Document:

WWW.EXFILE.COM, INC. -- 14656 -- SCHNITZER STEEL INDUSTRIES, INC. -- EXHIBIT 10.5 TO FORM 8-K

    EXHIBIT
      10.5

    UNITED
      STATES OF AMERICA

    Before
      the

    SECURITIES
      AND EXCHANGE COMMISSION

     

    SECURITIES
      EXCHANGE ACT OF 1934 

    Release
      No. 54606 / October 16, 2006

     

    ACCOUNTING
      AND AUDITING ENFORCEMENT 

    Release
      No. 2493 / October 16, 2006

     

    ADMINISTRATIVE
      PROCEEDING 

    File
      No. 3-12456

     

    
      	
               

                

              

               

              In
                the Matter of

               

              SCHNITZER
                STEEL

              INDUSTRIES,
                INC.,

               

              Respondent.

               

               

                

              

            	
              ORDER
                INSTITUTING CEASE-AND-

              DESIST
                PROCEEDINGS, MAKING 

              FINDINGS,
                AND IMPOSING A CEASE-

              AND-DESIST
                ORDER PURSUANT TO 

              SECTION
                21C OF THE SECURITIES 

              EXCHANGE
                ACT OF 1934

               

            

    

    

    I.

     

    The
      Securities and Exchange Commission (“Commission”) deems it appropriate that
      cease-and-desist proceedings be, and hereby are, instituted pursuant to Section
      21 C of the Securities Exchange Act of 1934 (“Exchange Act”), against Schnitzer
      Steel Industries, Inc. (“Schnitzer” or “Respondent”).

     

    II.

     

    In
      anticipation of the institution of these proceedings, Respondent has submitted
      an Offer of Settlement (the “Offer”) which the Commission has determined to
      accept. Solely for the purpose of these proceedings and any other proceedings
      brought by or on behalf of the Commission,
      or to which the Commission is a party, and without admitting or denying the
      findings
      herein,
      except as to the Commission’s jurisdiction over it and the subject matter of
      these proceedings, which are admitted, Respondent consents to the entry of
      this
      Order Instituting Cease-and-Desist Proceedings, Making Findings, and Imposing
      a
      Cease-and-Desist Order Pursuant to Section 21C of the Securities Exchange Act
      of
      1934 (“Order”), as set forth below.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    III.

     

    On
      the
      basis of this Order and Respondent’s Offer, the Commission finds1
      that:

     

    Summary

     

    1.  This
      matter involves violations of the Foreign Corrupt Practices Act of 1977 (“FCPA”)
      by Schnitzer Steel Industries, an Oregon-based steel company that sells scrap
      metal. From at least 1999 through 2004, Schnitzer has paid cash kickbacks or
      made gifts to managers of government-controlled
      steel mills in China to induce those managers to purchase scrap metal
      from
      Schnitzer. Schnitzer made the payments on its own behalf and as a broker for
      Japanese steel companies. During this period, Schnitzer also paid bribes to
      managers of private steel mills in China and South Korea, and improperly
      concealed those payments in its books and records.

     

    Facts

     

    2.  Schnitzer,
      incorporated in Oregon and headquartered in Portland, Oregon, operates three
      business segments that include a steel manufacturer, a metals recycling business
      and an auto parts business. Schnitzer reported revenue of $853 million for
      its
      fiscal year ended August 31, 2005. At the time of the conduct described below,
      Schnitzer’s common stock was registered with the Commission pursuant to Section
      12(g) of the Exchange Act and was listed on the NASDAQ National Market.
      Schnitzer filed reports with the Commission pursuant to Section 13 of the
      Exchange Act.

     

    3.  As
      part
      of its metals recycling business, Schnitzer buys and resells metal, including
      selling scrap metal to steel mills in Asia. In 1995, Schnitzer acquired an
      entity with two subsidiaries: a subsidiary in South Korea that it renamed SSI
      International Far East Ltd. (“SSI Korea”), and a U.S. subsidiary in Tacoma,
      Washington that it renamed SSI International, Inc. (“SSI International”).
      Thereafter, Schnitzer used these subsidiaries to facilitate its Asian scrap
      metal sales.

     

    A.     
      Sales
      to Government-owned Steel Mills in China

     

    4.  From
      at
      least 1999 through 2004, employees and agents of SSI International and SSI
      Korea
      made improper cash payments to managers of scrap metal customers owned, in
      whole
      or in part, by the Chinese government. These payments were intended to induce
      those managers to purchase scrap metal from Schnitzer.

     

    5.  During
      the period 1999 through 2004, Schnitzer paid over $205,000 in improper payments
      to managers of its government-owned customers in China in connection with 30
      sales transactions. Schnitzer’s gross revenue for those transactions totaled
      approximately $96 million, and Schnitzer earned $6,259,104 in net profits on
      the
      sales.

     

    _______________

    1The
      findings herein are made pursuant to Respondent’s Offer of Settlement and are
      not binding on
      any
      other person or entity in this or any other proceeding.

     

    
      
        
        

      

      
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    6.  Schnitzer
      paid two types of kickbacks to the general managers of its scrap metal
      customers. For the first type, Schnitzer paid a “standard” kickback, which was
      generally $3,000 to $6,000 per shipment. Schnitzer paid these kickbacks out
      of
      the revenue it earned on the scrap metal sale. Schnitzer also paid the general
      managers of Chinese customers a second kickback that Schnitzer referred to
      internally as a “refund” or “rebate.” To pay the “refunds,” Schnitzer
      participated in a scheme whereby the general manager of a steel mill would
      cause
      the steel mill to overpay Schnitzer for the steel purchase, and would then
      personally recover the “overpayment” from Schnitzer, in amounts ranging from
      $3,000 to $15,000.

     

    7.  Schnitzer
      wired the money for the improper payments to secret bank accounts in South
      Korea
      opened by the head of SSI Korea specifically for receiving these payments.
      The
      head of SSI International and the head of SSI Korea would then use funds from
      the secret accounts to make improper cash payments to managers of Schnitzer’s
      customers. In addition to the cash payments, the Schnitzer officers gave gifts
      to the managers of the government-owned customers. A Schnitzer senior official
      was aware of and authorized the wire transfers to the secret bank
      accounts.

     

    8.  Separate
      from SSI Korea’s role as a seller of Schnitzer’s metals, SSI Korea also acted as
      a broker for Japanese scrap metal companies that sold scrap metal in China,
      receiving brokerage commissions for locating scrap metal buyers in China. Since
      at least 1999, Japanese companies provided SSI Korea with funds to make improper
      payments to managers of the Chinese steel mills similar to the payments made
      by
      Schnitzer for scrap metal it sold. On behalf of Schnitzer, the funds were
      delivered to the managers of the Japanese steel mill customers.

     

    9.  From
      1999
      to 2004, Schnitzer made improper payments on behalf of its Japanese customers
      to
      managers of steel mills owned, in whole or in part, by the Chinese government
      in
      approximately eight scrap metal transactions. SSI Korea earned $58,610 in
      brokerage commissions and realized $19,991 in net profits from those eight
      transactions.

     

    10.    
      In
      order
      to conceal the improper payments, Schnitzer falsely described those payments
      to
      the foreign officials as “sales commissions,” “commission to the customer,”
“refunds,” or “rebates” in Schnitzer’s books and records.

     

    B.      Sales
      to Privately Owned Steel Mills in China and South Korea

     

    11.    
      In
      addition to making improper payments for scrap metal sales to
      government-owned
      steel mills in China, Schnitzer paid bribes to managers of privately owned
      steel
      mills in
      China
      and South Korea. Schnitzer falsely described the payments as “sales
      commissions,” “commission to the customer,” “refunds,” or “rebates” in
      Schnitzer’s books and records.

     

    12.    
      From
      1999
      to 2004, Schnitzer made over $420,000 in improper payments to managers of
      privately owned Chinese steel mills to induce them to purchase scrap metal
      from
      Schnitzer. Schnitzer paid managers of the privately owned South Korean steel
      mills approximately $1,273,000 in bribes from 1999 to 2004 to induce them to
      purchase scrap metal from Schnitzer. From 1999 to 2004, SSI Korea also earned
      $1,513,097 in commissions for brokered sales on

    

    
      
        
        

      

      
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    behalf
      of
      Japanese companies in which such kickbacks were paid. Schnitzer also provided
      non-cash gifts to general managers of Korean customers.

     

    C.  Schnitzer’s
      Lack of Internal Controls

     

    13.   
       During
      the period of the foreign transactions described above, Schnitzer provided
      no
      training or education to any of its employees, agents or subsidiaries regarding
      the requirements
      of the
      FCPA. Schnitzer also failed to establish a program to monitor its employees,
      agents and subsidiaries for compliance with the FCPA.

     

    D.  Schnitzer’s
      Investigation and Subsequent Events

     

    14.     
      In
      May
      2004, Schnitzer’s compliance department uncovered the improper payments and
      Schnitzer began to investigate the potential FCPA violations. At that time,
      a
      senior executive of Schnitzer prohibited any further payments, but nonetheless
      authorized Schnitzer employees to pay at least two additional bribes that
      Schnitzer previously had promised private customers. The same senior executive
      also authorized Schnitzer employees to increase entertainment
      expenses in lieu of cash payments to its private and government-owned scrap
      metal customers.
      In response, Schnitzer employees gave managers of Schnitzer’s scrap metal
      customers
      additional gifts, including gift certificates worth $10,000 and a watch worth
      $2,400.

     

    15.     
      After
      Schnitzer began its internal investigation, but before it had issued a directive
      to its employees to preserve documents related to the scrap metal transactions,
      SSI Korea employees destroyed documents concerning the improper
      payments.

     

    Legal
      Analysis

     

    16.    
       The
      FCPA,
      enacted in 1977, added Section 30A to the Exchange Act to prohibit public
      companies from, among other things, making improper payments to foreign
      officials for the
      purpose
      of influencing their decisions in order to obtain or retain business.
See
      15
      U.S.C.
§ 78dd-1.

