UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

January 17, 2013

Date of Report (Date of earliest event reported)

 

GTJ REIT, INC.

(Exact name of registrant as specified in its Charter)

 

Maryland

 

0001368757

 

20-5188065

(State or other jurisdiction
of incorporation)

 

(Commission File Number)

 

(IRS Employer
Identification No.)

 

444 Merrick Road

Lynbrook, NY 11563

(Address of principal executive offices) (Zip Code)

 

(516) 881-3535

Registrant’s telephone number, including area code

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


 

Item 1.01                                            Entry into a Material Definitive Agreement.

 

On January 17, 2013, GTJ REIT, Inc. (“GTJ”) and its wholly-owned subsidiaries GTJ GP, LLC (the “General Partner”) and GTJ Realty, LP (the “UPREIT”) (collectively, “the Company”), and Wu/Lighthouse Portfolio, LLC (“Wu/Lighthouse Portfolio”), Jeffrey Wu (“Wu”), the Wu Family 2012 Gift Trust (the “Wu Trust”), Paul Cooper (“P. Cooper”), Louis Sheinker (“L. Sheinker”), Jerome Cooper (“J. Cooper”), Jeffrey Ravetz (“J. Ravetz”) and Sarah Ravetz (“S. Ravetz”), and together with Wu/Lighthouse Portfolio, Wu, the Wu Trust, P. Cooper, L. Sheinker, J. Cooper, J. Ravetz and S. Ravetz collectively hereinafter referred to as “Sellers”), entered into a certain contribution agreement effective as of January 1, 2013 (the “Contribution Agreement”) pursuant to which the UPREIT acquired all of the Sellers’ outstanding ownership interests in 25 commercial properties located in New York, New Jersey and Connecticut (the “Acquired Properties”).  The Acquired Properties have a gross asset value of approximately $194 million, and are subject to an aggregate of approximately $115 million in outstanding mortgage indebtedness, which was assumed by the UPREIT upon the closing.  P. Cooper, the Company’s Chief Executive Officer and a director is a 6% owner and principal of Wu/Lighthouse Portfolio and J. Cooper our Chairman of the Board of Directors owns a .666% interest therein.  With the acquisition of the Acquired Properties, the UPREIT currently owns a total of 32 properties, including its seven (7) previously-owned properties.

 

The transaction was evaluated and negotiated on behalf of the Company by the special committee formed by the Board of Directors (the “Special Committee”) comprising solely of independent and disinterested directors, and upon the unanimous recommendation of the Special Committee, unanimously approved by the Board of Directors.  The Special Committee engaged Duff & Phelps, LLC, a provider of independent financial advisory and investment banking services, as its independent financial advisor and to provide an opinion as to the fairness, within a range, from a financial point of view, to the stockholders of the Company, of the consideration to be paid to the Sellers by the UPREIT in the transaction.  The opinion is directed to the Special Committee and may only be relied upon by the Special Committee and the Board of Directors, and sets forth, among other things, the assumptions made, procedures followed, matters considered and qualifications and limitations on the review undertaken in rendering the opinion.  A copy of the fairness opinion of Duff & Phelps, LLC is filed with this Current Report on Form 8-K.

 

In consideration of the acquisition of the Acquired Properties, the UPREIT issued to the Sellers, limited partnership units of the UPREIT such that immediately following closing, GTJ REIT beneficially owned 66.71% of the outstanding partnership units of the UPREIT and the Sellers (other than Wu/Lighthouse Portfolio) collectively received 33.29% of the partnership units therein. A copy of the organizational chart setting forth the ownership structure of the UPREIT is filed herewith as Exhibit 99.2.

 

General Partner is the general partner of the UPREIT (through its 1% general partnership interest in the UPREIT) and as a result thereof, the Company, through its ownership of General Partner, will exercise managerial control over the properties, business and operations of the UPREIT.  The UPREIT is authorized to issue common limited partnership units, Class A limited partnership units and Class B limited partnership units.  While all limited partnership units have

 

2


 

the same economic rights, holders of the UPREIT’s Class B limited partnership units have no voting rights.  The Company holds Class A limited partnership units.

 

Common limited partnership units in the UPREIT are convertible/redeemable, at the option of the General Partner, into shares of GTJ common stock or cash.  Class B limited partnership units in the UPREIT are convertible/redeemable, at the option of the General Partner, into shares of newly-authorized Series B Preferred Stock of the Company or cash.  Shares of Series B Preferred Stock have the same economic interest as Common Stock; however holders of the Series B Preferred Stock have no voting rights.  The conversion of all of the Sellers’ limited partnership units into the Company’s capital stock as of the closing date would result in the issuance of approximately 1,820,000 shares of Common Stock and approximately 5,005,000 shares of Series B Preferred Stock comprising an aggregate interest of 33.29% of the then outstanding capital stock of the Company.

 

Set forth below is a chart listing the ownership interests in Wu/Lighthouse Portfolio of the individual Sellers their ownership interest in the UPREIT and in GTJ (assuming conversion of all of their limited partnership units in the UPREIT into GTJ capital stock) as of the closing date.

 

 

 

% Ownership
Wu/LH

 

Total Limited
Partnership
Units Owned

 

% Ownership
of UPREIT

 

% Ownership
of GTJ
(on “as converted
basis”)

 

 

 

 

 

 

 

 

 

 

 

Jeffrey Wu

 

72.000

%

23,972

(1)

23.972

%

23.972

%

 

 

 

 

 

 

 

 

 

 

Wu Family 2012 Gift Trust

 

8.00

%

2,660

(2)

2.66

%

2.66

%

 

 

 

 

 

 

 

 

 

 

Paul Cooper

 

6.000

%

1,997

(3)

1.997

%

1.997

%

 

 

 

 

 

 

 

 

 

 

Jerome Cooper

 

0.666

%

222

(3)

0.222

%

0.222

%

 

 

 

 

 

 

 

 

 

 

Jeffrey Ravetz

 

5.740

%

1,911

(3)

1.911

%

1.911

%

 

 

 

 

 

 

 

 

 

 

Sarah Ravetz

 

0.928

%

308

(3)

0.309

%

0.309

%

 

 

 

 

 

 

 

 

 

 

Louis Sheinker

 

6.666

%

2,219

(3)

2.219

%

2.219

%

 

 

 

 

 

 

 

 

 

 

Total

 

100.000

%

33,290

 

33.290

%

33.290

%

 

(1)          Includes 2,219 common units and 21,753 Class B Units.

(2)          Class B Units.

(3)          Common Units.

 

3


 

The Contribution Agreement contains usual and customary representations, warranties and covenants of the parties, indemnification provisions and the payment of certain expenses to the Sellers relating to the Acquired Properties as of the Closing Date.

 

Amended and Restated Limited Partnership Agreement

 

Concurrently with the execution of the Contribution Agreement, the Company, the General Partner and the Sellers (other than Wu/Lighthouse Portfolio) entered into a certain Amended and Restated Limited Partnership Agreement of GTJ Realty, LP, which was effective as of January 1, 2013 (the “Limited Partnership Agreement”).  The Limited Partnership Agreement, among other things, grants the General Partner all management powers over the properties, business and operations of the UPREIT and states that no limited partner shall have any right or obligation to participate in or exercise control or management power over the properties, business and operations of the Partnership, except as expressly provided therein.  The Limited Partnership Agreement also provides for certain conversion/redemption rights for the Common units and Class B limited partnership units.  The Common units may be converted or redeemed by the limited partner, for either cash or shares of GTJ Common Stock, at the option of the General Partner.  The Class B limited partnership units may be converted or redeemed for either cash or Series B Preferred Stock, at the option of the General Partner.  The Limited Partnership Agreement also contains provisions concerning distributions of Available Cash (as defined therein) to the partners, repayment of certain indebtedness, tax allocations, admission of additional limited partners and certain other usual and customary provisions.

 

Tax Protection Agreement

 

Pursuant to the terms of a Tax Protection Agreement effective as of January 1, 2013 (the “Tax Protection Agreement”) by and among the Company, the UPREIT, and the Sellers (other than Wu/Lighthouse Portfolio) (the “Protected Partners”), the Company agreed to refrain from, directly or indirectly, making any sale, transfer, exchange or other disposition of the Acquired Properties for a period of seven (7) years following the closing date, subject to certain limited exceptions as set forth therein, and to indemnify the Protected Partners from certain tax consequences they may be subject to as a result of a breach of the Tax Protection Agreement by the Company or the UPREIT.

 

Registration Rights Agreement

 

Concurrent with the execution of the Contribution Agreement, the Company and the individual Sellers entered into a certain registration rights agreement (the “Registration Rights Agreement”) pursuant to which the Company granted the individual Sellers certain “Piggy-Back Registration Rights” in the event that (a) the individual Sellers limited partnership units are converted into capital stock of the Company and (b) the Company proposes to register its shares of common stock under the Securities Act as set forth in the Registration Rights Agreement.  The Registration Rights Agreement contains usual and customary registration procedures, representations and warranties of the parties and indemnification obligations.

 

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Employment Agreements

 

Effective as of January 1, 2013, the Company entered into employment agreements with each of Paul Cooper, our Chief Executive Officer, Louis Sheinker, our President and Chief Operating Officer, and David J. Oplanich, our Chief Financial Officer.

 

Paul Cooper Employment Agreement

 

Mr. Cooper’s employment agreement provides for an initial term of three (3) years (the “Initial Term”) and two successive automatic one (1) year renewal terms (each a “Renewal Term”), unless either party gives written notice to the other party not less than sixty (60) days prior to the expiration of the Initial Term or any Renewal Term, as the case may be, of its desire to terminate the agreement.  Mr. Cooper’s employment agreement provides for the payment of a base salary at the annual rate of $550,000 per year, subject to annual increases at the discretion of the Company.  Additionally, Mr. Cooper may earn a cash bonus of $250,000 per year and an equity bonus payable in shares of the Company’s restricted common stock valued at $150,000 per year (“Equity Bonus”), upon the achievement of certain benchmarks set forth in an annual budget approved by the Board of Directors and agreed to by Mr. Cooper (the “Bonus Criteria”).  In addition, the employment agreement provides that the Company shall provide Mr. Cooper with certain usual and customary benefits commensurate with his position including without limitation, medical insurance, life insurance, disability insurance, participation in 401(k) plan and an automobile allowance.

 

In the event that (a) the Company terminates the agreement without Cause (as defined in the employment agreement), (b) Mr. Cooper terminates the agreement for Good Reason (as defined in the employment agreement), (c) the Company does not renew the employment agreement after expiration of the Initial Term or any Renewal Term, as the case may be, or (d) following a Change in Control (as defined in the employment agreement) and (i) the Company, or any successor entity terminates Mr. Cooper without Cause, or (ii) Mr. Cooper terminates his employment for Good Reason, then the Company shall have severance obligations to Mr. Cooper, including severance payments, accelerated vesting of unvested Equity Bonus and COBRA payments for the greater of the remainder of the Initial Term or one (1) year.  The severance payments shall be calculated as follows: (a) if Mr. Cooper’s employment is terminated following a Change in Control as provided for in the employment agreement, or for Good Reason, the Company shall pay him base salary and bonus (assuming achievement of the Bonus Criteria) that he would have earned for the remainder of the Initial Term or one (1) year, which ever is greater.  If the Company does not extend the agreement following expiration of the Initial Term and provided that the Company achieved the Bonus Criteria for each of the three (3) years of the Initial Term, the Company shall pay Mr. Cooper one (1) times his base salary and one (1) times his bonus amount.  If such termination occurs during a Renewal Term, the Company shall pay Mr. Cooper the base salary and bonus (assuming achievement of the Bonus Criteria for such Renewal Term) he could have earned during the remainder of such Renewal Term.

 

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Louis Sheinker Employment Agreement

 

Mr. Sheinker’s employment agreement provides for an initial term of three (3) years (the “Initial Term”) and two successive automatic one (1) year renewal terms (each a “Renewal Term”), unless either party gives written notice to the other party not less than sixty (60) days prior to the expiration of the Initial Term or any Renewal Term, as the case may be, of its desire to terminate the agreement.  Mr. Sheinker’s employment agreement provides for the payment of a base salary at the annual rate of $500,000 per year, subject to annual increases at the discretion of the Company.  Additionally, Mr. Sheinker may earn a cash bonus of $200,000 per year and an equity bonus payable in shares of the Company’s restricted common stock valued at $50,000 per year (“Equity Bonus”), upon the achievement of certain benchmarks set forth in an annual budget approved by the Board of Directors and agreed to by Mr. Sheinker (the “Bonus Criteria”).  In addition, the employment agreement provides that the Company shall provide Mr. Sheinker with certain usual and customary benefits commensurate with his position including without limitation, medical insurance, life insurance, disability insurance, participation in 401(k) plan and an automobile allowance.

 

In the event that (a) the Company terminates the agreement without Cause (as defined in the employment agreement), (b) Mr. Sheinker terminates the agreement for Good Reason (as defined in the employment agreement), (c) the Company does not renew the employment agreement after expiration of the Initial Term or any Renewal Term, as the case may be, or (d) following a Change in Control (as defined in the employment agreement) and (i) the Company, or any successor entity terminates Mr. Sheinker without Cause, or (ii) Mr. Sheinker terminates his employment for Good Reason, then the Company shall have severance obligations to Mr. Sheinker, including severance payments, accelerated vesting of unvested Equity Bonus and COBRA payments for the greater of the remainder of the Initial Term or one (1) year.  The severance payments shall be calculated as follows: (a) if Mr. Sheinker’s employment is terminated following a Change in Control as provided for in the employment agreement, or for Good Reason, the Company shall pay him base salary and bonus (assuming achievement of the Bonus Criteria) that he would have earned for the remainder of the Initial Term or one (1) year, which ever is greater.  If the Company does not extend the agreement following expiration of the Initial Term and provided that the Company achieved the Bonus Criteria for each of the three (3) years of the Initial Term, the Company shall pay Mr. Sheinker one (1) times his base salary and one (1) times his bonus amount.  If such termination occurs during a Renewal Term, the Company shall pay Mr. Sheinker the base salary and bonus (assuming achievement of the Bonus Criteria for such Renewal Term) he could have earned during the remainder of such Renewal Term.

 

David Oplanich Employment Agreement

 

Mr. Oplanich’s employment agreement provides for an initial term of one (1) year (the “Initial Term”) and automatic one (1) year renewal terms (each a “Renewal Term”), unless either party gives written notice to the other party not less than sixty (60) days prior to the expiration of the Initial Term or any Renewal Term, as the case may be, of its desire to terminate the agreement.  Mr. Oplanich’s employment agreement provides for the payment of a base salary at the annual rate of $350,000 per year, subject to annual increases at the discretion of the

 

6


 

Company.  Additionally, Mr. Oplanich may earn a cash bonus and equity bonus at the discretion of the Board of Directors.  In addition, the employment agreement provides that the Company shall provide Mr. Oplanich with certain usual and customary benefits commensurate with his position including without limitation, medical insurance, life insurance, disability insurance, participation in 401(k) plan and an automobile allowance.

 

In the event that (a) the Company terminates the agreement without Cause (as defined in the employment agreement), (b) Mr. Oplanich terminates the agreement for Good Reason (as defined in the employment agreement), (c) the Company does not renew the employment agreement after expiration of the Initial Term, as the case may be, or (d) following a Change in Control (as defined in the employment agreement) and (i) the Company, or any successor entity terminates Mr. Oplanich without Cause, or (ii) Mr. Oplanich terminates his employment for Good Reason, then the Company shall have severance obligations to Mr. Oplanich, including severance payments, accelerated vesting of unvested Equity Bonus and COBRA payments for the remainder of the Initial Term.  The severance payments shall be calculated as follows: (a) if Mr. Oplanich’s employment is terminated during the Initial Term, following a Change in Control as provided for in the employment agreement, or for Good Reason, the Company shall pay him an amount equal to one (1) times his base salary.  If Mr. Oplanich’s employment is terminated during a Renewal Term for any of the foregoing reasons, then the Company shall pay him an amount equal to the base salary he would have received for the remainder of such Renewal Term.  If the Company does not extend the agreement following expiration of the Initial Term the Company shall pay Mr. Oplanich one (1) times his base salary.

 

The foregoing descriptions are summaries only of the material terms of the transaction documents set forth above and are qualified by the terms of such documents, copies of which are filed with this Current Report on Form 8-K.

 

Item 2.01                                            Completion of Acquisition or Disposition of Assets

 

On January 17, 2013, the Company completed the acquisition of the Acquired Properties, effective as of January 1, 2013.  The disclosures required by this Item 2.01 is set forth in Items 1.01 and 2.03.

 

Item 2.03                                            Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant

 

Each of the Acquired Properties was and continues to be encumbered by certain mortgage indebtedness from one of three different lenders in the aggregate amount of approximately $115 million.  Concurrent with the acquisition of the Acquired Properties, the Company, the UPREIT and the entity owners of the Acquired Properties entered into certain loan assumption and modification documents to facilitate the acquisition of the Acquired Properties.  Below is a summary of the material terms of the arrangement with each lender.

 

7


 

United States Life Insurance Company Loan:

 

Wu/LH 15 Executive L.L.C., a Delaware limited liability company, Wu/LH 22 Marsh Hill L.L.C., a Delaware limited liability company, Wu/LH 35 Executive L.L.C., a Delaware limited liability company, Wu/LH 470 Bridgeport L.L.C., a Delaware limited liability company, Wu/LH 950 Bridgeport L.L.C., a Delaware limited liability company and Wu/LH 8 Slater L.L.C., a Delaware limited liability company (collectively, the “USLIC Borrowers”) previously entered into mortgage loans with The United States Life Insurance Company in the City of New York, successor by merger to First SunAmerica Life Insurance Company, a New York corporation ( “ USLIC ” ) in the aggregate original principal amount of $23.5 million (the “ USLIC Mortgage Loan”)

 

The USLIC Mortgage Loan bears interest at a rate of 5.76% and matures on April 1, 2018. USLIC has the option of extending the terms of the USLIC Mortgage Loan for an additional five (5) years based on new market interest rate and a new amortization period. After September 8, 2014, the USLIC Mortgage Loan may be prepaid upon the following terms and conditions: (i) USLIC receives not less than 30 days prior written notice and (ii) USLIC receives a prepayment fee equal to the greater of (a) 1% of the outstanding principal and (b) a yield maintenance amount.

 

The Company has assumed the obligations of the original guarantors under the USLIC Mortgage Loan and the USLIC Borrowers executed and delivered to USLIC certain loan assumption and modification documents included herewith.

 

Below is a breakdown of the specific properties encumbered by the USLIC Mortgage Loan:

 

Owner

 

Address

 

Collateral

 

Original
Principal
Amount

 

Maturity
Date

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 15 Executive L.L.C.

 

15 Executive Blvd Orange, CT

 

Mortgage and security interest in chattels and intangible personalty

 

$

4,096,400

 

3/8/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 22 Marsh Hill L.L.C.

 

22 Marsh Hill Rd Orange, CT

 

Mortgage and security interest in chattels and intangible personalty

 

$

2,716,700

 

3/8/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 35 Executive L.L.C.

 

35 Executive Blvd Orange, CT

 

Mortgage and security interest in chattels and intangible personalty

 

$

5,724,600

 

3/8/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 470 Bridgeport L.L.C.

 

470 Bridgeport Ave Shelton, CT

 

Mortgage and security interest in chattels and intangible personalty

 

$

3,683,700

 

3/8/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 950 Bridgeport L.L.C.

 

950 Bridgeport Ave Mildord, CT

 

Mortgage and security interest in chattels and intangible personalty

 

$

2,639,000

 

3/8/2018

 

 

8


 

Owner

 

Address

 

Collateral

 

Original
Principal
Amount

 

Maturity
Date

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 8 Slater L.L.C.

 

8 Slater Street Port Chester, NY

 

Mortgage and security interest in chattels and intangible personalty

 

$

4,639,600

 

3/8/2018

 

 

John Hancock Loan:

 

Wu/LH 12 Cascade L.L.C., Wu/LH 25 Executive L.L.C., Wu/LH 269 Lambert L.L.C., Wu/LH 103 Fairview Park L.L.C., Wu/LH 412 Fairview Park L.L.C., Wu/LH 401 Fieldcrest L.L.C., Wu/LH 404 Fieldcrest L.L.C., Wu/LH 36 midland L.L.C., Wu/LH 100-110 Midland L.L.C., Wu/LH 112 Midland L.L.C., Wu/LH 199 Ridgewood L.L.C., Wu/LH 203 Ridgewood L.L.C., Wu/LH 100 American L.L.C., Wu/LH 200 American L.L.C., Wu/LH 300 American L.L.C., Wu/LH 400 American L.L.C. and Wu/LH 500 American L.L.C., (collectively, the “John Hancock Borrowers”), entered into mortgage loan with John Hancock Life Insurance Company (U.S.A.) , a Michigan corporation, successor by merger to John Hancock Life Insurance Company, a Massachusetts corporation, doing its mortgage business in New York as Manulife Financial (“John Hancock”) in the aggregate original principal amount of $105 million (the “John Hancock Loan”) which made pursuant to that certain Loan Agreement dated February 25, 2008 among the John Hancock Borrowers and certain other borrowers who have since been released from the John Hancock Loan. Certain of the notes given in connection with the John Hancock Loan in the original principal amounts of $12 million and $3.9 million were fully paid by Wu/Lighthouse Portfolio prior to the acquisition of the Acquired Properties.

 

A portion of the John Hancock Loan matures on March 1, 2013 (the “5 Year Notes”) and the remaining portion of the John Hancock Loan matures on March 1, 2018 (the “10 Year Notes”) The 5 Year Notes bear interest at a rate of 5.44% and the 10 Year Notes bear interest at 6.17%. The 5 Year Notes are interest only with a fixed monthly payment. The 10 Year Notes are interest only for the first five (5) years; for years 6 through 10, payments are of principal and interest. After a certain “Lockout Period” (three years for the 5 Year Notes and five years for the 10 Year Notes), the John Hancock Mortgage Loan may be prepaid upon the following terms and conditions: (a) Not less then 30 days and not more than 90 days notice must be given to John Hancock; (b) Payment of a prepayment penalty equal to the greater of (i) the sum of the present values of all scheduled payments under the notes minus the principle value of the note immediately prior to prepayment; or (ii) 1% of the principal balance of the notes immediately prior to the prepayment.

 

The Company has assumed the obligations of the original guarantors under the John Hancock Mortgage Loan and John Hancock Borrowers executed and delivered to Lender certain loan assumption and modification documents included herewith.

 

Below is a breakdown of the specific properties encumbered by the John Hancock Loan:

 

9


 

Owner

 

Address

 

Collateral

 

Original
Principal
Amount

 

Maturity
Date

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 12 Cascade L.L.C.

 

12 Cascade Blvd Orange, CT

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

3,050,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 25 Executive L.L.C.

 

25 Executive Blvd Orange, CT

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

415,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 269 Lambert L.L.C.

 

269 Lambert Road Orange, CT

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

6,300,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 103 Fairview Park L.L.C.

 

103 Fairview Park Dr Elmsford, NY

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

8,100,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 412 Fairview Park L.L.C.

 

412 Fairview Park Dr Elmsford, NY

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

2,185,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 401 Fieldcrest L.L.C.

 

401 Fieldcrest Dr Elmsford, NY

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

2,460,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 404 Fieldcrest L.L.C.

 

404 Fieldcrest Ave Elmsford, NY

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

8,000,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 36 Midland L.L.C.

 

36 Midland Ave Port Chester, NY

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

5,550,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 100-110 Midland L.L.C.

 

100-110 Midland Ave Port Chester, NY

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

14,340,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 112 Midland L.L.C.

 

112 Midland Ave Port Chester, NY

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

825,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 199 Ridgewood L.L.C.

 

199 Ridgewood Dr Elmsford, NY

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

1,840,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 203 Ridgewood L.L.C.

 

203 Ridgewood Dr Elmsford, NY

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

3,450,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 100 American L.L.C.

 

100 American Road Morris Plains, NJ

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

9,500,000

 

2/28/2018

 

 

10


 

Owner

 

Address

 

Collateral

 

Original
Principal
Amount

 

Maturity
Date

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 200 American L.L.C.

 

200 American Road Morris Plains, NJ

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

4,500,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 300 American L.L.C.

 

300 American Road Morris Plains, NJ

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

4,970,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 400 American L.L.C.

 

400 American Road Morris Plains, NJ

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

6,960,000

 

2/28/2018

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 500 American L.L.C.

 

500 American Road Morris Plains, NJ

 

Mortgage, Assignments of Leases and Rents, personal property, contracts and licenses

 

$

6,655,000

 

2/28/2018

 

 

People’s United Bank Loan

 

Wu/LH 15 Progress Drive L.L.C. (the “PUB Borrower”) entered into a mortgage loan with Peoples United Bank, a federal savings bank (the “PUB Lender”) in the original principal amount of $2.7 million (the “PUB Mortgage Loan”) which was made pursuant to a Loan and Security Agreement by and between the PUB Lender and the PUB Borrower dated as of September 30, 2010 encumbering certain real property located at 15 Progress Road, Shelton Connecticut.

 

The PUB Mortgage Loan bears interest at a rate of 5.23% and matures on October 1, 2020. The PUB Mortgage Loan may be prepaid upon payment of a Prepayment Fee equal to the “Net Loss” (which is defined in the Promissory Note for the PUB Mortgage Loan attached hereto).

 

GTJ has assumed the obligations of the original guarantors under the PUB Mortgage Loan and the PUB Borrowers executed and delivered to the PUB Lender certain loan assumption and modification documents included herewith.

 

Owner

 

Address

 

Collateral

 

Original
Principal
Amount

 

Maturity
Date

 

 

 

 

 

 

 

 

 

 

 

 

Wu/LH 15 Progress L.L.C.

 

15 Progress Dr Shelton, CT

 

Mortgage and security interest in chattels and intangible personalty

 

$

2,700,000

 

10/1/2020

 

 

Concurrently with the acquisition of the Acquired Properties, GTJ amended its existing loan agreements with Hartford Life Insurance Company and Manufacturers and Traders Trust Company.  Below is a summary of the changes.

 

11


 

Hartford Insurance Loan

 

165-25 147th Avenue, LLC, a New York limited liability company, and 85-01 24th Avenue, LLC, a New York limited liability company (collectively, the “ Hartford Borrower”), entered into a consolidated and restated mortgage loan with Hartford Life Insurance Company, a Connecticut corporation (“Hartford Life”), Hartford Life And Accident Insurance Company, a Connecticut corporation (“Hartford Life and Accident”) and Hartford Life And Annuity Insurance Company, a Connecticut corporation (collectively, the “Hartford Lender”) in the aggregate principal amount of $45.5 Million (the “ Hartford Loan”) pursuant to a certain Fixed Rate Term Loan Agreement dated July 1, 2010 by and between Hartford Borrower and Hartford Lender (the “ Hartford Loan Agreement”). The Hartford Loan is guaranteed by GTJ.

 

As described in the Hartford Loan Agreement, there is a restriction on the ability of any Person (as defined in the Hartford Loan Agreement) having an ownership or beneficial interest in Hartford Borrower from conveying direct or indirect ownership interests in Hartford Borrower.  Hartford Borrower requested and Hartford Lender agreed to modify the applicable restrictions in connection with an UPREIT transaction.

 

Manufacturers and Traders Trust Company

 

Farm Springs Road, LLC, a Connecticut limited liability company (the “ M&T Borrower”), previously entered into a line of credit agreement with Manufacturers And Traders Trust Company, (the “M&T Lender ”) in the amount of $10 million (the “ M&T Loan ”) pursuant to an Open-End Mortgage dated August 26, 2011.

 

The M&T Loan is guaranteed by GTJ.  The M&T Mortgage has been amended to include the M&T Borrower as a co-borrower pursuant to the terms of a certain amended and restated LIBOR Grid Note and a certain amended and restated Credit Agreement, each being delivered by GTJ and M&T Borrower for the benefit of M&T Lender.

 

The foregoing descriptions are summaries only of the material terms of the aforementioned financing transactions and are qualified in their terms entirely by the material financing documents relating to such transactions, copies of which are filed with this Current Report on Form 8-K.

 

Item 3.02.                                         Unregistered Sales of Equity Securities.

 

The disclosure required by this item is set forth under Item 1.01 above.

 

Item 5.02                                            Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

 

In connection with the completion of the acquisitions described above, Louis Sheinker, formerly a principal of Wu/Lighthouse Portfolio was appointed as President and Chief Operating Officer, and a director of the Company.  Mr. Sheinker brings nearly 27 years of real estate experience to the Company.  His primary responsibilities will be to (a) oversee real estate

 

12


 

operations on behalf of the Company and the UPREIT, (b) implement strategic initiatives designed to facilitate the Company’s growth and expansion, and (c) property management and construction management.  Prior to joining the Company, Mr. Sheinker was a co-founding partner in Lighthouse Real Estate Ventures (“Lighthouse”). He has participated in restructuring and repositioning of over 4 million square feet of office space and industrial properties having an aggregate value in excess of $800 million. Prior to founding Lighthouse, Mr. Sheinker was the President of Sheinker Wasserstein Realty Services, Inc., where he managed a $100 million portfolio and rendered management and asset management services on behalf of financial institutions throughout the New York Metropolitan Area.

 

The material terms of Mr. Sheinker’s employment agreement are described under Item 1.01 of this Current Report Form 8-K, and a copy of Mr. Sheinker’s employment agreement is filed herewith.

 

Also, as described above, the Company entered into employment agreements, effective as of January 1, 2013, with Paul Cooper and David J. Oplanich, our Chief Executive Officer and Chief Financial Officer, respectively.  The material terms of the employment agreements for Messrs. Cooper and Oplanich are described in Item 1.01 of this Current Report on Form 8-K, and copies of such agreements are being filed herewith.

 

Expansion of the Board of Directors; Appointment of New Directors

 

Effective as of January 17, 2013 and pursuant to the Company’s Bylaws, the Board of Directors voted to expand the number of members comprising the entire Board of Directors from seven (7) to ten (10) directors.  In addition, the Board of Directors voted to elect each of Louis Sheinker, Jeffery Wu and Stanley Perla to serve as Class II directors of the Company.  It is expected that Mr. Perla will be named as a member of the Company’s Audit Committee.  Messrs. Perla and Wu qualify as “independent directors” as such term is defined in the Company’s charter.

 

Stanley R. Perla, CPA, 69, was a partner for Ernst & Young LLP, a public accounting firm from September 1978 to June 2003 and Managing Partner of Cornerstone Accounting Group LLP, from June 2008 to May 2011. He served as Ernst & Young’s National Director of Real Estate Accounting as well as Ernst & Young’s National Accounting and Auditing Committee. He is an active member of the National Association of Real Estate Investment Trusts and the National Association of Real Estate Companies. Mr. Perla has also been a trustee and chair of the audit committees of American Mortgage Acceptance Company and Lexington Realty Trust, Vice President — Director of Internal Audit for Vornado Realty Trust (July 2003 — May 2008). Mr. Perla is currently chair of the Madison Harbor Balanced Strategies audit committee and also serves on the valuation and nominating & compensation committees and is chair of the American Realty Capital Daily Net Asset Value Fund audit committee and a member of the board of the American Realty Capital Real Estate Income Fund.

 

Jeffrey Wu is an active and accomplished investor in commercial real estate and many other businesses.  Since mid-80’s, he has transacted over sixty properties totaling more than four million square feet.  He is also the principal shareholder, a founder and director of United

 

13


 

International Bank.  In addition, he is the sole owner of Hong Kong Supermarket Chain, one of the largest Asian supermarket chains with stores in multi-states.  Jeffrey is a major contributor to many charities and non-profit organizations, and serves as a director of the New York Law Enforcement Foundation.

 

Item 9.01                                            Financial Statements and Exhibits.

 

(a)                                  Financial statements of businesses acquired .

 

Pursuant to Item 9.01(A)(4) of Form 8-K, the Company intends to file the financial information required by this paragraph (A) of Item 9.01 as an amendment to this Form 8-K within seventy-one days of the date this Current Report on Form 8-K as filed with the Securities and Exchange Commission.

 

(b)                                  Proforma financial information .

 

Pursuant to Item 9.01(B)(2) of Form 8-K, the Company intends to file the financial information required by this paragraph (B) of Item 9.01 as an amendment to this Form 8-K within seventy-one days of the date this Current Report on Form 8-K as filed with the Securities and Exchange Commission

 

(d)                                  Exhibits

 

Exhibit No.

 

Description

 

 

 

4.1

 

Articles Supplementary of the Series B Preferred Stock of GTJ REIT, Inc. dated as of January 10, 2013.

 

 

 

10.1

 

Contribution Agreement by and among Wu/Lighthouse Portfolio, LLC, GTJ REIT, Inc., GTJ GP, LLC, GTJ Realty, LP, Jeffrey Wu, Paul Cooper, Louis Sheinker, Jerome Cooper, Jeffrey Ravetz and Sarah Ravetz dated as of January 1, 2013.

 

 

 

10.2

 

Amended and Restated Limited Partnership Agreement by and between GTJ REIT, Inc. and GTJ GP, LLC dated as of January 1, 2013.

 

 

 

10.3

 

Tax Protection Agreement by and among GTJ REIT, Inc., GTJ Realty, LP, Jeffrey Wu, Wu Family 2012 Gift Trust, Paul Cooper, Jerome Cooper, Jeffrey Ravetz, Sarah Ravetz and Louis Sheinker dated as of January 1, 2013.

 

 

 

10.4

 

Registration Rights Agreement by and among GTJ REIT, Inc. and certain investors dated as of January 1, 2013.

 

 

 

10.5

 

Employment Agreement by and between David J. Oplanich and GTJ REIT, Inc. dated as of January, 2013.

 

 

 

10.6

 

Employment Agreement by and between Paul Cooper and GTJ REIT, Inc. dated as of January, 2013.

 

 

 

10.7

 

Employment Agreement by and between Louis Sheinker and GTJ REIT, Inc. dated as of January, 2013.

