party hereto
     in writing; or

          (ii) if to the Secured Party, to the address of each Lender  specified
     for such purpose in the Loan Agreement (taking into account, as applicable,
     Section  9.12 of the  Loan  Agreement),  or at such  other  address  as the
     Secured Party shall have specified to each of the other parties to the Loan
     Documents in writing.

     Notices  under this Section  16(a) will be deemed given only when  actually
received.

-8-
<PAGE>

(b) Successors and Assigns.

     All covenants  and other  agreements  contained in this  Agreement by or on
behalf  of any of the  parties  hereto  bind and inure to the  benefit  of their
respective  successors and assigns (including any successor to the Secured Party
under the Loan Documents) whether so expressed or not.

     (c) Severability.

     Any provision of this Agreement that is prohibited or  unenforceable in any
jurisdiction  shall,  as to such  jurisdiction,  be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions  hereof,  and  any  such  prohibition  or   unenforceability  in  any
jurisdiction  shall (to the full  extent  permitted  by law) not  invalidate  or
render unenforceable such provision in any other jurisdiction.

     (d) Construction.

     In this  Agreement,  unless  a clear  contrary  intention  appears  (i) the
singular number includes the plural number and vice versa; (ii) reference to any
gender includes each other gender; (iii) reference to any agreement, document or
instrument  means such agreement,  document or instrument as amended or modified
and in effect from time to time in accordance  with the terms thereof;  (iv) any
reference  herein to any Person  shall be  construed  to include  such  Person's
successors  and assigns or, if such Person is an  individual,  to such  Person's
heirs, legal representatives and assigns; (v) references to Sections,  Schedules
or  Exhibits  refer  to the  Sections,  Schedules  and  Exhibits  of or to  this
Agreement and "hereunder," "hereof," "hereto," and words of similar import shall
be deemed  references  to this  Agreement  as a whole and not to any  particular
Section or other provision  hereof;  (vi) "including" and "include" do not limit
the generality of any description preceding such term; (vii) "or" is used in the
inclusive sense of "and/or"; and (viii) references to documents,  instruments or
agreements shall be deemed to refer as well to all addenda, exhibits, schedules,
supplements or amendments thereto. Each covenant contained in the Loan Documents
shall  be  construed  (absent  express  provision  to  the  contrary)  as  being
independent  of each other  covenant  contained in the Loan  Documents,  so that
compliance  with any one  covenant  shall not (absent  such an express  contrary
provision) be deemed to excuse  compliance  with any other  covenant.  Where any
provision in any Loan  Document  refers to action to be taken by any Person,  or
that such Person is prohibited  from taking,  such provision shall be applicable
whether such action is taken directly or indirectly by such Person.

     (e) Counterparts; Execution and Delivery by Facsimile or E-mail.

     This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together shall  constitute one instrument.
Each  counterpart may consist of a number of copies hereof,  each signed by less
than all,  but  together  signed by all, of the parties  hereto.  Delivery of an
executed  counterpart  of this Agreement by facsimile or by e-mail of a PDF file
or similar electronic image file shall be equally as effective as delivery of an
original  executed  counterpart  of this  Agreement.  Any  party  delivering  an
executed  counterpart  of this  Agreement  by  facsimile or by e-mail also shall
deliver an original executed  counterpart of this Agreement,  but the failure to

                                      -9-
<PAGE>

deliver  an  original  executed  counterpart  shall  not  affect  the  validity,
enforceability, or binding effect hereof.

     (f) Waiver of Jury Trial.

     EACH  PARTY  HERETO  HEREBY  IRREVOCABLY,   KNOWINGLY,   VOLUNTARILY,   AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION  BASED HEREON,  OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT,  OR ANY COURSE OF CONDUCT,  COURSE OF DEALING OR STATEMENTS  (WHETHER
ORAL OR  WRITTEN)  RELATING  TO THE  FOREGOING.  THIS  PROVISION  IS A  MATERIAL
INDUCEMENT  FOR THE PARTIES TO ENTER INTO THIS  AGREEMENT AND FOR THE LENDERS TO
ENTER INTO THE LOAN AGREEMENT.

     (g) Governing Law.

     This Agreement shall be construed and enforced in accordance  with, and the
rights of the  parties  shall be  governed  by, the law of the State of New York
excluding  choice-of-law  principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

     ANY LEGAL ACTION OR PROCEEDING  WITH RESPECT TO THIS  AGREEMENT OR THE LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT,  THE DEBTOR SUBMITS TO THE  NON-EXCLUSIVE  JURISDICTION OF THOSE
COURTS. THE DEBTOR IRREVOCABLY WAIVES ANY OBJECTION,  INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY
NOW OR  HEREAFTER  HAVE TO THE  BRINGING  OF ANY  ACTION OR  PROCEEDING  IN SUCH
JURISDICTION  IN  RESPECT  OF ANY OF THE LOAN  DOCUMENTS  OR ANY OTHER  DOCUMENT
RELATED THERETO, INCLUDING THIS AGREEMENT. THE DEBTOR WAIVES PERSONAL SERVICE OF
ANY SUMMONS,  COMPLAINT OR OTHER  PROCESS,  WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.

      [Remainder of page intentionally left blank; signature page follows]

                                      -10-

<PAGE>

     IN WITNESS  WHEREOF,  the Debtor has executed this Agreement as of the date
first written above.

Debtor:                                   GTJ RATE CAP, LLC

                                          By:____________________________
                                          Name:
                                          Title:

                [Signature page to LIBOR Cap Security Agreement]

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