     

    17.    
       The
      FCPA
      also added Exchange Act Section 13(b)(2)(A) to require public companies to
      make
      and keep books, records, and accounts, which, in reasonable detail, accurately
      and fairly reflect the transactions and dispositions of the assets of the
      issuer, and Exchange Act Section 13(b)(2)(B) to require such companies to devise
      and maintain a system of internal accounting
      controls sufficient to provide reasonable assurances that: (i) transactions
      are
      executed in
      accordance with management’s general or specific authorization; and (ii)
      transactions are recorded as necessary to permit preparation of financial
      statements in conformity with generally accepted accounting principles or any
      other criteria applicable to such statements, and to maintain accountability
      for
      assets. See
      15
      U.S.C.
§§ 78m(b)(2)(A) and 78m(b)(2)(B).

     

    18.     
      In
      each
      of the transactions described above, Schnitzer was aware of the high probability
      that its employees or agents intended to make gifts or payments in order to
      obtain or retain business for Schnitzer. In each instance described in
      paragraphs 4 through 9, by proceeding

    

    
      
        
        

      

      
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    with
      the
      transactions, Schnitzer made or authorized the making of illegal payments to
      foreign officials, in violation of Section 30A. Schnitzer violated Section
      13(b)(2)(A) by improperly recording
      in its books and records payments it made in the transactions involving its
      subsidiary in
      Korea.
      Finally, Schnitzer violated Section 13(b)(2)(B) by failing to devise and
      maintain an effective system of internal controls to prevent and detect
      violations of the FCPA.

     

    Schnitzer’s
      Remedial Efforts

     

    19.     
      In
      determining to accept the Offer, the Commission considered remedial acts
      undertaken by Respondent and cooperation afforded the Commission
      staff.

     

    IV.

     

    Undertakings
      

     

    Respondent
      undertakes to:

     

    1.  Retain,
      through its Board of Directors, within sixty (60) calendar days of the issuance
      of this Order, and for a period of three years thereafter, an independent
      compliance consultant (“Compliance Consultant”), not unacceptable to the staff
      of the Commission, to review and evaluate Schnitzer’s internal controls,
      record-keeping, and financial reporting policies and procedures
      as they relate to Schnitzer’s compliance with the books and records, internal
      accounting
      controls, and anti-bribery provisions of the FCPA, codified at Sections
      13(b)(2)(A), 13(b)(2)(B), and
      30A
      of the Exchange Act and other applicable foreign bribery laws. This review
      and
      evaluation
      shall
      include an assessment of those policies and procedures as actually implemented
      in practice. The compensation and expenses of the Compliance Consultant, and
      of
      the persons hired under his or her authority, shall be paid by Schnitzer.
      Schnitzer may extend the time period for retention of the Compliance Consultant
      with prior written approval of the Commission staff;

     

    2.  Schnitzer
      shall cooperate fully with the Compliance Consultant. Schnitzer shall grant
      the
      Compliance Consultant the authority to take such reasonable steps, in the
      Compliance Consultant’s view, as necessary to be fully informed about the
      operations of Schnitzer within the scope of his or her responsibilities under
      this Order. To that end, Schnitzer shall provide the Compliance
      Consultant with access to files, books, records, and personnel that fall within
      the scope
      of his
      or her responsibilities under this Order. It shall be a condition of the
      Compliance Consultant’s retention that the Compliance Consultant is independent
      of Schnitzer and that no attorney-client relationship shall be formed between
      them. In connection with the Compliance Consultant’s work, Schnitzer shall not
      withhold from the Commission or the Commission’s staff, and shall require the
      Compliance Consultant to agree not to withhold from the Commission or the
      Commission’s staff, any documents or information on the basis of any privilege
      or work product claims.
      This paragraph does not apply to communications and information shared among
      Schnitzer
      and
      counsel representing Schnitzer solely for the purpose of rendering legal advice
      in connection with investigations conducted by the Department of Justice (“DOJ”)
      and the Commission.

    

    
      
        
        

      

      
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    3.  Schnitzer
      shall order the Compliance Consultant to assess whether Schnitzer’s policies and
      procedures are reasonably designed to detect and prevent violations of the
      FCPA,
      and during the three-year consultancy, conduct an initial review and prepare
      an
      initial report, followed by two follow-up reviews and follow-up reports as
      described below. With respect to each of the three reviews, after initial
      consultations with Schnitzer, DOJ, and the Commission staff, Schnitzer shall
      require the Compliance Consultant to prepare a written work plan for each of
      the
      three reviews, which shall be submitted to Schnitzer, the Commission staff,
      and
      DOJ. In order to conduct an effective initial review and to fully understand
      any
      existing deficiencies in controls, policies, and procedures related to the
      FCPA
      and other applicable foreign bribery laws, Schnitzer shall
      require that the Compliance Consultant’s initial work plan include such steps as
      are necessary
      to
      develop an understanding of the facts and circumstances surrounding the
      violations described above in Section III.

     

    4.  In
      connection with the initial review, Schnitzer shall require the Compliance
      Consultant to issue a written report, within one hundred twenty (120) calendar
      days after being retained, setting forth the Compliance Consultant’s assessment
      and making recommendations reasonably designed to improve Schnitzer’s program,
      policies, and procedures for ensuring compliance with the FCPA. Schnitzer shall
      require that the Compliance Consultant provide the report to Schnitzer’s Board
      of Directors and contemporaneously transmit a copy to the following individuals
      or their successors: (1) Helane L. Morrison, District Administrator, Securities
      and Exchange Commission, 44 Montgomery St., Suite 2600, San Francisco,
      California 94104; and (2) Mark
      F.
      Mendelsohn, Deputy Chief, Fraud Section, Criminal Division, U.S. Department
      of
      Justice,
      10th
      and
      Constitution Ave., N.W. (Bond), Washington, D.C. 20530. Schnitzer shall allow
      the Compliance Consultant to extend the time period for issuance of the report
      with prior written approval of the DOJ and the Commission staff;

     

    5.  Within
      one hundred twenty (120) calendar days after receiving the report,
      Schnitzer
      shall
      adopt all recommendations in the report of the Compliance Consultant; provided,
      however, that within one hundred twenty (120) calendar days after receiving
      the
      report, Schnitzer shall in writing advise the Compliance Consultant and the
      Commission staff in writing of any recommendations that it considers to be
      unduly burdensome, impractical or costly. With respect to any recommendation
      that Schnitzer considers unduly burdensome, impractical or costly, Schnitzer
      need not adopt that recommendation within that time but shall propose in writing
      an alternative policy, procedure or system designed to achieve the same
      objective or purpose. As to any recommendation on which Schnitzer and the
      Compliance Consultant do not agree, Schnitzer shall attempt in good faith to
      reach an agreement within sixty (60) calendar days after Schnitzer serves the
      written advice. In the event Schnitzer and the Compliance Consultant are unable
      to agree on an alternative proposal, Schnitzer shall abide by the determinations
      of the Compliance Consultant. With respect to any recommendation that the
      Compliance Consultant determines cannot reasonably be implemented within one
      hundred twenty (120) calendar days after receiving the report, Schnitzer shall
      allow the Compliance Consultant to extend the time period for implementation
      with prior written approval of the Commission staff and DOJ.

     

    6.  
      Schnitzer shall require the Compliance Consultant to undertake two follow-up
      reviews to determine whether Schnitzer’s policies and procedures are reasonably
      designed to detect and prevent violations of the FCPA and other applicable
      foreign bribery laws. Within one

    

    
      
        
        

      

      
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    hundred
      twenty (120) calendar days of initiating each follow-up review, Schnitzer shall
      (i) require the Compliance Consultant to complete the review, (ii) require
      the
      Compliance Consultant to certify
      whether Schnitzer’s anti-bribery compliance program, including its policies and
      procedures, is
      appropriately designed and implemented to ensure compliance with the FCPA,
      (iii)
      report on the Compliance
      Consultant’s findings in the same fashion as set forth in paragraph IV.4 with
      respect to
      the
      initial review, and (iv) adopt recommendations in the same fashion as set forth
      in paragraph IV.5 with respect to the initial review. Schnitzer shall require
      the Compliance Consultant to commence the first follow-up review one year after
      retention of the Compliance Consultant, and the second follow-up review at
      least
      one year after completion of the first follow-up review. Schnitzer shall allow
      the Compliance Consultant to extend the time period for these follow-up reviews
      with prior written approval of the Commission staff and DOJ.

     

    7.  In
      undertaking the initial review and follow-up reviews described in Paragraphs
      IV.2 through IV.6 above, Schnitzer shall require the Compliance Consultant
      to
      formulate conclusions based on sufficient evidence obtained through, among
      other
      things, (i) inspection of documents, including all of Schnitzer’s policies and
      procedures relating to Schnitzer’s anti-bribery compliance program; (ii) onsite
      observation of FCPA systems and procedures, including Schnitzer’s internal
      controls, recordkeeping and internal audit procedures; (iii) meetings with
      and
      interviews of Schnitzer employees, officers, directors and any other relevant
      persons; and (iv) analyses, studies and testing of Schnitzer’s anti-bribery
      compliance program. In undertaking such assessment and reviews, Schnitzer shall
      allow the Compliance Consultant, at his or her own discretion, to rely, to
      a
      reasonable extent and after reasonable inquiry, on reports, studies, and
      analyses issued or undertaken by other consultants hired by Schnitzer prior
      to
      the date of this Order.