 

 

 

10.8

 

Amendment and Modification of Loan Agreement by and among WU/LH 12 Cascade L.L.C., WU/LH 25 Executive L.L.C., WU/LH 269 Lambert L.L.C., WU/LH 103 Fairview Park L.L.C., WU/LH 412 Fairview Park L.L.C., WU/LH 401 Fieldcrest L.L.C., WU/LH 404 Fieldcrest L.L.C., WU/LH 36 Midland L.L.C., WU/LH 100-110 Midland L.L.C., WU/LH 112 Midland L.L.C., WU/LH 199 Ridgewood L.L.C., WU/LH 203 Ridgewood L.L.C., WU/LH 100 American L.L.C., WU/LH 200 American L.L.C., WU/LH 300 American L.L.C., WU/LH 400 American L.L.C. and WU/LH 500 American L.L.C. (collectively the “John Hancock Borrowers”) and John Hancock Life Insurance Company (“John Hancock”) dated as of January 1, 2013 in the aggregate original principal amount of $105,000,000.00. (To file by amendment)

 

14


 

10.9

 

Loan Agreement by and among the John Hancock Borrowers and John Hancock dated as of February 25, 2008 in the aggregate principal amount of $105,000,000.00. (To file by amendment)

 

 

 

10.10

 

Open-End Mortgage Deed, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and among Wu/LH 25 Executive L.L.C., Wu/LH 12 Cascade L.L.C., Wu/LH 269 Lambert L.L.C., Wu/LH 470 Bridgeport L.L.C., Wu/LH 22 Marsh Hill L.L.C., Wu/LH 15 Executive L.L.C., Wu/LH 950 Bridgeport L.L.C. (collectively the “Connecticut Mortgagors”) and John Hancock dated as of February 25, 2008 in the principal sum of $21,765,000.00. (To file by amendment)

 

 

 

10.11

 

Second Open-End Mortgage Deed, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and among Connecticut Mortgagors and John Hancock dated as of February 25, 2008 in the principal sum of $32,585,000.00. (To file by amendment)

 

 

 

10.12

 

Third Open-End Mortgage Deed, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and among Connecticut Mortgagors and John Hancock dated as of February 25, 2008 in the principal sum of $50,650,000.00. (To file by amendment)

 

 

 

10.13

 

First Amendment of Mortgage, Assignment of Lease and Rents, Security Agreement and Fixture Filing by and among WU/LH 100 American L.L.C., WU/LH 200 American L.L.C., WU/LH 300 American L.L.C., WU/LH 400 American L.L.C. and WU/LH 500 American L.L.C. (collectively the “New Jersey Mortgagors”) and John Hancock, dated as of January, 2013. (To file by amendment)

 

 

 

10.14

 

Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and among the New Jersey Mortgagors and John Hancock dated as of February 25, 2008 in the principal sum of $105,000,000.00. (To file by amendment)

 

 

 

10.15

 

Mortgage, Assignment of Leases and Rents and Security Agreement by and among Wu/LH 103 Fairview Park L.L.C., Wu/LH 412 Fairview Park L.L.C., Wu/LH 401 Fieldcrest L.L.C., Wu/LH 404 Fieldcrest L.L.C., Wu/LH 199 Ridgewood L.L.C., Wu/LH 203 Ridgewood L.L.C., Wu/LH 36 Midland L.L.C., Wu/LH 100-110 Midland L.L.C., Wu/LH 112 Midland L.L.C., Wu/LH 8 Slater L.L.C. and John Hancock dated as of February 25, 2008 in the principal sum of $50,650,000.00. (To file by amendment)

 

15


 

10.16

 

Mortgage Note by and among the John Hancock Borrowers and John Hancock dated as of February 25, 2008 in the principal sum of $9,765,000.00. (To file by amendment)

 

 

 

10.17

 

Mortgage Note by and among the John Hancock Borrowers and John Hancock dated as of February 25, 2008 in the principal sum of $12,000,000.00. (To file by amendment)

 

 

 

10.18

 

Mortgage Note by and among the John Hancock Borrowers and John Hancock dated as of February 25, 2008 in the principal sum of $20,960,000.00. (To file by amendment)

 

 

 

10.19

 

Mortgage Note by and among the John Hancock Borrowers and John Hancock dated as of February 25, 2008 in the principal sum of $11,625,000.00. (To file by amendment)

 

 

 

10.20

 

Mortgage Note by and among the John Hancock Borrowers and John Hancock dated as of February 25, 2008 in the principal sum of $30,650,000.00. (To file by amendment)

 

 

 

10.21

 

Mortgage Note by and among the John Hancock Borrowers and John Hancock dated as of February 25, 2008 in the principal sum of $16,100,000.00. (To file by amendment)

 

 

 

10.22

 

Mortgage Note by and among the John Hancock Borrowers and John Hancock dated as of February 25, 2008 in the principal sum of $3,900,000.00. (To file by amendment)

 

 

 

10.23

 

Cash and Deposit Account Pledge & Security Agreement by and among the John Hancock Borrowers in favor of John Hancock dated as of January 1, 2013 relating to a loan in the original aggregate principal amount of $21,765,000.00. (To file by amendment)

 

 

 

10.24

 

Cash and Deposit Account Pledge & Security Agreement by and among the John Hancock Borrowers in favor of John Hancock dated as of January 1, 2013 relating to a loan in the aggregate principal amount of $32,585,000.00. (To file by amendment)

 

 

 

10.25

 

Cash and Deposit Account Pledge & Security Agreement by and among the John Hancock Borrowers in favor of John Hancock dated as of January 1, 2013 relating to a loan in the original aggregate principal amount of $50,650,000.00. (To file by amendment)

 

16


 

10.26

 

Deposit Account Control Agreement by and among the John Hancock Borrowers, John Hancock, and Bank of America, N.A. dated as of January 1, 2013. (To file by amendment)

 

 

 

10.27

 

Deposit Account Control Agreement by and among the John Hancock Borrowers, John Hancock, and Bank of America, N.A. dated as of January 1, 2013. (To file by amendment)

 

 

 

10.28

 

Deposit Account Control Agreement by and among the John Hancock Borrowers, John Hancock, and Bank of America, N.A. dated as of January 1, 2013. (To file by amendment)

 

 

 

10.29

 

Guaranty Agreement by and among GTJ REIT, Inc., GTJ GP, LLC, and GTJ Realty, LP (collectively the “Guarantors”), in favor of John Hancock, dated as of January 1, 2013 guaranteeing a loan in the original aggregate principal amount of $21,765,000.00. (To file by amendment)

 

 

 

10.30

 

Guaranty Agreement by and among the Guarantors in favor of John Hancock, dated as of January 1, 2013 guaranteeing a loan in the original aggregate principal amount of $32,585,000.00. (To file by amendment)

 

 

 

10.31

 

Guaranty Agreement by and among the Guarantors in favor of John Hancock dated as of January 1, 2013 guaranteeing a loan in the original aggregate principal amount of $50,650,000.00. (To file by amendment)

 

 

 

10.32

 

Indemnification Agreement by and among the John Hancock Borrowers, and Guarantors in favor of John Hancock dated as of January, 2013 for a loan in the original aggregate principal amount of $21,765,000.00. (To file by amendment)

 

 

 

10.33

 

Indemnification Agreement by and among the John Hancock Borrowers, and Guarantors in favor of John Hancock dated as of January, 2013 for a loan in the original aggregate principal amount of $32,585,000.00. (To file by amendment)

 

 

 

10.34

 

Indemnification Agreement by and among the John Hancock Borrowers, and Guarantors in favor of John Hancock dated as of January, 2013 for a loan in the original aggregate principal amount of principal amount of $50,650,000.00. (To file by amendment)

 

 

 

10.35

 

First Amendment to Loan and Security Agreement by and among Wu/LH 15 Progress L.L.C. (“15 Progress”), Paul A. Cooper, Jeffrey D. Ravetz, Louis E. Sheinker, Jeffrey Wu, GTJ REIT, Inc.,

 

17


 

 

 

GTJ Realty, LP, and Peoples United Bank (“PUB”) dated as of January 1, 2013 for a loan in the original principal amount of $2,700,000.00. (To file by amendment)

 

 

 

10.36

 

Loan and Security Agreement by and among 15 Progress and PUB dated as of September 30, 2010 in the original principal amount of $2,700,000.00. (To file by amendment)

 

 

 

10.37

 

Promissory Note made by 15 Progress to PUB dated as of September 30, 2010 in the principal sum of $2,700,000.00. (To file by amendment)

 

 

 

10.38

 

Open-End Mortgage Deed and Security Agreement by and among 15 Progress and PUB dated as of September 30, 2010 in the principal sum of $2,700,000.00. (To file by amendment)

 

 

 

10.39

 

Substitute Limited Guaranty by GTJ REIT, Inc. to PUB dated as of January, 2013. (To file by amendment)

 

 

 

10.40

 

First Amendment to Loan Agreement by and among 165-25 147 th  Avenue, LLC, 85-01 24 th  Avenue, LLC, GTJ REIT, Inc. and Hartford Life Insurance Company, Hartford Life and Accident Insurance Company and Hartford Life and Annuity Insurance Company dated as of January 1, 2013. (To file by amendment)

 

 

 

10.41

 

Mortgage Modification Agreement by and among Farm Springs Road, LLC (“Farm Springs”), and Manufacturers and Traders Trust Company (“M&T”) dated as of January 1, 2013. (To file by amendment)

 

 

 

10.42

 

Standard Libor Grid Note by and among GTJ REIT, Inc., Farm Springs and M&T dated as of January 1, 2013 in the amount of $10,000,000.00. (To file by amendment)

 

 

 

10.43

 

Credit Agreement by and among GTJ REIT, Inc., Farm Springs, and M&T dated as of January 1, 2013. (To file by amendment)

 

 

 

10.44

 

Waiver and Consent by and between GTJ REIT, Inc. and M&T dated as of January 1, 2013. (To file by amendment)

 

 

 

10.45

 

Assumption, Consent and Modification Agreement by and among Wu/LH 8 Slater L.L.C. (“8 Slater”), Paul Cooper, Jeffrey Ravetz, Louis Sheinker, GTJ REIT, Inc., and The United States Life Insurance Company in the City of New York (“USLIC”) successor by merger to First SunAmerica Life Insurance Company dated as of January 1, 2013. (To file by amendment)

 

18


 

10.46

 

Consolidated, Amended and Restated Promissory Note by and between 8 Slater and USLIC dated as of March 8, 2011 in the principal sum of $4,639,600.00. (To file by amendment)

 

 

 

10.47

 

Mortgage, Consolidation, Extension, Spreader and Security Agreement, Fixture Filing, Financing Statement and Assignment of Leases and Rents by and between 8 Slater and USLIC dated as of March 8, 2011 in the principal sum of $4,639,600.00. (To file by amendment)

 

 

 

10.48

 

Assumption, Consent and Modification Agreement by and among Wu/LH 15 Executive L.L.C. (“15 Executive”), Paul Cooper, Jeffrey Ravetz, Louis Sheinker, GTJ REIT, Inc., and USLIC dated as of January 1, 2013. (To file by amendment)

 

 

 

10.49

 

Promissory Note made by 15 Executive to USLIC dated as of March 8, 2011 in the principal sum of $4,096,400.00. (To file by amendment)

 

 

 

10.50

 

Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and between 15 Executive and USLIC dated as of March 8, 2011 in the principal sum of $4,096,400.00. (To file by amendment)

 

 

 

10.51

 

Assumption, Consent and Modification Agreement by and among Wu/LH 35 Executive L.L.C. (“35 Executive), Paul Cooper, Jeffrey Ravetz, Louis Sheinker, GTJ REIT, Inc., and USLIC dated as of January 1, 2013. (To file by amendment)

 

 

 

10.52

 

Promissory Note made by 35 Executive to USLIC dated as of March 8, 2011 in the principal sum of $5,724,600.00. (To file by amendment)

 

 

 

10.53

 

Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and between 35 Executive and USLIC dated as of March 8, 2011 in the principal sum of $5,724,600.00. (To file by amendment)

 

 

 

10.54

 

Assumption, Consent and Modification Agreement by and among Wu/LH 470 Bridgeport L.L.C. (“470 Bridgeport”), Paul Cooper, Jeffrey Ravetz, Louis Sheinker, GTJ REIT, Inc., and USLIC dated as of January 1, 2013. (To file by amendment)

 

19


 

10.55

 

Promissory Note made by 470 Bridgeport to USLIC dated as of March 8, 2011 in the principal sum of $3,683,700.00. (To file by amendment)

 

 

 

10.56

 

Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and between 470 Bridgeport and USLIC dated as of March 8, 2011 in the principal sum of $3,683,700.00. (To file by amendment)

 

 

 

10.57

 

Assumption, Consent and Modification Agreement by and among Wu/LH 950 Bridgeport L.L.C. (“950 Bridgeport”), Paul Cooper, Jeffrey Ravetz, Louis Sheinker, GTJ REIT, Inc., and USLIC dated as of January 1, 2013. (To file by amendment)

 

 

 

10.58

 

Promissory Note made by 950 Bridgeport to USLICdated as of March 8, 2011 in the principal sum of $2,639,000.00. (To file by amendment)

 

 

 

10.59

 

Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and between 470 Bridgeport and USLIC dated as of March 8, 2011 in the principal sum of $2,639,000.00. (To file by amendment)

 

 

 

10.60

 

Assumption, Consent and Modification Agreement by and among Wu/LH 22 Marsh Hill L.L.C. (“22 Marsh Hill”), Paul Cooper, Jeffrey Ravetz, Louis Sheinker, GTJ REIT, Inc., and USLIC dated as of January 1, 2013. (To file by amendment)

 

 

 

10.61

 

Promissory Note made by 22 Marsh Hill to SunAmerica dated as of March 8, 2011 in the principal sum of $2,716,700.00. (To file by amendment)

 

 

 

10.62

 

Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and between 22 Marsh Hill and USLIC dated as of March 8, 2011 in the principal sum of $2,716,700.00. (To file by amendment)

 

 

 

10.63

 

Amended and Restated Affiliate Guaranty Agreement by 15 Executive, 22 Marsh Hill, 35 Executive, 470 Bridgeport, 950 Bridgeport, and 8 Slater (collectively the “USLIC Borrowers”) in favor of USLIC dated as of January 1, 2013. (To file by amendment)

 

 

 

10.64

 

Amended and Restated Cash Collateral Agreement by the USLIC Borrowers in favor of USLIC and acknowledged and agreed to by M. Robert Goldman & Company, Inc. dated as of January 1, 2013.

 

20


 

10.65

 

Environmental Indemnity Agreement by the USLIC Borrowers and GTJ REIT, Inc. for the benefit of USLIC as of January 1, 2013. (To file by amendment)

 

 

 

10.66

 

Guaranty Agreement by GTJ REIT, Inc. in favor of USLIC dated as of January 1, 2013. (To file by amendment)

 

 

 

99.1

 

Fairness Opinion from Duff & Phelps, as independent financial advisor to the Special Committee of the Board of Directors dated January 10, 2013.

 

 

 

99.2

 

Organizational Chart

 

21


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: January 24, 2013

GTJ REIT, INC.

 

 

 

By:

/s/ David J. Oplanich

 

 

David J. Oplanich

 

 

Chief Financial Officer

 

22

Exhibit 4.1

 

ARTICLES SUPPLEMENTARY

 

of

 

THE SERIES B PREFERRED STOCK

 

of

 

GTJ REIT, INC.

 

(Under Section 2-208 of the Maryland General Corporation Law)

 

To the State Department

of Assessments and Taxation

State of Maryland

 

FIRST:  The name of the corporation (the “ Corporation ”) is GTJ REIT, Inc.

 

SECOND :  Under the authority contained the charter of the Corporation (the “ Charter ”), the Board of Directors of the Corporation (the “ Board of Directors ”), by duly adopted resolutions, has classified and designated 6,500,000 shares of the authorized but unissued Preferred Stock of the Corporation as Series B Preferred Stock.  A description of the said Series B Preferred Stock, including the preferences, conversion and other rights, voting powers, restrictions, dividends and other distributions, qualifications, and terms and conditions of redemption, as set by the Board of Directors, is as follows:

 

SERIES B PREFERRED STOCK

 

Section 1.               Designation of Series and Number of Shares .  The shares of such series shall be designated as “Series B Preferred Stock” (the “ Series B Preferred Stock ”), and the number of shares constituting the Series B Preferred Stock shall be 6,500,000.  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 B Preferred Stock to a number less than the number of shares then outstanding less than 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 B Preferred Stock.

 

Section 2.              Dividends and Distributions .  The holders of the outstanding shares of Series B Preferred stock shall not be entitled to any preferential dividends, but shall participate in any dividends payable on the shares of common stock, par value $0.001 (the “ Common Stock ”), of the Corporation, such that dividends payable on each outstanding share of Series B Preferred Stock shall be equal to the dividends payable on each outstanding share of Common Stock.

 

Section 3 .              Voting Rights .  The holders of shares of Series B Preferred Stock shall have no voting rights.

 


 

Section 4 .              Conversion into Common Stock .  The holders of the Series B Preferred Stock shall have the following conversion rights (the “ Conversion Rights ”), subject to the Common Share Ownership Limit:

 

(A)          Automatic Conversion .  Each share of Series B Preferred Stock shall automatically be converted into shares of Common Stock, without any further action of on the part of the holder thereof, on a one for one basis, or as adjusted pursuant to Section 4(C) below (the “ Conversion Rate ”), in the event of:  (i) the completion by the Corporation of a public offering pursuant to a registration statement under the Securities Act of 1933, as amended, resulting in aggregate net proceeds to the Corporation of at least one hundred million ($100,000,000) dollars (the “ IPO ”); (ii) a merger or consolidation of the Corporation with or into another corporation or entity in which the stockholders of the Corporation immediately prior to such event(s) do not own at least a majority of the outstanding shares of the surviving corporation or entity; or (iii) the sale, lease or other transfer (in one or a series of related transactions) of all or substantially all of the Corporation’s assets;

 

(B)          Optional Conversion.  Each share of Series B Preferred Stock may be converted into shares of Common Stock, on a one-for-one basis, or as adjusted pursuant to the Conversion Rate, at the option of the holder of any shares of Series B Preferred Stock by surrendering to the Corporation or any transfer agent of the Corporation the certificate or certificates for the shares to be converted, accompanied by written notice specifying the number of shares to be converted.

 

A conversion under 4 (B) above 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.”  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 in the case with respect to any fractional interest in a share of Common Stock as provided in Section 4(C).  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 Conversation Date.  Upon conversion of only a portion of the number of shares represented by a certificate of Series B 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 B Preferred Stock representing the unconverted portion of the certificate so surrendered. Notwithstanding the foregoing, in no event shall a conversion under 4(B) result in (x) the holder seeking to convert the Series B Preferred Stock to Common Stock owning a greater percentage of Common Stock than the largest holder of Common Stock of the Corporation immediately prior to the conversion.

 


 

(C)          No Fractional Shares .  No fractional shares of Common Stock or scrip shall be issued upon conversion of shares of Series B Preferred Stock. If more than one share of Series B Preferred Stock shall be surrendered for conversion at anyone 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 B Preferred Stock so surrendered. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of any shares of Series B 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)          Adjustment of Shares . The Conversion Rate 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 Rate 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 B 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 B Preferred Stock been converted immediately prior to such date. Successive adjustments in the Conversion Rate 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 B 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 which the Common Stock issuable (at the time of such consolidation, merger, sale, lease or conveyance) upon conversion of such share of Series B 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 B 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 B Preferred Stock.

 

(iii)          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 B 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 this Section 4(D); 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.

 


 

(E)      Notice to Transfer Agent .  Whenever the Conversion Rate shall be adjusted as provided in Section 4(D), the Corporation shall forthwith file in the office of any transfer agent for the Series B Preferred Stock and at the principal office of the Corporation, a statement showing in detail the facts requiring such adjustment and the Conversion Rate 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 B Preferred Stock at its address appearing on the Corporation’s records.

 

(F)       Notice to Holders of Shares of Series B Preferred Stock .  In the event the Corporation shall propose to take any action of the type that would result in an adjustment in the Conversion Rate as provided in Section 4(D), the Corporation shall give notice to each holder of shares of Series B 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 Rate and the number, kind or class of shares or other securities or property which shall be deliverable upon conversion of shares of Series B Preferred Stock. In the case of any action which would require the fixing of a record 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.

 

(G)      Taxes .  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 B 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 B Preferred Stock in respect of which such shares are being issued.

 

(H)      Reserve .  The Corporation shall reserve at all times so long as any shares of Series B 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 B Preferred Stock, sufficient shares of Common Stock to provide for the conversion of all outstanding shares of Series B 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.

 


 

(I)       Validity .  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 non-assessable 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 .              Reacquired Shares .  Any shares of Series B 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 6 .              Liquidation, Dissolution or Winding Up .  In the event of any voluntary or involuntary liquidation, dissolution or winding up, or any distribution of the assets of the Corporation, there shall be no preference given to holders of the Series B Preferred Stock to the aggregate assets available for distribution.  Each holder of Series B Preferred Stock shall be entitled to receive, ratably with each holder of Common Stock and Preferred Stock, that portion of such aggregate assets available for distribution as the number of outstanding Series B Preferred Stock held by such holder bears to the total number of outstanding Common Stock and Preferred Stock.

 

Section 7 .              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 or any other property, then in any such case the shares of Series B Preferred Stock shall at the same time be similarly  exchanged or changed in an amount per share (subject to the provision for  adjustment  hereinafter set forth) equal to one (1) times the aggregate amount of shares, securities, cash or any other  property (payable in kind), as the case may be, into which or for which each 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 B 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.

 

Section 8 .              Redemption .  The Series B Preferred Stock shall not be redeemable.

 


 

Section 9 .              Ranking .  The Series B Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, pari pasu to all series of any other class of the Corporation’s Preferred Stock and Common Stock except if otherwise set forth under the terms of such other series.

 

Section 10 .            Amendment .  The Articles 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 B Preferred Stock so as to affect them adversely without the affirmative vote of all of the holders of the outstanding shares of Series A Preferred Stock, voting together as a single class.

 

THIRD :  This document shall become effective on the date of its filing.

 

[Signature Page Follows]

 


 

IN WITNESS WHEREOF , the Corporation has caused these Articles Supplementary to be signed in its name and on its behalf by its Chief Financial Officer and attested to by its Secretary on this 10th day of January, 2013.

 

ATTEST:

GTJ REIT, INC.

 

 

By:

/s/ Douglas A. Cooper

 

By:

/s/ David J. Oplanich

Name:

Douglas A. Cooper

Name:

David J. Oplanich

Title:

Secretary

Title:

Chief Financial Officer

 

Exhibit 10.1

 

EXECUTION VERSION

 

CONTRIBUTION AGREEMENT

 

This CONTRIBUTION AGREEMENT (this “ Agreement ”), dated as of January 1, 2013, by and among WU/LIGHTHOUSE PORTFOLIO, LLC, a Delaware limited liability company (“ Portfolio ”), GTJ REIT, INC., a Maryland corporation (“ GTJ ”), GTJ GP, LLC, a Maryland limited liability company (the “ GP ”), GTJ REALTY, LP, a Delaware limited partnership (the “ UPREIT ”), Jeffrey Wu, Paul Cooper, Louis Sheinker, Jerome Cooper, Jeffrey Ravetz and Sarah Ravetz.

 

WHEREAS, Portfolio is the owner of 100% of the outstanding membership interests of the entities identified on Exhibit A annexed hereto (the “ Portfolio POEs ”), which Portfolio POEs own the real property and improvements (the “ Portfolio Properties ”) more particularly identified on Exhibit A , subject to the mortgage loans also identified on Exhibit A (the “ Existing Portfolio Mortgage Indebtedness ”); and

 

WHEREAS, the GP is the general partner of the UPREIT and GTJ is presently the owner of 100% of the outstanding membership interests of the GP and 100% of the outstanding limited partnership interests of the UPREIT; and

 

WHEREAS, GTJ has previously contributed to the UPREIT (the “ GTJ Contribution ”) 100% of the outstanding membership interests of the entities identified on Exhibit B annexed hereto (the “ GTJ POEs ”), which GTJ POEs own the real property and improvements (the “ GTJ Properties ”) more particularly identified on Exhibit B , subject to the mortgage loans also identified on Exhibit B (the “ Existing GTJ Mortgage Indebtedness ”);

 

WHEREAS, Portfolio wishes to make a capital contribution to the UPREIT, a wholly-owned subsidiary of GTJ by contributing to the UPREIT 100% of its outstanding membership interests in the Portfolio POEs (the “ Portfolio Contribution ”) in exchange for a 33.29% limited partnership interest in the UPREIT such that immediately following the Portfolio Contribution GTJ shall own a 65.71% limited partnership interest in the UPREIT (the “ GTJ Interest ”),  GP shall own a 1% general partnership interest in the UPREIT and Portfolio (or at Portfolio’s direction, its beneficial owners, the “ Portfolio Members ”) shall own collectively a 33.29% limited partnership interest in the UPREIT (the “ Portfolio Interest ”);

 

WHEREAS, the Portfolio Contribution is subject to Portfolio obtaining the approval (the “ Portfolio Lender Approval ”) of the holders of the Existing Portfolio Mortgage Indebtedness and the GTJ Contribution is subject to GTJ obtaining any required approval (the “ GTJ Lender Approval ”) of the holder of the Existing GTJ Mortgage Indebtedness; and

 


 

WHEREAS, upon the making of the Portfolio Contribution, the GP, GTJ and Portfolio (or the Portfolio Members) shall enter into amended and restated agreement of limited partnership dated of even date herewith and annexed hereto as Exhibit C .

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Agreement, the parties agree as follows:

 

ARTICLE I
THE CONTRIBUTION; ISSUANCE OF THE INTEREST

 

SECTION 1.1               The Portfolio Interest .

 

(a)           Subject to the terms and conditions set forth herein, Portfolio agrees to make the Portfolio Contribution to the UPREIT at the Closing (as defined below) in exchange for the Portfolio Interest .  The parties agree that the Portfolio Contribution is valued at $75,089,000 (subject to adjustment pursuant to Section 5.4).  Notwithstanding the foregoing, in exchange for the Portfolio Contribution, Portfolio shall direct the UPREIT to issue the Portfolio Interest directly to the Portfolio Members in accordance with their respective membership interests in Portfolio.

 

(b)           In accordance with the terms set forth herein, Portfolio is contributing 100% of the membership interests of Portfolio POEs, in exchange for a 33.29% limited partnership interest in the UPREIT.  The contribution is intended to result in the tax-free formation of a partnership under Section 721 of the Internal Revenue Code, as outlined in Revenue Ruling 99-5, 1999-1 CB 434, January 15, 1999.  Section 721(a) of the Internal Revenue Code generally provides that no gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership.

 

SECTION 1.2               The GTJ Interest .

 

(a)           The parties agree that the GTJ Contribution is valued at $150,471,000.

 

(b)           Prior to this Agreement, GTJ contributed 100% of the outstanding membership interests of the GTJ POEs to UPREIT, in exchange for a 1% general partnership interest to GP and a 99% limited partnership interest to GTJ in the UPREIT.  The contribution is intended to result in the tax-free formation of a partnership under Section 721 of the Internal Revenue Code, as outlined in Revenue Ruling 99-5, 1999-1 CB 434, January 15, 1999.  Section 721(a) of the Internal Revenue Code generally provides that no gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership.

 

SECTION 1.3               Closing .  The closing shall take place at the offices of Ruskin Moscou Faltischek, P.C., 1425 RXR Plaza, East Tower, 15 th  Floor, Uniondale, New York at 10 a.m. New York time on or about January 11, 2012, or at such other location, on such other date, and/or at

 

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such other time as may be agreed upon by Portfolio and GTJ (such closing being called the “ Closing ” and such date being called the “ Closing Date ”).  At the Closing, Portfolio (or the Portfolio Members), GP and GTJ shall enter into an amended and restated agreement of limited partnership (the “ UPREIT LPA ”) in the form annexed hereto as Exhibit C .

 

SECTION 1.4               Closing Deliveries by Portfolio .  At the Closing, Portfolio shall deliver or cause to be delivered to GTJ and the UPREIT:

 

(a)           the UPREIT LPA together with the Registration Rights Agreement annexed thereto, duly executed by Portfolio;

 

(b)           Assignment of Portfolio Interest Agreement in the form annexed hereto as Exhibit D duly executed by Portfolio;

 

(c)           the Portfolio Lender Approval Documents in the form annexed hereto as Exhibit E duly executed by all parties thereto;

 

(d)           a Termination of Management Agreement annexed hereto as Exhibit G , duly executed by Portfolio, Lighthouse Real Estate Management LLC and Green Holland Management, LLC; and

 

(e)           an opinion of Portfolio’s counsel as to due formation, authority and execution of Portfolio and the Portfolio POEs in the form annexed hereto as Exhibit H-1 ;

 

(f)            title insurance or a title endorsement, including without limitation surveys and searches, sufficient to confirm the existing title insurance coverage afforded to the GTJ POEs and the Portfolio POEs, which shall in all respects be acceptable to GTJ;

 

(g)           evidence of compliance by each of the Portfolio POEs with respect to the Connecticut Transfer Act with respect to the contribution of the Portfolio Properties located in Connecticut, and the NJ ISDA with respect to the Portfolio Properties located in New Jersey (collectively, the “Transfer Act Requirements”), including Portfolio’s approval, of the deposit of any funds to be escrowed as required by the applicable agencies of Connecticut and New Jersey in order to obtain such compliance;

 

(h)           the Tax Protection Agreement annexed hereto as Exhibit F (the “ Tax Agreement ”) duly executed by Portfolio;

 

(i)            such transfer tax forms/affidavits as may be required by any governmental authority having jurisdiction over the Portfolio Properties; and

 

(j)            the certificates and other documents required to be delivered pursuant to Section 4.2;

 

(j)            employment agreements for each of Paul Cooper and Louis Sheinker (the “ Employment Agreements ”) substantially in the forms previously agreed to and duly executed by Paul Cooper and Louis Sheinker, respectively.

 

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SECTION 1.5               Closing Deliveries by GTJ .  At the Closing, GTJ shall deliver or cause to be delivered to Portfolio, the items listed in (a) through (i) below:

 

(a)           the UPREIT LPA together with the Registration Rights Agreement annexed thereto duly executed by Portfolio;

 

(b)           Assignment and Assumption of GTJ Interest Agreement in the form annexed hereto as Exhibit D-1 , duly executed by GTJ, if the membership interests in the GTJ POEs have not been previously assigned to the UPREIT;

 

(c)           the GTJ Lender Approval Documents in the form annexed hereto as Exhibit E-1 and duly executed by all parties thereto;

 

(d)           the Management Agreement in the form annexed hereto as Exhibit G-1 , duly executed by GTJ Management, LLC, a taxable REIT subsidiary of GTJ;

 

(e)           an opinion of counsel as to the due formation, authority and execution of GTJ and the GTJ POEs in the form annexed hereto as Exhibit H-2 ;

 

(f)            title insurance or a title endorsement, including without limitation surveys and searches, sufficient to confirm the existing title insurance coverage afforded to the GTJ POEs and the Portfolio POEs;

 

(g)           evidence of GTJ’s compliance with respect to the Connecticut Transfer Act with respect to any of the GTJ Properties located in Connecticut, including GTJ’s approval of the deposit of any funds to be escrowed as required by the applicable agencies of Connecticut in order to obtain such compliance;

 

(h)           such transfer tax forms/affidavits as may be required by any governmental authority having jurisdiction over the Portfolio Properties, duly executed by Portfolio and the UPREIT;

 

(i)            the Tax Protection Agreement duly executed by GTJ;

 

(j)            the certificates and other documents required to be delivered pursuant to Section 4.02; and

 

(k)           the SunAmerica Reserves (as hereinafter defined) provided that the UPREIT obtains the full benefit of the SunAmerica Reserves.

 

(k)           the Employment Agreements, duly executed by GTJ.

 

SECTION 1.6               Closing Deliveries by the UPREIT .  At the Closing, the UPREIT shall deliver or cause to be delivered to GTJ and Portfolio:

 

(a)           the UPREIT LPA together with the Registration Rights Agreement, duly executed by the UPREIT; and

 

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(b)           the Management Agreements in the form annexed hereto as Exhibit G-1 , duly executed by the UPREIT; and

 

(c)           the certificates and other documents required to be delivered pursuant to Section 4.3.

 

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PORTFOLIO

 

Portfolio represents and warrants to GTJ as follows:

 

SECTION 2.1               Organization, Qualifications and Power .  Portfolio and each of the Portfolio POEs is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly licensed and qualified to transact business in the manner that its business is currently being conducted.  Each of the Portfolio POEs has the power and authority to own, lease, operate and hold its respective Portfolio Properties and to carry on its business as currently conducted.  Portfolio and each of the Portfolio POEs is in good standing under the laws of each jurisdiction wherein the nature of its respective business or its respective ownership of property requires it to be so qualified.

 

SECTION 2.2               Equity Interests .  Portfolio is the record and beneficial owner of 100% of the outstanding membership interests in the Portfolio POEs free and clear of all Encumbrances (as defined in Section 2.3).  Except for its ownership interest in the Portfolio POEs, Portfolio (a) does not own of record or beneficially, directly or indirectly, (i) any shares of capital stock or equity securities or securities convertible into capital stock or equity securities of any other corporation or business entity, and (ii) any participating interest in any partnership or joint venture or (b) does not control, directly or indirectly, any other entity.  There are no options, warrants, rights (including conversion of preemptive rights), written or verbal agreements or side letters for the purchase or acquisition from or sale or disposition by Portfolio or any Portfolio POE of any of its membership interest except as set forth in Schedule 2.2 annexed hereto.  Other than the Existing Portfolio Mortgage Indebtedness, neither Portfolio or the Portfolio POEs is a party or subject to any agreement or understanding, and, to Portfolio’s or any Portfolio POE’s knowledge, there is no agreement or understanding between any persons and/or entities, which affects or relates to the voting or giving of written consents with respect to any security or by any director of Portfolio or any Portfolio POE.  Each of the Portfolio POEs is a “bankruptcy remote” entity, as such term is commonly used in the CMBS industry.

 

SECTION 2.3               Authorization of Agreements, Conflicts, Etc.   The execution and delivery by Portfolio of this Agreement and the performance by Portfolio of its obligations hereunder and thereunder (including the making of the Portfolio Contribution) have been duly authorized by all requisite legal and governmental action and will not contravene, conflict with, violate or cause a default under any provision of any law, Portfolio’s or the Portfolio POE’s articles of organization or limited liability company agreement, or subject to the Portfolio Lender Approval, any provision of any loan agreement, contract (including the Portfolio Contracts (as defined below)) or other instrument to which Portfolio, any of the Portfolio POEs or any of their respective properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice

 

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or lapse of time or both) a default under any such agreement, contract or other instrument, or result in the creation or imposition of any lien, charge, restriction, claim or encumbrance of any nature (collectively, “ Encumbrances ”) whatsoever upon any of the properties or assets of Portfolio or any of the Portfolio POEs.

 

SECTION 2.4               Enforceability .  This Agreement has been duly executed and delivered by Portfolio and constitutes the legal, valid and binding obligation of Portfolio, enforceable against Portfolio in accordance with its terms.

 

SECTION 2.5               Portfolio Financial Statements .

 

(a)           Portfolio has furnished to GTJ drafts of the unaudited financial statements of Portfolio and the Portfolio POE’s as of June 30, 2012 on a consolidated basis, (the “ Portfolio Financial Statements ”).  All of the Portfolio Financial Statements (including any related notes) (i) have been prepared in accordance with generally accepted accounting principles, (“ GAAP ”) consistently applied; (ii) have been prepared from and in accordance with the books and records of each of the Portfolio POEs and (iii) fairly and accurately present the consolidated financial position of Portfolio and the Portfolio POEs as of such date.  All material liabilities of Portfolio and the Portfolio POEs or any of their respective assets and properties, including accrued salaries and wages, as of June 30, 2012 are reflected or reserved against on such June 30, 2012 financial statements .

 

(b)           The Net Assets of Portfolio on a consolidated basis on the Closing Date, taken immediately prior to the Closing, shall be not less than the aggregate Net Assets of the Portfolio POEs as reflected on the Portfolio Financial Statements dated as of June 30, 2012.  “Net Assets” means, with respect to an entity as of a particular date, the total assets of such entity as of such date less the total liabilities of such entity as of such date, determined in the same manner as Portfolio determined such items in preparing the Financial Statements dated as of June 30, 2012.

 

SECTION 2.6               No Undisclosed Liabilities .  Except as set forth in Schedule 2.6 , and except (a)  for liabilities and obligations incurred in the ordinary course of business consistent with past practice after June 30, 2012 which have not resulted in and are not reasonably expected to result in any material increase in each Portfolio POE’s liabilities from those provided for or disclosed in the Portfolio Financial Statements and (b) for liabilities and obligations disclosed, reflected or reserved for in the Portfolio Financial Statements, since June 30, 2012 , none of Portfolio or its Portfolio POEs has incurred any liability or obligation that would be required to be reflected or reserved against in a balance sheet of such person prepared in accordance with GAAP.

 

SECTION 2.7               Absence of Certain Changes .  Except as disclosed in the Portfolio Financial Statements or as set forth in Schedule 2.7 , since June 30, 2012, each of Portfolio and the Portfolio POEs has conducted its business only in the ordinary course of business consistent with past practice, and neither Portfolio nor any of the Property POEs has experienced any material adverse change in its financial condition.  Since June 30, 2012, none of Portfolio and the

 

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Portfolio POEs has taken any of the actions or permitted to occur any of the events specified in this Section 2.7 or committed to do any of the foregoing:

 

(a)           material adverse change in its financial condition;

 

(b)           amendment of the charter, operating agreements or other organizational documents;

 

(c)           split, combine or reclassify any of its membership interests;

 

(d)           issuance, sale or otherwise disposition of any of its membership interests, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of its membership interests;

 

(e)           declaration or payment of any dividends or distributions on or in respect of any of its membership interests or redemption, purchase or acquisition of its membership interests;

 

(f)            material change in any method of accounting or accounting practice of Portfolio or the Portfolio POEs, except as required by GAAP or as disclosed in the notes to the Financial Statements;

 

(g)           except for the Portfolio Space Leases set forth in Schedule 2.14 , entry into any contract that would constitute a material contract;

 

(h)           incurrence, assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and liabilities incurred in the ordinary course of business consistent with past practice;

 

(i)            material damage, destruction or loss (whether or not covered by insurance) to its property;

 

(j)            any capital investment in, or any loan to, any other person or entity;

 

(k)           acceleration, termination, material modification to or cancellation of any material contract (including, but not limited to, any material contract) to which Portfolio or the Portfolio POEs are a party or by which they are bound;

 

(l)            any material capital expenditures;

 

(m)          any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its members, managers, officers and employees;

 

(n)           adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy law or consent to the filing of any bankruptcy petition against it under any similar law; and

 

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(o)           acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or equity of, or by any other manner, any business or any person or any division thereof.

 

SECTION 2.8               No Default; Compliance with Applicable Laws; Permits .

 

(a)           Except as set forth in Schedule 2.8 , neither the Portfolio nor any of the Portfolio POEs is in default or violation of any term, condition or provision of (i) its articles of organization, limited liability company agreement or other governing instrument (ii) any statute, law, rule, regulation, judgment, decree, order, arbitration award, concession or grant applicable to Portfolio or the Portfolio POEs (or their assets and properties), including, without limitation, laws, rules and regulations relating to the environment, occupational health and safety, employee benefits, wages, workplace safety, equal employment opportunity and race, religious or sex discrimination and (iii) the Portfolio Contract.

 

(b)           To Portfolio’s knowledge, Portfolio and the Portfolio POEs have all licenses, permits, exemptions, consents, waivers, authorizations, rights, certificates of occupancy, franchises, orders or approvals of, and have made all required registrations with, any Federal, state, local or foreign government, court or legislative, executive or regulatory authority of agency (each, a “ Governmental Entity ”) that are material to the conduct of the business of, or the intended use of the Portfolio Properties (collectively the “ Portfolio Permits ”), not including, however, the Permits relating to safety matters and compliance with Environmental Laws (as defined below), which are addressed in Section 2.13 of this Agreement, and all of the Portfolio Permits are valid and in full force and effect and will not be invalidated or otherwise affected by consummation of the transactions contemplated by this Agreement.  To Portfolio’s knowledge, no violations are or have been recorded in respect of any of the Portfolio Permits, and to Portfolio’s knowledge, no event has occurred which would allow revocation or termination or which would result in the impairment of the rights of the Portfolio POEs with respect to any such Portfolio Permits and no proceeding is pending or, to Portfolio’s knowledge, threatened, to revoke, limit or enforce any of the Portfolio Permits.

 

SECTION 2.9               Ownership and Sufficiency of Assets .  Except as set forth in Schedule 2.9 , Portfolio and the Portfolio POEs, own or have the right to use all tangible assets used regularly in the conduct of business of Portfolio and the Portfolio POEs as presently conducted, and which are expected to be used in the future, including, without limitation, all material tangible assets reflected on the balance sheet, dated as of June 30, 2012, included in the Portfolio Financial Statements.  Such assets represent all of the material tangible assets necessary to conduct the business of Portfolio and the Portfolio POEs as presently conducted and which are expected to be required in the future.

 

SECTION 2.10             Litigation .  Except as set forth in Schedule 2.10 , there is no action, suit, claim, proceeding or investigation pending or, to Portfolio’s knowledge, threatened against or affecting Portfolio or the Portfolio POEs or their respective assets and property, at law or in equity, or before or by any Governmental Entity (each, a “ Portfolio Action ”) which individually or in the aggregate could reasonably be expected to have a material adverse effect on the business, assets or property of Portfolio or the Portfolio POEs and, to Portfolio’s knowledge,

 

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there is no basis for any of the foregoing.  None of Portfolio or the Portfolio POEs is in default with respect to any order, writ, injunction or decree known to or served upon such person of any court or of any Governmental Entity.  Except as set forth in Schedule 2.10 , there is no Portfolio Action by Portfolio or any of the Portfolio POEs pending or threatened against others.  The litigation set forth in Schedule 2.10 , including costs of defense, will have no material adverse effect on the business, results of operations, financial condition or business prospects of Portfolio and the Portfolio POEs, taken as a whole.

 

SECTION 2.11             Contracts .

 

(a)           Schedule 2.11 sets forth a list of each material contract, agreement, plan, understanding, commitment or arrangement, written or oral, including, but not limited to, loan service agreements, to which each of Portfolio and the Portfolio POEs is a party or by which Portfolio or the Portfolio POEs or any of their respective assets is bound (collectively, the “ Portfolio Contracts ”).

 

(b)           Except as set forth in Schedule 2.11 , each of the Portfolio Contracts is a legal, valid and binding obligation of Portfolio or the applicable Portfolio POE and is enforceable by and against Portfolio or such Portfolio POE in accordance with its terms.  Each of Portfolio and the applicable Portfolio POEs has performed all material obligations required to be performed by it under the Portfolio Contracts to which it is or was a party, and is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any respect thereunder and, to Portfolio’s knowledge, no other party to any of the Portfolio Contracts is (with or without the lapse of time or the giving of notice, or both) in breach or default in any respect thereunder.  Neither Portfolio nor any of the Portfolio POEs has received any notice of the intention of any party to terminate any Portfolio Contract.  Complete and correct copies of all Portfolio Contracts have been delivered or made available to GTJ.

 

SECTION 2.12             Taxes .  Portfolio and each of the Portfolio POEs has timely filed all Tax Returns required to be filed by it or obtained valid extensions thereof, true and complete copies of which have been delivered to GTJ, and Portfolio and each of the Portfolio POEs has paid or accrued all Taxes (as hereinafter defined) due with respect to such Tax Returns other than such Taxes as are being contested in good faith by Portfolio or a Portfolio POE, and Portfolio and the Portfolio POEs as applicable, have paid all other Taxes which have become due or payable (whether or not shown on any Tax Return), including Taxes which Portfolio or any of the Portfolio POE is or was obligated to withhold from amounts owing to employees, creditors and third parties.  All such filed Tax Returns were correct and complete in all material respects.  All Taxes with respect to which Portfolio or any of the Portfolio POEs has become obligated pursuant to elections made by Portfolio or any of the Portfolio POEs in accordance with generally accepted practice have been paid and adequate reserves have been established for all Taxes accrued but not yet payable.  “ Taxes ” shall mean any and all taxes, charges, fees, levies or other assessments, including, without limitation, net income, gross receipts, excise, real or personal property, sales, withholding, social security, occupation, use, service, service use, value added, license, net worth, payroll, franchise, transfer, recording, gross income, alternative or add-on minimum, environmental, goods and services, capital stock, profits, single business, employment, severance, stamp, unemployment, customs and duties taxes, fees and charges,

 

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imposed by any taxing authority (whether domestic or foreign including, without limitation, any state, local or foreign government or any subdivision or taxing agency thereof (including a United States possession)), whether computed on a separate, consolidated, unitary, combined or any other basis; and such term shall include any interest, penalties or additional amounts attributable to, or imposed upon, or with respect to, any such taxes, charges, fees, levies or other assessments. “ Tax Return ” shall mean any report, return, document, declaration or other information or filing required to be supplied to any taxing authority or jurisdiction (foreign or domestic) with respect to Taxes.

 

SECTION 2.13             Environmental and Safety Matters .

 

(a)           Except as set forth in the reports described in Schedule 2.13 (the “ Schedule 2.13 Reports ”), to Portfolio’s knowledge: (i) Portfolio and each of the Portfolio POEs is and has been in compliance, in all material respects, with all applicable Environmental Laws (as defined below) and all the Portfolio Permits, licenses, and authorizations required hereunder for the Portfolio Properties; and (ii) during the ownership of the Portfolio Properties by the Portfolio POEs, no material spill, release, disposal, leak, migration, burial, or placement of any material regulated under Environmental Laws (hereinafter “ Hazardous Materials ”) has occurred on, in, from, or at any of the Portfolio Properties which has resulted in a Liability under Environmental Laws for Portfolio or any of the Portfolio POEs.  Neither Portfolio nor any of the Portfolio POEs has received any written notice, order, claim, or other indication alleging non-compliance with any Environmental Laws.  As used in this Agreement, “ Environmental Laws ” shall mean all federal, state, local or foreign laws, rules, regulations, ordinances or government guidance and policies relating to the environment and worker health and safety and common law in the context of the environment, worker health and safety, and human health and welfare, including the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

 

(b)           Portfolio ha s delivered to GTJ or its advisors or consultants, true, complete, and correct copies of all environmental reports, analyses, tests, or monitoring performed at the request of Portfolio which pertain to the Portfolio Properties as of the date of this Agreement.   Except as set forth in the Schedule 2.13 Reports, to Portfolio’s knowledge, neither Portfolio nor any of the Portfolio POEs has any Liability resulting from, and there have been no events which could form the basis for, Liability resulting from transportation, treatment, disposal, or release of any Hazardous Materials at, to, or from any location other than the Portfolio Properties and not including migration or releases of Hazardous Materials in the general vicinity of the Portfolio Properties.  Except as set forth in the Schedule 21.3 Reports, neither Portfolio nor any of the Portfolio POEs has received written notice of any past or present events, conditions, circumstances, activities, practices, incidents, actions, or plans that have resulted in or threaten to result in any Liability under Environmental Laws, or otherwise form the basis of any claim, action, suit, proceeding, hearing, or investigation under, any Environmental Laws.  “ Liability ” for purposes of this Section includes any cost, damage, expense, losses, obligation, responsibility, fines, penalties, judgments, awards, settlements, response actions and corrective actions, as defined under Environmental Laws, judicial or administrative orders and judgments, demands of government agencies, and government agency proceedings any of which relate to Environmental Laws, human health, safety, and welfare and property damage (public or private).

 

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SECTION 2.14             Leasing Matters .

 

(a)           There are no leases or other agreements for the use or occupancy of all or any portion of the Portfolio Properties other than with the tenants (the “ Portfolio Tenants ”) set forth on Schedule 2.14 or as indicated in the Portfolio Tenant Estoppel Certificates, as hereinafter defined (such leases or occupancy agreements, together with all renewals, replacements and amendments thereof being herein referred to as the “ Portfolio Space Leases ”).

 

(b)           Except as otherwise disclosed on Schedule 2.14 or in the Portfolio Space Leases or any Portfolio Tenant Estoppel Certificates heretofore delivered to GTJ: (A) all of such Portfolio Space Leases are in full force and effect, without modification, amendment or extension, and (B) no renewal or extension options have been granted to the Portfolio Tenants by any of the Portfolio POEs and no tenants thereunder have any option to purchase the premises demised or the premises within which such premises are contained; (C) no tenant is entitled to, and none of the Portfolio POEs has granted, any rental concessions or abatements for any period subsequent to the Closing Date; (D) there is no action or proceeding pending against of the Portfolio POEs by any tenant thereunder, except as set forth on Schedule 2.14 ; (E) no tenant under the Portfolio Space Leases is in default in any of its material obligations thereunder and there is no action or proceeding pending by any of the Portfolio POEs with regard to any tenant under the Portfolio Space Leases; (F) true and complete copies of all Portfolio Space Leases and have been delivered to GTJ; (G) each of the Portfolio POEs, as lessor under the Portfolio Space Leases, has not received any notice that it is in default of any of its obligations under such Portfolio Space Leases which has not been cured; (H) none of the Portfolio POEs has received written notice that any Portfolio Tenant contests its pro rata share of tax increases or operating expenses as required by its Portfolio Space Lease or that any Portfolio Tenant contests any rent, escalation or other charges billed to it or claims that any work required to be performed by the lessor under each of the Portfolio Space Leases has not been completed; (I) no assignment, pledge or other encumbrance of any rights or interest of any of the Portfolio POEs under any Portfolio Space Lease will be in effect on the Closing Date other than pursuant to the Existing Portfolio Mortgage Indebtedness; (J) none of the Portfolio POEs has received written notice from any Tenant asserting, any defense to, offset or claim against, rent or additional rent payable by it under its Portfolio Space Lease, and no Portfolio Tenant is entitled to any free rent, abatement or rent concession, except as set forth in the Portfolio Space Leases; (K) no Portfolio Tenant has prepaid any rents or additional rents for more than one (1) month in advance; (L) there are no leasing brokerage commissions (or unpaid installments thereof) now due and payable, with respect to any Portfolio Space Leases (including renewals, extensions or expansions in connection therewith) (the “ Portfolio Payable Commissions ”), (M) Schedule 2.14 sets forth all arrearages in the payment of Fixed Rent and Overage Rent as of the date set forth in such schedule (the “ Portfolio Arrears Schedule ”) and (N) Schedule 2.14 sets forth all tenant improvement work required to be performed by the lessor under any Portfolio Space Lease or for which the lessor is required under any Portfolio Space Lease to reimburse any Portfolio Tenant or grant any allowance in favor of any Portfolio Tenant which has not been completed and/or the costs of which (the “ Portfolio TI Work/Costs ”) have not been paid (regardless of whether such Portfolio Tenant is in default under its Portfolio Space Lease).

 

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(c)           Schedule 2.14 (c) correctly sets forth the security deposits and letters of credit, if any (the “ Portfolio Security Deposits ”) required to be held by each of the Portfolio POEs or Portfolio.  All Portfolio Security Deposits held in cash are kept in a segregated account, and no claim has been received for a return of any of the Portfolio Security Deposits.

 

SECTION 2.15             Condemnation .  There are no pending or, to the actual knowledge of Portfolio, threatened, condemnation or eminent domain proceedings which would affect title to any of the Portfolio Properties.

 

SECTION 2.16             Union Contracts; Employees .  There are no Union Agreements to which Portfolio, any of the Portfolio POEs or the Portfolio Properties is subject. The parties listed on Schedule 2.16 are all of the employees of Portfolio (the “ Portfolio Employees ”).  Schedule 2.16 correctly sets forth the salaries, wages, vacation pay, bonuses and any other fringe benefits (if any) of such Portfolio Employees and the employees of Nautilus Management LLC.  There are no employment proceedings or claims, whether judicial, arbitral, administrative, or otherwise, filed, pending or, to Portfolio’s knowledge, threatened against Portfolio or any of the Portfolio POEs by any Portfolio Employee, including, but not limited to, claims with respect to worker’s compensation, fringe benefits or employment discrimination.  GTJ agrees to offer employment on an “at will” basis to all current employees of Nautilus Management LLC (each, a “ Nautilus Employee ”).  Portfolio covenants and agrees to indemnify and hold GTJ harmless from and against any amounts owed to, or claims made by any Portfolio and Nautilus Employee, and from payroll and other employee-related taxes.

 

SECTION 2.17             Neither Portfolio nor any of the Portfolio POEs is in default of, or has received notice of any default or breach by any of the Portfolio POEs under any of the covenants, conditions, restrictions, rights of way or easements affecting any of the Portfolio Properties.

 

SECTION 2.18             None of the Portfolio POEs has transferred, and has knowledge that any other person has transferred, any (except as may be otherwise stated in Section 3.15 ) rights or development rights relating to any of the Portfolio Properties.

 

SECTION 2.19             Neither Portfolio nor any of the Portfolio POEs has received notice of (i) any pending improvement to be made by any Governmental Entity with respect to any of the Portfolio Properties; or (ii) any defect in any of the Portfolio Properties which would materially and adversely affect the insurability or current use of any of the Portfolio Properties (except as may be otherwise stated in Section 3.15 ).

 

SECTION 2.20             There are no material agreements, documents or other instruments evidencing, securing, or otherwise relating to or delivered in connection with the Existing Portfolio Mortgage Indebtedness, other than the documents identified on Schedule 2.20 (collectively, the “ Portfolio Mortgage Loan Documents ”), true, correct and complete copies of which have been delivered by Portfolio to GTJ.

 

SECTION 2.21             The Portfolio Mortgage Loan Documents are in full force and effect. None of the Portfolio POEs has received any notice of acceleration or default, which

 

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remains uncured, under the Portfolio Mortgage Loan Documents from the Lender or any successor thereto or servicer, and to the knowledge of Portfolio, no event has occurred, nor does any circumstance or condition exist, which with the giving of notice or the expiration of time, or both, which would result in or could reasonably be expected to result in a default by any of the POEs or the Lenders under the Portfolio Mortgage Loan Documents.  All of the representations and warranties contained in the Portfolio Mortgage Loan Documents are true, complete and correct.  There are no loan service agreements, or any other similar agreements, with respect to the Portfolio Loan Mortgage Documents.

 

SECTION 2.22             Governmental Approvals .  No registration or filing with, or consent or approval of or other action by, any Governmental Entity or instrumentality is or will be necessary for the valid execution, delivery and performance by Portfolio of this Agreement or the making of the Portfolio Contribution by Portfolio to the UPREIT.

 

SECTION 2.23             Receivables .  Except as set forth in Schedule 2.23 , all accounts, notes and other receivables and amounts owing to Portfolio (the “ Portfolio Receivables ”) represent arm’s length sales in the ordinary course of business consistent with past practice and are free and clear of all Encumbrances.  Except as set forth in Schedule 2.23 , the Financial Statements as of June 30, 2012 contain reserves for uncollected Portfolio Receivables in accordance with GAAP applied on a consistent basis.

 

SECTION 2.24             Brokers .  Except as set forth on Schedule 2.24 , none of Portfolio or any of the Portfolio POEs has any contract, arrangement or understanding with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement or any other transaction with Portfolio involving Portfolio or any of the Portfolio POEs.

 

SECTION 2.25             Securities Law Matters .

 

(a)           Portfolio is an “accredited investor” within the meaning of Rule 501 under the Securities Act of 1933, as amended (the “ Securities Act ”), and Portfolio was not organized for the specific purpose of acquiring the Portfolio Interest;

 

(b)           Portfolio has sufficient knowledge and experience in investing in companies similar to the UPREIT in terms of the UPREIT’s stage of development and other relevant factors so as to be able to evaluate the risks and merits of its investment in the UPREIT and it is able financially to bear the risks thereof;

 

(c)           Portfolio has had an opportunity to discuss with GTJ and GTJ’s management the terms of the Portfolio Contribution and the business, management and financial affairs of GTJ and the GTJ POEs and to obtain any additional information regarding the foregoing which Portfolio possesses or can acquire without unreasonable effort or expense;

 

(d)           The Portfolio Interest is being acquired for Portfolio’s own account and not with a view to, or the intention of, any distribution in violation of the Securities Act or any applicable state securities laws; and

 

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(e)           Portfolio understands that (i) the Portfolio Interest has not been registered under the Securities Act by reason of the sale of the Interest in a transaction exempt from the registration requirements of the Securities Act, (ii) the Portfolio Interest must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration, (iii) the Portfolio Interest may not be transferred, sold, pledged, hypothecated or otherwise disposed of in the absence of an effective registration statement with respect to the securities evidenced by this certificate, filed and made effective under the Securities Act and such applicable state securities laws, or unless the UPREIT receives an opinion of counsel satisfactory to the UPREIT to the effect that registration under such act and such applicable state securities laws is exempt therefrom, and (iv) the Portfolio Interest shall be subject to the restrictions on transfer set forth in the UPREIT LPA.

 

(f)            Portfolio and its representatives, attorneys, accountants and consultants have reviewed all the public filings of GTJ as filed with the Securities and Exchange Commission.

 

SECTION 2.26             Condition of Portfolio Properties.   To the knowledge of Portfolio, each of the property condition reports and environmental reports prepared by or on behalf of PW Grosser in connection with this transaction fairly represent the condition of each of the Portfolio Properties, including without limitation, any deferred maintenance items.

 

SECTION 2.27             Anti-Terrorism Requirements

 

(a)           no principal of Portfolio is listed on the list maintained by the United States Department of Treasury, Office of Foreign Assets control (commonly known as the OFAC list) or otherwise qualifies as a person with whom business by a United States citizen or resident is prohibited; and

 

(b)           no principal of Portfolio is in violation of any anti-money laundering or anti-terrorism statute, including the uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56 (commonly known as the USA Patriot Act), and the related regulations issues thereunder, including temporary regulations, all as amended from time to time.

 

SECTION 2.28             Relationship with Related Persons .  None of the directors, officers, or members of Portfolio or the Portfolio POEs, and their Related Persons, have any interest in any of the properties or assets of or used by Portfolio or the Portfolio POEs and do not own, of record or as a beneficial owner, an equity interest or any other financial or profit interest in any person or entity that (i) except as set forth in Schedule 2.28 , had had business dealings or a material financial interest in any transaction with Portfolio or the Portfolio POEs, or (ii) has engaged or is engaged in competition with Portfolio or the Portfolio POEs with respect to any line of business of Portfolio or the Portfolio POEs in any market presently served by the Portfolio or the Portfolio POEs (a “ Competing Business ”) (except for the ownership of less than three percent (3%) of the outstanding capital stock of any Competing Business that is publicly traded on any recognized exchange or in the over-the-counter market).  Except as set forth on Schedule 2.28 , no member, manager, officer, or employee of Portfolio or the Portfolio POEs and none of

 

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their Related Persons is a party to any contract with, or has any claim against, Portfolio or the Portfolio POEs or the properties and assets.  All money owed by Portfolio or the Portfolio POEs to its members, managers, officers, or their Related Persons, (other than for salary) are for bona fide debts and are set forth in Schedule 2.28 .  “ Related Person ” or “ Related Persons ” means, with respect to a particular individual:

 

(i)            each other member of such individual’s family; and

 

(ii)           any affiliate of one or more members of such individual’s family.

 

With respect to a specified person other than an individual:

 

(i)            any affiliate of such specified person; and

 

(ii)           each person that serves as a director, member, officer, manager, general partner, shareholder, executor or trustee of such specified person (or in a similar capacity).

 

SECTION 2.29             Insurance .  Schedule 2.29 sets forth a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, directors and officers’ liability, fiduciary liability and other casualty and property insurance maintained by Portfolio or the Portfolio POEs and relating to the assets, business, operations, employees, officers and directors of the Portfolio or the Portfolio POEs (collectively, the “ Insurance Policies ”) and true and complete copies of such Insurance Policies have been made available to GTJ.  Such Insurance Policies are in full force and effect and shall remain in full force and effect following the consummation of the transactions contemplated by this Agreement.  Neither Portfolio or the Portfolio POEs have received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies.  All premiums due on such Insurance Policies have either been paid or, if due and payable prior to Closing, will be paid prior to Closing in accordance with the payment terms of each Insurance Policy. The Insurance Policies do not provide for any retrospective premium adjustment or other experience-based liability on the part of Portfolio.  All such Insurance Policies (a) are valid and binding in accordance with their terms; (b) are provided by carriers who are financially solvent; and (c) have not been subject to any lapse in coverage.  There are no claims related to the business of Portfolio or the Portfolio POEs pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights.  None of Portfolio or the Portfolio POEs is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy.  The Insurance Policies are of the type and in the amounts customarily carried by persons conducting a business similar to Portfolio or the Portfolio POEs and are sufficient for compliance with all applicable laws and contracts to which Portfolio or the Portfolio POEs are a party or by which they are bound.

 

SECTION 2.30             Books and Records .  None of the Portfolio or the Portfolio POEs have maintained minute books or membership interest record books of Portfolio and the Portfolio

 

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POEs.  Portfolio and the Portfolio POEs have provided to GTJ true, complete and correct copies of their respective operating agreements.

 

SECTION 2.31             Material Disclosure; No Omission .  No representation or warranty or other statement made by Portfolio or the Portfolio POEs in this Agreement in connection with the contemplated transactions contains any untrue statement or omits to state a material fact necessary to make any of them, in light of the circumstances in which it was made, not misleading.

 

SECTION 2.32             Title to Property .  Except as set forth in the title reports for each of the Portfolio Properties prepared by Fidelity National Title Insurance Company as it relates to Connecticut properties, Excalibur, as agent for Fidelity National Title Insurance Company, as it relates to New York properties, and Titlevest, as agent for Fidelity National Title Insurance Company as it relates to New Jersey and delivered to GTJ, the Portfolio POEs have good and marketable title to each of the Portfolio Properties, free and clear Encumbrances.

 

SECTION 2.33             Knowledge Representations.   For purposes of this Agreement, “knowledge of Portfolio” shall include the actual knowledge, after due inquiry, of:

 

(i)            Green Holland Management, LLC;

 

(ii)           Louis Sheinker;

 

(iii)          Nautilus Management LLC; and

 

(iv)          Paul Cooper.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF GTJ

 

GTJ represents and warrants to Portfolio as follows:

 

SECTION 3.1               Organization, Qualifications and Power .  GTJ is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland and is duly licensed and qualified to transact business in the manner that its business is currently being conducted.  Each of the GTJ POEs is a limited liability company duly organized, validly existing and in good standing under the laws of its state of organization and is duly licensed and qualified to transact business in the manner that its business is currently being conducted. Each of the GTJ POEs has the power and authority to own, lease, operate and hold its properties and to carry on its business as currently conducted.  GTJ and each of the GTJ POEs is in good standing under the laws of each jurisdiction wherein the nature of its respective business or its respective ownership of property requires it to be so qualified.

 

SECTION 3.2               REIT Status .  GTJ is a real estate investment trust as defined in Section 856 of the Internal Revenue Code.  GTJ (i) for all taxable years for which the Internal Revenue Service could assert a tax liability, has been subject to taxation as a real estate investment trust (a “REIT”) within the meaning of Section 856 of the Code from July 1, 2007 through the date of

 

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this Agreement and has satisfied all requirements to qualify as a REIT for all such years, (ii) has elected REIT status as of July 1, 2007 and has maintained such election to the date of this representation, and presently intends to continue to operate, in such a manner as to qualify as a REIT, and (iii) has not taken or omitted to take any action which would reasonably be expected to result in a challenge to its status as a REIT and, to GTJ’s knowledge, no such challenge is pending or threatened. Each of the GTJ POEs and the Other GTJ Subsidiaries (as defined below) which is a partnership, joint venture or limited liability company (i) has been since its formation and continues to be treated for federal income tax purposes as a partnership and not as a corporation or an association taxable as a corporation and (ii) has not since the later of its formation or the acquisition by GTJ of a direct or indirect interest therein, owned any assets (including, without limitation, securities) that would cause GTJ to violate Section 856(c)(4) of the Code. Each of the Other GTJ Subsidiaries which is a corporation has been since its formation a qualified REIT subsidiary under Section 856(i) of the Code. Except as set forth on Schedule 3.2 , none of GTJ, the GTJ POEs and the Other GTJ Subsidiaries hold any asset the disposition of which would be subject to rules similar to Section 1374 of the Code as a result of an election under IRS Notice 88-19 or Temporary Treas. Reg. ss.1.337(d)-5T.

 

SECTION 3.3               Capitalization .

 

(a)           The authorized shares of capital stock of GTJ consist of (i) 100,000,000 shares of GTJ Common Stock, $0.0001 par value per share, 13,684,084 of which are issued and outstanding on the date of this Agreement; and (ii) 10,000,000 shares of preferred stock, $0.0001 par value per share (“GTJ Preferred Stock”), none of which are issued and outstanding on the date of this Agreement, but 500,000 shares of GTJ Preferred Stock have been classified as Series A Preferred Stock and 6,500,000 shares of GTJ Preferred Stock have been classified as Series B Preferred Stock are designated with none outstanding on the date of this Agreement.

 

(b)           Set forth in Schedule 3.3 annexed hereto is a true and complete list of the following: (i) each qualified or nonqualified option to purchase shares of Common Stock granted under GTJ’s 2007 Incentive Award Plan or any other formal or informal arrangement (collectively, the “ GTJ Stock Options”); and (ii) all other warrants or other rights to acquire GTJ Common Stock, all stock appreciation rights, restricted stock, dividend equivalents, deferred compensation accounts, performance awards, restricted stock unit awards and other awards which are outstanding on the date of this Agreement (“ GTJ Stock Rights ”). Schedule 3.3 sets forth for each GTJ Stock Option and GTJ Stock Right the name of the grantee, the date of the grant, the number of shares of GTJ Common Stock subject to each option or other award, and the exercise price per share. On the date of this Agreement, except as set forth in this Section 3.3 or in Schedule 3.3, no shares of GTJ Common Stock were outstanding or reserved for issuance.

 

(c)           All outstanding shares of GTJ Common Stock are duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. There are no bonds, debentures, notes or other indebtedness of GTJ having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of GTJ may vote.

 

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SECTION 3.4               Equity Interests .  GP owns a 1% general partnership interest in the UPREIT and GTJ owns a 99% limited partnership interest in the UPREIT.  The UPREIT owns 100% of the outstanding membership interest in the GTJ POEs.  Except for its ownership interest in UPREIT, the GTJ POEs and the other subsidiaries set forth in Schedule 3.4 annexed hereto (the “ Other GTJ Subsidiaries ”), GTJ (a) does not own of record or beneficially, directly or indirectly, (i) any shares of capital stock or equity securities or securities convertible into capital stock or equity securities of any other corporation or business entity, and (ii) any participating interest in any partnership or joint venture or (b) does not control, directly or indirectly, any other entity.

 

SECTION 3.5               Authorization of Agreements, Conflicts, Etc.   The execution and delivery by GTJ of this Agreement and the performance by GTJ of its obligations hereunder and thereunder (including the making of the GTJ Contribution) have been duly authorized by all requisite legal and governmental action and will not violate any provision of any law, GTJ’s articles of incorporation or by-laws, or subject to the GTJ Lender Approval, any provision of any loan agreement, contract or other instrument to which GTJ, any of the GTJ POEs, the Other GT Subsidiaries or any of their respective properties or assets is bound, or conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such loan agreement, contract or other instrument, or result in the creation or imposition of any Encumbrance whatsoever upon any of the properties or assets of GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries.

 

SECTION 3.6               Enforceability .  This Agreement has been duly executed and delivered by the GTJ and constitutes the legal, valid and binding obligation of GTJ, enforceable against GTJ in accordance with its terms.

 

SECTION 3.7               Financial Statements .

 

(a)           GTJ has furnished to Portfolio copies of the unaudited consolidated and consolidating financial statements of GTJ, the GTJ POEs and the Other GTJ Subsidiaries as of June 30, 2012 (the “ GTJ Financial Statements ”).  All of the GTJ Financial Statements (including any related notes) (i) have been prepared from and in accordance with GAAP form the books and records of GTJ, the GTJ POEs and the Other GTJ Subsidiaries and (ii) fairly and accurately present the consolidated financial position of GTJ, the GTJ POEs and the Other GTJ Subsidiaries as of such date.  Except as set forth on Schedule 3.7(a), all material liabilities of GTJ, the GTJ POEs and the Other GTJ Subsidiaries or any of their respective assets and properties, including accrued salaries and wages, as of June 30, 2012 are disclosed or reserved against on such GTJ Financial Statements.

 

(b)           Except as set forth on Schedule 3.7(b) , the Net Assets of GTJ on a consolidated basis on the Closing Date, taken immediately prior to the Closing, shall be not less than the aggregate Net Assets of the GTJ POEs as reflected on the GTJ Financial Statements dated as of June 30, 2012.  “Net Assets” means, with respect to an entity as of a particular date, the total assets of such entity as of such date less the total liabilities of such entity as of such date, determined in the same manner as GTJ determined such items in preparing the Financial Statements dated as of June 30, 2012.

 

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SECTION 3.8               No Undisclosed Liabilities .  Except as set forth in Schedule 3.8 , and except (a) for liabilities and obligations incurred in the ordinary course of business consistent with past practice after June 30, 2012 which have not resulted and are not reasonably expected to result in any material increase in each GTJ POEs liabilities from those provided for or disclosed in the GTJ Financial Statements, (b) for liabilities and obligations disclosed or reserved for in the GTJ Financial Statements, including without limitation, with respect to the sale or winding down of any of the Other GTJ Subsidiaries and (c) for direct costs associated with the scope of work required to complete the work set forth in the electrical contracts with the Department of Citywide Administrative Services, the Staten Island Museum and the Port Authority Bus Terminal estimated to be approximately $3,000,000 (the “Electrical Contract Liabilities”)  entered into by GTJ POE’s,  (the “ GTJ Pre-Closing Contingent Liabilities ”) and (d) for withdrawal liability estimated to be approximately $1,400,000, since June 30, 2012 , none of GTJ, its GTJ POEs or the Other GTJ Subsidiaries has incurred any liability or obligation that would be required to be disclosed or reserved against in a balance sheet of such person prepared in accordance with GAAP.

 

SECTION 3.9               Absence of Certain Changes .  Except (a) as disclosed in the Financial Statements or (b) as set forth in Schedule 3.9 , since June 30, 2012, each of GTJ, the GTJ POEs and the Other GTJ Subsidiaries has conducted its business only in the ordinary course of business consistent with past practice, and none of GTJ, any of the GTJ POEs and the Other GTJ Subsidiaries has experienced any material adverse change in its financial condition.  Since June 30, 2012, none of GTJ, the GTJ POEs and the Other GTJ Subsidiaries has taken any of the actions or permitted to occur any of the events specified in this Section 3.9 or committed to do any of the foregoing.

 

SECTION 3.10             No Default; Compliance with Applicable Laws; Permits .

 

(a)           Except as set forth in Schedule 3.10 , none of GTJ, the GTJ POEs and the Other GTJ Subsidiaries is in default or violation of any term, condition or provision of (i) its articles of organization, limited liability company agreement or other governing instrument or (ii) any material statute, law, rule, regulation, judgment, decree, order, arbitration award, concession or grant applicable to GTJ, the GTJ POEs or the Other GTJ Subsidiaries, as their respective assets and properties including, without limitation, laws, rules and regulations relating to the environment, occupational health and safety, employee benefits, wages, workplace safety, equal employment opportunity and race, religious or sex discrimination.