     

    8.  The
      Compliance Consultant’s charge, as described above, is to review Schnitzer’s
      controls, policies and procedures related to the compliance with the FCPA.
      To
      the extent the Compliance Consultant, during the course of his or her
      assessment, discovers that corrupt payments or corrupt transfers of property
      or
      interests may have been offered, promised, paid, or authorized by any Schnitzer
      entity or person, or any entity or person working directly or indirectly
for
      Schnitzer, Schnitzer shall require the Compliance Consultant promptly to report
      such payments
      to
      Schnitzer’s Corporate Compliance Officer, to its Audit Committee, and to its
      outside counsel (who must have experience providing advice and conducting
      investigations regarding FCPA matters)
      for further investigation, unless the Compliance Consultant believes, in the
      exercise of his
      or her
      discretion, that such disclosure should be delayed. In such circumstances,
      Schnitzer shall allow
      the
      Compliance Consultant to refer the matter directly to the staff of the
      Commission or DOJ
      at the
      address listed above in paragraph IV.4. If the Compliance Consultant refers
      the
      matter only to Schnitzer’s Corporate Compliance Officer, its Audit Committee,
      and its outside counsel, Schnitzer shall promptly report the same to the
      Commission staff and DOJ at the addresses listed above in paragraph IV.4. If
      Schnitzer fails to make such disclosure within ten (10) calendar days of the
      report of such payments to Schnitzer’s Corporate Compliance Officer, to its
      Audit Committee, and to its outside counsel, Schnitzer shall require the
      Compliance Consultant to independently disclose his/her findings to the staff
      of
      the Commission and DOJ. Further, in the event that any Schnitzer entity or
      person, or any entity or person working directly or indirectly for Schnitzer,
      refuses to provide information necessary for the performance of the Compliance
      Consultant’s responsibilities, Schnitzer shall require the Compliance Consultant
      to disclose that

    

    
      
        
        

      

      
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    fact
      to
      the Commission staff and to DOJ. Schnitzer shall not take any action to
      retaliate against the Compliance Consultant for such disclosures. Schnitzer
      shall not preclude the Compliance Consultant from reporting other criminal
      or
      regulatory violations discovered in the course of performing his or her duties,
      in the same manner as described above.

     

    9. Schnitzer
      shall require the Compliance Consultant to enter into an agreement with
      Schnitzer that provides that for the period of engagement and for a period
      of
      two years from completion of the engagement, the Compliance Consultant shall
      not
      enter into any additional employment, consultant, attorney-client, auditing
      or
      other professional relationship with Schnitzer, or any of its present or former
      affiliates, directors, officers, employees, or agents acting in their capacity.
      The agreement will also provide that the Compliance Consultant will require
      that
      any firm with which he or she is affiliated or of which he or she is a member,
      and any person engaged to assist the Compliance Consultant in performance of
      his
      or her duties under this Order shall not, without prior written consent of
      the
      Securities and Exchange Commission’s Division of Enforcement,
      enter into any employment, consultant, attorney-client, auditing or other
      professional relationship
      with Schnitzer, or any of its present or former affiliates, directors, officers,
      employees,
      or
      agents acting in their capacity as such for the period of the engagement and
      for
      a period of two years after the engagement. To ensure the independence of the
      Compliance Consultant, Schnitzer shall not have the authority to terminate
      the
      Compliance Consultant without the prior written approval of the Commission
      staff
      and the DOJ.

     

    V.

     

    In
      view
      of the foregoing, the Commission deems it appropriate to impose the
      sanctions
      agreed
      to in Respondent Schnitzer’s Offer.

     

    Accordingly,
      it is hereby ORDERED that:

     

    A.  Respondent
      Schnitzer cease and desist from committing or causing any violations and any
      future violations of Sections 13(b)(2)(A), 13(b)(2)(B), and 30A of the Exchange
      Act.

     

    B.  Respondent
      shall comply with the undertakings enumerated in Section IV above.

     

    C.  IT
      IS
      FURTHERED ORDERED that Respondent shall, within ten days of the entry of this
      Order, pay disgorgement and prejudgment interest in the total amount of
      $7,725,201, consisting of $6,279,095 in disgorgement and $1,446,106 in
      prejudgment interest, to the United States Treasury. Such payment shall be:
      (A)
      made by United States postal money order, certified check, bank cashier's check
      or bank money order; (B) made payable to the Securities and Exchange Commission;
      (C) hand-delivered or mailed to the Office of Financial Management, Securities
      and Exchange Commission, Operations Center, 6432 General Green Way, Mail Stop
      0-3, Alexandria, VA 22312; and (D) submitted under cover letter that identifies
      Schnitzer

    

    
      
        
        

      

      
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    Steel
      Industries, Inc. as a Respondent in these proceedings, the file number of these
      proceedings, a copy
      of
      which cover letter and money order or check shall be sent to Helane L. Morrison,
      District
      Administrator, Securities and Exchange Commission, 44 Montgomery Street,
      26th
      Floor,
      San Francisco, CA 94104.

     

     

    By
      the
      Commission.

     

    Nancy
      M.
      Morris

    Secretary

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        9Exhibit 10.2

 

RIGHTS AGREEMENT

BETWEEN

GTJ REIT, INC.

AND

AMERICAN STOCK TRANSFER & TRUST COMPANY AS RIGHTS AGENT

DATED AS OF                   ,
2006

 

 

RIGHTS
AGREEMENT

AGREEMENT,
dated as of             , 2006, between GTJ REIT, Inc., a
Maryland corporation (the “Company”), and American Stock Transfer & Trust
Company (the “Rights Agent”).

W I T N E
S S E T H

WHEREAS,
the Board of Directors of the Company has authorized and declared a dividend of
one preferred share purchase right (a “Right”) for each share of Common Stock
(as hereinafter defined) of the Company that shall become outstanding between
the date hereof and the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date (as such terms are hereinafter defined), such
Right representing the right to purchase one one-hundredth of a share of
Preferred Stock (as hereinafter defined), or certain shares of Common Stock,
upon the terms and subject to the conditions herein set forth;

NOW,
THEREFORE, in consideration of the promises and the mutual agreements herein
set forth, the parties hereby agree as follows:

Section 1.                                            Certain
Definitions. For purposes of this Agreement, the following terms have the
meanings indicated:

 

(a)                                  “Acquiring
Person” shall mean any Person (other than an Excluded Person) who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of fifteen (15%) percent or more of the Common Stock of the
Company then outstanding (which figure may be reduced by the Board of
Directors, before there is an Acquiring Person, but to not less than ten (10%)
percent); it being specifically noted that the Rights issued in respect of any
Common Stock that are beneficially owned by each such Acquiring Person shall be
void, and the Acquiring Person shall have no right to exercise such Rights
under any provisions of this Agreement (determined pursuant to Section 9(a)(ii)
hereof). Notwithstanding the foregoing, (i) no Person shall become an “Acquiring
Person” as the result of an acquisition of Common Stock by the Company which,
by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person to fifteen (15%) percent or
more of the Common Stock of the Company then outstanding provided, however,
that if a Person shall become the Beneficial Owner of fifteen (15%) percent or
more of the Common Stock of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
become the Beneficial Owner of any additional Common Stock of the Company, then
such Person shall be deemed an “Acquiring Person”; and (ii) if the Board of
Directors of the Company determines in good faith that a Person who would
otherwise be an “Acquiring Person,” as defined pursuant to the foregoing
provisions of this paragraph (a), has inadvertently become an Acquiring Person,
and such Person divests as promptly as practicable a

 

 2
 

 

 

sufficient number of Common Stock so that
such Person would no longer be an “Acquiring Person,” then such Person shall
not be deemed to be an “Acquiring Person” for any purposes of this Agreement.

(b)                                 “Affiliate”
and “Associate” shall have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), as in effect on the date of this
Agreement.

(c)                                  “Beneficial
Owner” is a person who or which shall be deemed to have the “Beneficial
Ownership” of and to “beneficially own” any securities:

(i)                                     which
such Person or any of such Person’s Affiliates or Associates beneficially owns,
directly or indirectly;

(ii)                                  which
such Person or any of such Person’s Affiliates or Associates has (A) the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) or upon the
exercise of conversion rights, exchange rights, rights (other than these
Rights), warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); or

(iii)                               which
are beneficially owned, directly or indirectly, by any other Person with which
such Person or any of such Person’s Affiliates or Associates has any agreement,
arrangement or understanding, oral or written (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.

Notwithstanding anything in this
definition of Beneficial Ownership to the contrary, the phrase “then
outstanding,” when used with reference to a Person’s Beneficial Ownership of
securities of the Company, shall mean the number of such securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially
hereunder.

 

 3
 

 

 

(d)                                 “Business
Day” shall mean any day other than a Saturday, a Sunday or a day on which
banking institutions in New York State are authorized or obligated by law or
executive order to close.

(e)                                  “Close
of Business” on any given date shall mean 5:00 p.m., New York City time, on
such date; provided, however, that if such date is not a Business Day it shall
mean 5:00 p.m., New York City time, on the next succeeding Business Day.

(f)                                    “Common
Stock” when used with reference to the Company shall mean the shares of common
stock, par value $0.001 per share, of the Company. “Common Stock” when used
with reference to any Person other than the Company shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.

(g)                                 “Distribution
Date” shall have the meaning set forth in Section 3 hereof.

(h)                                 “Excluded
Person” shall mean (i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee benefit plan of the
Company or any subsidiary of the Company, (iv) any entity holding Common Stock
for or pursuant to the terms of any such plan, or (v) any person whom the Board
of Directors of the Company determines by resolution to treat as an Excluded
Person.

(i)                                     “Final
Expiration Date” shall have the meaning set forth in Section 8 hereof.

(j)                                     “Person”
shall mean any individual, firm, corporation or other entity, and shall include
any successor (any merger or otherwise) of such entity.

(k)                                        “Preferred
Stock” shall mean shares of Series A Preferred Stock, par value $0.001 per
share, of the Company having the rights and preferences set forth on Exhibit A.

(1)                                  “Redemption
Date” shall have the meaning set forth in Section 8 hereof.

(m)                               “Shares
Acquisition Date” shall mean the first date of public announcement by the
Company or an Acquiring Person that an Acquiring Person has become such.