 

(b)           To GTJ’s knowledge, each of GTJ, the GTJ POEs and the Other GTJ Subsidiaries have all licenses, permits, exemptions, consents, waivers, authorizations, rights, certificates of occupancy, franchises, orders or approvals of, and has made all required registrations with, any Governmental Entity that are material to the conduct of its business including, without limitation, the intended use of the GTJ Properties (collectively the “ GTJ Permits ”), not including, however permits relating to safety matters and compliance with Environmental Laws, which are addressed in Section 3.15 of this Agreement, and all of the GTJ Permits are valid and in full force and effect and will not be invalidated or otherwise affected by consummation of the transactions contemplated by this Agreement.  To GTJ’s knowledge, no material violations are or have been recorded in respect of any of the GTJ Permits and no event

 

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has occurred which would allow revocation or termination or which would result in the impairment of the rights of GTJ, the GTJ POEs or the Other GTJ Subsidiaries respect to any such the GTJ Permits and no proceeding is pending or, to GTJ’s knowledge, threatened, to revoke, limit or enforce any of the GTJ Permits.

 

SECTION 3.11             Ownership and Sufficiency of Assets .  Except as set forth in Schedule 3.11 , GTJ, the GTJ POEs and the Other GTJ Subsidiaries, taken as a whole, own or has the right to use all material tangible assets used regularly in the conduct of business of GTJ, the GTJ POEs and the Other GTJ Subsidiaries as presently conducted and which ware expected to be used in the future, including, without limitation, all material tangible assets reflected on the balance sheet, dated as of June 30, 2012, included in the GTJ Financial Statements.  Such assets represent all of the material tangible assets necessary to conduct the business of GTJ, the GTJ POEs and the Other GTJ Subsidiaries as presently conducted.

 

SECTION 3.12             Litigation .  Except as set forth in Schedule 3.12 , there is no action, suit, claim, proceeding or investigation pending or, to GTJ’s knowledge, threatened against or affecting GTJ, the GTJ POEs or the Other GTJ Subsidiaries, at law or in equity, or before or by any Governmental Entity (each, a “ GTJ Action ”) which individually or in the aggregate could reasonably be expected to have a material adverse effect on the business assets or operations of GTJ, the GTJ POEs or the other GTJ Subsidiaries, taken as a whole, and, to GTJ’s knowledge, there is no basis for any of the foregoing.  None of GTJ, the GTJ POEs or the Other GTJ Subsidiaries is in default with respect to any order, writ, injunction or decree known to or served upon such person of any court or of any Governmental Entity.  Except as set forth in Schedule 3.12 , there is no GTJ Action by GTJ, the GTJ POEs or the Other GTJ Subsidiaries pending or threatened against others.  The litigation set forth in Schedule 3.12 , including costs of defense, will have no material adverse effect on the business, results of operations, financial condition or business prospects of GTJ, the GTJ POEs and the Other GTJ Subsidiaries, taken as a whole.

 

SECTION 3.13             Contracts .

 

(a)           Schedule 3.13 sets forth a list of each material contract, agreement, plan, understanding, commitment or arrangement, written or oral, to which GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries is a party or by which GTJ, any of the GTJ POEs, any of the Other GTJ Subsidiaries or any of their respective assets is bound (collectively, the “ GTJ Contracts ”).

 

(b)           Except as set forth in Schedule 3.13 , each of the GTJ Contracts is a legal, valid and binding obligation of GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries to the extent such entity is a party thereto and is enforceable by and against GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries to the extent such entity a party thereto, in accordance with its terms.  Each of GTJ, the GTJ POEs and the Other GTJ Subsidiaries has performed all material obligations required to be performed by it under the GTJ Contracts to which it is or was a party, and is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any respect thereunder and, to GTJ’s knowledge, no other party to any of the GTJ Contracts is (with or without the lapse of time or the giving of notice, or both) in breach or default in any respect thereunder.  None of GTJ, any of the GTJ POEs and the Other GTJ

 

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Subsidiaries has received any notice of the intention of any party to terminate any GTJ Contract.  Complete and correct copies of all GTJ Contracts have been delivered or made available to Portfolio.

 

SECTION 3.14             Taxes .  Each of GTJ, the GTJ POEs and the Other GTJ Subsidiaries has timely filed all Tax Returns required to be filed by it or obtained valid extensions thereof, and each of GTJ, the GTJ POEs and the GTJ Subsidiaries has paid or accrued all Taxes (as hereinafter defined) due with respect to such Tax Returns other than such Taxes as are being contested in good faith by GTJ any of the GTJ POEs or the Other GTJ Subsidiaries as well as all other material Taxes which have become due or payable, including Taxes which GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries is or was obligated to withhold from amounts owing to employees, creditors and third parties.  All such Taxes with respect to which GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries has become obligated pursuant to elections made by GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries in accordance with generally accepted practice have been paid and adequate reserves have been established for all Taxes accrued but not yet payable.

 

SECTION 3.15             Environmental and Safety Matters .

 

(a)           Except as set forth in Schedule 3.15 , to GTJ’s knowledge: (i) each of GTJ, the GTJ POEs and the Other GTJ Subsidiaries is and has been in compliance in all material respects with all applicable Environmental Laws (as defined below) and all the GTJ Permits, licenses, and authorizations required hereunder for the conduct of such entity’s business, including, without limitation, the operation of the GTJ Properties; (ii) during the ownership of the GTJ Properties by the GTJ POEs, no Hazardous Materials has occurred on, in, from, or at any of the GTJ Properties which has resulted in a Liability under Environmental Laws for GTJ or any of the GTJ POEs; and (iii) neither GTJ nor any of the GTJ POEs has received any written notice, order, claim, or other indication alleging non-compliance with any Environmental Laws.

 

(b)           GTJ ha s delivered to Portfolio or its advisors or consultants, true, complete, and correct copies of all environmental reports, analyses, tests, or monitoring performed at the request of GTJ or the GTJ POEs that pertain to the GTJ Properties as of the date of this Agreement.   Except as set forth in Schedule 3.15 to GTJ’s knowledge: (i) none of GTJ, any of the GTJ POEs and the Other GTJ Subsidiaries has received written notice of any past or present events, conditions, circumstances, activities, practices, incidents, actions, or plans that have resulted in or threaten to result in any Liability under Environmental Laws, or otherwise form the basis of any claim, action, suit, proceeding, hearing, or investigation under, any Environmental Laws; (ii) none of GTJ, any of the GTJ POEs and any of the Other GTJ Subsidiaries has any Liability resulting from, and there have been no events which could form the basis for, Liability resulting from transportation, treatment, disposal, or release of any Hazardous Materials at, to, or from any location other than the GTJ Properties and not including migration or releases of Hazardous Materials in the general vicinity of the GTJ Properties.

 

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SECTION 3.16             Leasing Matters .

 

(a)           There are no leases or other agreements for the use or occupancy of all or any portion of the GTJ Properties other than with the tenants (the “ GTJ Tenants ”) set forth on Schedule 3.16 or as indicated in the GTJ Tenant Estoppel Certificates, as hereinafter defined (such leases or occupancy agreements, together with all renewals, replacements and amendments thereof entered into after the date hereof being herein referred to as the “ GTJ Space Leases ”).

 

(b)           Except as otherwise disclosed on Schedule 3.16 or in the GTJ Space Leases or any GTJ Tenant Estoppel Certificate heretofore delivered to Portfolio: (A) all of such GTJ Space Leases are in full force and effect, without modification, amendment or extension, and (B) no renewal or extension options have been granted to the GTJ Tenants by any of the GTJ POEs and no tenants thereunder have any option to purchase the premises demised or the premises within which such premises are contained; (C) no tenant is entitled to, and none of the GTJ POEs has not granted, any rental concessions or abatements for any period subsequent to the Closing Date; (D) there is no action or proceeding pending against the GTJ POEs by any tenant thereunder, except as set forth on Schedule 3.16 ; (E) no tenant under the GTJ Space Leases is in default in any of its material obligations thereunder and there is no action or proceeding pending by any of the GTJ POEs with regard to any tenant under the Space Leases; (F) true and complete copies of all Space Leases and have been delivered to Portfolio; (G) each of the GTJ POEs, as lessor under the Space Leases, has not received any notice that it is in default of any of its obligations under such GTJ Space Leases which has not been cured; (H) none of the GTJ POEs has received written notice that any GTJ Tenant contests its pro rata share of tax increases or operating expenses as required by its Space Lease or that any GTJ Tenant contests any rent, escalation or other charges billed to it or claims that any work required to be performed by the lessor under each of the GTJ Space Leases has not been completed; (I) no assignment, pledge or other encumbrance of any rights or interest of any of the GTJ POEs under any GTJ Space Lease will be in effect on the Closing Date other than pursuant to the Existing GTJ Mortgage Indebtedness; (J) none of the GTJ POEs has received written notice from any GTJ Tenant asserting, any defense to, offset or claim against, rent or additional rent payable by it under its GTJ Space Lease, and no GTJ Tenant is entitled to any free rent, abatement or rent concession, except as set forth in the GTJ Space Leases; (K) no GTJ Tenant has prepaid any rents or additional rents for more than one (1) month in advance; (L) there are no leasing brokerage commissions (or unpaid installments thereof) now due and payable, with respect to any GTJ Space Leases (including renewals, extensions or expansions in connection therewith) (the “ GTJ Payable Commissions ”), (M)  Schedule 3.16 sets forth all arrearages in the payment of Fixed Rent and Overage Rent as of the date set forth in such schedule (the “ GTJ Arrears Schedule ”) and (N)  Schedule 3.16 sets forth the tenant improvement work required to be performed by the lessor under any GTJ Space Lease or for which the lessor is required under any GTJ Space Lease to reimburse any GTJ Tenant or grant any allowance in favor of any GTJ Tenant which has not been completed and/or the costs of which (the “ GTJ Tenant Improvement Costs ”) have not been paid (regardless of whether such GTJ Tenant is in default under its GTJ Space Lease).

 

(c)           Schedule 3.16 (c)  correctly sets forth the security deposits and letters of credit, if any (the “ GTJ Security Deposits ”) required to be held by each of the GTJ POEs.

 

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SECTION 3.17             Condemnation .  Except as set forth on Schedule 3.17 , there are no pending or, to the actual knowledge of GTJ, threatened, condemnation or eminent domain proceedings that would affect title to any of the GTJ Properties.

 

SECTION 3.18             Union Contracts; Employees .  Except as set forth on Schedule 3.18 , there are no Union Agreements to which GTJ, any of the GTJ POEs, any of the Other GTJ Subsidiaries or any of the GTJ Properties is subject.  To the actual knowledge of GTJ, there are no employment proceedings filed or pending against GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries by any of the employees of ether GTJ, a GTJ POE or any of the Other GTJ Subsidiaries.

 

SECTION 3.19             Notice of Default Affecting GTJ Properties .  Neither GTJ nor any of the GTJ POEs has received notice of any default or breach by any of the GTJ POEs under any of the covenants, conditions, restrictions, rights of way or easements affecting any of the GTJ Properties.

 

SECTION 3.20             Transfer of Material or Development Rights .  None of the GTJ POEs has transferred, and has knowledge that any other person has transferred, any material rights or development rights relating to any of the GTJ Properties.

 

SECTION 3.21             Notice of Improvements or Defects .  Neither GTJ nor any of the GTJ POEs has received notice of (i) any pending improvement to be made by any Governmental Entity with respect to any of the GTJ Properties; or (ii) any defect in any of the GTJ Properties which would materially adversely affect the insurability or current use of any of the GTJ Properties (except as may be otherwise stated in Section 3.15).

 

SECTION 3.22             Existing GTJ Mortgage Indebtedness .  There are no material agreements, documents or other instruments evidencing, securing, or otherwise relating to or delivered in connection with the Existing GTJ Mortgage Indebtedness, other than the documents identified on Schedule 3.22 (collectively, the “ GTJ Mortgage Loan Documents ”), true, correct and complete copies of which have been delivered by GTJ to Portfolio.

 

SECTION 3.23             GTJ Mortgage Loan Documents . The GTJ Mortgage Loan Documents are in full force and effect. None of the GTJ POEs has received any notice of acceleration or default, which remains uncured or waived, under the GTJ Mortgage Loan Documents from the Lender or any successor thereto or servicer, and to the actual knowledge of GTJ, no event has occurred, nor does any circumstance or condition exist, which with the giving of notice or the expiration of time, or both, which would result in, or could reasonably be expected to result in a default by any of the POEs under the GTJ Mortgage Loan Documents.

 

SECTION 3.24             Governmental Approvals .  No registration or filing with, or consent or approval of or other action by, any Governmental Entity or instrumentality is or will be necessary for the valid execution, delivery and performance by GTJ of this Agreement or the making of the GTJ Contribution by GTJ to the UPREIT.

 

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SECTION 3.25             Receivables .  Except as set forth in Schedule 3.25 , all accounts, notes and other receivables and amounts owing to GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries (the “ GTJ Receivables ”) represent arm’s length sales in the ordinary course of business consistent with past practice and are free and clear of all Encumbrances.  Except as set forth in Schedule 3.25 , the Financial Statements as of June 30, 2012 contain reserves for uncollected GTJ Receivables that are consistent with GAAP and the historical practice of GTJ.

 

SECTION 3.26             Brokers .  Except as set forth on Schedule 3.26 , none of GTJ, the GTJ POEs and the Other GTJ Subsidiaries has any contract, arrangement or understanding with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement or any other transaction with GTJ involving GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries.

 

SECTION 3.27             Title to Property .  Except as set forth the title reports for each of the GTJ Properties prepared by TitleVest, as agent for First American Title Insurance Company and delivered to Portfolio, the GTJ POEs have good and marketable title to each of the GTJ Properties, free and clear Encumbrances.

 

SECTION 3.28             Knowledge Representations .  For purposes of this Agreement, “knowledge of GTJ” shall include the actual knowledge after due inquiry of Douglas A. Cooper and David J. Oplanich, the Executive Vice President and Secretary and Chief Financial Officer, respectively of GTJ.

 

SECTION 3.29             Knowledge Imputed to Portfolio.   The parties acknowledge that Paul Cooper, a managing member of Portfolio and the Portfolio POEs, has served as an Executive Officer of GTJ and as a member of its Board of Directors since June 26, 2006, Chief Executive Officer since May 29, 2012 and is actively involved and familiar with its business, properties and affairs.  Accordingly, notwithstanding anything stated herein to the contrary, Portfolio waives any claim for misrepresentation, breach of warranty, indemnification or that GTJ failed to comply with Section 4.1(a), as to matters of which Paul Cooper has actual knowledge, and to which Douglas A. Cooper and/or David J. Oplanich did not have actual knowledge or should have known after due inquiry.  All of such knowledge shall be deemed to have been disclosed under this Agreement for all relevant purposes to Portfolio.

 

ARTICLE IV
CONDITIONS TO CLOSING

 

SECTION 4.1               Conditions to Obligations of Portfolio .  The obligations of Portfolio to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, or written waiver by GTJ, at or prior to the Closing, of each of the following conditions:

 

(a)           Representations, Warranties and Covenants .  The representations and warranties of GTJ contained in this Agreement shall be true and correct in all material respects as of the Closing, the covenants and agreements contained in this Agreement to be complied with by GTJ on or before the Closing shall have been complied with in all material respects and Portfolio shall have received a certificate from GTJ to such effect.

 

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(b)           Secretary Certificate .  GTJ shall have delivered to Portfolio: (i) a copy of the text of the resolutions by which the corporate action on the part of GTJ necessary to approve this Agreement were taken, certified by GTJ’s Secretary, (ii) an incumbency certificate signed by an officer of GTJ certifying the signature and office of each officer and manager executing this Agreement or any other agreement, certificate or other instrument executed pursuant hereto, (iii) a copy of GTJ’s Articles of Amendment and Restatement, as amended to date, certified by the Department of Assessments and Taxation of the State of Maryland, (iv) a copy of the By-Laws of GTJ, as amended to date, certified by the Secretary of GTJ, and (v) certificates of status for GTJ, issued as of a recent date, by the Department of Assessments and Taxation of the State of Maryland and each other jurisdiction in which GTJ is required to be qualified to do business.

 

(c)           No Proceeding or Litigation .  No GTJ Action shall have been commenced or threatened in writing by or against GTJ, any of the GTJ POEs or any of the Other GTJ Subsidiaries which seeks to restrain or materially alter the transactions contemplated hereby which Portfolio reasonably believes is likely to render it impossible or unlawful to consummate the transactions contemplated by this Agreement.

 

(d)           Consents and Approvals .  Each of GTJ, the GTJ POEs and the Other GTJ Subsidiaries shall have received, each in form and substance reasonably satisfactory to Portfolio, all third party consents which Portfolio deems reasonably necessary or desirable for the consummation of the transactions contemplated by this Agreement, including, without limitation, the GTJ Lender Approval.

 

(e)           GTJ Tenant Estoppels .  Portfolio shall have received on or before Closing estoppel certificates (the “ GTJ Tenant Estoppels ”) in substantially the form annexed hereto as Schedule 4.1 duly executed by a number of the GTJ Tenants reasonably acceptable to Portfolio.  Notwithstanding the foregoing, any estoppel required from the City of New York may be substantially in the form previously delivered by the City to GTJ in connection with the financing received in 2010.

 

(f)            Board Expansion .  The Board of Directors of GTJ shall be expanded to 10 directors and the following individuals shall be appointed as Class II directors to serve in accordance with the By-laws of GTJ:  Louis Sheinker, Jeffrey Wu and Stanley Perla.

 

(g)           Other Deliveries .  The Portfolio shall have received on or before the Closing the items set forth in Section 1.5 and 1.6 and such other documents as Portfolio may reasonably request.

 

SECTION 4.2               Conditions to Obligations of GTJ .  The obligations of GTJ to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, or written waiver by GTJ, at or prior to the Closing, of each of the following conditions:

 

(a)           Representations, Warranties and Covenants .  The representations and warranties of Portfolio contained in this Agreement shall be true and correct in all material respects as of the Closing and the covenants and agreements contained in this Agreement to be

 

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complied with by Portfolio on or before the Closing shall have been complied with in all material respects, and GTJ shall have received a certificate from Portfolio to such effect.

 

(b)           Secretary Certificate .  Portfolio shall have delivered to GTJ: (i) a copy of the text of the resolutions by which the company action on the part of Portfolio necessary to approve this Agreement were taken, certified by Portfolio’s Secretary, (ii) an incumbency certificate signed by an officer of Portfolio certifying the signature and office of each officer and manager executing this Agreement or any other agreement, certificate or other instrument executed pursuant hereto, (iii) a copy of Portfolio’s Certificate of Formation, as amended to date, certified by the State Secretary of the State of Delaware, (iv) a copy of the operating agreement of Portfolio, as amended to date, certified by the Secretary of Portfolio, and (v) good standing certificates for Portfolio, issued as of a recent date, by the State Secretary of the State of Delaware and each other jurisdiction in which Portfolio is required to be qualified to do business.

 

(c)           No Proceeding or Litigation .  No Action shall have been commenced or threatened in writing by or against Portfolio or any of the Portfolio POEs which seeks to restrain or materially alter the transactions contemplated hereby which GTJ reasonably believes is likely to render it impossible or unlawful to consummate the transactions contemplated by this Agreement.

 

(d)           Consents and Approvals .  Each of Portfolio and the Portfolio POEs shall have received, each in form and substance reasonably satisfactory to Purchaser, all third party consents which Purchaser deems reasonably necessary or desirable for the consummation of the transactions contemplated by this Agreement, including, without limitation, the Portfolio Lender Approvals.

 

(e)           Portfolio Tenant Estoppels .  GTJ shall have received on or before Closing estoppel certificates (the “ Portfolio Tenant Estoppels ”) in the form annexed hereto as Schedule 4.1 duly executed by each of the Portfolio Tenants.  GTJ shall have the option to require landlord estoppel certificates in form and substance reasonably acceptable to GTJ, in the event a Portfolio Tenant Estoppel is not delivered in form acceptable to GTJ.

 

(f)            Financial Advisor Opinion .   GTJ shall have received the written opinion of Duff & Phelps, GTJ’s financial advisor, to the effect that the proposed consideration to be received by GTJ is fair to GTJ and the stockholders of GTJ from a financial point of view.

 

(g)           Investor Letter .  Each of the beneficial owners of Portfolio shall execute and deliver the investor letter attached hereto as Exhibit I .

 

(h)           Board Expansion .  The Board of Directors of GTJ shall be expanded to 10 directors and the following individuals shall be appointed as Class II directors to serve in accordance with the By-laws of GTJ:  Louis Sheinker, Jeffrey Wu and Stanley Perla.

 

(i)            Other Deliveries .  GTJ shall have received on or before the Closing the items set forth in Section 1.4 and such other documents as GTJ may reasonably request.

 

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SECTION 4.3               Conditions to Obligations of the UPREIT .  The obligations of the UPREIT to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, or written waiver by the UPREIT, at or prior to the Closing, of each of the following conditions:

 

(a)           Representations, Warranties and Covenants .  The representations and warranties of Portfolio and GTJ contained in this Agreement shall be true and correct in all material respects as of the Closing and the covenants and agreements contained in this Agreement to be complied with by Portfolio and GTJ on or before the Closing shall have been complied with in all material respects, and the UPREIT shall have received a certificate from Portfolio and GTJ to such effect.

 

(b)           No Proceeding or Litigation .  No Action shall have been commenced or threatened by or against Portfolio, any of the Portfolio POEs, GTJ, the GTJ POEs or any of the Other GTJ Subsidiaries which seeks to restrain or materially alter the transactions contemplated hereby which the UPREIT reasonably believes is likely to render it impossible or unlawful to consummate the transactions contemplated by this Agreement.

 

(c)           Consents and Approvals .  Each of Portfolio, the Portfolio POEs, GTJ and the GTJ POEs shall have received, each in form and substance reasonably satisfactory to the UPREIT, all third party consents which the UPREIT deems reasonably necessary or desirable for the consummation of the transactions contemplated by this Agreement, including, without limitation, the Portfolio Lender Approvals.

 

(d)           Other Deliveries .  The UPREIT shall have received on or before the Closing the items set forth in Section 1.4 and such other documents as the UPREIT may reasonably request.

 

ARTICLE V
CLOSING ADJUSTMENTS

 

SECTION 5.1               Net Closing Adjustments .  The net prorations under this Article V shall be paid by the party who owes the other party, in cash at Closing.

 

SECTION 5.2               Adjustments Related to the Portfolio Properties .  The parties agree that the following are to be apportioned at the Closing as of the close of business on the day immediately preceding the Closing Date (the “ Adjustment Date ”):

 

(a) (i) All real estate taxes, assessments, vault charges, water rates and sewer taxes, if any, with respect to the Portfolio Properties and the current fiscal year on the basis of the fiscal year for which assessed on a per diem basis, except that if the Closing Date shall occur before the tax rate is fixed, then the apportionment of such taxes shall be upon the basis of the tax rate for the next preceding year applied to the latest assessed valuation, and when the tax rate is fixed there shall be a recomputation and any additional payment or refund shall be made accordingly. If there is a water meter(s) on the Portfolio Properties, apportionment shall be made on the basis of the last available reading, subject to final adjustment after the Closing Date when

 

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the next reading is available. In such case, Portfolio shall endeavor to furnish readings to a date not more than thirty (30) days prior to the date of Closing; provided, however, if a Portfolio Tenant under a Portfolio Space Lease is required pursuant to such Portfolio Space Lease to pay the charges indicated by any specific water meter, such water meter charges shall not be apportioned and the Portfolio Contribution shall be made subject to such charges.

 

(ii) If on the date hereof any of the Portfolio Properties or any shall be or shall have been affected by a special assessment or assessments which are or may become payable in annual installments, of which the first installment is then a charge or lien, or has been paid, then for the purposes of this Agreement all the unpaid installments of any such assessment, including those which are to become due and payable after Closing, shall be assumed by the UPREIT, and shall not be deemed to be an objection to title.

 

(b) Transferable license and permit fees with respect to the Portfolio Properties, and all other similar charges, with respect to licenses and permits paid for by any of the Portfolio POEs which are assigned to UPREIT at the Closing.

 

(c) (i) Fixed Rents (collectively, “ Fixed Rents ”) paid or payable by Portfolio Tenants under the Portfolio Space Leases in connection with their occupancy shall be adjusted and prorated as if collected by Portfolio. Any Fixed Rents collected by Portfolio after the Closing from any Portfolio Tenant who owes Fixed Rents for periods prior to the Closing, shall be applied (i) first: in payment of Fixed Rents owed by such Portfolio Tenant for all periods prior to the month in which the Closing Date occurs, and (ii) second, in payment of Fixed Rents then owed by such Portfolio Tenant for all periods after the month in which the Closing Date occurs.  Each such amount, less any reasonable third party costs of collection (including reasonable counsel fees) reasonably allocable thereto, shall be adjusted and prorated as provided above, and to the extent such amounts relate to period prior to the Closing, such sums shall be distributed to Portfolio.

 

(ii) On a monthly basis for a period of twelve (12) consecutive months following the Closing Date GTJ shall cause the UPREIT to bill all Portfolio Tenants who owe Fixed Rents for periods prior to the Closing and shall use commercially reasonable efforts to collect such past due Fixed Rents; provided, however, that GTJ shall have no obligation to cause the UPREIT to commence any actions or proceedings or expend any monies to collect any such past due Fixed Rents. Notwithstanding the foregoing, if the UPREIT shall be unable to collect such past due Fixed Rents, after the expiration of such twelve (12) month period, GTJ shall cause the UPREIT to assign, without representation or warranty, all such arrearages to Portfolio, and Portfolio shall have the right to pursue Portfolio Tenants to collect such delinquencies (including, without limitation, the prosecution of one or more lawsuits).  Notwithstanding the foregoing, Portfolio, at it sole cost and expense, shall have the right to continue all claims and legal proceedings pending as of the Closing (the “ Portfolio Pre-Closing Claims ”) which relate to the Portfolio Properties or any of the Portfolio Tenants (provided such Portfolio Tenants are no longer in occupancy of the Portfolio Properties) and any amounts awarded in such proceedings shall belong to Portfolio as to periods occurring prior to the Closing.  Schedule 5.2 annexed hereto sets forth a list of the Portfolio Pre-Closing Claims.  In no event shall Portfolio be entitled to evict (by summary proceedings or otherwise) any such Portfolio Tenants. Any payment by a Tenant in an amount

 

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less than the full amount of Fixed Rents and Overage Rent (as defined below) then due and payable by such Tenant shall be applied first to Fixed Rents (in the order of priority as to time periods as is set forth in Section 5.2(c)(i) above) to the extent of all such Fixed Rents then due and payable by such Tenant, and thereafter to Overage Rent (in the order of priority as to time periods as is set forth in Section 5.2(c)(iv) below).

 

(iii) With respect to any Portfolio Space Lease that provides for payment of additional rent based upon (x) a percentage of the Tenant’s business during a specified annual or other period (sometimes referred to as “percentage rent”), (y) so called common area maintenance or “cam” charges or (z) so called “escalation rent” or additional rent based upon fuel pass-alongs, increases in real estate taxes or operating expenses or labor costs or cost of living or porter’s wages or otherwise (such percentage rent, cam charges, escalation rent and additional rent being collectively called “Overage Rent”), such Overage Rent shall be adjusted and prorated on an if, as and when collected basis.

 

(iv) Subject to the last full sentence of Section 5.2(c)(ii) above and Section 5.2(c)(vi) below, as to any Overage Rent in respect of an accounting period that shall have expired prior to the Closing but which shall be paid after the Closing, GTJ agrees that it will cause the UPREIT to pay the entire amount over to Portfolio upon receipt thereof, less any third party costs of collection (including reasonable counsel fees) reasonably allocable thereto. GTJ agrees that it shall cause the UPREIT to (i) to the extent not previously billed, render bills in accordance with its usual practices for any Overage Rent in respect of an accounting period that shall have expired prior to the Closing but which is payable after the Closing, (ii) bill Portfolio Tenants such Overage Rent attributable to an accounting period that shall have expired prior to the Closing on a monthly basis for a period of twelve (12) consecutive months thereafter and (iii) use commercially reasonable efforts to collect Overage Rent; provided, however, that GTJ shall have no obligation to cause the UPREIT to commence any actions or proceedings or expend any monies to collect any such Overage Rent. Notwithstanding the foregoing, if the UPREIT shall be unable to collect such Overage Rent, after the expiration of such twelve (12) month period, Portfolio shall have the right to pursue Portfolio Tenants to collect such delinquencies (including, without limitation, the prosecution of one or more lawsuits), but Portfolio shall not be entitled to evict (by summary proceedings or otherwise) any Portfolio Tenants. If Portfolio shall request, GTJ will cause the UPREIT to deliver to Portfolio copies of all statements relating to Overage Rent for a period prior to the Closing for a period of one hundred eighty (180) days after the Closing.  GTJ shall cause the UPREIT to bill Portfolio Tenants for Overage Rent for accounting periods prior to the Closing in accordance with and on the basis of such information furnished by Portfolio, absent manifest error.

 

(v) Subject to the last full sentence of Section 5.2 (c)(ii) above, Overage Rent paid on or prior to the Closing in respect of the accounting period in which the Closing occurs shall be apportioned as of the close of business of the day preceding the Closing Date with Portfolio receiving the proportion of such Overage Rent (less a like portion of any third party costs and expenses, including reasonable counsel fees, incurred in the collection of such Overage Rent) that the portion of such accounting period prior to the Closing Date bears to the entire such accounting period, and Owner receiving the proportion of such Overage Rent (less a like portion of any third party costs and expenses, including reasonable counsel fees, incurred in the

 

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collection of such Overage Rent) that the portion of such accounting period from and after the Closing Date bears to the entire such accounting period. If, prior to the Closing, Portfolio shall receive any installments of Overage Rent attributable to Overage Rent for periods from and after the Closing Date such sum shall be apportioned at the Closing. If, after the Closing, the UPREIT shall receive any installments of Overage Rent attributable to Overage Rent for periods prior to Closing, such sum (less any third party costs and expenses, including reasonable attorneys’ fees, incurred by the UPREIT in the collection of such Overage Rent) shall be paid by the UPREIT to Portfolio promptly after the UPREIT receives payment thereof. At Portfolio’s request, GTJ shall cause the UPREIT to deliver to Portfolio copies of any statements received from any Portfolio Tenant, or sent by the UPREIT, relating to Overage Rent relating to any period prior to the Closing Date for a period of one hundred eighty days (180) days after the Closing.

 

(vi) Any payment by a Portfolio Tenant on account of Overage Rent (to the extent not applied against Fixed Rents due and payable by such Portfolio Tenant in accordance with the terms hereof) shall be applied to Overage Rent then due and payable in the following order of priority: (i) first, in payment of Overage Rent for the accounting period in which the Closing Date occurs, (ii) second, in payment of Overage Rent for the accounting period preceding the accounting period in which the Closing Date occurs, in the chronological order in which such payments are due for each such accounting period pursuant to the applicable Portfolio Space Lease and (iii) third, in payment of Overage Rent for the accounting period or periods succeeding the accounting period in which the Closing Date occurs.

 

(vii) To the extent that any portion of Overage Rent is required to be paid monthly by Portfolio Tenants on account of estimated amounts for any calendar year (or, if applicable, any lease year or any other applicable accounting period), and at the end of such calendar year (or lease year or other applicable accounting period, as the case may be), such estimated amounts are to be recalculated based upon the actual expenses, taxes and other relevant factors for that calendar year, lease year or other applicable accounting period, with the appropriate adjustments being made with such Portfolio Tenants, then such portion of the Overage Rent shall be prorated at the Closing based on such estimated payments (i.e., with the UPREIT entitled to distribute to Portfolio all monthly or other periodic installments of such amounts paid with respect to periods prior to the calendar month or other applicable installment period in which the Closing occurs; the UPREIT to retain at the Closing all monthly or other periodic installments of such amounts theretofore received by with respect to periods following the calendar month or other applicable installment period in which the Closing occurs; and to apportion as of the Closing Date all monthly or other periodic installments of such amounts with respect to the calendar month or other applicable installment period in which the Closing occurs). At the time(s) of final calculation and collection from (or refund to) each Portfolio Tenant of the amounts in reconciliation of actual Overage Rent for a period for which estimated amounts paid by such Portfolio Tenant have been prorated, there shall be a reproration. If, with respect to any Portfolio Tenant, the recalculated Overage Rent exceeds the estimated amount paid by such Portfolio Tenant, (i) the entire excess, upon receipt from the applicable Portfolio Tenant, shall be paid by the UPREIT as received by the UPREIT to Portfolio, if the accounting period for which such recalculation was made expired prior to the Closing, and (ii) such excess shall be apportioned as of the Closing Date (on the basis described in the first sentence of Section 5.2(c)(vi) above), if the Closing occurred during the accounting period for which such recalculation was made, with

 

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the UPREIT, upon receipt from the applicable Portfolio Tenant, paying to Portfolio after receipt by the UPREIT the portion of such excess which Portfolio is so entitled to receive.  If, with respect to any Portfolio Tenant, the recalculated Overage Rent is less than the estimated amount paid by such Portfolio Tenant, (l) the entire shortfall shall be retained by the UPREIT for reimbursement to such Portfolio Tenant or credit against Overage Rent next coming due from such Portfolio Tenant (or, at the UPREIT’s option, directly to the Portfolio Tenant in question), if the accounting period for which such recalculation was made expired prior to the Closing and (2) such shortfall shall be apportioned as of the Closing Date (on the basis described in the first sentence of Section 5.2(c)(iv) above), if the Closing occurred during the accounting period for which such recalculation was made, with Portfolio paying to the UPREIT for reimbursement to such Portfolio Tenant or credit against Overage Rent next coming due from such Portfolio Tenant (or, at Portfolio’s option, directly to the Portfolio Tenant in question) the portion of such shortfall so allocable to the UPREIT.  Notwithstanding anything to the contrary contained in this Agreement or in the UPREIT LPA, from and after the Closing, if Portfolio fails to pay the Shortfall within thirty (30) days of written request from GTJ, GTJ shall be entitled, after 5 days notice to Portfolio, to cause the UPREIT to set off against any accrued and unpaid distributions due to Portfolio under Article 5 of the UPREIT LPA, the aggregate amount of Overage Rent overcharges paid by Portfolio Tenants in respect of all periods prior to the Closing and not reimbursed by Portfolio to such Portfolio Tenants; provided, however, GTJ may not set off any amounts if Portfolio advises GTJ that it disputes such Overage Rent overcharges within such thirty (30) day period, until such time as the disputed item is resolved by agreement of the parties or a court order.

 

(viii) Until the earlier to occur of twelve (12) months after the actual date of Closing and such time as all amounts required to be paid to Portfolio by GTJ pursuant to this Section 5.2(c) shall have been paid in full, GTJ shall cause the UPREIT to furnish to Portfolio not less frequently than monthly, upon Portfolio’s request, a reasonably detailed accounting of such amounts payable. Portfolio shall have the right from time to time for a period of six (6) months following the Closing, on prior notice to GTJ, during ordinary business hours on business days, to review the UPREIT’s rental records with respect to the Portfolio Properties to ascertain the accuracy of such accountings. Amounts payable by Portfolio Tenants in respect of overtime heat, air conditioning or other utilities or services, freight elevator charges, supplemental water, HVAC and condenser charges, services or repairs and labor costs associated therewith, above standard cleaning and all other items which are payable by a Portfolio Space Tenant as reimbursement or payment for above standard overtime services whether pursuant to such Portfolio Tenant’s Portfolio Space Lease or pursuant to a separate agreement with any of the Portfolio POEs (collectively “Reimburseables”) shall not be adjusted, and shall be disbursed to Portfolio, if incurred prior to Closing or to the UPREIT, if incurred after the Closing.

 

(d) Payments under the Service Contracts.

 

(e) Electricity and other utilities under contracts for the supply of same.

 

(f) Interest accrued in respect of the Existing Portfolio Indebtedness for the month in which the Closing Date occurs.

 

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(g) All Portfolio Tenants Security Deposit shown on Schedule 2.14 as cash or in the form of a letter of credit shall be delivered to the UPREIT at the Closing.

 

(h) All amounts held by the Portfolio Lender and/or servicer under the Existing Portfolio Indebtedness, including, without limitation, tax, insurance, capital expenditure and rollover reserves and escrows shall be reimbursed to Portfolio by the UPREIT, as set forth in a statement from the Portfolio Lender or the servicer under the Existing Portfolio Indebtedness.  Notwithstanding any provision to the contrary contained in the Agreement, the parties agree that the UPREIT shall pay to Portfolio at Closing, 100% of the reserve amounts (the “ SunAmerica Reserves ”) due to the borrowers under the First SunAmerica Reserve Agreements and not advanced as of the Closing (as defined on Schedule 2.20 annexed hereto) (currently having an aggregate balance of $1,952,969.51) and that the SunAmerica Reserves shall become the property of the UPREIT upon release of the same by the lender.  Notwithstanding the foregoing, GTJ may elect to defer payment of the Sun America Reserves to Portfolio until the date the UPREIT is able to refinance the property located at 8 Farms Spring Road, Farmington, CT, and the same shall constitute a loan by Portfolio to GTJ having an interest rate equal to the 30-day LIBOR rate as published by the Wall Street Journal plus 1%.

 

(i) Schedule 5.2 hereof sets forth all tenant improvement costs and Portfolio Payable Commissions payable under the Leasing Brokerage Agreements in respect of all Portfolio Space Leases entered into or the subject of active negotiations at any time prior to the date hereof and due on or after January 31, 2012 (the “ Post Cut-Off Date Leasing Payables ”), including Payable Commissions payable in connection with the exercise prior to the date hereof of any renewal, extension or expansion option provided for in any Portfolio Space Lease.  The parties agree that the UPREIT shall reimburse Portfolio at Closing for all Post Cut-Off Date Leasing Payables due under leases identified on Schedule 5.2 and mutually executed and delivered on or before Closing.

 

(j) Any refunds of insurance premiums for canceled policies shall belong to Portfolio, for periods occurring prior to Closing, and to the UPREIT thereafter.

 

(k) The UPREIT shall reimburse Portfolio for all utility company deposits paid by the Portfolio POEs.

 

(m) Such other apportionments and adjustments as are customarily apportioned upon the transfer of similar types of property or similar transactions in the jurisdictions where the Portfolio Properties are located.

 

(n)  GTJ, at it sole cost and expense, shall have the right to continue all claims and legal proceedings pending as of the Closing (the “ GTJ Pre-Closing Claims ”) which relate to the GTJ Properties or any of the GTJ Tenants and any amounts awarded in such proceedings shall belong to GTJ as to periods occurring prior to the Closing.  Schedule 5.2 annexed hereto sets forth a list of the GTJ Pre-Closing Claims.

 

(o) Portfolio shall reasonably cooperate with UPREIT in connection with all actions taken by the UPREIT under this Section 5.2.

 

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SECTION 5.3.                                           Portfolio Tax Proceedings .  Schedule 5.3 sets forth all tax certiorari proceedings related to the Portfolio Properties as of the Effective Date and the fee arrangements with each tax certiorari attorney (the “ Portfolio Tax Proceedings ”).  Portfolio shall be entitled to continue the Portfolio Tax Proceedings after Closing; provided, however, that Portfolio shall not be entitled to settle any such Portfolio Tax Proceeding relating to the tax year in which the Closing occurs without the prior written consent of the UPREIT which shall not be unreasonably withheld.  Any tax savings or refund for the tax years prior to Closing shall belong to Portfolio and any such savings or refund for the tax year in which the Closing occurs shall be prorated and adjusted as of the Closing Date after deduction of the actual attorneys’ fees and other expenses related to the proceeding, subject to the rights, if any, of current or former Portfolio Tenants.

 

SECTION 5.4                                              GTJ Tax Proceedings .  Schedule 5.4 sets forth all tax certiorari proceedings related to the GTJ Properties as of the Effective Date and the fee arrangements with each tax certiorari attorney (the “ GTJ Tax Proceedings ”).  GTJ shall be entitled to continue the GTJ Tax Proceedings after Closing; provided, however, that GTJ shall not be entitled to settle any such GTJ Tax Proceeding relating to the tax year in which the Closing occurs without the prior written consent of the UPREIT which shall not be unreasonably withheld.  Any tax savings or refund for the tax years prior to Closing shall belong to GTJ and any such savings or refund for the tax year in which the Closing occurs shall be prorated and adjusted as of the Closing Date after deduction of the actual attorneys’ fees and other expenses related to the proceeding, subject to the rights, if any, of current or former GTJ Tenants.

 

SECTION 5.5                                              United Technologies Lease Payables .  The parties acknowledge that (i) one of the GTJ POEs has entered into a lease (the “UT Lease”) with United Technologies at the property located at 8 Farms Spring Road; (ii) GTJ paid for Tenant Improvement Costs and Payable Commissions payable under the Leasing Brokerage Agreements in respect of the UT Lease in the aggregate amount of $4,857,500 (the “UT Leasing Payables”), and (iii) in order to pay for the UT Leasing Payables, GTJ borrowed said amount under the line of credit facility described in Part B of Schedule 3.22 annexed hereto.  The parties agree that the repayment of said borrowing on account of the UT Leasing Payables shall be the responsibility of the UPREIT.

 

SECTION 5.6                                              Survival of Adjustments .  In the event any adjustments are miscalculated at the Closing, or corrected after Closing, such errors shall be promptly corrected after the Closing. This Article V shall survive the Closing until the date (the “Survival Date”) which is 540 days after the Closing(except for Sections 5.2(c)(vii), 5.3, 5.4, 5.5 and 5.6 respectively, which shall survive without limitation as to time).

 

ARTICLE VI
INDEMNIFICATION

 

SECTION 6.1                                              Obligation of the Portfolio and Portfolio Members to Indemnify .  Portfolio and the Portfolio Members (collectively, the “ Portfolio Indemnitors ”), severally but not jointly, agree to indemnify, defend and hold harmless GTJ, the GTJ POEs, the Other GTJ Subsidiaries and any of their members, managers, officer, directors, agents, contractors or subcontractors (collectively, the “ GTJ Related Parties ”) from and against all Losses based upon, arising out of or

 

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otherwise in respect of:  (i) any inaccuracy in or any breach of any representation or warranty of Portfolio contained in this Agreement; (ii) the failure of Portfolio to comply with any covenant or agreement of Portfolio contained in this Agreement; or (iii) any liability or obligation with respect to the Portfolio Mortgage Loan Documents which accrue prior to the date hereof or for which they are responsible to Portfolio Lenders under the assumption documents.  “ Losses ” means losses, damages, liabilities, deficiencies, actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however , that “Losses” shall not include punitive damages, except in the case of fraud or to the extent actually awarded to a governmental authority or other third party.

 

SECTION 6.2                                              Obligation of GTJ to Indemnify .  GTJ agrees to indemnify, defend and hold harmless Portfolio, the Portfolio POEs and any of their members, managers, officer, directors, agents, contractors or subcontractors (collectively, the “ Portfolio Related Parties ”) from and against all Losses based upon, arising out of or otherwise in respect of (i) any inaccuracy in or any breach of any representation or warranty of GTJ contained in this Agreement or (ii) the failure of GTJ to comply with any covenant or agreement of GTJ contained in this Agreement or (iii) the payment by GTJ of amounts in excess of $3,000,000 with respect to the Electrical Contract Liabilities.

 

SECTION 6.3                                              Limitations on Indemnification Obligations .

 

(a)                                  The obligations of the Portfolio Indemnitors, collectively, to pay Losses as set forth in Section 6.1 hereunder shall be limited to Five Million ($5,000,000) Dollars in the aggregate (the “Portfolio Indemnification Limit”).  Each individual Portfolio Indemnitor shall only be liable up to his or her pro rata amount of any Losses as set forth on Schedule 6.3 . Notwithstanding the foregoing, such Portfolio Indemnification Limit shall not apply to any Losses resulting from the representations made in Sections 2.2 and 2.12 herein but each individual Portfolio Indemnitor shall only be liable up to his or her pro rata amount of any Losses as set forth on Schedule 6.3.

 

(b)                                  The obligations of GTJ to pay Losses as set forth in Section 6.2 hereunder shall be limited to Five Million ($5,000,000) Dollars in the aggregate (the “GTJ Indemnification Limit”). Notwithstanding the foregoing, such GTJ Indemnification Limit shall not apply to any Losses resulting from the representations made in Section 3.2 herein.

 

(c)                                   The limitations set forth in subsections (a) and (b) above shall not apply in the case of fraud or intentional misrepresentation.

 

SECTION 6.4                                              Payment of Indemnification Obligations by Portfolio Indemnitors .  Any sums due to GTJ under Section 6.1 shall be payable as follows (a) the first Three Million ($3,000,000) Dollars, in the aggregate, shall be paid from the distributions otherwise due to the Portfolio Members under the UPREIT LPA, on a pro rata basis; and (b) the remaining Two Million ($2,000,000) Dollars, in the aggregate, shall be paid by reducing the amount of the respective Portfolio Interests of the Portfolio Indemnitors, on a pro rata basis by reducing the number of limited partnership units held by the Portfolio Indemnitors such that the value of the

 

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reduction in the Portfolio Interests equals the amount of Losses due pursuant to Section 6.1. Such adjustment shall be based upon the valuation of the Portfolio limited partnership interests at the time of Closing. If the value of any Portfolio Indemnitor’s portion of the Portfolio Interest is insufficient to satisfy his or her portion of the obligations under Section 6.1, then such Portfolio Indemnitor shall pay GTJ his or her portion of any remaining obligations under Section 6.1.

 

SECTION 6.5                                              Payment of Indemnification Obligations by GTJ .  To the extent GTJ does not have funds available to satisfy a ny sums due to Portfolio under Section 6.2 (the “Shortfall”), such Shortfall shall be paid (i) with funds derived from a loan obtained by GTJ or a raise of capital by GTJ, or (ii) by reducing the limited partnership units held by GTJ such that the value of the reduction equals the amount of the Shortfall. Such adjustment shall be based upon the valuation of the GTJ limited partnership interest at Closing.

 

SECTION 6.6                                              Procedures for Payment of Indemnification Obligations .  Each of GTJ and GTJ and Portfolio agree that no payment shall be made to the other under Section 6.4 or 6.5 except in accordance with the following procedures:

 

(a)                                  A claim for any sums due under Sections 6.4 or 6.5 shall be made in writing and (the “Indemnification Notice”) delivered to the other party on or before the Survival Date and shall set forth the nature of the breach and dollar amount sought by the claimant.

 

(b)                                  If the party receiving the Indemnification Notice disputes any portion of the Indemnification Notice, said party shall notify the claimant in writing (the “Dispute Notice”) no later than 15 days following receipt of the Indemnification Notice.

 

(c)                                   If the parties are unable to resolve the dispute as evidenced by a written agreement signed by both parties on or before the 30 th  day following receipt of the Indemnification Notice, the claimant shall initiate a lawsuit in an Approved Court (as defined in Section 7.12) and make service upon the other party no later than the 60 th  day following receipt of the Indemnification Notice.

 

(d)                                  If the claimant is thereafter awarded a sum of money by such court in a ruling by such court with no further appeal thereon and all appeal periods and rights having expired, said sum shall be due and payable as provided in Sections 6.4 or 6.5, as applicable.

 

ARTICLE VII
MISCELLANEOUS

 

SECTION 7.1                                              Expenses .

 

(a)                                  Portfolio shall be responsible for (i) all costs related to title reports and insurance, survey updates, zoning reports, environmental reports and building condition reports and the like related to the GTJ Properties (regardless of whether the same were ordered by GTJ or Portfolio); (ii) reasonable attorney fees and disbursements incurred by Portfolio and (iii) lender expenses (other than the express loan assumption fees not to exceed 1% of the then

 

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outstanding principal balance of the subject mortgage) incurred in connection with obtaining the Portfolio Lender Approval.

 

(b)                                  GTJ or its designees shall be responsible for (i) all costs related to title reports and insurance, survey updates, zoning reports, environmental reports, Transfer Act Requirement and building condition reports and the like related to the Portfolio Properties (regardless of whether the same were ordered by Portfolio or GTJ); (ii) any and all transfer taxes due in connection with the Portfolio Contribution and the GTJ Contribution; (iii) reasonable attorney fees and disbursements incurred by GTJ; (iv) all lender expenses incurred in connection with obtaining the GTJ Lender Approvals; (v) any loan assumption fees charged in connection with obtaining the Portfolio Lender Approvals (not to exceed 1% of the outstanding principal balance of the subject mortgage) and the GTJ Lender Approvals; and (vi) a one time contribution of $18,000.00 towards Portfolio’s legal fees.

 

SECTION 7.2                                              Survival of Representations .  All representations and warranties made herein shall survive the Closing until the Survival Date, provided, however, that the representations and warranties contained in Sections 2.2, 2.12 and 3.2 shall survive indefinitely or until the expiration of any applicable statute of limitations.

 

SECTION 7.3                                              Assignment .  Neither party may assign any of its rights or delegate any of its obligations hereunder without the prior written consent of the other party. Any purported assignment or delegation in violation of this Section shall be null and void.  No assignment or delegation shall relieve the assigning or delegating party of any of its obligations hereunder.

 

SECTION 7.4                                              No Third Party Beneficiaries .  This Agreement shall be binding upon and inure solely to the benefit of the parties hereto, the Portfolio Members and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

SECTION 7.5                                              Notices .  All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, sent by overnight courier or by facsimile transmission (with a confirmatory copy sent by overnight courier) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

 

(a)                                  if to Portfolio, addressed to:

 

Lighthouse Real Estate Management LLC

60 Hempstead Road

West Hempstead, NY 11052

Attn:  Louis Sheinker

Facsimile No.:  (516) 693-5501

 

with a copy to:

 

Schiff Hardin LLP

666 Fifth Avenue

 

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New York, New York 10103

Attention: Christine A. McGuinness

Facsimile No.:  (212) 753-5044

 

(b)                                  if to GTJ, addressed to:

 

GTJ REIT, Inc.

444 Merrick Road

Suite 370

Lynbrook, New York 11563

Attn: David J. Oplanich, CFO

Facsimile: (516) 887-2029

 

with a copy to:

 

Ruskin Moscou Faltischek, P.C.

1425 RXR Plaza

East Tower, 15 th  Floor

Uniondale, New York 11556

Attn: Adam P. Silvers

Facsimile No.: (516) 663-6719

 

with a copy to:

 

GTJ REIT, Inc.

444 Merrick Road

Suite 370

Lynbrook, New York 11563

Attn: Paul Cooper, CEO

Facsimile: (516) 887-2029

 

SECTION 7.6                                              Entire Agreement .  This Agreement, together with all Exhibits and Schedules to this Agreement, constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between Portfolio and GTJ with respect to the subject matter hereof.  All Schedules and Exhibits hereto are hereby incorporated herein by reference.

 

SECTION 7.7                                              Amendment .  This Agreement may be amended by the parties hereto only by an instrument in writing signed on behalf of each of the parties hereto.

 

SECTION 7.8                                              Counterparts; Facsimiles .  This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute

 

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one and the same agreement.  Execution may be accomplished by delivery of original, facsimile or static electronic image (such as PDF files) copies of the signature page hereto.

 

SECTION 7.9                                              Headings .  Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting this Agreement.

 

SECTION 7.10                                       Severability .  In the event any one or more of the provision contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby.  The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

SECTION 7.11                                       Governing Law .  This Agreement shall be governed by, and construed and enforced in accordance with the laws of the State of New York without regard to its principles of conflicts of law.

 

SECTION 7.12                                       Consent to Jurisdiction and Venue .  Each party hereto hereby irrevocably and unconditionally submits to the jurisdiction of any state court (each, an “Approved Court”) sitting in the State of New York, County of Nassau, or Federal court sitting in the Eastern District of New York and irrevocably agrees that all actions or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby shall be litigated exclusively in either of said courts.  Each party hereto agrees not to commence any legal proceeding related hereto or thereto except in such courts.  Each party hereto irrevocably waives any objection which it may now or hereafter have to the laying of the venue of any such proceeding in any such court and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.  Each party hereto consents to process being served in any such action or proceeding by mailing a copy thereof by registered or certified mail.

 

SECTION 7.13                                       Negotiated Agreement .  Portfolio, Portfolio Members and GTJ each acknowledge that they have been advised and represented by independent counsel in the negotiation, execution and delivery of this Agreement and accordingly agree that if an ambiguity exists with respect to any provision of this Agreement, such provision shall not be construed against any party because such party or its representatives drafted such provision.

 

[SIGNATURE PAGE FOLLOWS]

 

38


 

IN WITNESS WHEREOF , Portfolio and GTJ have executed this Agreement as of the day and year first above written.

 

 

GTJ REIT, Inc.

 

 

 

 

 

 

 

By:

/s/ David J. Oplanich

 

 

David J. Oplanich

 

 

Chief Financial Officer

 

 

 

 

GTJ GP, LLC

 

 

 

 

 

By: GTJ REIT, Inc.

 

 

 

 

 

 

 

 

By:

/s/ David J. Oplanich

 

 

 

 

David J. Oplanich

 

 

 

 

Chief Financial Officer

 

 

 

 

 

 

GTJ Realty, LP

 

 

 

 

 

 

 

By: GTJ GP, LLC, its general partner

 

 

 

 

 

 

 

By: GTJ REIT, Inc., its manager

 

 

 

 

 

 

 

 

 

 

By:

/s/ David J. Oplanich

 

 

 

 

 

David J. Oplanich

 

 

 

 

 

Chief Financial Officer

 

 

 

 

 

 

WU/Lighthouse Portfolio, LLC

 

 

 

 

 

 

 

By: Lighthouse 100 William Operating LLC, its manager

 

 

 

 

 

 

 

 

By:

/s/ Louis Sheinker

 

 

 

 

Louis Sheinker

 

 

 

 

Managing Member

 

 

 

 

 

 

 

 

By:

/s/ Jeffrey Ravetz

 

 

 

 

Jeffrey Ravetz

 

 

 

 

Managing Member

 

 

 

 

 

 

 

 

 

 

 

/s/ Jeffrey Wu

 

Jeffrey Wu

 

 

 

[SIGNATURE PAGE TO CONTRIBUTION AGREEMENT]

 


 

/s/ Paul Cooper

 

Paul Cooper

 

 

 

 

 

/s/ Louis Sheinker

 

Louis Sheinker

 

 

 

 

 

/s/ Jerome Cooper

 

Jerome Cooper

 

 

 

 

 

/s/ Jeffrey Ravetz

 

Jeffrey Ravetz

 

 

 

 

 

/s/ Sarah Ravetz

 

Sarah Ravetz

 

 

 

[SIGNATURE PAGE TO CONTRIBUTION AGREEMENT]

 


 

EXHIBIT A

 

Portfolio POEs

 

Property Owner

 

Property Address

 

State

WU/LH 466 Bridgeport L.L.C.

 

466 Bridgeport Avenue, Shelton

 

CT

Wu/LH 470 Bridgeport L.L.C.

 

470 Bridgeport Avenue, Shelton

 

CT

Wu/LH 950 Bridgeport L.L.C.

 

950 Bridgeport Avenue and 974 Bridgeport Avenue, Milford

 

CT

Wu/LH 12 Cascade L.L.C.

 

12 Cascade Boulevard, Orange

 

CT

Wu/LH 15 Executive L.L.C.

 

15 Executive Boulevard, Orange

 

CT

WU/LH 35 Executive L.L.C.

 

35 Executive Boulevard, Orange

 

CT

WU/LH 15 Progress L.L.C.

 

15 Progress Drive, Shelton

 

CT

Wu/LH 22 Marsh Hill L.L.C.

 

22 Marsh Hill Road, Orange

 

CT

Wu/LH 25 Executive L.L.C.

 

25 Executive Boulevard, Orange

 

CT

Wu/LH 269 Lambert L.L.C.

 

269 Lambert Road, Orange

 

CT

Wu/LH 103 Fairview Park L.L.C.

 

103 Fairview Park Drive, Elmsford

 

NY

Wu/LH 412 Fairview Park L.L.C.

 

412 Fairview Park Drive, Elmsford

 

NY

Wu/LH 401 Fieldcrest L.L.C.

 

401 Fieldcrest Avenue, Elmsford

 

NY

Wu/LH 404 Fieldcrest L.L.C.

 

404 Fieldcrest Drive, Elmsford

 

NY

Wu/LH 36 Midland L.L.C.

 

36 Midland Avenue, Port Chester

 

NY

Wu/LH 100-110 Midland L.L.C.

 

100-110 Midland Avenue, Port Chester

 

NY

Wu/LH 112 Midland L.L.C.

 

112 Midland Avenue, Port Chester

 

NY

Wu/LH 199 Ridgewood L.L.C.

 

199 Ridgewood Drive, Elmsford

 

NY

Wu/LH 203 Ridgewood L.L.C.

 

203 Ridgewood Drive, Elmsford

 

NY

Wu/LH 8 Slater L.L.C.

 

8 Slater Street, Port Chester

 

NY

Wu/LH 100 American L.L.C.

 

100 American Road, Morris Plains

 

NJ

Wu/LH 200 American L.L.C.

 

200 American Road, Morris Plains

 

NJ

Wu/LH 300 American L.L.C.

 

300 American Road, Morris Plains

 

NJ

Wu/LH 400 American L.L.C.

 

400 American Road, Morris Plains

 

NJ

Wu/LH 500 American L.L.C.

 

500 American Road, Morris Plains

 

NJ

 

PORTFOLIO LOANS

 

1.             Consolidated, Amended and Restated Promissory Note, in the amount of $4,639,600, made by Wu/LH 8 Slater L.L.C., a Delaware limited liability company to First Sun America Life

 


 

Insurance Company, a New York corporation, and its successors and/or assigns (the “FSA Lender”), as payee.

 

2.             Promissory Note, in the amount of $4,096,400, made by Wu/LH 15 Executive L.L.C., a Delaware limited liability company to FSA Lender, as payee.

 

3.             Promissory Note, in the amount of $5,724,600, made by Wu/LH 35 Executive L.L.C., a Delaware limited liability company to the FSA Lender, as payee.

 

4.             Promissory Note, in the amount of $2,716,700, made by Wu/LH 22 Marsh Hill L.L.C., a Delaware limited liability company to the FSA Lender, as payee.

 

5.             Promissory Note, in the amount of $3,683,700, made by Wu/LH 470 Bridgeport L.L.C., a Delaware limited liability company to the FSA Lender, as payee.

 

6.             Promissory Note, in the amount of $2,639,000, made by Wu/LH 950 Bridgeport L.L.C., a Delaware limited liability company to the FSA Lender, as payee.

 

7.             Promissory Note in the principal amount of $2,700,000 by Wu/LH 15 Progress L.L.C. in favor of People’s United Bank.

 

8.             Mortgage Note, in the amount of $20,960,000 by Wu/LH 12 Cascade L.L.C., Wu/LH 25 Executive L.L.C., Wu/LH 269 Lambert L.L.C., Wu/LH 103 Fairview Park L.L.C., Wu/LH 401 Fieldcrest Park L.L.C., Wu/LH 404 Fieldcrest Park L.L.C., Wu/LH 412 Fairview Park L.L.C., Wu/LH 36 Midland L.L.C., Wu/LH 100-110 Midland L.L.C., Wu/LH 112 Midland L.L.C., Wu/LH 199 Ridgewood L.L.C., Wu/LH 203 Ridgewood L.L.C., Wu/LH 100 American L.L.C., Wu/LH 200 American L.L.C., Wu/LH 300 American L.L.C., Wu/LH 400 American L.L.C., Wu/LH 500 American L.L.C., each a Delaware limited liability company (collectively, the” JH Borrowers”) to John Hancock Life Insurance Company (the “JH Lender”), as payee.*

 

9.             Mortgage Note in the amount of $30,650,000 by the JH Borrowers to the JH Lender, as payee.

 

10.          Mortgage Note in the amount of $16,100,000 by the JH Borrowers to the JH Lender, as payee.

 

11.          Mortgage Note in the amount of $9,765,000 by the JH Borrowers to the JH Lender, as payee.

 

12.          Mortgage Note in the amount of $11,625,000 by the JH Borrowers to the JH Lender, as payee.

 

*Please note that items 8-12 are cross collateralized.

 


 

EXHIBIT B

 

GTJ POEs

 

165-25 147th Ave, LLC

 

165-25 147th Avenue

Jamaica, New York

 

 

 

49-19 Rockaway Beach Blvd, LLC

 

49-19 Rockaway Beach Boulevard

Arverne, New York

 

 

 

85-01 24 th  Ave, LLC

 

85-01 24th Avenue

East Elmhurst, New York

 

 

 

114-15 Guy Brewer Blvd, LLC

 

114-15 Guy Brewer Boulevard,

Jamaica, New York

 

 

 

612 Wortman Avenue LLC

 

612 Wortman Avenue

Brooklyn, New York

 

 

 

23-85 87th Street, LLC

 

23-85 87th Street

East Elmhurst, New York

 

 

 

Farm Springs Road LLC

 

8 Farm Springs Road

Farmington, Connecticut

 

GTJ LOANS

 

Lender

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturers and Traders Trust Company

Standard Labor Grid Note $10,000,000.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Hartford Life Insurance Company Promissory Note $45,500,000.00

 

 

 

 

 

 

 


 

EXHIBIT C

 

UPREIT LPA

 


 

EXHIBIT D

 

ASSIGNMENT AND ASSUMPTION OF PORTFOLIO INTEREST AGREEMENT

 

ASSIGNMENT OF PORTFOLIO INTEREST AGREEMENT

 

ASSIGNMENT OF MEMBERSHIP INTEREST

 

IN

 

[                                      ]

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, WU/LIGHTHOUSE PORTFOLIO L.L.C. (“Assignor”), hereby sells, assigns, transfers and conveys to GTJ Realty, LP (“Assignee”), all of the Assignor’s right, title and interest in and to Assignor’s one hundred (100%) membership interest (the “Membership Interest”) in [                                                    ] (the “Company”).

 

Assignor represents that it has not encumbered and is not aware of any other encumbrances or assignments affecting the Membership Interest being transferred hereunder and that the Membership Interest being transferred hereunder is being transferred free and clear of all liens, claims and encumbrances.

 

IN WITNESS WHEREOF , the parties have duly executed this Assignment as of the      day of                         , 2012.

 

WU/Lighthouse Portfolio, LLC

 

By: Lighthouse 100 William Operating LLC, its manager

 

 

 

 

 

 

By:

 

 

 

 

 

Louis Sheinker

 

 

 

 

Managing Member

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Jeffrey Ravetz

 

 

 

 

 

 

Managing Member

 

 


 

EXHIBIT D-1

 

ASSIGNMENT AND ASSUMPTION OF GTJ INTEREST AGREEMENT

 

ASSIGNMENT OF MEMBERSHIP INTEREST

 

IN

 

[                                      ]

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, GTJ GP, LLC (“Assignor”), hereby sells, assigns, transfers and conveys to GTJ Realty, LP (“Assignee”), all of the Assignor’s right, title and interest in and to Assignor’s one hundred (100%) membership interest (the “Membership Interest”) in [                                      ] (the “Company”).

 

Assignor represents that it has not encumbered and is not aware of any other encumbrances or assignments affecting the Membership Interest being transferred hereunder and that the Membership Interest being transferred hereunder is being transferred free and clear of all liens, claims and encumbrances.

 

IN WITNESS WHEREOF , the parties have duly executed this Assignment as of the [    ] th  day of                                  , 2012.

 

 

GTJ GP, LLC

 

 

 

 

 

By:

GTJ REIT, INC., its sole member

 

 

 

 

 

 

By:

 

 

 

Name: David J. Oplanich

 

 

Title: Chief Financial Officer

 


 

EXHIBIT E

 

PORTFOLIO LENDER APPROVAL DOCUMENTS

 

A.  Lender Approval Documents Each Dated as of January 1, 2013 With Respect to the Loan Documents Dated March 8, 2011 Between First SunAmerica Life Insurance Company (“Lender”) and (i) WU/LH 15 Executive L.L.C., a Delaware limited liability company (the “15 Executive Borrower”), WU/LH 22 Marsh Hill L.L.C., a Delaware limited liability company (the “Marsh Hill Borrower”), WU/LH 35 Executive L.L.C., a Delaware limited liability company (the “35 Executive Borrower”), WU/LH 470 Bridgeport L.L.C., a Delaware limited liability company (the “470 Bridgeport Borrower”), WU/LH 950 Bridgeport L.L.C., a Delaware limited liability company (the “950 Bridgeport Borrower”), WU/LH 8 Slater L.L.C., a Delaware limited liability company (the “8 Slater Borrower”; and together with the 15 Executive Borrower, the Marsh Hill Borrower, the 35 Executive Borrower, the 470 Bridgeport Borrower, the 950 Bridgeport Borrower, collectively, the “Borrower”).

 

1.

 

Assumption, Consent and Loan Modification Agreement (15 Executive).

2.

 

Assumption, Consent and Loan Modification Agreement (35 Executive).

3.

 

Assumption, Consent and Loan Modification Agreement (22 Marsh Hill).

4.

 

Assumption, Consent and Loan Modification Agreement (470 Bridgeport).

5.

 

Assumption, Consent and Loan Modification Agreement (950 Bridgeport).

6.

 

Assumption, Consent and Loan Modification Agreement (8 Slater).

7.

 

Certificate Concerning Governing Documents (15 Executive).

8.

 

Certificate Concerning Governing Documents (35 Executive).

9.

 

Certificate Concerning Governing Documents (22 March Hill).

10.

 

Certificate Concerning Governing Documents (470 Bridgeport).

11.

 

Certificate Concerning Governing Documents (950 Bridgeport).

12.

 

Certificate Concerning Governing Documents (8 Slater).

13.

 

Certificate Concerning Leases and Financial Condition (15 Executive).

14.

 

Certificate Concerning Leases and Financial Condition (35 Executive).

15.

 

Certificate Concerning Leases and Financial Condition (22 Marsh Hill).

16.

 

Certificate Concerning Leases and Financial Condition (470 Bridgeport).

17.

 

Certificate Concerning Leases and Financial Condition (950 Bridgeport).

18.

 

Certificate Concerning Leases and Financial Condition (8 Slater).

19.

 

Amended and Restated Agreement Concerning Insurance Requirements.

20.

 

Environmental Indemnity Agreement.

21.

 

Amended and Restated Affiliate Guaranty Agreement.

22.

 

Guaranty Agreement (New).

23.

 

Receipt and Agreement (Escrow Instructions).

24.

 

Subordination of Management Agreement.

25.

 

Amended and Restated Cash Management Agreement.

 


 

B.                                     LENDER APPROVAL DOCUMENTS EACH DATED AS OF JANUARY 1, 2013 WITH REGARD TO $2,700,000 LOAN DATED SEPTEMBER 30 , 2010 FROM PEOPLE’S UNITED BANK (“Lender”) TO WU/LH 15 PROGRESS L.L.C. (“Borrower”) SECURED BY 15 PROGRESS DRIVE AND 30 COMMERCE DRIVE SHELTON, CONNECTICUT (the “Property”).

 

1.                                       First Amendment to Loan and Security Agreement.

2.                                       Replacement Guaranty.

3.                                       Conditional Assignment of Management Agreement.

 

C.                                     LENDER APPROVAL DOCUMENTS EACH DATED AS OF JANUARY 1, 2013 WITH REGARD TO THE MORTGAGE LOANS, IN THE AGGREGATE AMOUNT OF $105,000,000 BY JOHN HANCOCK LIFE INSURANCE COMPANY (THE “JH LENDER”), AS LENDER TO WU/LH 12 CASCADE L.L.C., WU/LH 25 EXECUTIVE L.L.C., WU/LH 269 LAMBERT L.L.C., WU/LH 103 FAIRVIEW PARK L.L.C., WU/LH 401 FIELDCREST PARK L.L.C., WU/LH 404 FIELDCREST PARK L.L.C., WU/LH 412 FAIRVIEW PARK L.L.C., WU/LH 36 MIDLAND L.L.C., WU/LH 100-110 MIDLAND L.L.C., WU/LH 112 MIDLAND L.L.C., WU/LH 199 RIDGEWOOD L.L.C., WU/LH 203 RIDGEWOOD L.L.C., WU/LH 100 AMERICAN L.L.C., WU/LH 200 AMERICAN L.L.C., WU/LH 300 AMERICAN L.L.C., WU/LH 400 AMERICAN L.L.C., WU/LH 500 AMERICAN L.L.C., WU/LH 15 EXECUTIVE L.L.C.,, WU/LH 22 MARSH HILL L.L.C., WU/LH 35 EXECUTIVE L.L.C., , WU/LH 470 BRIDGEPORT L.L.C., WU/LH 950 BRIDGEPORT L.L.C.,, WU/LH 8 SLATER L.L.C., EACH A DELAWARE LIMITED LIABILITY COMPANY (COLLECTIVELY, THE “JH BORROWERS”)[NOTE: A PORTION OF THESE LOANS WERE REFINANCED AS PER A AND B OF THIS EXHIBIT E]

 

1.                                       Amendment and Modification of Loan Agreement.

 

2.                                       Manager’s Consent and Subordination of Management Agreement by GTJ Management, LLC.

 

3.                                       Sub- Manager’s Consent and Subordination of Sub-Management Agreement by CB Richard Ellis Inc.

 

4.                                       Cash and Deposit Account Pledge and Security Agreement (NJ Loan).

 

5.                                       Indemnification Agreement (NJ Loan).

 

6.                                       Guaranty Agreement (NJ Loan).

 

7.                                       Cash and Deposit Account Pledge and Security Agreement (NY Loan).

 

8.                                       Indemnification Agreement (NY Loan).

 

9.                                       Guaranty Agreement (NY Loan).

 

10.                                Cash and Deposit Account Pledge and Security Agreement (CT Loan).

 


 

11.                                Indemnification Agreement (CT Loan).

 

12.                                Guaranty Agreement (CT Loan).

 

13.                                Deposit Account Control Agreement (NY).

 

14.                                Deposit Account Control Agreement (NJ).

 

15.                                Deposit Account Control Agreement (CT).

 


 

EXHIBIT E-1

 

GTJ LENDER APPROVAL DOCUMENTS

 

A.                         Lender Approval Document Dated as of January 1, 2013 With Regard to Loan Documents Dated July 1, 2010 By and Between Hartford Life Insurance Company, Hartford Life and Accident Insurance Company and Hartford Life and Annuity Insurance Company (collectively, the “Lender”), and (i) 84-01 24 th  Avenue, LLC and (ii) 165-25 147 th  Avenue, LLC.