(n)                                 “Subsidiary”
of any Person shall mean any corporation or other entity of which a majority of
the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.

 

 4
 

 

 

Section
2.                                            Appointment
of Rights Agent. The Company hereby appoints the Rights Agent to act as
agent for the Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall, prior to the Distribution Date also be the holders of
the Common Stock) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from time to time
appoint such co-Rights Agents as it may deem necessary or desirable.

Section
3.                                            Issue
of Right Certificates.

(a)                                  Until
the earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the
tenth Business Day (or such later date as may be determined by action of the
board of directors of the Company prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
an Excluded Person) of, or of the first public announcement of the intention of
any Person (other than an Excluded Person) to commence a tender or exchange
offer, the consummation of which would result in any Person (other than an
Excluded Person) becoming the Beneficial Owner of Common Stock aggregating
fifteen (15%) percent or more of the then outstanding Common Stock (including
any such date which is after the date of this Agreement and prior to the
issuance of the Rights; the earlier of such dates being herein referred to as
the “Distribution Date”), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the Certificate for Common Stock
registered in the names of the holders thereof (which certificates shall also
be deemed to be Rights Certificates as such term is hereinafter defined) and
not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of
Common Stock. As soon as practicable after the Distribution Date, the Company
will prepare and execute, the Rights Agent will countersign, and the Company
will send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage pre-paid mail, to each record holder of Common
Stock as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a “Right Certificate”), evidencing
one Right for each Common Share so held. On and following the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.

(b)                           The
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit C hereto (the “Summary of Rights”), by
first-class, postage-prepaid mail, to each record holder of Common at the
address of such holder shown on the records of the Company. With respect to certificates
for Common Stock outstanding until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Stock outstanding, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby.

 

 5
 

 

 

(c)                                  Certificates
for Common Stock which become outstanding (including, without limitation,
reacquired Common Stock referred to in the last sentence of this paragraph (c))
prior to the earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date shall have printed on the following legend:

This
certificate also evidences and entitles the holder hereof to certain rights as
set forth in a Rights Agreement between GTJ REIT, Inc. and American Stock
Transfer & Trust Company, dated as of             , 2006,
(the “Rights Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of
GTJ REIT, Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. GTJ REIT, Inc. will mail to the holder
of this certificate a copy of the Rights Agreement without charge after receipt
of a written request therefor. Under certain circumstances, as set forth in the
Rights Agreement, Rights issued to any Person who becomes an Acquiring Person
(as defined in the Rights Agreement) will be null and void.

With respect to such certificates
containing the foregoing legend, until the Distribution Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any
such certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented thereby. In the event that the Company
purchases or acquires any Common Stock prior to the Distribution Date, any
rights associated with such Common Stock shall be deemed cancelled and retired
so that the Company shall not be entitled to exercise any rights associated
with the Common Stock which are no longer outstanding or which are held as
treasury stock.

Section
4.                                            Form
of Right Certificates. The Right Certificates
(and the forms of election to purchase Preferred Stock and of assignment to be
printed on the reverse thereof) shall be substantially the same as Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 22 hereof, the Right Certificates
shall entitle the holders thereof to purchase such number of one one-hundredths
of a Preferred Share as shall be set forth therein at the price per one
one-hundredth of a Preferred Share set forth herein and therein (the “Purchase
Price”), and the number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.

 

 6
 

 

 

Section
5.                                            Countersignature
and Registration. The Right Certificates
shall be executed on behalf of the Company either by its Chairman of the Board,
its Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed
thereto the Company’s seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the
Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent and issued and delivered by the Company with the same force and effect as
though the Person who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of
the Company by any Person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Agreement any such
Person was not such an officer. Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at its principal office, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.

Section
6.                                            Transfer.
Split Up. Combination and Exchange of Right Certificates Mutilated, Destroyed,
Lost or Stolen Right Certificates.
Subject to the provisions of Section 14 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on
the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
rights that have become void pursuant to Section 9(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Upon receipt, or as soon as practical thereafter, the Rights
Agent shall countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates. Upon receipt by the Company
and the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and at the Company’s request, reimbursement to the Company and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the Rights

 

 7
 

 

 

Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a new Right
Certificate of like tenor to the Rights Agent for delivery to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.

Section
7.                                            Cancellation
and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.

Section
8.                                            Exercise
of Rights: Purchase Price: Expiration Date of Rights.

(a)                                  The
registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate, with the
form of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, together with payment
of the Purchase Price for each one one-hundredth of a Preferred Share as to
which the Rights are exercised, at or prior to the earliest of (i) the Close of
Business on             , 2016, (the “Final Expiration Date”),
(ii) the time at which the Rights are redeemed as provided in Section 23 hereof
(the “Redemption Date”), or (iii) the time at which such Rights are exchanged
as provided in Section 24 hereof.

(b)                                 The
Purchase Price for each one one-hundredth of a Preferred Share purchasable
pursuant to the exercise of a Right shall initially be fifty ($50.00) dollars,
and shall be subject to adjustment from time to time as provided in Sections 9
and 10 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) below.

(c)                                  Upon
receipt of a Right Certificate representing exercisable Rights, with the form
of election to purchase duly executed, accompanied by payment of the Purchase
Price for the Shares to be purchased and an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with Section 12 hereof by certified check, cashier’s check or money
order payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Stock
certificates for the number of Preferred Stock to be purchased and the Company
hereby irrevocably authorizes any such transfer agent to comply with all such
requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of

 

 8
 

 

 

a Preferred Share as are to be purchased
(in which case, certificates for the Preferred Stock represented by such
receipts shall be deposited by the transfer agent of the Preferred Stock with
such depositary agent) and the Company hereby directs such depositary agent to
comply with such request, (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names
as may be designated by such holder and (iv) when appropriate, after receipt,
deliver such cash to or upon the order of the registered holder of such Right
Certificate.

(d)                                 In
case the registered holder of any Right Certificate shall exercise less than
all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to his duly
authorized assigns, subject to the provisions of Section 14 hereof.

Section
9.                                            Adjustment
of Purchase Price: Number of Shares or Number of Rights. The
Purchase Price, the number of Preferred Stock purchaseable by each Right and
the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 9.

(a) 
(i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in Preferred
Stock, (B) subdivide the outstanding Preferred Stock, (C) combine the
outstanding Preferred Stock into a smaller number of Preferred Stock or (D)
issue any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 9(a), the Purchase Price in effect
as of the effective date of such subdivision, combination or reclassification,
and the number and kind of shares of capital stock issuable on such date, shall
be proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive the aggregate number and kind of shares
of capital stock which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Stock transfer books of the Company
were open, he would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company issuable upon the exercise of one Right.

(ii)                                  Subject
to Section 24 of this Agreement, in the event any Person becomes an Acquiring
Person, each holder of a Right shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-hundredths of a Preferred Share for which a Right is
then exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Stock, such number of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then current Purchase Price by the
number of one one-hundredths of a Preferred Share for which a Right is then

 

 9
 

 

 

exercisable and dividing that product by
(y) 50% of the then current per share market price of the Company’s Common Stock
(determined pursuant to Section 9(d) hereof) as of the date of the occurrence
of such event. In the event that any Person shall become an Acquiring Person
and the Rights shall then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be afforded by the
Rights. From and after the occurrence of such event, any Rights that are or
were acquired or beneficially owned by any Acquiring Person (or any Associate
or Affiliate of such Acquiring Person, including, without limitation, any
Rights issued in respect of any Common Stock that are beneficially owned by any
Acquiring Person at the time such Acquiring Person becomes an Acquiring Person)
shall be void and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provisions of this Agreement. No Right
Certificate shall be issued pursuant to Section 3 that represents Rights
beneficially owned by an Acquiring Person whose Rights would be void pursuant
to the preceding sentence or any Associate or Affiliate thereof; no Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to an Acquiring Person whose Rights are void pursuant
to the preceding sentence shall be cancelled.

(iii)                               In
the event that there shall not be sufficient Common Stock issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize additional Common Stock
for issuance upon exercise of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Stock, the Company shall substitute, for each
Common Share that would otherwise be issuable upon exercise of a Right, a
number of Preferred Stock or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share as of the date
of issuance of such Preferred Stock or fraction thereof.

(b)                                 In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Stock entitling them (for a period
expiring within 45 calendar days after such record date) to subscribe for or
purchase Preferred Stock (or shares having the same rights, privileges and
preferences as the Preferred Stock; (“Equivalent Preferred Stock”) or
securities convertible into Preferred Stock or Equivalent Preferred Stock at a
price per Preferred Share or Equivalent Preferred Share (or having a conversion
price per share, if a security convertible into Preferred Stock or Equivalent
Preferred Stock) less than the then current per share market price of the
Preferred Stock (as defined in Section 9(d)) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred Stock
outstanding on such record date plus the number of Preferred Stock which the
aggregate offering price of the total number of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the

 

 10
 

 

 

convertible securities so to be offered)
would purchase at such current market price and the denominator of which shall
be the number of Preferred Stock outstanding on such record date plus the
number of additional Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.

(c)                                  In
case the Company shall fix a record date for the making of a distribution to
all holders of the Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than regular quarterly cash dividend or a dividend payable in Preferred
Stock) or subscription rights or warrants (excluding those referred to in
Section 9(1) hereof), the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
then current per share market price of the Preferred Stock after such record
date, less the fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Stock; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.

(d) 
(i) For the purpose of any computation hereunder, the “current per share
market price” of any security (a “Security”) on any date shall be deemed to be
the average of the daily closing prices per share of such Security for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution
on such Security payable in shares of such Security or securities convertible
into such shares or (B) any

 

 11
 

 

 

subdivision, combination or reclassification
of such Security and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to reflect the
current market price per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market, Inc. (“Nasdaq”)
or such other system then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Security selected by the Board of Directors of the Company or if there is none
by good faith determination of the Board of Directors. The term “Trading Day”
shall mean a day on which the principal national securities exchange on which
the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any
national securities exchange, a Business Day.

(ii)                                  For
the purpose of any computation hereunder, the “current per share market price”
of the Preferred Stock shall be determined in accordance with the method set
forth in Section 9(d)(i); provided, however, that if the Preferred Stock are
not publicly traded, the “current per share market price” of the Preferred
Stock shall be conclusively deemed to be the current per share market price of
the Common Stock as determined pursuant to Section 9(d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof) multiplied by one hundred, if the Preferred
Stock are not then convertible; or if then convertible, the number of Common
Stock into which the Preferred Stock are then convertible. If neither the
Common Stock nor the Preferred Stock are publicly held or so listed or traded,
the “current per share market price” shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.

(e)                                  No
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustment which by reason of this Section 9(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 9 shall be made to
the nearest cent or to the nearest one one-millionth of a Preferred Share or
one ten-thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 9(e), any adjustment
required by this Section 9

 

 12
 

 

 

shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.

(f)                                    If
as a result of an adjustment made pursuant to Section 9(a) hereof, the holder
of any Right thereafter exercised shall become entitled to receive any shares
of capital stock of the Company other than Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any Right shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Stock
contained in Section 9(a) through (c), inclusive, and the provisions of
Sections 8, 10, 12 and 13 with respect to the Preferred Stock shall apply on
like terms to any such other shares.

(g)                                 All
Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-hundredths of a Preferred Share
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.

(h)                                 Unless
the Company shall have exercised its election as provided in Section 9(i), upon
each adjustment of the Purchase Price as a result of the calculations made in
Sections 9(1) and (c), each Right outstanding immediately prior to the making
of such adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share) obtained by
(i) multiplying (x) the number of one one-hundredths of a share covered by a
Right immediately prior to this adjustment by (i) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

(i)                                     The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in substitution for any adjustment in the
number of one one-hundredths of a Preferred Share purchasable upon the exercise
of a Right. Each of the Rights outstanding after such adjustment of the number
of Rights shall be exercisable for the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 9(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record

 

 13
 

 

 

date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein and
shall be registered in the names of the holders of record of Right
Certificates, on the record date specified in the public announcement.

(j)                                     Irrespective
of any adjustment or change in the Purchase Price or the number of one
one-hundredths of a Preferred Share issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of one one-hundredths of a Preferred
Share which were expressed in the initial Right Certificates issued hereunder.

(k)                                  Before
taking any action that would cause an adjustment reducing the Purchase Price
below one one-hundredth of the then par value, if any, of the Preferred Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-assessable Preferred
Stock at such adjusted Purchase Price.

(1)                                  In
any case in which this Section 9 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuing to
the holder of any Right exercised after such record date of the Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon
such exercise over and above the Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder’s right to receive such additional shares
upon the occurrence of the event requiring such adjustment.

(m)                               Anything in this Section 9 to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly required by
this Section 9, as and to the extent that it in its sole discretion shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any Preferred Stock at less than
the current market price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for
Preferred Stock, dividends on Preferred Stock payable in Preferred Stock or
issuance of rights, options or warrants referred to hereinabove in Section
9(b), hereafter made by the Company to holders of its Preferred Stock shall not
be taxable to such stockholders.

 

 14

 

 

(n)                                 In
the event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Stock payable in Common Stock or (ii) effect a subdivision, combination
or consolidation of the Common Stock by reclassification or otherwise than by
payment of dividends in Common Stock) into a greater or lesser number of Common
Stock, then in any such case (A) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of Common Stock outstanding immediately
before such event and the denominator of which is the number of Common Stock
outstanding immediately after such event, and (B) each Common Share outstanding
immediately after such event shall have issued with respect to it that number
of Rights which each Common Share outstanding immediately prior to such event
had issued with respect to it. The adjustments provided for in this Section
9(n) shall be made successively whenever such a dividend is declared or paid or
such a subdivision, combination or consolidation is effected.

Section
10.                                      Consolidation,
Merger or Sale or Transfer of Assets or Earning Power.
In the event, directly or indirectly, at any time after a Person has become an
Acquiring Person, (a) the Company shall consolidate with, or merge with and
into, any other Person, or any Person shall consolidate with the Company, or
merge with and into the Company and, in connection with such merger, all or
part of the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any other property,
or (c) the Company shall sell or otherwise transfer (or one or more of its
subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Stock,
such number of Common Stock of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of
one one-hundredths of a Preferred Share for which a Right is then exercisable
and dividing that product by (B) 50% of the current
per share market price of the Common Stock of such other Person (determined
pursuant to Section 9(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) the issuer of such Common Stock
shall thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, all the obligations and duties of the Company
pursuant to this Agreement; (iii) the term “Company” shall thereafter be deemed
to refer to such issuer; and (iv) such issuer shall take such steps (including,
but not limited to, the reservation of a sufficient number of its Common Stock
in accordance with Section 12 hereof) in connection with such consummation as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the

 

 15
 

 

 

Common Stock thereafter deliverable upon
the exercise of the Rights. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights Agent a
supplemental agreement so providing. The Company shall not enter into any
transaction of the kind referred to in this Section 10 if at the time of such
transaction there are any rights, warrants, instruments or securities outstanding
or any agreements or arrangements which, as a result of the consummation of
such transaction, would eliminate or substantially diminish the benefits
intended to be afforded by the Rights. The provisions of this Section 10 shall
similarly apply to successive mergers or consolidation or sale or other
transfers.

Section
11.                                      Certificate
of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 9 or 10 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common Stock or the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof.

Section
12.                                      Availability
of Preferred Stock. The Company covenants
and agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Stock or any Preferred Stock held in its
treasury, the number of Preferred Stock that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 8. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Stock delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Preferred Stock
(subject to payment of the Purchase Price), be duly and validly authorized and issued
and fully paid and nonassessable shares. The Company further covenants and
agrees that it will pay when due and payable any and all Federal and state
transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Stock upon the exercise
of Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock in a name other
than that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depositary receipts for Preferred Stock upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by the holder of
such Right Certificate at the time of surrender) or until it has been
established to the Company’s reasonable satisfaction that no such tax is due.

Section
13.                                      Preferred
Stock Record Date. Each Person in whose
name any certificate for Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Stock represented thereby on, and such certificate shall be dated,
the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the

 

 16
 

 

 

Preferred Stock transfer books of the
Company are closed, such Person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Stock transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Right Certificate shall not be entitled to any Rights of a holder
of Preferred Stock for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.

Section
14.                                      Fractional
Rights and Fractional Shares.

(a)                                  The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a
whole Right. For the purposes of this Section 14(a), the current market value
of a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in
the principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the Company shall be
used.

(b)                                 The
Company shall not be required to issue fractions of Preferred Stock (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share) upon exercise of the Rights or to distribute certificates which evidence
fractional Preferred Stock (other than fractions which are integral multiples
of one one-hundredth of a Preferred Share). Fractions of Preferred Stock in
integral multiples of one one-hundredth of a Preferred Share may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and

 

 17
 

 

 

preferences to which they are entitled as
Beneficial Owners of the Preferred Stock represented by such depositary
receipts. In lieu of fractional Preferred Stock that are not integral multiples
of one one-hundredth of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one Preferred Share. For the purposes of this Section 14(b),
the current market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of Section
9(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.

(c)                                  The
holder of a right by the acceptance of the Right expressly waives his right to
receive any fractional Rights or any fractional shares upon exercise of a Right
(except as provided above).

Section
15.                                      Rights
of Action. All rights of action in
respect of this Agreement, excepting the rights of action given to the Rights
Agent under Section 18 hereof, are vested in the respective registered holders
of the Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Right Certificate
(or, prior to the Distribution Date, of the Common Stock), may, in his own
behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such Right
Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.

Section
16.                                      Agreement
of Right Holders. Every holder of a Right,
by accepting the same, consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:

(a)                                  prior
to the Distribution Date, the Rights will be transferable only together with
the transfer of the Common Stock;

(b)                                 after
the Distribution Date, the Right Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the principal office of
the Rights Agent, duly endorsed or accompanied by a proper instrument of
transfer; and

(c)                                  the
Company and the Rights Agent may deem and treat the Person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificates or the associated

 

 18
 

 

 

Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.

Section
17.                                      Right
Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.

Section 18.                                      Concerning
the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises. The
Rights Agent shall be protected and shall incur no liability for, or in respect
of any action taken, suffered or omitted by it in connection with, its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Stock or Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.

Section
19.                                      Merger
or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been

 

 19
 

 

 

countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at the
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement. In case at any time
the name of the Rights Agent shall be changed and at such time any of the Right
Certificates shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.

Section
20.                                      Duties
of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:

(a)                                  The
Rights Agent may consult with legal counsel, and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.

(b)                                 Whenever
in the performance of its duties under this Agreement the Rights Agent shall
deem it necessary or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.

(c)                                  The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own negligence, bad faith or willful misconduct.

(d)                                 The
Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have been made by
the Company only.

(e)                                  The
Rights Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its

 

 20
 

 

 

countersignature thereof); nor shall it
be responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights becoming
void pursuant to Section 9(a)(ii) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in Section
3, 9, 10, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after actual notice that such change or
adjustment is required); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Preferred Stock to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Stock will, when issued, be fully
paid and nonassessable.

(f)                                    The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.

(g)                                 The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of it duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Secretary or the Treasurer of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions.

(h)                                 The
Rights Agent and any stockholder, director, officer or employee of the Rights
Agent may buy, sell or deal in any of the Rights or other securities of the
Company or become pecuniary interested in any transaction in which the Company
may be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.

(i)                                     The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or accountable
for any act, default, neglect or misconduct of such attorneys or agents or for
any loss to the Company resulting from any such act, default, neglect or
misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.