 

1.                                       First Amendment to Loan Agreement.

 

B.                         Lender Approval Document Dated as of January 1, 2013 With Regard to Loan Documents Dated August 26, 2011 By and Between Manufacturers and Traders Trust Company (the “Lender”) and GTJ REIT, Inc.

 

1.                                       Mortgage Modification Agreement

2.                                       Standard Liber Grid Note

3.                                       Credit Agreement

4.                                       Waiver and Consent

5.                                       Amendment and Reaffirmation of Environmental Compliance and Indemnification Agreement

6.                                       Reaffirmation of General Assignment of Rents

 


 

C.                                     EXHIBIT F

 

Tax Protection Agreement

 


 

EXHIBIT G

 

TERMINATION OF PROPERTY MANAGEMENT SERVICES
(Portfolio Properties)

 

Reference is hereby made to a certain management agreement (the “ Management Agreement ”) dated as of February 28, 2008 between Wu/Lighthouse Portfolio L.L.C., a Delaware limited liability company (the “ Portfolio Owner ”) and Lighthouse Real Estate Management LLC, a New York limited liability company (hereafter referred to as “ Primary Manager ”), regarding the management of various properties owned by the Portfolio Owner and more particularly identified on said Schedule A (the “ Managed Assets ”), which Management Agreement was amended by a certain First Amendment to Management Agreement dated as of February 15, 2011.

 

Reference is hereby made to a certain Sub-Management Agreement (the “ Sub-Management Agreement ”) dated as of March 10, 2009 between the Primary Manager and Green Holland Management LLC, a New York limited liability company (“ Green Holland ”) pursuant to which the Primary Manager engaged Green Holland to perform the services required to be performed by the Primary Manager under the Management Agreement with regard the Managed Assets.

 

The parties hereto agree that effective as of January 1, 2013, the Management Agreement and the Sub-Management Agreement shall be terminated and of no further force and effect; provided, however, that the obligation of the Portfolio Owner to pay a commission under Section 5.2 thereof shall survive in the event a lease identified on Schedule 1 annexed hereto is mutually executed and delivered on or before May 1, 2013.

 

By signing below, GTJ Realty, LP, as successor in interest to Portfolio Owner hereby agrees to assume the obligations of Portfolio Owner under the immediately preceding paragraph with respect to said Section 5.2.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of January 1, 2013.

 

 

WU/LIGHTHOUSE PORTFOLIO L.L.C.

 

 

 

By: Lighthouse 100 William Operating LLC

 

 

 

 

By

 

 

 

 

 

LIGHTHOUSE REAL ESTATE MANGEMENT LLC

 

 

 

By:

 

 

 

 

 

GREEN HOLLAND MANAGEMENT LLC

 

 

 

By:

 

 


 

AGREED:

 

GTJ Realty, LP

 

 

By:  GTJ GP, LLC, its general partner

 

 

 

By:  GTJ REIT, Inc., its manager

 

 

 

By:

 

 

 

David J. Oplanich

 

Chief Financial Officer

 


 

SCHEDULE A

 

Managed Assets

 

Property Owner

 

Property Address

 

State

WU/LH 466 Bridgeport L.L.C.

 

466 Bridgeport Avenue, Shelton

 

CT

Wu/LH 470 Bridgeport L.L.C.

 

470 Bridgeport Avenue, Shelton

 

CT

Wu/LH 950 Bridgeport L.L.C.

 

950 Bridgeport Avenue and 974 Bridgeport Avenue, Milford

 

CT

Wu/LH 12 Cascade L.L.C.

 

12 Cascade Boulevard, Orange

 

CT

Wu/LH 15 Executive L.L.C.

 

15 Executive Boulevard, Orange

 

CT

WU/LH 35 Executive L.L.C.

 

35 Executive Boulevard, Orange

 

CT

WU/LH 15 Progress L.L.C.

 

15 Progress Drive, Shelton

 

CT

Wu/LH 22 Marsh Hill L.L.C.

 

22 Marsh Hill Road, Orange

 

CT

Wu/LH 25 Executive L.L.C.

 

25 Executive Boulevard, Orange

 

CT

Wu/LH 269 Lambert L.L.C.

 

269 Lambert Road, Orange

 

CT

Wu/LH 103 Fairview Park L.L.C.

 

103 Fairview Park Drive, Elmsford

 

NY

Wu/LH 412 Fairview Park L.L.C.

 

412 Fairview Park Drive, Elmsford

 

NY

Wu/LH 401 Fieldcrest L.L.C.

 

401 Fieldcrest Avenue, Elmsford

 

NY

Wu/LH 404 Fieldcrest L.L.C.

 

404 Fieldcrest Drive, Elmsford

 

NY

Wu/LH 36 Midland L.L.C.

 

36 Midland Avenue, Port Chester

 

NY

Wu/LH 100-110 Midland L.L.C.

 

100-110 Midland Avenue, Port Chester

 

NY

Wu/LH 112 Midland L.L.C.

 

112 Midland Avenue, Port Chester

 

NY

Wu/LH 199 Ridgewood L.L.C.

 

199 Ridgewood Drive, Elmsford

 

NY

Wu/LH 203 Ridgewood L.L.C.

 

203 Ridgewood Drive, Elmsford

 

NY

Wu/LH 8 Slater L.L.C.

 

8 Slater Street, Port Chester

 

NY

Wu/LH 100 American L.L.C.

 

100 American Road, Morris Plains

 

NJ

Wu/LH 200 American L.L.C.

 

200 American Road, Morris Plains

 

NJ

Wu/LH 300 American L.L.C.

 

300 American Road, Morris Plains

 

NJ

Wu/LH 400 American L.L.C.

 

400 American Road, Morris Plains

 

NJ

Wu/LH 500 American L.L.C.

 

500 American Road, Morris Plains

 

NJ

 


 

Schedule 1

 

[See Schedule 5.2 of Contribution Agreement]

 


 

EXHIBIT G-1

 

Management Agreements

 

MANAGEMENT AGREEMENT
(UPREIT Assets)

 

The Management Agreement, made as of January 1, 2013 by and between GTJ REALTY, LP (hereinafter called the “Owner”), having an office at 444 Merrick Road, Suite 370, Lynbrook, New York 11563 and GTJ MANAGEMENT, LLC, having an office at 444 Merrick Road, Suite 370, Lynbrook, New York 11563 (hereinafter called the “Manager”).

 

R E C I T A L S :

 

Owner desires to engage the services of Manager as an independent contractor to operate and manage the properties identified on Schedule 1 annexed hereto located in the States of New York, New Jersey and Connecticut (said property and the buildings and improvements thereon are collectively called the “Property”).

 

NOW, THEREFORE, in consideration of the premises, Owner and the Manager agree as follows:

 

ARTICLE 1

 

ENGAGEMENT OF THE MANAGER

 

1.1          Engagement .  Owner hereby engages the Manager as an independent contractor and the Manager hereby accepts such engagement on the terms and conditions hereinafter provided.

 

ARTICLE 2

 

DUTIES AND AUTHORITY OF THE MANAGER

 

2.1          Duties and Authority of the Manager .  Manager shall operate and manage the Property and shall render services and perform duties (or cause such services or duties to be rendered and performed) and shall have authority as follows:

 

2.2          Leasing .  The Manager shall use all reasonable efforts to keep the Property fully rented by procuring tenants and by effecting renewals and extensions of existing leases as more particularly provided in the business plan of the Owner as may be amended from time to time.  There shall be no rent concessions or allowances for tenant improvements without the Owner’s approval, and all leases (including any lease modifications, cancellations, renewals, options to purchase, rights of first refusal, rights of first offer or expansions) shall be in writing.  The actual third party cost of negotiating and obtaining leases (including reasonable legal fees, leasing commissions, and advertising and promotional) shall be considered an operating expense borne by

 


 

the Owner.  The Owner shall also establish from time to time the amount that may be expended for tenant improvements for any tenant at the Property, and the Manager shall not contract for or spend more than the amount set forth by the Owner without the Owner’s consent. Notwithstanding the foregoing, Manager shall have the right with Owner’s consent to enter into subcontracts for leasing and any management services required to be rendered by Manager under this Agreement.

 

2.3          Lease Enforcement .  The Manager shall secure, as fully as practicable, the compliance of tenants with the terms, covenants and conditions of their leases; keep tenants informed of all rules and regulations affecting each individual Property and any updates relating thereto; and receive, consider and handle service requests by tenants and maintain systematic records showing the action taken with respect to each request.

 

2.4          Tenant Relations .  The Manager shall maintain business-like relations with tenants whose service requests shall be received, considered and acted upon and recorded in a fashion and in an order that shows the action taken with respect to each request.

 

The Manager shall, and is hereby authorized and directed:

 

(i)                 to request, demand, collect, receive and receipt all monthly rents, percentage rents (if any), common area maintenance charges (if any), sales tax, rental escalation, operating expense reimbursements, real estate taxes and insurance premiums or stops or charges or any utility charges or HVAC charges and any other taxes or charges due from tenants of the Property permitted or required to be collected by the Owner under any lease or rental agreement with such tenant in the name of the Owner (hereinafter collectively called “Rents”), as such Rents become due;

 

(ii)                  to institute and prosecute actions or proceedings in the name of the Owner and at the Owner’s expense for the collection of rents or charges due from tenants or for eviction of tenants and a recovery of possession of the leased premises, and such expense may include the engaging of counsel for any such matter; provided, however, the Manager shall not initiate any legal action without the Owner’s consent.

 

2.5          Operating Accounts .  The Manager shall promptly deposit all Rents, income and other receipts received from the operation of each Property in a commercial checking account (hereinafter called “Operating Account”) at such bank as the Owner shall designate.  The Operating Account shall initially be kept at M&T Bank, People’s United Bank, Valley National Bank and/or Bank of America, as the case may be. All funds in the Operating Account and interest thereon shall at all times be and remain the property of the Owner and shall be indicated as such on the records of the bank.  No other funds shall in any way be commingled with the funds in the Operating Account.  The Manager is authorized to withdraw funds from the Operating Account on behalf of the Owner only for the purpose of making payment of operating expenses pursuant to §4.1, and other disbursements, including dividend disbursements or as authorized herein.  Within 15 days after the end of each calendar month, the Manager shall

 


 

disburse to the Owner the amount due to the Owner from the operation of the Property during the preceding month, such disbursement to be made by wire transfer, or by a check or checks drawn on the Operating Account, leaving as a balance the Working Capital Reserve as provided for in §4.3.  Each check written on the Operating Account by the Manager for an amount in excess of $5,000  shall require two signatories, which signatories may be changed from time to time, as designated by Owner.

 

2.6          Security Deposits .  The Manager shall cause security deposits to be deposited in the Operating Account (or into separate accounts as maybe required by law) and to be disbursed in accordance with the applicable lease agreements pursuant to which such deposits have been made.

 

2.7          Maintenance, Repairs, Purchase Orders and Contracts .  The Manager shall cause the building, appurtenances and grounds of the Property to be maintained in accordance with standards applicable to comparable buildings in the county where each individual Property is located, such maintenance to include: (1) performing (or cause to be performed) interior and exterior cleaning, painting, decorating, plumbing, steam fitting, carpentry and such other normal maintenance and repair work as may be necessary; (2) performing such necessary preventative maintenance as may be necessary or reasonably desirable; (3) purchasing supplies, materials and services; and (4) executing contracts in the name and on behalf of the Owner for utilities, vermin extermination, janitorial services, laundry service, trash removal and other services deemed by the Manager to be reasonably necessary or advisable.  Every maintenance or operating contract or order shall be for a term not exceeding one year, shall be terminable by either the Manager or the Owner, for any reason, without penalty, upon 30 days notice or for cause (after the expiration of any notice or cure period), and shall be subject to the Owner’s prior approval unless it does not exceed either $5,000 per annum per individual Property or the amount specified on the Approved Budget for the expense item(s) covered by such contract.  When taking bids or issuing purchase orders, the Manager shall secure and credit to the Owner all discounts, rebates or commissions obtainable with respect to purchases, service contracts, maintenance and repair work or other transactions made on the Owner’s behalf (which shall include the Owner’s share of any discounts, rebates or commissions based on purchases made in common with or for the benefit of other parties).  The Manager shall promptly notify the Owner in the event that the Manager becomes aware that the condition of the Property or any part thereof requires expenditures for any repairs, replacements or structural alterations in excess of the amount budgeted for such repairs, or in the event that any part of the Property fails to meet the standards of any federal, state or local law, ordinance or regulation of which the Manager has actual knowledge.  Notwithstanding the foregoing, in the event of an emergency, Manager may use its reasonable judgment in making necessary repairs, if such immediate action is required. for the preservation or protection of the Property or of any tenants or other persons, but Owner shall be notified by the most expedient means immediately thereafter.

 

2.8          Employ and Supervise Employees .  The Manager shall employ, train, supervise and discharge such employees as are necessary for the efficient and economical operation and management of the Property.  All employees shall be employees of the Manager or its affiliate and not the Owner, and their wages and other benefits which are considered part of operating expenses under §4.1 shall be subject to the reasonable approval of the Owner.  The wages, salaries and other compensation, including Social Security taxes, unemployment insurance taxes,

 


 

unemployment compensation fringe benefits, medical and health insurance and similar items, shall be deemed to be expenses of operation; provided, however, no penalty or interest imposed by the IRS for the Manager’s failure to pay timely to the IRS the Social Security taxes, unemployment insurance taxes or withholding taxes of such employees shall be an expense of operation.  The Manager shall, at the Owner’s expense, procure and maintain adequate workers’ compensation insurance or an equivalent thereof covering all employees and shall prepare and file all returns and other documents required under the Federal Unemployment Tax Act, or any similar federal or state legislation, and all withholding tax returns required for employees.  All compensation fixed by the Manager for employees, as provided in this Agreement, shall be reasonably comparable to the compensation paid for similar work performed in the same geographic area.  The Manager will not retain union employees without the Owner’s approval.

 

2.9          Insurance .  Provided sufficient funds are available in the Operating Account, the Manager shall if requested by the Owner cause to be placed and kept in force all forms of insurance relating to the Property required by the Owner or by the terms of any mortgage,  deed of trust or other security instrument, ground lease, or similar instrument covering any portion of the Property (including any operating agreement of Owner (the “Operating Agreement”).  All insurance coverage shall be placed with such companies, in such amounts, and with such beneficial interests appearing therein as shall be acceptable to the Owner and shall name Owner as primary insured and such parties as are designated by Owner as an additional insured.  The Manager shall promptly investigate and make a full written report as to all accidents or claims for damage relating to the ownership, operation and maintenance of the affected Property, including any damage or destruction to the affected Property and the estimated cost of repair, and shall cooperate with and make all reports required by any insurance company.  The Manager shall not vary or change any portion of the insurance program required by the Owner but shall review annually the insurance program and make such recommendations to the Owner as to changes as the Manager shall deem advisable or necessary.

 

2.10        Government and Mortgage Compliance .  The Manager shall use reasonable efforts to take such actions as may be necessary to comply with all present and future laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments, courts, departments, commissions, boards and officers, or any other body exercising the functions similar to those of any of the foregoing which may be applicable to any individual Property, and attempt to obtain and maintain all certificates of occupancy, licenses and/or operating permits, if any, for the Property.  The Owner agrees to execute and deliver any and all applications and other documents and to otherwise reasonably cooperate to the fullest extent with the Manager in applying for, obtaining and maintaining such certificates, licenses and permits.  The Manager shall also use all reasonable efforts to cause the Property to comply with all terms, covenants and provisions contained in any deed of trust or mortgage, operating agreement, leases or other agreement now or hereafter encumbering or affecting the Property or any portion of the Property and any security agreement now or hereafter encumbering or affecting the personal property located at the Property or any portion thereof.

 

2.11        Taxes, Loans and Other Payments .  To the extent sufficient funds are available in the Operating Account, the Manager shall pay when due all taxes, assessments, rents and other impositions applicable to the Property and all loan payments (including required escrows of taxes

 


 

and/or insurance premiums, if any), all operating expenses and all authorized expenses relating to the operation and maintenance of the Property, and promptly notify Owner of any change in the amount of real and personal property assessments or terms relating to the Property, and recommend and advise Owner as to contesting the amount or validity thereof and cooperate with Owner and provide necessary assistance to Owner in the contesting of any taxes or assessments or any appeal thereof.

 

2.12        Books and Records .  The Manager shall maintain complete and accurate books, records and accounts of all costs and expenses incurred and all income and receipts received in connection with the operation of the Property.  The books and records regarding the Property shall be kept in such detail as the Owner shall reasonably require (or pursuant to any regulatory requirements delivered by Owner to Manager in writing), including, but not limited to, an historical record of all debits and credits, contracts, certificates, documents, correspondence and other writings pertaining to any material transaction arising out of or related to the Property or the operation thereof.  All such books and records of the Manager which relate to the Property, shall be available for inspection and audit by the Owner or any of its partners at all reasonable times during normal business hours, or shall be delivered to Owner whenever written request therefor is made.

 

2.13        Inventories, Rent Rolls and Reports .  The Manager shall prepare, keep current and submit to the Owner within 30 days after the close of each calendar quarter, the following: (1) an inventory of the Owner’s equipment and personal property at the Property; (2) a rent roll of existing leases in form satisfactory to the Owner; (3) a schedule of tenant security deposits being held by the Manager on behalf of the Owner; (4) reports of existing vacancies; and (5) on a semi-annual basis, tenant sales data in cases where tenant are obligated to pay percentage rents under their leases.  In addition, the Manager shall prepare and submit to the Owner at least 60 days prior to the commencement of each fiscal year of the Owner a leasing schedule showing proposed lease rates, concessions  and tenant improvements proposed to be granted at the Property, including the formula for granting such concessions, and the projected net annual effect of leasing activity at the Property for the upcoming fiscal year.

 

2.14        Statement of Operations .  The Manager shall prepare and submit to Owner all statements required under Section 10.2 of the Operating Agreement of Owner.

 

2.15        Budgets .  The Manager shall prepare and submit to the Owner for the Owner’s review and approval, following:

 

(a)           Within forty five (45) days of commencement of this Agreement and thereafter, at least forty five  (45) days prior to the commencement of each calendar year,  an operating and working capital budget, which when approved by Owner shall be the “Approved Budget,” setting forth the Manager’s detailed projection of cash receipts, cash expenditures, working capital and other necessary reserves and capital improvements and expenditures (all on a month-to-month basis) for such period in connection with the operation of the Property.

 

(b)           At least 30 days prior to commencement of each quarter of each fiscal year

 


 

of the Owner, a forecast of such items as are shown on the most recent annual Approved Budget for the balance of such fiscal year.

 

(c)           From time to time in the Manager’s discretion, or at the direction of the Owner, one or more supplements to or revisions of an Approved Budget.

 

2.16        Manager’s Duties .  The Manager shall perform other normal business functions and otherwise operate and make the business and affairs of the Owner with respect to the Property in accordance with and as limited by this Agreement and shall perform such other duties with respect to the Property as it shall deem necessary and proper.  Notwithstanding any other provision of this Agreement, the Manager is required to perform its duties only to the extent that funds are available to the Manager in the Operating Account and in no event shall the Manager be required to use its own funds for such purposes.  If and to the extent the Manager does use its own funds after obtaining Owner’s prior consent, it is entitled to reimburse itself out of the Operating Account.  Manager shall notify Owner when Manager uses its own funds and when it reimburses itself out of the Operating Account.

 

ARTICLE 3

 

LIMITATIONS ON AUTHORITY

 

3.1          Limitations on Authority .  Notwithstanding any other provision of this Agreement, the Manager shall have  no authority to take any of the following actions, except upon the prior written approval of the Owner:

 

3.2          Land Acquisitions .  The Manager shall not acquire any real property or interest therein on behalf of the Owner.

 

3.3          Sale or Encumbrances of the Property .  The Manager shall not sell or otherwise transfer or mortgage the Property or any part thereof, except the sale of worn out or obsolete personal property or other personal property no longer useful in the operation of the Property.

 

3.4          Expenditures .  The Manager shall not make any expenditure or incur any obligation for any item or transaction or group of similar items or transactions which would cause an Approved Budget for any individual Property to be exceeded by more than 10% or $5,000 of said line item except in the case of an emergency.

 

3.5          Review by the Owner .  The Manager and the Owner shall meet periodically to discuss and review the management activities to be conducted by the Manager hereunder.

 

ARTICLE 4

 

EXPENSES AND COSTS

 

4.1          Operating Expenses .  The Owner shall be responsible for the payment of all costs of operating and managing the Property. To the extent that funds are available, the Manager shall

 


 

pay all such costs out of the rents and receipts generated by its operation of the Property. In the event, however, that such rents and receipts do not generate sufficient funds to pay all such costs, the Manager shall promptly notify the Owner and the Owner shall advance funds to the Manager to pay such deficiency, or otherwise instruct the Manager as to the application of existing funds. The Manager shall not be held responsible for any act or failure to act which is occasioned by the failure of the Owner to provide funds or to assure the Manager of the provision for such funds to cover the cost or expense of any item which is required to be paid for by the Owner.

 

4.2          Management Costs .  The Management Fee is intended to compensate Manager for the expertise and time spent by the management personnel of the Manager in connection with the operation and management of the Property and the performance of the services contemplated herein and to cover general office overhead expenses of the Manager to the extent they are related to management personnel of the Manager.  The Manager shall be reimbursed for all other expenses incurred by the Manager in connection with the performance of the service required herein, including, without limitation, the following, as approved by Owner:

 

(i)            All out-of-pocket expenses paid to third parties in connection with the rendition of the series contemplated herein, including travel, printing, long distance telephone expenses and delivery costs for the Property;

 

(ii)           The allocable portion of all compensation of personnel employed by the Manager to perform any portion of the services contemplated herein from an on-site management office, including all storage and workshop areas, maintained solely for the benefit of the Property (collectively, “On-Site Locations”), together with all costs of rental or purchase of such On-Site Locations or of equipment supplies, utilities and other materials or services required in order to enable such personnel to perform their respective duties at such On-Site Locations; and

 

(iii)          The allocable portion of the salaries, other compensation and office overhead relating only to supervisors employed by the Managers who perform any portion of the On-Site services, which portion shall be determined by multiplying (i) the monthly base salary of each such supervisor by (ii) the percentage of such supervisor’s time devoted to the Property during such month.

 

In no event shall the Manager be reimbursed for the costs of compensation or overhead relating to any employee of the Manager or any affiliate of the Manager with respect to obtaining or negotiating leases of space in the Property other than pursuant to subparagraph (ii) above and §5.2 below.

 

4.3          Working Capital Reserve .  The Manager shall establish and maintain a working capital reserve by setting aside out of the monthly gross receipts from the Property such amount as shall be prescribed in the most recently Approved Budget or as shall be determined by the Manager and the Owner from time to time to be necessary to meet reasonably anticipated operating expenses for the next succeeding end of month. Any deficit in the working capital reserve shall be replenished by a deposit into reserve within 30 days after the withdrawal from the working capital reserve which occasioned such deficit; provided, however, that in the event gross

 


 

receipts in any calendar month are insufficient to permit the setting aside of the applicable amount set forth above, such deficient amount shall be set aside from gross receipts in the next succeeding month(s) until the amount of such deficit has been placed in the working capital reserve. No expenditures shall be made by the Manager from the working capital reserve in payment of any item unless such expenditure (1) shall be made to the Manager in payment of the fees and other sums due to Manager, plus the amounts reimbursable to the Manager hereunder for expenses actually incurred by the Manager on behalf of the Owner or the Property, (2) shall have been specifically provided for in the Approved Budget, (3) shall have been specifically approved in writing by the Owner, or (4) constitutes an emergency in accordance with §2.7.

 

ARTICLE 5

 

COMPENSATION

 

5.1          Management Fee .  The Manager shall receive, in full payment of all management services performed under this Agreement, a fee, for each month in which this Agreement shall be in effect, in an amount equal to the fees shown on Schedule 2 annexed hereto (as the same may be amended from time to time to reflect any payments required to be made by Tenants on account of management services).  The fee shall be paid to the Manager within five (5) Business Days of receipt of all or any portion of the same by Owner.

 

5.2          Leasing Fee .  Leasing fees payable with respect to the Property shall be paid as follows: (A) no commission shall be due to Manager in connection with any leasing activity; (B) if an outside broker is involved in any new lease or any renewal, extension or expansion under an existing lease, the Owner shall pay a commission to the outside broker based on market rates and (C) in the event Manager hires a sub-manager as an exclusive broker for the Property, Owner shall pay the sub-manager a commission pursuant to a separate agreement.

 

ARTICLE 6

 

TERM AND TERMINATION

 

6.1          Term and Termination of Agreement .  This Agreement shall be in effect for a period of one year, beginning as of the date hereof, and shall be automatically renewed for a period of one year, beginning as of the date hereof, and shall be automatically renewed for successive one year periods thereafter,  subject, however, to the condition that this Agreement may be terminated by either party without cause upon 30 days prior written notice, or with cause, by either the Owner or the Manager at any time.  The Owner’s ability to terminate this Agreement “with cause” shall include, without limitation, the following circumstances:  (i) if Owner or Manager shall file or there shall be filed against either party a petition in bankruptcy or insolvency or a reorganization or for the appointment of a receiver or trustee for all or a substantial part of Owner’s or Manager’s assets; (ii) failure of either Owner or Manager to perform any of the terms, conditions, covenants or acts required to be performed under this Agreement which failure shall continue uncured or unabated for a period of fifteen (15) business days after written notice thereof to the defaulting party; provided, however, with regard to terms, conditions, covenants or acts not curable by the tender of money, Manager or Owner shall have such longer period of time as is

 


 

reasonably required to cure or abate the failure to perform; (iii) if Manager is dissolved, or if Owner is dissolved and no written extension hereof with Owner or Manager’s successor is in effect except in the event the successor entity to Manager is an affiliate of Manager in which event the Agreement shall not terminate but shall continue with Manager’s successor; (iv) if Owner shall fail, within fifteen (15) days of written notice by Manager, to provide sufficient funds to pay the ongoing expenses of the Property, pursuant to the Approved Budget as may be modified from time to time by written approval of Owner; or (v) if Manager wrongfully seizes or otherwise fails to timely deliver funds belonging to or due to Owner.

 

6.2          Sale, Destruction or Taken .  In the event that the property is sold, by foreclosure or otherwise, or in the event of a substantial casualty to any portion of the Property and the Owner elects not to rebuild, or in the event of the taking of substantially all of any individual Property through condemnation proceedings, either the Owner or the Manager may terminate this Agreement with respect to the affected portion of the Property upon 30 days’ prior written notice to the other party.

 

6.3          Final Accounting .  At the time that this Agreement is terminated for whatever reason, a final accounting shall be caused to be made at the Owner’s sole cost and expense of all transactions theretofore completed.  Any sums then owing to the Manager, whether for reimbursement of expenses or on account of its fee hereunder, shall be paid to the Manager. Upon termination, all books and records and all original leases and contracts relating to the Property which are in the Manager’s possession shall be immediately delivered to the Owner or its designee.

 

ARTICLE 7

 

7.1          Notices .  All communications, notices and demands of any kind which either party may be required or desire to give to or serve upon the other party shall be made in writing, and shall be hand delivered by personal service to an officer of the other party or sent by overnight delivery, registered or certified mail, postage prepaid, return receipt requested, at the address for each party first set forth above.  Any such notice sent by mail shall be presumed to have been received by the addressee three (3) business days after posting in the United States mail.  Each party may designate up to two additional persons to whom copies of any notices to such party shall be sent at the same time that notices are sent to such party.  Either party may change its address and change the name or address of the persons to whom copies of notice are to be sent by giving the other party written notice of its new address or any other change as herein provided.

 

7.2          Assignment . The Manager shall have no power or right to assign or delegate any of its obligations or responsibilities hereunder to any other person, firm or corporation without the prior written consent of Owner and the Owner.

 

7.3          Qualifications of the Manager .  The Manager hereby represents and warrants to Owner that it is qualified to do business in the state where the Property is located and possesses all licenses and other qualifications required by all governmental authorities for the Manager to exercise all the functions set forth in this Agreement.

 


 

7.4          Parties Are Not Partners; No Agency .  It is the intention of the parties thereto that the Manager shall be, and remain, an independent contractor.  The parties do not intend and nothing contained herein shall be deemed to create a partnership, co-tenancy, joint venture or agency of any kind.

 

7.5          Attorneys’ Fees .  In the event of any action between the Manager and Owner seeking enforcement of any of the terms and conditions of this Agreement, or in connection with the Property, the prevailing party in such action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, not limited to taxable costs and reasonable attorneys’ fees.

 

7.6          Liability of Owner .  Neither Owner nor any partner, member,  shareholder, agent or employee of Owner shall have any personal liability under this Agreement, nor shall resort be had to their private property except their interest in the Property for the satisfaction of any claims under this Agreement.

 

7.7          Entire Agreement; Amendments .  This Agreement and the items incorporated herein contain all of the agreements of the parties hereto with respect to the matters contained herein and no prior agreement or understanding pertaining to any such matter shall be effective.  No provisions of this Agreement may be amended or modified in any manner whatsoever except by an agreement in writing signed by each of the parties hereto.

 

7.8          Captions .  Captions to articles, sections and paragraphs to this Agreement are not a part of this Agreement and shall not be deemed to affect the meaning or construction of any of its provisions.

 

7.9          Severability .  If any term or provision of this Agreement or the application thereof to any person or circumstance shall to any extent be invalid or unenforceable, the remaining terms and provisions of this Agreement, or the application of such terms or provisions to the person or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law.

 

7.10        Indemnity .  Owner shall indemnify the Manager and hold the Manager harmless from and against all loss, cost, expense, claims, demands, liability and obligations (collectively, “Loss”) which the Manager may ever suffer or incur or have asserted against it arising from or in any way connected with the performance of its obligations hereunder, except that Owner shall have no responsibility with respect to, and the Manager shall indemnify Owner and hold Owner harmless from and against, all loss resulting from the willful misconduct, unlawful or fraudulent acts or gross negligence of the Manager or its officers, employees or other representatives.  Likewise, Owner shall indemnify the Manager and hold the Manager harmless from and all loss resulting from the willful misconduct or gross negligence of Owner or its partners, employees or other representatives. In no event shall the Manager be liable to Owner for any mistake in judgment so long as the Manager acts in good faith. Owner shall not indemnify the Manager with respect to the Manager’s violation of any laws regulations or ordinances which (a) prohibit discrimination on the basis of race, sex, color, religion or nationality, or (b) pertain to fair

 


 

employment or sexual harassment. The Manager hereby in;demnifies Owner and holds Owner harmless from and against all Loss which Owner may ever suffer or incur or have assessed against it with respect to the Manager’s violation of any laws, regulations or ordinances described in subparagraphs (a) or (b) above. This section shall survive the termination of this Agreement.

 

7.11        Governing Law .  This Agreement shall be construed in accordance with the laws, including the conflict of law rules, of the State of New York.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first written above.

 

 

OWNER:

 

 

 

GTJ REALTY, LP

 

 

 

 

By: GTJ GP, LLC, its general partner

 

 

 

 

By: GTJ REIT, INC.

 

 

 

 

 

 

 

 

By

 

 

 

 

 

 

MANAGER:

 

 

 

GTJ MANAGEMENT, LLC

 

 

 

 

By:

GTJ REIT, Inc.

 

 

 

 

 

 

By:

 

 


 

SCHEDULE 1

 

Property Owner

 

Property Address

 

 

 

165-25 147th Ave, LLC

 

165-25 147th Avenue

Jamaica, New York

 

 

 

49-19 Rockaway Beach Blvd, LLC

 

49-19 Rockaway Beach Boulevard

Arverne, New York

 

 

 

85-01 24 th  Ave, LLC

 

85-01 24 th  Avenue

East Elmhurst, New York

 

 

 

114-15 Guy Brewer Blvd, LLC

 

114-15 Guy Brewer Boulevard,

Jamaica, New York

 

 

 

612 Wortman Avenue LLC

 

612 Wortman Avenue

Brooklyn, New York

 

 

 

23-85 87th Street, LLC

 

23-85 87th Street

East Elmhurst, New York

 

 

 

Farm Springs Road LLC

 

8 Farm Springs Road

Farmington, Connecticut

 


 

Property Owner

 

Property Address

WU/LH 466 Bridgeport L.L.C.

 

466 Bridgeport Avenue, Shelton, CT

Wu/LH 470 Bridgeport L.L.C.

 

470 Bridgeport Avenue, Shelton, CT

Wu/LH 950 Bridgeport L.L.C.

 

950 Bridgeport Avenue and 974 Bridgeport Avenue, Milford, CT

Wu/LH 12 Cascade L.L.C.

 

12 Cascade Boulevard, Orange, CT

Wu/LH 15 Executive L.L.C.

 

15 Executive Boulevard, Orange, CT

WU/LH 35 Executive L.L.C.

 

35 Executive Boulevard, Orange, CT

WU/LH 15 Progress L.L.C.

 

15 Progress Drive, Shelton, CT

Wu/LH 22 Marsh Hill L.L.C.

 

22 Marsh Hill Road, Orange, CT

Wu/LH 25 Executive L.L.C.

 

25 Executive Boulevard, Orange, CT

Wu/LH 269 Lambert L.L.C.

 

269 Lambert Road, Orange, CT

Wu/LH 103 Fairview Park L.L.C.

 

103 Fairview Park Drive, Elmsford, NY

Wu/LH 412 Fairview Park L.L.C.

 

412 Fairview Park Drive, Elmsford, NY

Wu/LH 401 Fieldcrest L.L.C.

 

401 Fieldcrest Avenue, Elmsford, NY

Wu/LH 404 Fieldcrest L.L.C.

 

404 Fieldcrest Drive, Elmsford, NY

Wu/LH 36 Midland L.L.C.

 

36 Midland Avenue, Port Chester, NY

Wu/LH 100-110 Midland L.L.C.

 

100-110 Midland Avenue, Port Chester, NY

Wu/LH 112 Midland L.L.C.

 

112 Midland Avenue, Port Chester, NY

Wu/LH 199 Ridgewood L.L.C.

 

199 Ridgewood Drive, Elmsford, NY

Wu/LH 203 Ridgewood L.L.C.

 

203 Ridgewood Drive, Elmsford, NY

Wu/LH 8 Slater L.L.C.

 

8 Slater Street, Port Chester, NY

Wu/LH 100 American L.L.C.

 

100 American Road, Morris Plains, NJ

Wu/LH 200 American L.L.C.

 

200 American Road, Morris Plains, NJ

Wu/LH 300 American L.L.C.

 

300 American Road, Morris Plains, NJ

Wu/LH 400 American L.L.C.

 

400 American Road, Morris Plains, NJ

Wu/LH 500 American L.L.C.