Section
21.                                      Change
of Rights Agent. The Rights Agent or
any successor Rights agent may resign and be discharged form its duties under
this Agreement upon 30 days’ notice in writing mailed to the Company and to
each transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first class

 

 21
 

 

 

mail. The Company may remove the Rights
Agent or any successor Right Agent upon 30 days’ notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock or Preferred Stock by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of New York State (or of any other state of the United States so
long as such corporation is authorized to do business as a banking institution
in the State of New York State), in good standing, having an office in the State
of New York State, which is authorized under such laws to exercise corporate
trust or stock transfer powers an is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50 million.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock
or Preferred Stock, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.

Section
22.                                      Issuance
of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such
form as may be approved by its Board of Directors of the Company to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement.

 

 22

 

 

Section
23.                                      Redemption.

(a)                                  The Board of
Directors of the Company may, at its option, at any time prior to such time as
any Person becomes an Acquiring Person, redeem all but not less than all the
then outstanding Rights at a redemption price of $0.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the “Redemption Price”). The redemption of the
Rights by the Board of Directors of the Company may be made effective at such
time, on such basis and with such conditions as the Board of Directors of the
Company in its sole discretion may establish.

(b)                                 Immediately
upon the action of the Board of Directors of the Company ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23, and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give
public notice of any such redemption; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of such
redemption. Within 10 days after such action of the Board of Directors of the
Company ordering the redemption of the Rights, the Company shall mail a notice
of redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made. Neither the Company nor any of its Affiliates or Associates
may redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of Common Stock prior to
the Distribution Date.

Section
24.                                      Exchange.

(a)                                  The Board of
Directors of the Company may, at its option, at any time after any Person
becomes an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 9(a)(ii) hereof) for the number of Common
Stock, one-thousandths of Preferred Stock or other securities or property for
which the Rights are then exercisable (such exchange being hereinafter referred
to as the “Exchange Ratio”). Notwithstanding the foregoing, the Board of
Directors of the Company shall not be empowered to effect such exchange at any
time after any Person (other than an Excluded Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Stock then outstanding.

 23
 

 

 

(b)                                 Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to paragraph (a) of this Section 24 and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company promptly shall mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Common Stock for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 9(a)(ii)
hereof) held by each holder of Rights.

(c)                                  In the event
that there shall not be sufficient authorized Common Stock to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
Common Stock for issuance upon exchange of the Rights. In the event the Company
shall, after good faith effort, be unable to take all such action as may be
necessary to authorize such additional Common Stock, the Company shall
substitute, for each Common Share that would otherwise be issuable upon
exchange of a Right, a number of Preferred Stock or fraction thereof such that
the current per share market price of one Preferred Share multiplied by such number
or fraction is equal to the current per share market price of one Common Share
as of the date of issuance of such Preferred Stock or fraction thereof.

(d)                                 The Company
shall not be required to issue fractions of Common Stock or to distribute
certificates which evidence fractional Common Stock. In lieu of such fractional
Common Stock, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Stock would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Common Share. For the purposes of this paragraph (d), the
current market value of a whole Common Share shall be the closing price of a
Common Share (as determined pursuant to the second sentence of Section 9(d)(i)
hereof) for the Trading Date immediately prior to the date of exchange pursuant
to this Section 24.

Section
25.                                      Notice of
Certain Events.

(a)                                  In case the
Company shall propose (i) to pay any dividend payable in stock of any class to the
holders of its Preferred Stock or to make any other distribution to the holders
of its Preferred Stock (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Preferred Stock rights or warrants to subscribe for
or to purchase any additional Preferred

 24
 

 

 

Stock or shares of stock of any class or
any other securities, rights or options, (iii) to effect any reclassification
of its Preferred Stock (other than a reclassification involving only the
subdivision of outstanding Preferred Stock), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to, any other Person, (v) to effect the liquidation, dissolution or winding up
of the Company, or (vi) to declare or pay any dividend on the Common Stock
payable in Common Stock or to effect a subdivision, combination or
consolidation of the Common Stock by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Common Stock and/or Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least 10 days
prior to the record date for determining holders of the Preferred Stock for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Stock and/or Preferred
Stock, whichever shall be the earlier.

(b)                                 In case the
event set forth in Section 9(a)(ii) hereof shall occur, then the Company shall
as soon as practicable thereafter give to each holder of a Right Certificate,
in accordance with Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of such event to
holders of Rights under Section 9(a)(ii) hereof.

Section
26.                                      Notices. Notices or
demands authorized by this Agreement to be given or made by the Rights Agent or
by the holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:

GTJ REIT, INC.

444 Merrick Road

Lynbrook, NY 11563

Attn: Chief Executive Officer

Subject to the
provisions of Section 21 hereof, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:

 25
 

 

 

American Stock Transfer & Trust
Company

59 Maiden Lane

New York, NY 10035

Attention:  Chief Executive Officer

Notices or demands
authorized by this Agreement to be given or made by the Company or the Rights
Agent to the holder of any Right Certificate shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Company.

Section
27.                                      Supplements
and Amendments. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions with respect to the
Rights which the Company may deem necessary or desirable, any such supplement
or amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes
an Acquiring Person, this Agreement shall not be amended in any manner which
would adversely affect the interests of the holders of Rights. Without limiting
the foregoing, the Company may at any time prior to such time as any Person
becomes an Acquiring Person amend this Agreement to lower the thresholds set
forth in Sections 1(a) and 3(a) to not less than the greater of (i) the sum of
..001% plus the largest percentage of the outstanding Common Stock then known by
the Company to be beneficially owned by any Person (other than an Excluded
Person) and (ii) 10%.

Section
28.                                      Registration. If, under
applicable securities laws, any of the securities issued or issuable hereunder
are required to be registered under the Securities Act of 1933, as amended, and
state securities laws, the Company shall make all reasonable efforts to effect
the registration of the same thereunder and under applicable state securities
laws, at the cost and expense of the Company, and may delay the issuance of any
securities until the same is accomplished.

Section
29.                                      Successors. All the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.

Section
30.                                      Benefits of
this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, the Common
Stock).

 26
 

 

 

Section
31.                                      Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

Section
32.                                      Governing
Law. This Agreement and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Maryland
and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed entirely
within such State.

Section
33.                                      Counterparts. This
Agreement may be executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.

Section
34.                                      Descriptive
Headings. Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

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

	
  

  	
   

  	
  GTJ REIT, INC.

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name: Jerome Cooper

  	
   

  
	
  Title: Secretary

  	
   

  	
   

  	
   

  	
  Title: Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AMERICAN STOCK TRANSFER &

  TRUST COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title: Secretary

  	
   

  	
   

  	
  Title:

  	
   

  

 

 27

 

 

Exhibit A

SERIES
A PREFERRED STOCK

Section
1.                                            Designation
and Amount. The shares of such series shall be
designated as “Series A Preferred Stock” (the “Series A Preferred Stock”) and
the number of shares constituting the Series A Preferred Stock shall be 500,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number of shares of
Series A Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series A
Preferred Stock.

Section
2.                                            Dividends
and Distributions.

(A)                              Subject to
the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Series A Preferred Stock
with respect to dividends, the holders of shares of Series A Preferred Stock,
in preference to the holders of Common Stock, par value $0.001 per share (the “Common
Stock”), of the Corporation, and of any other junior stock, shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first day of March, June, September and December in each year (each such date
being referred to herein as a “Quarterly Dividend Payment Date”), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Series A Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1 or (b) subject to
the provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount of all cash dividends, and 100 times the aggregate per share
amount payable in kind) of all non-cash dividends or other distributions (or if
the Series A Preferred Stock becomes convertible into Common Stock, on a Common
Stock equivalent basis), other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount to
which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding

 28
 

 

 

immediately prior to such event, or if
the Series A Preferred Stock is then convertible, on an “as converted” basis.

(B)                                The
Corporation shall declare a dividend or distribution on the Series A Preferred
Stock as provided in paragraph (A) of this Section immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1 per share on the Series A Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.

(C)                                Dividends
shall begin to accrue and be cumulative on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which cash
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and before
such Quarterly Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the payment thereof.

Section
3.                                            Voting
Rights. The holders of shares of Series A Preferred Stock shall
have the following voting rights:

(A)                              Subject to
the provision for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the stockholders of the Corporation (or if the Series A
Preferred Stock becomes convertible into Common Stock, on a Common Stock
equivalent basis). In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares

 29
 

 

 

of Common Stock that were outstanding
immediately prior to such event, or if the Series A Preferred Stock is then
convertible, on an “as converted” basis as hereinafter set forth.

(B)                                Except as
otherwise provided herein, in any other Certificate of Designations creating a
series of Preferred Stock or any similar stock, or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
and any other capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.

(C)                                Except as
set forth herein, or as otherwise provided by Maryland law, holders of Series A
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.

Section
4.                                            Conversion

The
Series A Preferred Stock shall be convertible into Common Stock as follows (all
capitalized terms to have the meaning set forth in a Rights Agreement (the “Rights
Agreement”) dated as of             , 2006 between the
Corporation and American Stock Transfer and Trust Company, which are
incorporated herein by reference, unless otherwise defined herein):

(A)                              Subject
to and upon compliance with the provisions of this Section 4, the holder of any
shares of Series A Preferred Stock shall have the right, at such holder’s
option, at any time or from time to time after the earlier of (i) the tenth day
after the Shares Acquisition Date or (ii) the tenth Business Day (or such later
date as may be determined by action of the board of directors of the
Corporation prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than an Excluded Person) of,
or of the first public announcement of the intention of any Person (other than
an Excluded Person) to commence a tender or exchange offer, the consummation of
which would result in any Person, including such Person’s Associates and
Affiliates (other than an Excluded Person) becoming the Beneficial Owner of
Common Stock aggregating fifteen (15%) percent (or such lesser percentage as
may be fixed by the board of directors of the Corporation pursuant to the
Rights Agreement) or more of the then outstanding Common Stock, to convert any
of such shares of Series A Preferred Stock into fully paid and nonassessable
shares of Common Stock as follows: the number of Shares of Common Stock into
which one share of Series A Preferred Stock may be converted is computed by
dividing (i) the Liquidation Amount (as hereinafter defined) by (ii) 50% of the
current per share market price of the Common Stock (as defined in the Rights
Agreement) on the date on which the Series A Preferred Stock first becomes
convertible into Common Stock (said amount being referred to herein as the “Conversion
Price” and being subject to adjustment pursuant to Section 4(D) hereof).

(B)                                Subject
to Subsection 4(A) above, the holder of any shares of Series A Preferred Stock
may exercise the conversion right specified in Subsection 4(A) by surrendering
to the Corporation or any transfer agent of the Corporation the certificate or
certificates for the shares

 30
 

 

 

to be converted,
accompanied by written notice specifying the number of shares to be converted.
Conversion shall be deemed to have been effected on the date when delivery of
notice of an election to convert and certificates for the shares to be
converted are delivered to the Corporation or the transfer agent. Such date is
referred to herein as the “Conversion Date.” Subject to the provisions of
Section 4(D)(iv) hereof, as promptly as practicable thereafter, the Corporation
shall issue and deliver to or upon the written order of such holder a
certificate or certificates for the number of full shares of Common Stock to
which such holder is entitled and a check or cash with respect to any
fractional interest in a share of Common Stock as provided in Section 4(C).
Subject to the provisions of Section 4(D)(iv), the person in whose name the
certificate(s) for Common Stock are to be issued shall be deemed to have become
a holder of record of such Common Stock on the applicable Conversion Date. Upon
conversion of only a portion of the number of shares represented by a certificate
of Series A Preferred Stock surrendered for conversion, the Corporation shall
issue and deliver to or upon the written order of the holder of the certificate
so surrendered, at the expense of the Corporation, a new certificate in the
number of shares of Series A Preferred Stock representing the unconverted
portion of the certificate so surrendered.

(C)                                No
fractional shares of Common Stock or scrip shall be issued upon conversion of
shares of Series A Preferred Stock. If more than one share of Series A Preferred
Stock shall be surrendered for conversion at any one time by the same holder,
the number of full shares of Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares of Series A
Preferred Stock so surrendered. Instead of any fractional shares of Common
Stock which would otherwise be issuable upon conversion of any shares of Series
A Preferred Stock, the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to that fractional interest of the
then current market price.

(D)                               The
Conversion Price set forth in Section 4(A) hereof shall be subject to
adjustment from time to time as follows:

(i)  If the Corporation shall (a) declare a
dividend or make a distribution on its Common Stock in shares of its Common
Stock, (b) subdivide or reclassify the outstanding shares of Common Stock into
a greater number of shares, or (c) combine or reclassify the outstanding Common
Stock into a smaller number of shares, the Conversion Price in effect at the
time of the record date for such dividend or distribution or the effective date
of such subdivision, combination, or reclassification shall be proportionately
adjusted so that the holder of any shares of Series A Preferred Stock
surrendered for conversion after such date shall be entitled to receive the
number of shares of Common Stock which he would have owned or been entitled to
receive had such Series A Preferred Stock been converted immediately prior to
such date. Successive adjustments in the Conversion Price shall be made
whenever any event specified above shall occur.

(ii)  In case of any consolidation with or merger
of the Corporation with or into another Corporation, or in case of any sale,
lease or conveyance to another Corporation of the assets of the Corporation as
an entity or substantially as an entity, each share of Series A Preferred Stock
shall after the date of such consolidation, merger, sale, lease or conveyance
be convertible into the number of shares of stock or other securities or
property (including cash) to

 31
 

 

 

which the Common
Stock issuable (at the time of such consolidation, merger, sale, lease or
conveyance) upon conversion of such share of Series A Preferred Stock would
have been entitled upon such consolidation, merger, sale, lease or conveyance;
and in any such case, if necessary, the provisions set forth herein with
respect to the rights and interests thereafter of the holders of the shares of
Series A Preferred Stock shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock or other
securities or property thereafter deliverable on the conversion or other
securities or property thereafter deliverable on the conversion of the shares
of Series A Preferred Stock.

(iii)  All calculations under this Section 1(D)
shall be made to the nearest cent or to the nearest one hundredth (1/100th) of
a share, as the case may be. Any provision of this Section 4(D) to the contrary
notwithstanding, no adjustment in the Conversion Price shall be made if the
amount of such adjustment would be less than $0.01, but any such amount shall
be carried forward and an adjustment with respect thereto shall be made at the
time of and together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall aggregate
$0.01 or more.

(iv)  In any case in which the provisions of this
Section 4(D) shall require that an adjustment shall become effective
immediately after a record date for an event, the Corporation may defer until
the occurrence of such event (a) issuing to the holder of any share of Series A
Preferred Stock converted after such record date and before the occurrence of
such event the additional shares of Common Stock issuable upon such conversion
by reason of the adjustment and (b) paying to such holder any amount of cash in
lieu of a fractional share of Common Stock pursuant to Subsection (D) of this
Section 4; provided that the Corporation upon request shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder’s
right to receive such additional shares, and such cash, upon the occurrence of
the event requiring such adjustment.

(F)                                 Whenever
the Conversion Price shall be adjusted as provided in Section 4 (D), the
Corporation shall forthwith file in the office of any transfer agent for the
Series A Preferred Stock and at the principal office of the Corporation, a
statement showing in detail the facts requiring such adjustment and the Conversion
Price that shall be in effect after such adjustment, and the Corporation shall
also cause a copy of such statement to be sent by mail, first class postage
prepaid to each holder of shares of Series A Preferred Stock at its address
appearing on the Corporation’s records.

(G)                                In
the event the Corporation shall propose to take any action of the type that
would result in an adjustment in the Conversion Price as provided in Section
4(D), the Corporation shall give notice to each holder of shares of Series A
Preferred Stock, which notice shall specify the record date, if any, with
respect to any such action and the approximate date on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price and the number, kind or class of shares or other securities or property
which shall be deliverable upon conversion of shares of Series A Preferred
Stock. In the case of any action which would require the fixing of a record

 32
 

 

 

date, such notice
shall be given at least 10 days prior to the date so fixed, and in case of all
other action, such notice shall be given at least 15 days prior to the taking
of such proposed action. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of any such action.

(H)                               The
Corporation shall pay all documentary, stamp, transfer or other transactional
taxes attributable to the issuance or delivery of shares of Common Stock upon
conversion of any shares of Series A Preferred Stock; provided that the
Corporation shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
for such shares in a name other than that of the holder of the shares of Series
A Preferred Stock in respect of which such shares are being issued.

(I)                                    The
Corporation shall reserve at all times so long as any shares of Series A
Preferred Stock remain outstanding, free from preemptive rights, out of its
treasury stock (if applicable) or its authorized but unissued shares of Common
Stock, or both, solely for the purpose of effecting the conversion of the
shares of Series A Preferred Stock, sufficient shares of Common Stock to
provide for the conversion of all outstanding shares of Series A Preferred
Stock, or if it cannot do so, to use all reasonable efforts to effect on
increase in the authorized Common Stock of the Corporation.

(J)                                   All
shares of Common Stock which shall be issued upon conversion of the shares of
Series A Preferred Stock will, upon issuance by the Corporation, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof, and the Corporation shall take no
action which will cause the contrary result.

Section 5.                                            Certain
Restrictions.

(A)                              Whenever
quarterly dividends or other dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:

 

(i)                                     declare
or pay dividends, or make any other distributions, on any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock;

 

(ii)                                  declare
or pay dividends, or make any other distributions, on any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except dividends paid ratably on
the Series A Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;

 

(iii)                               redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)

 33
 

 

 

to the Series A Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such junior stock
in exchange for shares of any stock of the Corporation ranking junior (either
as to dividends or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or

 

(iv)                              redeem or
purchase or otherwise acquire for consideration any shares of Series A
Preferred Stock, or any shares of stock ranking on a parity with the Series A
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.

(B)                                The Corporation
shall not permit any subsidiary of the Corporation to purchase or otherwise
acquire for consideration any shares of stock of the Corporation unless the
Corporation could, under paragraph (A) of this Section 5, purchase or otherwise
acquire such shares at such time and in such manner.

Section 6.                                            Reacquired
Shares. Any shares of Series A Preferred Stock purchased or otherwise
acquired by the Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the Amended and Restated
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.

 

Section 7.                                            Liquidation,
Dissolution or Winding Up. Upon any liquidation, dissolution or winding up
of the Corporation, no distribution shall be made (1) to the holders of shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
$5,000 (the “Liquidation Amount”) per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of Series A Preferred
Stock shall be entitled to receive, if greater, an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 100
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or, if the Series A Preferred Stock is then convertible, on an “as
converted” basis, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a

 

 34
 

 

 

greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under the proviso in clause (1) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. Notwithstanding clause (1) an if
the Series A Preferred Stock is then convertible into Common Stock, the number
of shares of Common Stock in to which one share of Series A Preferred Stock is
then convertible shall be substituted for the number “100” in Clause (1).

Section 8.                                            Consolidation.
Merger. etc. In case the Corporation shall enter into any consolidation,
merger, combination or other transaction in which the shares of Common Stock
are exchanged for or changed into other stock or securities, cash and/or any
other property, then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount of stock, securities, cash and/or any other
property payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event. However, if the Series A Preferred Stock becomes convertible into
Common Stock, the provisions of Section 4(D) shall be controlling.

Section 9.                                            No
Redemption. The shares of Series A Preferred Stock shall not be redeemable.

Section 10.                                      Rank.
The Series A Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Corporation’s Preferred Stock except if otherwise set forth under
the terms of such other services.

Section 11.                                      Amendment.
The Certificate of Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting together as a single
class.

 35

 

 

Exhibit B

 

Certificate No. Rights            

NOT EXERCISABLE AFTER                ,
2016 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECTTO
REDEMPTION AT $0.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.

 

RIGHT CERTIFICATE

 

GTJ REIT, INC.