 

500 American Road, Morris Plains, NJ

 


 

Schedule 2

 

Management Fee Schedule

 

TENANT NAME

 

PROP MGMT FEES
(BASED ON GROSS
RENTAL AMTS)

 

PROP MGMT FEES
(BASED ON COC’S)

 

CONNECTICUT

 

 

 

 

 

 

 

 

 

 

 

BKM ENTERPRISES
22 MARSH HILL ROAD

 

 

 

5

%

COLONY HARDWARE
269 LAMBERT

 

 

 

NA

 

DOONEY & BURKE
12 CASCADE BLVD

 

 

 

5

%

TRANSTAR METALS CORP
12 CASCADE BLVD

 

 

 

5

%

KBC ELECTRONICS INC
12 CASCADE BLVD

 

 

 

5

%

STROBER WALLBOARD DIST
950 BRIDGEPORT AVE

 

 

 

5

%

SHOEMART
950 BRIDGEPORT AVE

 

 

 

NA

 

LEX PRODUCTS CORP
15 PROGRESS

 

5% Prop Mgmt Fee (based on Income)

 

 

 

DOONEY & BURKE
15 EXECUTIVE BLVD

 

 

 

5

%

TRANSTAR METALS
15 EXECUTIVE BLVD

 

 

 

5

%

RJR SCHMIDT FINANCIAL LLC
15 EXECUTIVE BLVD

 

5% Prop Mgmt Fee (based on Income)

 

 

 

CENTER OF BALANCE PERSONAL TRAIN
25 EXECUTIVE BLVD

 

 

 

N/A

 

TANGOE
35 EXECUTIVE BLVD

 

 

 

N/A

 

INLINE PLASTICS CORP
470 BRIDGEPORT AVE.

 

 

 

5

%

 


 

NEW YORK

 

 

 

 

 

 

 

 

 

 

 

MAGNETIC ANALYSIS CORP
103 FAIRVIEW PARK DR

 

5% Prop Mgmt Fee (based on Income)

 

 

 

THE RELIABLE AUTOMATIC SPRINKLER
103 FAIRVIEW PARK DR

 

 

 

5

%

COCA COLA
412 FAIRVIEW PARK DRIVE

 

 

 

N/A

 

MCI
401 FIELDCREST DRIVE

 

 

 

N/A

 

FEDERAL EXPRESS
404 FIELDCREST DRIVE

 

 

 

N/A

 

MERCURY SOLAR SYSTEMS
36 MIDLAND AVE

 

5% Prop Mgmt Fee (based on Income)

 

 

 

PROSWING
36 MIDLAND AVE.

 

5% Prop Mgmt Fee (based on Income)

 

 

 

JPMORGAN CHASE
112 MIDLAND AVE.

 

 

 

N/A

 

DCH INVESTMENTS INC (ASSIGNEE)
100-110 MIDLAND AVE

 

 

 

5

%

AMERIPATH INC
100-110 MIDLAND AVE

 

 

 

5

%

AMERICAN UNIVERSAL SUPPLY INC
199 RIDGEWOOD

 

 

 

5

%

PGW AUTO GLASS
100-110 MIDLAND AVE

 

3% Prop Mgmt Fee (based on Income)
(Not to exceed 3% of gross rental amts per yr.)

 

 

 

SOLAR CITY
203 RIDGEWOOD DRIVE

 

 

 

N/A

 

DCH MIDLAND ( LICENSE AGREEMENT)
8 SLATER

 

 

 

N/A

 

NATIONAL COLLECTOR’S MINT INC
8 SLATER STREET

 

 

 

N/A

 

ZYLOWARE
8 SLATER

 

5% Prop Mgmt Fee (based on Income)

 

 

 

 


 

TENANT NAME

 

PROP MGMT FEES
(BASED ON GROSS
RENTAL AMTS)

 

PROP MGMT FEES
(BASED ON
COC’S)

 

 

 

 

 

 

 

NEW JERSEY

 

 

 

 

 

 

 

 

 

 

 

AE INSTITUTE
100 AMERICAN ROAD

 

 

 

5

%

BIOSCRIP INFUSION SERVICES
100 AMERICAN ROAD

 

 

 

5

%

TEMPTIME CORP
100 AMERICAN ROAD

 

 

 

5

%

OLI SYSTEMS INC.
100 AMERICAN ROAD

 

 

 

N/A

 

COTY US
100 AMERICAN ROAD

 

 

 

5

%

STATE OF NJ
100 AMERICAN ROAD

 

 

 

N/A

 

AHS INVESTMMENTS
200 AMERICAN ROAD

 

 

 

5

%

IMMUNOMEDICS INC
300 AMERICAN ROAD

 

 

 

5

%

CHARMANT GROUP INC
400 AMERICAN ROAD

 

 

 

5

%

COTY US
400 AMERICAN ROAD

 

 

 

5

%

STAR TRAK
400 AMERICAN ROAD

 

 

 

5

%

COTY
500 AMERICAN ROAD

 

 

 

5

%

 


 

EXHIBIT H-1

 

Opinion of Counsel

 


 

EXHIBIT H-2

 

Opinion of Counsel

 


 

EXHIBIT I

 

INVESTOR LETTER

 

January 1, 2013

 

GTJ REIT, INC.

444 Merrick Road, Suite 370

Lynbrook, NY 11563

Attn:  David Oplanich, CFO

 

GTJ Realty, LP

444 Merrick Road, Suite 370

Lynbrook, NY 11563

Attn: David Oplanich, CFO

 

Dear Mr. Oplanich:

 

I, the undersigned, represent and warrant as follows:

 

(a)           I am an “accredited investor” within the meaning of Rule 501 under the Securities Act of 1933, as amended (the “ Securities Act ”), and Portfolio was not organized for the specific purpose of acquiring the Portfolio Interest;

 

(b)           I have sufficient knowledge and experience in investing in companies similar to the UPREIT in terms of the UPREIT’s stage of development and other relevant factors so as to be able to evaluate the risks and merits of its investment in the UPREIT and it is able financially to bear the risks thereof;

 

(c)           I have had an opportunity to discuss with GTJ and GTJ’s management the terms of the Portfolio Contribution and the business, management and financial affairs of GTJ and the GTJ POEs and to obtain any additional information regarding the foregoing which Portfolio possesses or can acquire without unreasonable effort or expense;

 

(d)           My interest of the Portfolio Interest is being acquired for my own account and not with a view to, or the intention of, any distribution in violation of the Securities Act or any applicable state securities laws; and

 

(e)           I understand that (i) my interest of the Portfolio Interest has not been registered under the Securities Act by reason of the sale of the Interest in a transaction exempt from the registration requirements of the Securities Act, (ii) my interest of the Portfolio Interest must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt from such registration, (iii) my interest of the Portfolio Interest may not be transferred, sold, pledged, hypothecated or otherwise disposed of in the absence of an effective registration statement with respect to the securities evidenced by this certificate, filed and made effective under the Securities Act and such applicable state securities laws, or unless the UPREIT receives an opinion of counsel satisfactory to the UPREIT to the effect that registration under such act and such applicable state securities laws is exempt therefrom, and (iv) my interest of the Portfolio Interest shall be subject to the restrictions on transfer set forth in the UPREIT LPA.

 


 

(f)            My representatives, attorneys, accountants, consultants and I have reviewed all the public filings of GTJ as filed with the Securities and Exchange Commission.

 

 

Sincerely,

 

 

 


 

Schedule 2.2

 

Equity Interests

 

Cooper, Ravetz and Sheinker are entitled to a promote equal to 10% of Wu’s interest in the event Wu receives a certain return within 6 years of closing

 


 

Schedule 2.6

 

Undisclosed Portfolio Liabilities

 

None.

 


 

Schedule 2.7

 

Material Changes

 

None.

 


 

Schedule 2.8

 

No Default; Compliance with Applicable Laws; Permits

 

None.

 


 

Schedule 2.9

 

Ownership and Sufficiency of Assets

 

None.

 


 

Schedule 2.10

 

Litigation

 

January 1, 2013

 

Re: 100 William F/L Properties LLC (the “Company”); File no.: 5969-LH-GS

 

To Whom it May Concern

 

We are unaware of any pending or threatened litigation, claims, assessments or contingencies against the Company and its portfolio of limited liability companies with respect to which we have been engaged and to which we have devoted substantive attention on behalf of the Company which are material loss contingencies to the detriment of the Company.

 

The information set forth herein is as of the date of this letter and we disclaim any undertaking to advise you of any changes which may thereafter be brought to our attention.

 

We are currently handling the following matters on behalf of the Company:

 

·                   WU/LH 36 Midland v. Perfecto: action against former tenant wherein tenant defaulted. Likelihood of success high. Likelihood of recovery to be determined;

·                   WU/LH 470 Bridgeport v. United Recycling et al.: commenced action against encroaching neighbor. Likelihood of success high;

·                   WU/LH 103 Fairview v. The Wine Enthusiast: Action against former tenant for unpaid CAM. Likely resolved;

·                   WU/LH 8 Slater v. Polder: Action against former tenant for unpaid CAM. Likely resolved.

·                   Continuing Connecticut Transfer Act: Majority of Transfer Act work completed. Engineering Professionals have been prepaid from escrow funds for almost all work through continued testing and self-certification reporting. Limited Transfer Act work remains.

·                   WU/LH 15 Progress v. Scinto: Action against neighboring property for damage to transformer caused by water runoff condition. Likelihood of success difficult to determine at this time;

·                   WU/LH 269 Lambert v. KX: Commenced action against former tenant for the costs to remediate carbon condition. Likelihood of success high. Likelihood of collection high.

·                   Ongoing advice and counsel: we are not aware of any claim or action that would constitute a material loss or detriment to the Company.

 

This response is limited by, and in accordance with, the ABA Statement of Policy Regarding Lawyers Responses to Auditor’s Requests for Information (December, 1975); without limning the

 


 

generality of the foregoing, the limitations set forth in such Statement on the scope and use of this response (paragraphs 2 and 7) are specifically incorporated herein by reference and any description herein of any “loss contingencies” is qualified in its entirety by paragraph 5 of the Statement and the accompanying Commentary (which is an integral pat. of the Statement). Consistent with the last sentence of paragraph 6 of the ABA Statement of Policy and pursuant to the Company’s request, this will confirm as correct the Company understanding as set forth in its audit inquiry letter to us that whenever, in the course of performing legal services for the Company with respect to a matter recognized to involve an unasserted possible claim or assessment that may call for financial statement disclosure, we have formed a professional conclusion that the Company must disclose or consider disclosure concerning such possible claim or assessment, we as a matter of professional responsibility to the Company, will so advise the Company and will consult with the Company concerning the question of such disclosure and the applicable requirements of Statement of Financial Accounting Standards No.5.

 

Very truly yours,

 

 

 

MARK L. LUBELSKY AND ASSOCIATES

 

 

 

/s/ Mark Lubelsky

 

 

 

Mark L. Lubelsky

 

MLL:dm

 

 


 

Schedule 2.11

 

Portfolio Contracts

 

State

 

Property

 

Type

 

Contractor

 

Contract
Date

New Jersey

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

American Enterprise Park - General

 

 

 

 

 

 

 

 

 

 

Snow Removal

 

Winter Services Inc.

 

10/10/2011

 

 

 

 

 

 

 

 

 

 

 

 

 

Irrigation

 

All County Landscape

 

 

 

 

 

 

Landscaping

 

All County Landscape

 

 

 

 

 

 

Pond Maintenance

 

Black Lagoon

 

10/27/2011

 

 

 

 

Goose Control

 

National Goose

 

 

 

 

 

 

Janitorial

 

Carroll Serivces

 

 

 

 

 

 

Trash Disposal

 

 

 

 

 

 

 

 

Pest Control

 

Eastern Pest Services

 

5/6/2011

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

 

 

 

 

 

 

 

 

 

 

 

 

408 American

 

 

 

 

 

 

 

 

StarTrak:

 

HVAC

 

Reiner Group

 

12/1/2009

 

 

 

 

 

 

 

 

 

 

 

100 American

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OLI Systems:

 

HVAC

 

Clean Air Quality

 

 

 

 

NJLRC:

 

HVAC

 

Clean Air Quality

 

 

 


 

State

 

Property

 

Type

 

Contractor

 

Contract
Date

Connecticut

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

466 Bridgeport:

 

Snow Removal

 

Big Oaks

 

8/1/2011

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

12/20/2011

 

 

 

 

 

 

 

 

 

 

 

470 Bridgeport:

 

Snow Removal

 

Big Oaks

 

8/1/2011

 

 

 

 

Landscaping

 

Big Oaks

 

8/1/2011

 

 

 

 

Fire Sprinkler

 

Fire Protection Testing

 

12/23/2011

 

 

 

 

Janitorial

 

 

 

 

 

 

 

 

Irrigation

 

 

 

 

 

 

 

 

HVAC

 

Clean Air Quality

 

10/12/2011

 

 

 

 

 

 

 

 

 

 

 

950 Bridgeport:

 

Snow Removal:

 

Big Oaks

 

8/1/2002

 

 

 

 

Landscaping

 

Big Oaks

 

7/1/2011

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

1/18/2012

 

 

 

 

HVAC

 

Clean Air Quality

 

10/31/2011

 

 

 

 

Fire Pump

 

Advanced Power

 

4/12/2010

 

 

 

 

 

 

 

 

 

 

 

12 Cascade:

 

Snow Removal

 

Big Oaks

 

4/17/2011

 

 

 

 

Landscaping

 

Big Oaks

 

4/17/2011

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

1/27/2012

 

 

 

 

Janitorial

 

Frank Esposito

 

 

 

 

 

 

Irrigation

 

Let it rain

 

11/29/2011

 

 

 

 

 

 

 

 

 

 

 

15 Executive:

 

Snow Removal

 

Big Oaks

 

4/1/2011

 

 

 

 

Landscaping

 

Big Oaks

 

4/1/2011

 

 

 

 

Fire Sprinkler

 

Fire Protection Test

 

1/27/2012

 

 

 

 

Elevator

 

Otis

 

11/12/2011

 

 

 

 

Irrigation

 

Let it Rain

 

7/27/2011

 


 

State

 

Property

 

Type

 

Contractor

 

Contract
Date

Connecticut

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25 Executive:

 

Snow Removal

 

Big Oaks

 

4/1/2011

 

 

 

 

Landscaping

 

Big Oaks

 

4/1/2011

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

11/8/2011

 

 

 

 

Pond Maintenance

 

Limnology

 

1/4/2012

 

 

 

 

Irrigation

 

Let it Rain

 

7/27/2011

 

 

 

 

HVAC

 

Clean Air Quality

 

3/7/2011

 

 

 

 

 

 

 

 

 

 

 

35 Executive:

 

Snow Removal

 

Big Oaks

 

4/1/2011

 

 

 

 

Landscaping

 

Big Oaks

 

4/1/2011

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

11/8/2011

 

 

 

 

HVAC

 

Clean Air Quality

 

11/22/2011

 

 

 

 

Irrigation

 

LET IT RAIN????

 

 

 

 

 

 

 

 

 

 

 

 

 

22 Marsh Hill:

 

 

 

 

 

 

 

 

 

 

Snow Removal

 

Big Oaks

 

4/1/2011

 

 

 

 

Landscaping

 

 

 

4/1/2011

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

11/8/2011

 

 

 

 

HVAC

 

Clean Air Quality

 

11/15/2011

 

 

 

 

 

 

 

 

 

 

 

269 Lambert

 

Snow Removal

 

Big Oaks

 

4/1/2011

 

 

 

 

Landscaping

 

Big Oaks

 

4/1/2011

 

 

 

 

 

 

 

 

 

 

 

103 Fairview:

 

 

 

 

 

 

 

 

 

 

Alarm Monitoring

 

Classic Security

 

 

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

1/13/2012

 

 

 

 

 

 

 

 

 

 

 

412 Fairview:

 

No Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

401 Fieldcrest:

 

No Contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

404 Fieldcrest:

 

No Contracts

 

 

 

 

 


 

State

 

Property

 

Type

 

Contractor

 

Contract
Date

 

 

 

 

 

 

 

 

 

New York

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36 Midland:

 

Snow Removal

 

Brickman Group

 

 

 

 

 

 

Landscaping

 

Brickman Group

 

 

 

 

 

 

Irrigation

 

Pro Sprinkler

 

10/1/2009

 

 

 

 

Janitorial

 

Kencal Maintenance

 

6/29/2010

 

 

 

 

 

 

 

 

 

 

 

112 Midland:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100-110 Midland:

 

 

 

 

 

 

 

 

 

 

Snow Removal

 

Brickman Group

 

 

 

 

 

 

Landscaping

 

Brickman Group

 

 

 

 

 

 

Irrigation

 

Pro Sprinkler

 

 

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

 

 

 

 

 

Fire Alarm

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

199 Ridgewood:

 

 

 

 

 

 

 

 

 

 

Snow Removal

 

Brickman Group

 

 

 

 

 

 

Landscaping

 

Brickman Group

 

 

 

 

 

 

Fire Sprinkler

 

Fire Protection

 

11/13/2012

 

 

 

 

Alarm Monitoring

 

NB Systems, Inc.

 

6/15/2011

 

 

 

 

 

 

 

 

 

 

 

203 Ridgewood:

 

 

 

 

 

 

 

 

 

 

Fire Spinkler

 

Fire Protection

 

1/13/2012

 

 

 

 

 

 

 

 

 

 

 

8 Slater:

 

 

 

 

 

 

 

 

 

 

Snow Removal

 

Brickman Group

 

 

 

 

 

 

Landscaping

 

Brickman Group

 

 

 

 

 

 

Alarm Monitoring

 

Classic Security

 

1/22/2012

 

 

 

 

Irrigation

 

W&M Sprinkler Co

 

9/21/2011

 

 

 

 

Trash Removal

 

County Waste

 

12/1/2011

 

 

 

 

Pest Control

 

JP McHale

 

12/1/2011

 

 

 

 

Pump

 

Songer Contractor

 

 

 

 

 

 

Janitorial

 

Kencal Maintenance

 

12/1/2011

 


 

Schedule 2.13

 

Environmental and Safety/Hazardous Materials

 

Transaction Screen Process Documentation December 2011 prepared by P.W.Grosser Consulting, Inc. prepared for Wu/Lighthouse Portfolio L.L.C.

 


 

Schedule 2.14

 

Leasing Matters

 

Portfolio Payable Commissions:

 

Building:

269 Lambert Road, Orange, CT

 

Tenant:

Colony Hardware Corporation

 

Broker:

The Proto Group

Paid

$102,805.32

 

 

Payable:

$102,805.32 within 30 days of first day of rent

 

 

 

 

(first day scheduled for July 1, 2012)

 

CB Richard Ellis

Payable:

$102,805.32

 

LHRE Mgmt 

Payable:

$ 58,628.28

 

Portfolio Arrears Schedule See Attached.

 

Portfolio Security Deposits See Attached

 


 

Schedule 2.20

 

Portfolio Mortgage Loan Documents

 

[ADD ALL NEW LOAN DOCUMENTS THAT ARE BEING EXECUTED AT CLOSING IN CONNECTION WITH SUNAMERICA AND JOHN HANCOCK LOANS]

 

A.             Loan Documents Dated March 8, 2011 Between First SunAmerica Life Insurance Company (“Lender”) and (i) WU/LH 15 Executive L.L.C., a Delaware limited liability company (the “15 Executive Borrower”), WU/LH 22 Marsh Hill L.L.C., a Delaware limited liability company (the “Marsh Hill Borrower”), WU/LH 35 Executive L.L.C., a Delaware limited liability company (the “35 Executive Borrower”), WU/LH 470 Bridgeport L.L.C., a Delaware limited liability company (the “470 Bridgeport Borrower”), WU/LH 950 Bridgeport L.L.C., a Delaware limited liability company (the “950 Bridgeport Borrower”), WU/LH 8 Slater L.L.C., a Delaware limited liability company (the “8 Slater Borrower”; and together with the 15 Executive Borrower, the Marsh Hill Borrower, the 35 Executive Borrower, the 470 Bridgeport Borrower, the 950 Bridgeport Borrower, collectively, the “Borrower”)

 

1.                                       Consolidated, Amended and Restated Promissory Note (the “Consolidated Note”) in the original principal amount of $4,639,600 by the Borrowers in favor of Lender.

 

2.                                       Gap Promissory Note in the original principal amount of $735,817.59 executed by the Borrowers in favor of the Lender and covering the 8 Slater Property.

 

3.                                       Mortgage, Consolidation, Extension, Spreader and Security Agreement, Fixture Filing, Financing Statement and Assignment of Leases executed by the 8 Slater Borrower in favor of the Lender and covering the 8 Slater Property.

 

4.                                       Assignment of Leases and Rents executed by the Borrowers in favor of the Lender.

 

5.                                       The Gap Mortgage executed by the 8 Slater Borrower in favor of Lender.

 

6.                                       The Cash Collateral Agreement executed by and among Borrowers, Lender and M. Robert Goldman & Co., Inc., a Delaware corporation, as servicer (the “ Servicer ”).

 

7.                                       The Reserve Agreement (Earnout Reserve) executed by and among the Borrowers, the Lender and the Servicer.

 

8.                                       The Reserve Agreement (Ongoing Reserve) executed by and among Borrowers, the Lender and the Servicer.

 

9.                                       The Reserve Agreement (Initial TI/LC Reserve) executed by and among the Borrowers,

 


 

the Lender and the Servicer.

 

10.                                The Subordination of Management Agreement executed by Borrowers, Property Manager, and Owner in favor of Lender.

 

11.                                The Environmental Indemnity Agreement executed by the Borrowers and the Guarantors in favor of the Lender.

 

12.                                The Guaranty Agreement executed by the Guarantors in favor of the Lender.

 

13.                                The Affiliate Guaranty Agreement executed by and among Borrowers in favor of the Lender.

 

14.                                Promissory Note made by 15 Executive Borrower to the Lender in the principal amount of $4,096,400.00.

 

15.                                Promissory Note made by Marsh Hill Borrower to the Lender in the principal amount of $2,716,700.00.

 

16.                                Promissory Note made by 35 Executive Borrower to the Lender in the principal amount of $5,724,600.00.

 

17.                                Promissory Note made by 470 Bridgeport Borrower to the Lender in the principal amount of $3,683,700.00.

 

18.                                Promissory Note made by 950 Bridgeport Borrower to the Lender in the principal amount of $2,639,000.00.

 

19.                                Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing given by the 15 Executive Borrower to the Lender and covering the real property located at 15 Executive Boulevard, Orange, Connecticut.

 

20.                                Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, given by the Marsh Hill Borrower to the Lender and covering the real property located at 22 Marsh Hill Road, Orange, Connecticut.

 

21.                                Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, given by the 35 Executive Borrower to the Lender and covering the real property located at 35 Executive Boulevard, Orange, Connecticut.

 

22.                                Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, given by the 470 Bridgeport Borrower to the Lender and covering the real property located at 470 Bridgeport Avenue, Shelton, Connecticut.

 

23.                                Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture

 


 

Filing, given by the 950 Bridgeport Borrower to the Lender and covering the real property located at 950 Bridgeport Avenue, Milford, Connecticut.

 

24.                                Assignment of Leases and Rents covering the 15 Executive Premises, made by the 15 Executive Borrower in favor of the Lender.

 

25.                                Assignment of Leases and Rents covering the Marsh Hill Premises, made by the Marsh Hill Borrower in favor of the Lender.

 

26.                                Assignment of Leases and Rents covering the 35 Executive Premises, made by the 35 Executive Borrower in favor of the Lender.

 

27.                                Assignment of Leases and Rents covering the 470 Bridgeport Premises, made by the 470 Bridgeport Borrower in favor of the Lender.

 

28.                                Assignment of Leases and Rents covering the 950 Bridgeport Premises, made by the 950 Bridgeport Borrower in favor of the Lender.

 

29.                                Collateral Assignment of Environmental Escrow Agreement executed by and among Borrowers in favor of the Lender.

 

30.                                Section 255 Affidavit (ALR) executed by Paul Cooper.

 

31.                                Section 255 Affidavit (Consolidated Mortgage) executed by Paul Cooper.

 

32.                                Section 275 Affidavit (Assignment of Mortgage) executed by Paul Cooper.

 

33.                                Certificate Concerning Leases and Financial Condition (8 Slater L.L.C.) executed by the 8 Slater Borrower in favor of the Lender.

 

34.                                Certificate Concerning Leases and Financial Condition (15 Executive L.L.C.) executed by the 15 Executive Borrower in favor of the Lender.

 

35.                                Certificate Concerning Leases and Financial Condition (35 Executive L.L.C.) executed by the 35 Executive Borrower in favor of the Lender.

 

36.                                Certificate Concerning Leases and Financial Condition (950 Bridgeport L.L.C.) executed by the 950 Bridgeport Borrower in favor of the Lender.

 

37.                                Certificate Concerning Leases and Financial Condition (470 Bridgeport L.L.C.) executed by the 470 Bridgeport Borrower.

 

38.                                Certificate Concerning Leases and Financial Condition (22 Marsh Hill L.L.C.) executed by the Marsh Borrower.

 


 

39.                                Certificate Concerning Governing Documents (8 Slater L.L.C.) executed by the 8 Slater Borrower in favor of the Lender.

 

40.                                Certificate Concerning Governing Documents (15 Executive L.L.C.) executed by the 15 Executive Borrower in favor of the Lender.

 

41.                                Certificate Concerning Governing Documents (35 Executive L.L.C.) executed by the 35 Executive Borrower in favor of the Lender.

 

42.                                Certificate Concerning Governing Documents (950 Bridgeport L.L.C.) executed by the 950 Bridgeport Borrower in favor of the Lender.

 

43.                                Certificate Concerning Governing Documents (470 Bridgeport L.L.C.) executed by the 470 Bridgeport Borrower in favor of the Lender.

 

44.                                Certificate Concerning Governing Documents (22 Marsh Hill L.L.C.) executed by the Marsh Borrower in favor of Lender.

 

45.                                The following financing statements (the “ Financing Statements ”) naming the Borrower identified below as debtor and the Lender as secured party, copies of which are attached hereto

 

(a)                                  UCC Financing Statement with respect to the 15 Executive Borrower  to be filed with the Secretary of State of Delaware;

 

(b)                                  UCC Financing Statement with respect to the Marsh Hill Borrower  to be filed with the Secretary of State of Delaware;

 

c)                                       UCC Financing Statement with respect to the 35 Executive Borrower  to be filed with the Secretary of State of Delaware;

 

(d)                                  UCC Financing Statement with respect to the 470 Bridgeport Borrower  to be filed with the Secretary of State of Delaware;

 

(e)                                   UCC Financing Statement with respect to the 950 Bridgeport Borrower  to be filed with the Secretary of State of Delaware;

 

(f)                                    UCC Financing Statement with respect to the 8 Slater Borrower  to be filed with the Secretary of State of Delaware (the UCC financing Statements referred to in paragraphs (a) through (f) above are hereinafter referred to collectively as the “ Central Financing Statement ” and, each, a “ Central Financing Statement ”); and

 

(g)                                   UCC Financing Statement, Form UCC1 and UCC Financing Statement Addendum, Form UCC1Ad to be filed with the Clerk of Westchester County, New York (the “ Fixture Financing Statement ”).

 


 

B.                                     $2,700,000 LOAN DATED SEPTEMBER 30 , 2010 FROM PEOPLE’S UNITED BANK (“Lender”) TO WU/LH 15 PROGRESS L.L.C. (“Borrower”) SECURED BY 15 PROGRESS DRIVE AND 30 COMMERCE DRIVE SHELTON, CONNECTICUT (the “Property”).

 

1.               Loan Agreement between Lender and Guarantors and Borrower.

2.               Promissory Note in the principal amount of $2,700,000 by borrower in favor of Lender.

3.               Open-End Mortgage Deed and Security Agreement by Borrower in favor of Lender.

4.               Borrower’s Affidavit by Borrower.

5.               Assignment of Leases and Rentals between Borrower and Lender.

6.               Pledge and Security Agreement by Borrower’s members in favor of Lender.

7.               Environmental Indemnity Affidavit by Borrower and Guarantors.

8.               Guaranty (Paul A. Cooper) in favor of Lender.

9.               Guaranty (Louis E. Sheinker) in favor of Lender.

10.        Guaranty (Jeffrey D. Ravetz) in favor of Lender.

11.        Guaranty (Jeffrey Wu) in favor of Lender.

12.        UCC-1 Financing Statement by borrower in favor of Lender.

 

C.    MORTGAGE LOANS, IN THE AGGREGATE AMOUNT OF $105,000,000 BY JOHN HANCOCK LIFE INSURANCE COMPANY (THE “JH LENDER”), AS LENDER TO WU/LH 12 CASCADE L.L.C., WU/LH 25 EXECUTIVE L.L.C., WU/LH 269 LAMBERT L.L.C., WU/LH 103 FAIRVIEW PARK L.L.C., WU/LH 401 FIELDCREST PARK L.L.C., WU/LH 404 FIELDCREST PARK L.L.C.,  WU/LH 412 FAIRVIEW PARK L.L.C., WU/LH 36 MIDLAND L.L.C., WU/LH 100-110 MIDLAND L.L.C., WU/LH 112 MIDLAND L.L.C., WU/LH 199 RIDGEWOOD L.L.C., WU/LH 203 RIDGEWOOD L.L.C., WU/LH 100 AMERICAN L.L.C., WU/LH 200 AMERICAN L.L.C., WU/LH 300 AMERICAN L.L.C., WU/LH 400 AMERICAN L.L.C., WU/LH 500 AMERICAN L.L.C., WU/LH 15 EXECUTIVE L.L.C.,, WU/LH 22 MARSH HILL L.L.C., WU/LH 35 EXECUTIVE L.L.C., , WU/LH 470 BRIDGEPORT L.L.C., WU/LH 950 BRIDGEPORT L.L.C.,, WU/LH 8 SLATER L.L.C., EACH A DELAWARE LIMITED LIABILITY COMPANY (COLLECTIVELY, THE  “JH BORROWERS”)[NOTE: A PORTION OF THESE LOANS WERE REFINANCED AS PER A AND B OF THIS SCHEDULE 2.20]

 

1.                                       Loan Agreement in the aggregate amount of $105,000,000 dated February 25, 2008 between the JH Lender and the JH Borrowers.

2.                                       Manager’s Consent and Subordination of Management Agreement.

3.                                       Sub- Manager’s Consent and Subordination of Sub-Management Agreement.

 


 

4.                                       Collateral Assignment and Security Agreement in respect of Contracts, Agreements and Escrows.

5.                                       Indemnity and Escrow Agreement.

 

CONNECTICUT LOAN DOCUMENTS

 

6.                                       Mortgage Notes.

(a)                                 A – CT

7.                                       Open-End Mortgage Deed, Assignment of Leases and Rents, Security Agreement and Security and Fixture Filing.

8.                                       Assignment of Leases and Rents.

9.                                       Second Open-End Mortgage Deed, Assignment of Leases and Rents, Security Agreement and Security and Fixture Filing.

10.                                Second Assignment of Leases and Rents.

11.                                Third Open-End Mortgage Deed, Assignment of Leases and Rents, Security Agreement and Security and Fixture Filing.

12.                                Third Assignment of Leases and Rents.

13.                                Assignment of Agreements, Permits and Contracts.

14.                                Cash and Deposit Account Pledge and Security Agreement, together with Deposit Account Control Agreement.

15.                                Guaranty Agreement.

16.                                Indemnification Agreement.

17.                                Assignment of Mortgage, Assignment of Leases and Rents and Security Agreement (in Blank).

18.                                Assignment of Assignment of Leases and Rents (in Blank).

19.                                General Assignment (in Blank).

20.                                Three (3) UCC-1 Financing Statements, one for each of the Connecticut Borrowers as filed with the Secretary of State of Delaware.

21.                                Three (3) UCC-3 Financing Statements (Assignments) prepared in blank showing Lender as secured party; for each of the Connecticut Borrowers for filing with the Secretary of State of Delaware.

 

NEW YORK LOAN DOCUMENTS

 

22.                                Mortgage Notes.

(a)                                 A – NY

 


 

(b)                                 B – NY

23.                                Mortgage, Assignment of Leases and Rents and Security Agreement.

24.                                Assignment of Leases and Rents.

25.                                Second Assignment of Leases and Rents.

26.                                Assignment of Agreements, Permits and Contracts.

27.                                Cash and Deposit Account Pledge and Security Agreement, together with Deposit Account Control Agreement.

28.                                Assignment of Mortgage, Assignment of Leases and Rents and Security Agreement (in Blank).

29.                                Assignment of Assignment of Leases and Rents (in Blank).

30.                                General Assignment (in Blank).

31.                                Guaranty Agreement.

32.                                Indemnification Agreement.

33.                                Nine (9) UCC-1 Financing Statements one for each of the New York Borrowers as filed with the Secretary of State of Delaware.

34.                                Eighteen (18) UCC-3 Financing Statements (Assignments) prepared in blank showing Lender as secured party; a set of two for each of the New York Borrowers one for filing with the Westchester County Clerk’s office and the other for filing with the Secretary of State of Delaware.

 

NEW JERSEY LOAN DOCUMENTS

 

35.                                Mortgage Notes.

(a)                                 A – NJ

(b)                                 B – NJ

36.                                Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing.

37.                                Assignment of Leases and Rents.

38.                                Assignment of Agreements, Permits and Contracts.

39.                                Cash and Deposit Account Pledge and Security Agreement, together with Deposit Account Control Agreement.

40.                                Guaranty Agreement.

41.                                Indemnification Agreement.

42.                                Assignment of Mortgage, Assignment of Leases and Rents and Security Agreement (in Blank).

43.                                Assignment of Assignment of Leases and Rents (in Blank).

 


 

44.                                General Assignment (in Blank).

45.                                Five (5) UCC-1 Financing Statements, one for each of the New Jersey Borrowers as filed with the Secretary of State of Delaware.

46.                                Five (5) UCC-3 Financing Statements (Assignments) prepared in blank showing Lender as secured party; for each of the New Jersey Borrowers for filing with the Secretary of State of Delaware.

 

Documents Executed in Connection With the Portfolio Contribution (each dated as of the date hereof)

 

1.                                       Amendment and Modification of Loan Agreement.

2.                                       Manager’s Consent and Subordination of Management Agreement by GTJ Management, LLC.

3.                                       Sub- Manager’s Consent and Subordination of Sub-Management Agreement by CB Richard Ellis Inc.

4.                                       Cash and Deposit Account Pledge and Security Agreement (NJ Loan).

5.                                       Indemnification Agreement (NJ Loan).

6.                                       Guaranty Agreement (NJ Loan).

7.                                       Cash and Deposit Account Pledge and Security Agreement (NY Loan).

8.                                       Indemnification Agreement (NY Loan).

9.                                       Guaranty Agreement (NY Loan).

10.                                Cash and Deposit Account Pledge and Security Agreement (CT Loan).

11.                                Indemnification Agreement (CT Loan).

12.                                Guaranty Agreement (CT Loan).

13.                                Deposit Account Control Agreement (NY).

14.                                Deposit Account Control Agreement (NJ).

15.                                Deposit Account Control Agreement (CT).

 


 

Schedule 2.23

 

Portfolio Receivables

 

To be determined when closing date is finalized.

 


 

Schedule 2.24

 

Brokers

 

1.                                       Exclusive Real Estate Agreement dated March 1, 2010 by and between Wu/Lighthouse Portfolio LLC and CBRE, Inc. (f/k/a CB Richard Ellis, Inc.) regarding the New Jersey properties, as extended by letter agreement dated February 14, 2012.