 

This certifies that the
above-named person, or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement, dated
as of             , 2006 (the “Rights Agreement”), between GTJ
REIT, Inc., a Maryland corporation (the “Company”), and American Stock Transfer
& Trust Company (the “Rights Agent”), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York
City time, on             , 2016 at the principal office
of the Rights Agent, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series A Preferred Stock,
par value $0.001 per share (the “Preferred Stock”), of the Company, at a
purchase price of $50.00 per one one-hundredth of a Preferred Share (the “Purchase
Price”), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase duly executed. The number of Rights evidenced by
this Right Certificate (and the number of one one-hundredths of a Preferred
Share which may be purchased upon exercise hereof) set forth above, and the
Purchase Price set forth above, are the number and Purchase Price as of      ,
2006, based on the Preferred Stock as constituted at such date. As provided in
the Rights Agreement, the Purchase Price and the number of one one-hundredths
of a Preferred Share which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.

 

This Right Certificate is
subject to all of the terms, provisions and conditions of the Rights Agreement,
which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder

 36
 

 

 

of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned offices of the Rights
Agent.

 

This Right Certificate,
with or without other Right Certificates, upon surrender at the principal
office of the Rights Agent, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of Preferred Stock as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.

 

As provided by the Rights
Agreement, the Rights evidenced by this Certificate (i) may be redeemed by the Company
at a redemption price of $0.001 per Right or (ii) may be exchanged in whole or
in part for Preferred Stock or shares of the Company’s Common Stock, par value
$0.001 per share.

 

No fractional Preferred
Stock will be issued upon the exercise of any Right or Rights evidenced hereby
(other than fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof of a cash payment will be made, as
provided in the Rights Agreement.

 

No holder of this Right
Certificate shall be entitled to vote or receive dividends or be deemed for any
purpose the holder of the Preferred Stock or of any other securities of the
Company which may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as
provided in the Rights Agreement.

 

This Right Certificate
shall not be valid or obligatory for any purpose until it shall have been
countersigned by the Rights Agent.

 37
 

 

 

WITNESS the facsimile
signature of the proper officers of the Company and its corporate seal.

 

	
  Dated as of                    .

  	
   

  
	
   

  	
  GTJ REIT, INC.

  
	
  Attest:

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
  Name:

  	
   

  	
  Title:

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMERICAN STOCK TRANSFER & TRUST

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  	
   

  
						

 

 38
 

 

 

FORM OF REVERSE SIDE OF RIGHT CERTIFICATE

FORM OF ASSIGNMENT

 

To be executed by the
registered holder if such holder desires to transfer the Right Certificate.

 

FOR VALUE RECEIVED,                                     
hereby sells, assigns and transfers unto (please print name and address of
transferee) this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  Guaranteed

  	
   

  	
   

  

 

The undersigned hereby
certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

 39
 

 

 

FORM OF ELECTION TO PURCHASE

(be executed if holder
desires to exercise

Rights represented by the
Right Certificate.)

 

To:                              GTJ REIT,
INC.

The undersigned hereby
irrevocably elects to exercise              Rights
represented by this Right Certificate to purchase the Preferred Stock (or
Common Stock as provided in the Rights Agreement) issuable upon the exercise of
such Rights and requests that certificates for such Preferred Stock be issued
in the name of:

 

 

Please insert social security or other identifying number:

 

(Please print name and address)

 

If such number of Rights
shall not be all the Rights evidenced by this Right Certificate, a new Right
Certificate for the balance remaining of such Rights shall be registered in the
name of and delivered to:

 

Please insert social
security or other identifying number:

 

(Please print name and address)

 

Dated:

Signature:

Signature Guaranteed:

 

The undersigned hereby
certifies that the Rights evidenced by this Right Certificate are not
beneficially owned by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement).

 

 

Signature:

 40
 

 

 

The signature in the Form
of Assignment or Form of Election to Purchase, as the case may be, must conform
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.

 

In the event the
certification set forth above in the Form of Assignment or the Form of Election
to Purchase, as the case may be, is not completed, the Company and the Rights
Agent will deem the beneficial owner of the Rights evidenced by this Right
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and such Assignment or Election to Purchase
will not be honored.

 41
 

 

 

Exhibit C

SUMMARY OF RIGHTS TO PURCHASE

PREFERRED STOCK

 

 

On July 5, 2006, the
Board of Directors of GTJ REIT, Inc. (the “Company”) declared a dividend of one
preferred share purchase right (a “Right”) for each outstanding share of common
stock, par value $0.001 per share (the “Common Stock”), of the Company. The
dividend is payable on to the stockholders of record from and after such date.
Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Preferred Stock, par value $0.001 per
share (the “Preferred Stock”), of the Company at a price of $50.00 per one
one-hundredth of a Preferred Share (the “Purchase Price”), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the “Rights Agreement”) between the Company and American Stock
Transfer & Trust Company, as Rights Agent (the “Rights Agent”).

 

Until the earlier to
occur of (i) 10 days following a public announcement that a person or group of
affiliated or associated persons (other than (A) the Company, (B) a
majority-owned subsidiary of the Company, (C) any employee benefit plan of the
Company or any majority-owned subsidiary of the Company, or (D) any entity
holding Common Stock for or pursuant to the terms of any such plan) have
acquired beneficial ownership of fifteen (15%) percent or more of the
outstanding Common Stock (an “Acquiring Person”) or (ii) 10 business days (or
such later date as may be determined by action of the Board of Directors prior
to such time as any person or group of affiliated persons becomes an Acquiring
Person) following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of fifteen (15%) percent or more of
the outstanding Common Stock (the earlier of such dates being called the “Distribution
Date”), the Rights will be evidenced, with respect to any of the Common Share
certificates by such Common Share certificate with a copy of this Summary of
Rights attached thereto.

 

The Rights Agreement
provides that until the Distribution Date (or earlier redemption or expiration
of the Rights), the Rights will be transferred with and only with the Common
Stock. Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates upon transfer or new issuance of Common
Stock will contain a notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for Common Stock
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Right Certificates”) will be mailed to holders of record
of the Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.

 42
 

 

 

The Rights are not
exercisable until the Distribution Date. The Rights will expire on             , 2016
(the “Final Expiration Date”), unless the Final Expiration Date is extended, or
unless the Rights are earlier redeemed or exchanged, by the Company, in each
case, as described below.

 

The Purchase Price
payable, and the number of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities convertible
into Preferred Stock with a conversion price, less than the then-current market
price of the Preferred Stock or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Preferred Stock) or of subscription rights or warrants (other than
those referred to above).

 

The number of outstanding
Rights and the number of one one-hundredths of a Preferred Share issuable upon
exercise of each Right are also subject to adjustment in the event of a stock
split of the Common Stock or a stock dividend on the Common Stock payable in
Common Stock or subdivisions, consolidations or combinations of the Common
Stock occurring, in any such case, prior to the Distribution Date.

 

Preferred
Stock purchased upon exercise of the Rights will not be redeemable. Each
Preferred Share will be entitled to a minimum preferential quarterly dividend
payment of $1 per share but will be entitled to an aggregate dividend of 100
times the dividend declared per Common Share, or if the Preferred Stock are
then convertible, on an “as converted” basis. In the event of liquidation, the
holders of the Preferred Stock will be entitled to a minimum preferential
liquidation payment of $5,000 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share, or if the Preferred
Stock are then convertible, on an “as converted” basis. Each Preferred Share
will have 100 votes, voting together with the Common Stock, or if the Preferred
Stock are then convertible, on an “as converted” basis. Finally, in the event
of any merger, consolidation or other transaction in which Common Stock are
exchanged, each Preferred Share will be entitled to receive 100 times the
amount received per Common Share, or if the Preferred Stock are then
convertible, on an “as converted” basis. These rights are protected by
customary anti-dilution provisions.

From
and after the Distribution Date, the liquidation amount of the Preferred Stock
($5,000 per share) is convertible into shares of Common Stock at a rate of 50%
of the market value of the Common Stock on the Distribution Date, subject to
adjustment for stock splits, combinations and distributions, and for mergers
and asset acquisitions. Thereafter, voting and dividend rights will be based on
the Common Stock equivalent of the Preferred Stock, that is, each Preferred
Share, for such purpose, shall be treated as if it had been fully converted
into shares of Common Stock.

 43
 

 

 

In
the event that the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold
after a person or group has become an Acquiring Person, proper provision will
be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right. In the event that any person or group of affiliated or
associated persons becomes an Acquiring Person, proper provision shall be made
so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the
right to receive upon exercise that number of Common Stock having a market
value of two times the exercise price of the Right.

At
any time after any person or group becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the
outstanding Common Stock, the Board of Directors of the Company may, at its
option, exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that have become void) for one-half of the number
of Common Stock, one-thousandths of Preferred Stock or other securities or
property for which the Rights are then exercisable.

With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Stock will be issued (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share, which may, at
the election of the Company, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading day prior to the date of exercise.

At
any time prior to such time as any person becomes an Acquiring Person, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price of $0.001 per Right (the “Redemption Price”). The redemption
of the Rights may be made effective at such time on such basis with such
conditions as the Board of Directors in its sole discretion may establish.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.

The
terms of the Rights may be amended by the Board of Directors of the Company
without the consent of the holders of the Rights, including an amendment to
lower certain thresholds described above to not less than the greater of (i)
the sum of .001% plus the largest percentage of the outstanding Common Stock
then known to the Company to be beneficially owned by any person or group of
affiliated or associated persons (other than an excepted person) and (ii) 10%,
except that from and after such time as any person or group of affiliated or
associated persons becomes an Acquiring Person no such amendment may adversely
affect the interests of the holders of the Rights.

 44
 

 

 

Until
a Right is exercised, the holder thereof, as such, will have no rights as a
stockholder of the Company, including, without limitation, the right to vote or
to receive dividends.

A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is hereby
incorporated herein by reference.

 45

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