 

2.                                       Exclusive Real Estate Agreement dated March 1, 2010 by and between Wu/Lighthouse Portfolio LLC and CBRE, Inc. (f/k/a CB Richard Ellis, Inc.) regarding the New York properties, as extended by letter agreement dated February 14, 2012.

 

3.                                       Exclusive Real Estate Agreement dated March 1, 2010 by and between Wu/Lighthouse Portfolio LLC and CBRE, Inc. (f/k/a CB Richard Ellis, Inc.) regarding the Connecticut properties, as extended by letter agreement dated February 14, 2012.

 

4.                                       Management Agreement dated as of February 28, 2008 between Wu/Lighthouse Portfolio LLC and Lighthouse Real Estate Management LLC.

 

5.                                       Sales Management Agreement dated as of March 10, 2009 between Lighthouse Real Estate Management LLC and Green Holland Management LLC.

 


 

Schedule 2.28

 

Relationship with Related Persons

 

(NONE )

 


 

Schedule 2.29

 

Insurance

 

·                   General Liability Policy — Chubb effective 02/28/2012-13

·                   Property Policy - Chubb effective 02/28/2012-13

·                   Hired & Non-Owned Auto Policy - Chubb effective 02/28/2012-13

·                   Umbrella $200M Limit — HLI Umbrella Program (various carriers) 12/01/2011-12

·                   National Flood Policy — 269 Lambert Location 02/14/12-13

·                   National Flood Policy — 103 Fairview Location 02/28/12-13

 


 

Schedule 3.2

 

REIT Status

 

As of December 31, 2011, GTJ is in compliance with REIT status.  Notwithstanding, testing is done on a quarterly basis to monitor compliance with REIT status during the calendar year.

 


 

Schedule 3.3

Capitalization

 

Restricted Stock Awards

 

 

 

 

 

Shares O/S

 

 

 

 

 

 

 

Management

 

 

 

 

 

 

 

 

 

 

 

Jerome Cooper

 

Chairman

 

192,884

 

Paul A. Cooper

 

CEO

 

78,926

 

Douglas A. Cooper

 

EVP

 

45,843

 

David J. Oplanich

 

CFO

 

28,760

 

 

 

 

 

 

 

Directors

 

 

 

 

 

 

 

 

 

 

 

Joseph F. Barone

 

 

 

98,273

 

John J. Leahy

 

 

 

5,581

 

Donald M. Schaeffer

 

 

 

5,581

 

Harvey I. Schneider

 

 

 

5,581

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

467 Stockholders

 

 

 

13,186,619

 

 

 

 

 

 

 

Total Shares Outstanding

 

 

 

13,648,048

 

 


 

Stock Option Awards

 

 

 

 

 

Options

 

Grant

 

Expiration

 

Exercise

 

 

 

 

 

Granted

 

Date

 

Date

 

Price

 

 

 

 

 

 

 

 

 

 

 

 

 

Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jerome Cooper

 

Chairman

 

100,000

 

6/11/2007

 

6/11/2017

 

$

11.14

 

Paul A. Cooper

 

CEO

 

50,000

 

6/11/2007

 

6/11/2017

 

$

11.14

 

Douglas A. Cooper

 

EVP

 

50,000

 

6/11/2007

 

6/11/2017

 

$

11.14

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph F. Barone

 

 

 

10,000

 

6/9/2011

 

6/9/2021

 

$

11.14

 

John J. Leahy

 

 

 

15,000

 

6/11/2007

 

6/11/2017

 

$

11.14

 

Donald M. Schaeffer

 

 

 

15,000

 

6/11/2007

 

6/11/2017

 

$

11.14

 

Harvey I .Schneider

 

 

 

10,000

 

6/11/2007

 

6/11/2017

 

$

11.14

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David Jang (a)

 

 

 

15,000

 

6/11/2007

 

6/11/2017

 

$

11.14

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Options Outstanding

 

 

 

265,000

 

 

 

 

 

 

 

 

(a) David Jang was granted options during his tenure as an independent Board Member 6/1/2006 - 12/31/2009

 


 

Schedule 3.4

 

Other GTJ Subsidiaries

 

1.  Green Acquisition, Inc.

2.  Triboro Acquisition, Inc.

3.  Jamaica Acquisition, Inc.

4.  GTJ Co., Inc.

5.  GTJ Rate Cap LLC

6.  Green Bus Holding Corp.

7.  Jamaica Buses Holding Corp.

8.  Triboro Coach Holding Corp.

9.  49-19 Rockaway Beach Boulevard, LLC

10. 165-25 147 th Avenue, LLC

11. 114-15 Guy Brewer Boulevard, LLC

12. 85-01 24 th  Avenue, LLC

13. 23-85 87 th  Street, LLC

14. 612 Wortman Avenue, LLC

15. Varsity Transit, Inc.

16. Varsity Charter Corp.

17. The Bus Depot, Inc.

18. Outdoor NY Corp. f/k/a MetroClean Express Corp.

19. Outdoor NJ, Corp. f/k/a Metroclean Express of New Jersey, Inc.

20. Shelter Express Corp.

21. Shelter Electric Maintenance Corp.

22. Outdoor CA, Corp. f/k/a ShelterCLEAN, Inc.

23. Outdoor AZ, Corp. f/k/a ShelterClean of Arizona, Inc.

24. Transit Facility Management Corp.

25. Transit Facility Claims Corp.

26. Transit Alliance Insurance Co. Ltd.

27. A Very Limited Sticky Situation

28. Farms Springs Road, LLC

29. Shelter Electric Acquisition Subsidiary, LLC

30. ShelterCLEAN of SF, LLC

31. Shelter Parking Corp.

32. Shelter Parking Management, LLC

33. Shelter Parking Brevard, LLC

34. Shelter Parking Regency, LLC

35. GTJ Realty, LP

36. GTJ GP, LLC

37. GTJ Management, LLC

 


 

Schedule 3.7 (b)

 

Change to GTJ Financial Statements

 


 

Schedule 3.8

 

Undisclosed GTJ Liabilities

 

1.               Local 3, IBEW and Shelter Express Corp. and Metroclean Express Corp. Notice and Demand for Payment of Withdrawal Liability in the amount of $1,488,058.00.

 

2.               Morales Electrical Contracting, Inc. (“Morales”) is a subcontractor to Shelter Electric Maintenance Corp. which is the prime contractor to The City of New York, Department of Citywide Administrative Services (“DCAS”) under contract # CO281 dated 2010.  Morales is providing electrical construction service as a MWBE subcontractor per the requirements under the prime contract with DCAS. The subcontract agreement is dated as of June 22, 2010 in the amount of $374,476 with a scheduled completion date of December 31, 2012.

 

3.               Morales Electrical Contracting, Inc. (“Morales”) is a subcontractor to Shelter Electric Maintenance Corp. which is the subcontractor to Tec Systems Inc. (“TEC”) dated April 1, 2011.  Morales is providing electrical construction service as a MWBE subcontractor per the requirement under the subcontract with TEC. The subcontract agreement is dated 2011 in the amount of $1,100,000 with a scheduled completion date of December 31, 2012.

 

4.               On March 29, 2010, Shelter Electric Maintenance Corp. invested approximately four hundred dollars in exchange for a 40% interest in a joint venture with Morales Electrical Contracting, Inc., a Minority Women Owned Business Enterprise (“MWBE”). The joint venture was formed to secure MWBE contracts for the purpose of providing electrical construction services. There are currently four (4) projects within the joint venture as detailed below:

 

1.     United Fire Protection — Croton Water Filtration Plant                              $1,328,910

2.     VRH, Inc. — PABT WO # 29                           $299,143

3.     VRH, Inc. — PABT WO # 30                           $298,360

4.     Skyview Flushing Town Center                        99% complete remaining billing approx $15,000

 


 

Schedule 3.9

 

No Material Changes

 

None.

 


 

Schedule 3.10

 

No Defaults ; Compliance with Applicable Laws; Permits

 

None.

 


 

Schedule 3.11

 

Ownership and Sufficiency of Assets

 

NONE

 


 

Schedule 3.12

 

Litigation — GTJ Action

 

1.               Litigations covered by insurance.

 

2.               Varsity Transit, Inc. v. Sprague Energy Corp. and Dwayne Leisenheimer (Supreme Court Nassau County, Index No. 09-009997)

 

3.               Notice of Claim in the matter of 85-01 24 th  Avenue, LLC v. City of New York for breach of contract and monetary damages arising out of the City’s failure to repair, restore and/or replace property located at the premises known as 85-01 24 th  Avenue, East Elmhurst, New York.

 

4.               Condemnation in Arverne.

 


 

Schedule 3.13

 

GTJ Contracts

 

626 Wortman Avenue

 

Type

 

Contractor

 

Contract
Date

 

Contract Term

 

Expiration

 

 

 

 

 

 

 

 

 

Fuel Storage Tanks & Fuel Station Dispensing Equipment

 

Fenley & Nicol

 

Annual

 

Renewable

 

At Will

Environmental Compliance

 

P.W. Grosser Consultants

 

Annual

 

Renewable

 

At Will

Remediation Work VAC Truck Services

 

A.B. Oil

 

Annual

 

Renewable

 

At Will

Snow Removal

 

Catalyst Construction

 

Annual

 

Renewable

 

At Will

Fire Protection Equipment/ Extinguishers

 

Fire Foe

 

Annual

 

Renewable

 

At Will

HVAC

 

Iceberg Mechanical

 

Annual

 

Renewable

 

At Will

Landscaping

 

Reliable Cleaning & Maintenance

 

Annual

 

Renewable

 

At Will

Janitorial

 

Reliable Cleaning & Maintenance

 

Annual

 

Renewable

 

At Will

Oil Water Separator Cleanout

 

Systematic Technologies

 

Annual

 

Renewable

 

At Will

Remediation System Maintenance

 

Systematic Technologies

 

Annual

 

Renewable

 

At Will

Boiler Maintenance

 

Controlled Combustion

 

Annual

 

Renewable

 

At Will

Security Services

 

Starr Security

 

Annual

 

Renewable

 

At Will

Radiant Heating System / Garage

 

MTC Controls

 

Annual

 

Renewable

 

At Will

Overhead Garage Door Repair I Maintenance

 

Tierney& Courtney

 

Annual

 

Renewable

 

At Will

Electrical Construction Services

 

Morales Electrical Contracting, Inc.

 

June 27, 2002

 

Work to be completed by December 31, 2012

 

Completion of work

Joint Venture Agreement between Shelter Electric Maintenance Corp. and Morales Electrical Contracting, Inc.

 

Morales Electrical Contracting, Inc.

 

March 29, 2010

 

No term

 

Set forth in Section 16.1 of Agreement

Electrical Construction Services *not yet executed

 

Morales Electrical Contracting, Inc.

 

 

 

 

 

 

 


 

Schedule 3.15

 

Environmental

 

23-45 87th St, Jackson Heights, NY (GTJ0606)

 

Investigative And Status Reports

 

·                   2003-08-28 - MFG - Varsity - Phase I ESA and Subsurface Investigation Report

·                   2009-04-22 - EDR - Varsity - Aerial

·                   2009-04-22 - EDR - Varsity - EDR Report

·                   2009-04-22 - EDR - Varsity - Sanborns

·                   Status Reports: March 2005 — January 2012

 

Regulatory Correspondence

 

·                   2006-05-09 - NYSDEC - Varsity - Stipulation Agreement

·                   2006-06-27 - PWGC - Varsity - Stipulation Agreement

·                   2007-02-02 - NYSDEC - Varsity - Stipulation Agreement

·                   2009-11-17 - NYSDEC - Varsity - Intermedial Investigation Approval

·                   2010-11-10 - NYSDEC - Varsity - Additional Investigation Approval

 

Tank Upgrade Designs

 

·                   1998-07-20 - PWGC - Aboveground Tank Details D-3

·                   1998-07-20 - PWGC - Dispensing Island Details D-4

·                   1998-07-20 - PWGC - Legend and Notes L-1

·                   1998-07-20 - PWGC - Miscellaneous Details D-5

·                   1998-07-20 - PWGC - Underground Tank Details D-1

·                   1998-07-20 - PWGC - Underground Tank Details D-2

·                   1998-08-20 - PWGC - Varsity - Partial Plans and Sections V-3

·                   1998-09-08 - PWGC - Electrical Detail Sheet

·                   1998-09-08 - PWGC - Varsity - Exisiting Site Plan V-1

·                   1998-09-08 - PWGC - Varsity - Proposed Site Plan V-2

 

UST Closure Reports

 

·                   2002-10 - PWGC - Varsity - UST Closure Report

·                   2011-01 - PWGC - Varsity - Tank Removal Photolog

 

Work Plans

 

·                   2006-11-09 - PWGC - Comprehensive Work Plan

·                   2007-05-30 - PWGC - Comprehensive Work Plan Schedule Addendum

·                   2008-11-14 - PWGC - Varsity - Monitoring Well Installation Work Plan

·                   2009-10-27 - PWGC - Varsity - Additional Investigation Work Plan Rev1

·                   2010-01-15 - PWGC - Varsity - UST Removal and Contingency Plan

·                   2010-05-24 - PWGC - Varsity - Intermedial Investigation Work Plan

·                   2010-10-19 - PWGC - Varsity - Intermedial Investigation Work Plan

·                   2011-12-06 - PWGC - Varsity - Alternative Analysis

 


 

Environmental

 

49-19 Rockaway Beach Blvd, Far Rockaway, NY (GTJ0603)

 

Investigative And Status Reports

 

·                   2010-04-14 - PWGC - Far Rockaway Depot - Renovation Letter Trench Sample

·                   2011-04-21 - PWGC - Far Rockaway Depot - Injection Point Installation

·                   2005-12-14 - PWGC - Far Rockaway Depot - Baseline Environmental Report

·                   Status Reports: July 2007 — January 2012

 

PBS

 

·                   2010-09-14 - PWGC - Far Rockaway Depot - PBS Application

 

Regulatory Correspondence

 

·                   2007-02-02 - NYSDEC - Far Rockaway Depot - Stipulation Agreement

·                   2007-08-27 - NYSDEC - Far Rockaway Depot - Monitoring Well Installation Approval

·                   2008-02-25 - NYSDEC - Far Rockaway Depot - RAP Approval

·                   2009-11-17 - NYSDEC - Far Rockaway Depot - Additional Investigation Work Plan Approval

·                   2011-02-04 - NYSDEC - Far Rockaway Depot - RAP Approval

 

Tank Upgrade Plans

 

·                   1998-07-20 - PWGC - Aboveground Tank Details D-3

·                   1998-07-20 - PWGC - Dispensing Island Details D-4

·                   1998-07-20 - PWGC - Far Rockaway Depot - Existing Site Plan R-1

·                   1998-07-20 - PWGC - Legend and Notes L-1

·                   1998-07-20 - PWGC - Miscellaneous Details D-5

·                   1998-07-20 - PWGC - Underground Tank Details D-1

·                   1998-07-20 - PWGC - Underground Tank Details D-2

·                   1998-09-08 - PWGC - Electrical Detail Sheet

·                   1998-12-07 - PWGC - Far Rockaway Depot - Proposed Site Plan R-2

 

UST Closure Reports

 

·                   2002-10 - PWGC - Far Rockaway Depot - UST Closure Report

·                   2010-11-08 - PWGC - JFK Depot - UST Closure Report

 

Work Plans

 

·                   2006-11-09 - PWGC - Comprehensive Work Plan

·                   2007-05-30 - PWGC - Comprehensive Work Plan Schedule Addendum

·                   2008-02 - PWGC - Far Rockaway Depot - RAP

·                   2008-11-14 - PWGC - Far Rockaway Depot - Monitoring Well Installation Work Plan

·                   2009-10-22 - PWGC - Far Rockaway Depot - Additional Investigation Work Plan Revision 1

·                   2010-09 - PWGC - Far Rockaway Depot - RAP

 


 

Environmental

 

85-01 24th Ave, Jackson Heights, NY (Triboro) (GTJ0604)

 

FOIL

 

·                   2008-09-30 - NYSDEC - Triboro - Email Requiring Additional Investigation

·                   2009-11-23 - NYSDEC - Triboro - Additional Investigation Work Plan Approval

·                   2010-08-19 - NYSDEC - Triboro - PBS Inspection Form

·                   2010-08-19 - NYSDEC - Triboro - PBS Inspection Report

·                   2010-08-19 - NYSDEC - Triboro - Spill Report Forms

 

Investigative And Status Reports

 

·                   2005-01 - Malcolm Piernie - Triboro - Phase I ESA and Limited Phase II ESA

·                   2005-09-22 - LIRO - Triboro - Phase I ESA

·                   2005-12-14 - PWGC - Triboro - Baseline Environmental Report

·                   2005-12-27 - LIRO - Triboro - Limited Phase II ESA

·                   2010-06-28 - PSI - Triboro - Draft Phase I ESA

·                   Status Reports: June 2007 — January 2012

 

Regulatory Correspondence

 

·                   2005-12-22 - NYSDEC - Additional Investigation Required

·                   2007-02-02 - NYSDEC - Triboro - Stipulation Agreement

·                   2009-11-23 - NYSDEC - Triboro - Investigation Work Plan Approval

·                   2010-11-10 - NYSDEC - Triboro - Investigation Work Plan Approval

 

Tank Upgrade Designs

 

·                   1998-07-20 - PWGC - Aboveground Tank Details D-3

·                   1998-07-20 - PWGC - Dispensing Island Details D-4

·                   1998-07-20 - PWGC - Legend and Notes L-1

·                   1998-07-20 - PWGC - Miscellaneous Details D-5

·                   1998-07-20 - PWGC - Underground Tank Details D-1

·                   1998-07-20 - PWGC - Underground Tank Details D-2

·                   1998-09-08 - PWGC - Electrical Detail Sheet

·                   1998-09-08 - PWGC - Triboro - Existing Site Plan T-1

·                   1998-09-08 - PWGC - Triboro - Proposed Site Plan T-2

 

UST Closure Reports

 

·                   2002-10 - PWGC - Triboro - UST Closure Report

 

Work Plans

 

·                   2006-11-09 - PWGC - Comprehensive Work Plan

·                   2007-05-30 - PWGC - Comprehensive Work Plan Schedule Addendum

·                   2008 -11-14 - PWGC - Triboro - Monitoring Well Installation Work Plan

·                   2009 -10-01 - PWGC - Triboro - Additional Investigation Work Plan Rev 1

·                   2010 -05-24 - PWGC - Triboro - Intermedial Investigation Work Plan

·                   2010 -10-19 - PWGC - Triboro - Intermedial Investigation Work Plan

 


 

Environmental

 

114-15 Guy R Brewer Blvd, Jamaica, NY (GTJ0602)

 

FOIL

 

·                   2008-05 - EPM - Baisley Park Depot - Phase II Report

·                   2008-09 - MTA - Baisley Park Depot - Spill Closure Request

 

Investigative and Status Reports

 

·                   2005-12 - LIRO - Baisley Park Depot - Phase II Executive Summary Excerpt

·                   2007-12 - PWGC - Baisley Park Depot - Status Report and Spill Closure Report

·                   2008-02 - PWGC - Baisley Park Depot - Closure Report

·                   2008-02 - PWGC - Baisley Park Depot - Site Receptor Report

·                   2005-12-14 - PWGC - Baisley Park Depot - Baseline Environmental Report

·                   Status Reports: May 2007 — January 2012

 

Regulatory Correspondence

 

·                   2006-03-06 - NYSDEC - Baisley Park Depot - Spill Correspondence

·                   2006-03-22 - PWGC and NYSDEC - Baisley Park Depot - Spill Correspondence

·                   2007-02-02 - NYSDEC - Baisley Park Depot - Stipulation Agreement

·                   2008-03-12 - NYSDEC - Baisley Park Depot - No Further Action Letter

 

Tank Upgrade Plans

 

·                   1998-07-20 - PWGC - Aboveground Tank Details D-3

·                   1998-07-20 - PWGC - Dispensing Island Details D-4

·                   1998-07-20 - PWGC - Legend and Notes L-1

·                   1998-07-20 - PWGC - Miscellaneous Details D-5

·                   1998-07-20 - PWGC - Underground Tank Details D-1

·                   1998-07-20 - PWGC - Underground Tank Details D-2

·                   1998-09-08 - PWGC - Baisley Park Depot - Existing Site Plan J-1

·                   1998-09-08 - PWGC - Baisley Park Depot - Proposed Tank Location J-2

·                   1998-09-08 - PWGC - Electrical Detail Sheet

 

UST Closure Reports

 

·                   2000-08 - PWGC - Baisley Park Depot - UST Closure Report

 

Work Plans

 

·                   2006-11-09 - PWGC - Comprehensive Work Plan

·                   2007-05-30 - PWGC - Comprehensive Work Plan Schedule Addendum

·                   2008-11 - PWGC - Baisley Park Depot - Monitoring Well Installatin Work Plan

·                   2009-10 - PWGC - Baisley Park Depot - Monitoring Well Installation Work Plan (Revision 1)

 


 

Environmental

 

165-25 147th Avenue, Jamaica, NY (GTJ0601)

 

Investigative And Status Reports

 

·                   2005-09-19 - LIRO Engineers - JFK Depot - Phase I ESA

·                   2005-12-14 - PWGC - JFK Depot - Baseline Environmental Report

·                   2010-06-28 - Professional Service Industries - JFK Depot - DRAFT Phase I ESA

·                   Status Reports: June 2007 — January 2012

 

Regulatory Correspondence

 

·                   2007-02-02 - NYSDEC - JFK Depot - Stipulation Agreement

 

Tank Upgrade Designs

 

·                   1998-07-20 - PWGC - Aboveground Tank Details D-3

·                   1998-07-20 - PWGC - Dispensing Island Details D-4

·                   1998-07-20 - PWGC - Legend and Notes L-1

·                   1998-07-20 - PWGC - Miscellaneous Details D-5

·                   1998-07-20 - PWGC - Underground Tank Details D-1

·                   1998-07-20 - PWGC - Underground Tank Details D-2

·                   1998-09-08 - PWGC - Electrical Detail Sheet

·                   1998-09-08 - PWGC - JFK Depot - Existing Site Plan G-1

·                   1998-09-08 - PWGC - JFK Depot - Proposed Site Plan G-2

 

UST Closure Reports

 

·                   2000-08 - PWGC - JFK Depot - UST Closure Report

 

Work Plans

 

·                   2006-11-09 - PWGC - Comprehensive Work Plan

·                   2007-05-30 - PWGC - Comprehensive Work Plan Schedule Addendum

·                   2008-01-28 - PWGC - JFK Depot - RAP Revision 1

·                   2008-11-14 - PWGC - JFK Depot - Monitoring Well Installation Work Plan

·                   2009-10-22 - PWGC - JFK Depot - Additional Investigation Work Plan

 


 

Environmental

 

626 Wortman Ave, Brooklyn, NY (GTJ0605)

 

Bulk Storage

 

·                   2011-12-02 - PWGC - Wortman - PBS Application

 

FOIL (Sprague Spill)

 

·                   2007-05-15 - NYSDEC - Wortman - Responsible Parties

·                   2007-06-15 - NYSDEC - Wortman - Order On Consent

·                   2007-10 - National - Wortman - Petroleum Spill and Investigation Report

·                   2007-11-28 - NYSDEC - Wortman - Email Response for Investigation and Remediation Report

·                   2007-12-21 - National - Wortman - Petroleum Spill and Investigation Report Addendum

·                   2008-02-06 - NYSDEC - Wortman - National Remediation Report Review

·                   2009-12-18 - NYSDEC - Wortman - Sprague Spill Meeting Attendance

·                   2010-04-14 - NYSDEC - Wortman - Spill Report Form

·                   2011-05-19 - National - Wortman - Spill Closure Request

·                   2011-08-29 - National - Wortman - Spill Closure Request

·                   2012-01-18 - NYSDEC - Wortman - Spill Closure Approved

·                   2012-01-18 - NYSDEC - Wortman - Spill Report Form

·                   Status Reports (National): June 2008 — October 2010

 

Investigative And Status Reports

 

·                   2006-07-21 - PWGC - Wortman - Monitoring Well Installation and Baseline Sampling

·                   2007-08-21 - PWGC - Wortman - Final Site Assessment Report

·                   Status Reports: May 2007 — January 2012

 

Regulatory Correspondence

 

·                   2005-12-22 - NYSDEC - Wortman - Additional Investigation Required

·                   2007-02-02 - NYSDEC - Wortman - Stipulation Agreement

·                   2007-11-20 - NYSDEC - Wortman - RAP Approval

·                   2008-02-15 - NYSDEC - Wortman - RAP Addendum Approval

·                   2008-07-03 - NYSDEC - Wortman - Notice of Violation

·                   2010-07-20 - PWGC - Wortman - OMM Plan Sampling Aspect

·                   Date Unknown - NYSDEC - Wortman - Order On Consent

·                   Date Unknown - NYSDEC - Wortman - Order On Consent2

·                   Date Unknown - NYSDEC - Wortman - Order On Consent Revised

 

Tank Upgrade Designs

 

·                   1998-07-20 - PWGC - Aboveground Tank Details D-3

·                   1998-07-20 - PWGC - Dispensing Island Details D-4

·                   1998-07-20 - PWGC - Legend and Notes L-1

·                   1998-07-20 - PWGC - Miscellaneous Details D-5

·                   1998-07-20 - PWGC - Underground Tank Details D-1

·                   1998-07-20 - PWGC - Underground Tank Details D-2

·                   1998-09-08 - PWGC - Electrical Detail Sheet

 


 

·                   1998-09-08 - PWGC - Wortman - Existing Site Plan C-1

·                   1998-09-08 - PWGC - Wortman - Proposed Site Plan C-2

 

UST Closure Reports

 

·                   1999-11 - PWGC - Wortman - UST Closure Report

 

Work Plans

 

·                   2006-03-23 - PWGC - Wortman - Monitoring Well Installation and Baseline Work Plan

·                   2006-11-09 - PWGC - Comprehensive Work Plan

·                   2007-05-30 - PWGC - Comprehensive Work Plan Schedule Addendum

·                   2007-05-30 - PWGC - Wortman - Expedited Site Assessment Work Plan

·                   2007-09-28 - PWGC - Wortman - RAP

·                   2007-12-26 - PWGC - Wortman - TFM-UST Removal

·                   2008-01-25 - PWGC - Wortman - RAP Addendum

·                   2008-11-14 - PWGC - Wortman - Monitoring Well Installation

 

8 Farm Springs Road, Farmington, CT (RV0801)

 

Environmental Reports

 

·                   2008-01-01 — PWGC — Phase I Environmental Site Assessment

·                   1997-07-11- IVI, Inc. — Phase I Environmental Site Assessment

 

Engineering Reports

 

·                   2008-01-01 — PWGC — Property Condition Report

·                   2011-10-01 — PWGC — Property Condition Report

 


 

Schedule 3.16

 

Leasing — GTJ Space Leases

 

1.                                       Rent Abatement pursuant to that certain Lease dated June 6, 2012 by and between Farm Springs Road, LLC, as Landlord and United Technologies Corporation, as Tenant.

 

2.                                       Surrender Agreement dated June 30, 2012 by and between 612 Wortman, LLC, as Landlord, and Varsity Bus Co., Inc., as Tenant, and the First Addendum to Surrender Agreement dated July 2, 2008 by and between Landlord and Tenant.

 

Security Deposits

 

Aqua Duck:

 

 

$67,000.00

 

 

 

 

Motorcycle Safety School:

 

 

$21,250.00

 

 

 

 

Metro Paper Recycling:

 

 

$12,500.00

 


 

Schedule 3.17

 

Condemnation

 

Partial Condemnation at Arverne.

 


 

Schedule 3.18

 

Union Contracts; Employees

 

Attached hereto

 


 

Schedule 3.22

 

GTJ Mortgage Loan Documents

 

A.  Loan Documents Dated July 1, 2010 By and Between Hartford Life Insurance Company, Hartford Life and Accident Insurance Company and Hartford Life and Annuity Insurance Company (collectively, the “Lender”), and (i) 84-01 24 th  Avenue, LLC and (ii) 165-25 147 th  Avenue, LLC (collectively, the “Borrower”).

 

3.                                       Promissory Note in the principal amount of $25,000,000.00 executed by the Borrower in favor of Lender.

2.                                       Promissory Note in the principal amount of $10,500,000.00 executed by the Borrower in favor of the Lender.

3.                                       Promissory Note in the principal amount of $10,000,000.00 executed by the Borrower in favor of the Lender.

4.                                       $45,500,000.00 Consolidated, Amended and restated Mortgage, Security Agreement, Financing Statement and Fixture Filing executed by the Borrower in favor of the Lender and covering the                            Property.

5.                                       Assignment of Leases and Rents executed by the Borrower in favor of the Lender.

6.                                       Assignment of Property Documents.

7.                                       The Environmental Indemnity Agreement executed by the Borrower in favor of the Lender.

8.                                       Carveout Indemnity Agreement

9.                                       UCC-1 Financing Statement with respect to Borrower to be filed with the Secretary of State of New York.

10.                                Mortgagee Notification Letter to Tenant from 85-01 24 th  Avenue LLC and Hartford

11.                                Rent Payment Direction Letter to Tenant from 85-01 24 th  Avenue LLC and Hartford

12.                                Closing Affidavit between the Borrower and Carveout Indemnitor.

13.                                The Gap Mortgage executed by the Borrower in favor of Lender.

14.                                Gap Promissory Note in the original principal amount of $45,500,000.00 executed by the Borrower in favor of the Lender.

15.                                Consolidated Promissory Note in the original principal amount of $45,500,000.00 executed by the Borrower in favor of the Lender.

16.                                Section 275 Affidavit of 85-01 24 th  Avenue, LLC dated June 28, 2010

17.                                Section 275 Affidavit of 165-25 147 th  Avenue, LLC dated June 28, 2010

18.                                Section 255 Affidavit of 85-01 24 th  Avenue, LLC dated June 28, 2010

 


 

19.                                Section 255 Affidavit of 165-25 147 th  Avenue, LLC dated June 28, 2010

20.                                Section 255 Affidavit of 85-01 14 th  Avenue, LLC (Assignment of Leases and Rents) dated June 28, 2010

21.                                Section 255 Affidavit of 165-25 147 th  Avenue, LLC (Assignment of Leases and Rents) dated June 28, 2010.

 

B.  Loan Documents Dated August 26, 2011 By and Between Manufacturers and Traders Trust Company (“Lender”), and Farm Springs Road, LLC (“Guarantor”).

 

1.                                       Credit Agreement

2.                                       $10,000,000.00 Standard Libor Grid Note.

3.                                       Open-End Mortgage in the amount of $10,000,000 by Borrower in favor of Lender.

4.                                       General Assignment of Rents between Borrower and Lender.

5.                                       Environmental Compliance and Indemnification Agreement by Borrower, Lender and Indemnitor.

6.                                       Affidavit and Estoppel Certificate of Borrower.

7.                                       Tenant Estoppel Certificate of Hartford Fire Insurance Company.

8.                                       Rent Roll Certificate dated August 26, 2011 executed by Borrower.

9.                                       Continuing Guaranty of Guarantor in favor of Lender.

 


 

Schedule 3.25

 

GTJ Receivables

 

TBD AT CLOSING

 


 

Schedule 3.26

 

Brokers

 

Brokerage Agreement dated January 2, 2009 by and between 612 Wortman Avenue, LLC (“Owner”) and CBRE, Inc. (“CBRE”) as extended pursuant to various letter agreements.

 


 

Schedule 4.1 (d)

 

Estoppel Certificate Form

 

TENANT ESTOPPEL CERTIFICATE

 

THIS TENANT ESTOPPEL CERTIFICATE (this “ Certificate ”) is made this       day of                         , 2012, by                            (“ Tenant ”), to and for the benefit of                                    (“ Landlord ”) and Mortgagee (as defined below).

 

STATEMENT OF FACTS :

 

The Tenant is the tenant under that certain lease dated as of July 20, 2010, as amended on July 20, 2010 and further amended in March, 2010, (collectively, the “ Lease ”), covering that certain retail premises in the building located at 2075 Broadway, New York, New York (the “ Building ”), as is more particularly defined and described in the Lease (the “ Leased Premises ”).

 

Tenant hereby certifies to Landlord and Mortgagee that:

 

The Lease is in full force and effect.  There are no amendments, supplements or modifications of any kind to the Lease except as referenced above.

 

The Lease represents the entire agreement between Tenant and Landlord with respect to the leasing and occupancy of the premises leased under the Lease; there are no other promises, agreements, understandings, or commitments of any kind between Landlord and Tenant with respect thereto.  Tenant has not given Landlord any notice of termination under the Lease.

 

There has not been and is now no subletting of the Leased Premises, or any part thereof, or assignment by Tenant of the Lease, or any rights therein, to any party, other than as follows: [list or if none, say “None”]:                                                     .

 

The Lease has commenced pursuant to its terms.

 

To Tenant’s knowledge, no uncured default, event of default, or breach by Landlord exists under the Lease, no facts or circumstances exist that, with the passage of time or giving of notice, will or could constitute a default, event of default, or breach under the Lease.  Tenant has made no claim against Landlord alleging Landlord’s default under the Lease.

 

Tenant is in full and complete possession of the Leased Premises in the Building and has accepted the Leased Premises, including any work of Landlord performed thereon pursuant to the terms and provisions of the Lease. The term of the Lease commenced on                        and terminates on

 


 

                              , unless sooner terminated in accordance with the terms of the Lease.  Tenant has no option to renew or extend the lease term except as follows [list or if none, say “None”]:                                                                                                                                                                                                                           .

 

The base rent in the monthly amount of $                               is currently payable under the Lease. The date of Tenant’s last rental payment was                       .

 

Tenant is current with respect to, and is paying the full rent and other charges stipulated in the Lease (including, without limitation, common area maintenance charges) with no offsets, deductions, defenses or claims; and Tenant is not in default under the Lease.

 

As of the date hereof, Tenant is not entitled to any credits, reductions, offsets, defenses, free rent, rent concessions or abatements of rent under the Lease or otherwise against the payment of rent or other charges under the Lease.

 

All of the obligations of the Landlord under the Lease to make or to pay the Tenant for any improvements, alterations or work done on the Demised Premises have been duly performed and completed, and the improvements described in the Lease have been constructed in accordance with the plans and specifications therefor and have been accepted by us.

 

No advance rentals in excess of thirty (30) days have been paid, and we have no unsatisfied claims against the Landlord.

 

A security deposit in the amount of $                      has been given by Tenant under the terms of, or with respect to, the Lease.

 

Tenant has no option or right to purchase the property of which the premises are a part, or any part thereof.

 

Tenant has not at any time and does not presently use the Leased Premises for the generation, manufacture, refining, transportation, treatment, storage or disposal of any hazardous substance or waste or for any purpose which poses a substantial risk of imminent damage to public health or safety or to the environment.

 

Tenant acknowledges and agrees that this certificate may be relied upon by, and shall inure to the benefit of, Landlord, any purchaser of the Building or Landlord’s interest therein, any lenders to the owners of the Building or the Leased Premises, as applicable (“ Mortgagee ”) and to any of the owners’ constituent entities, and the successors and/or assigns of any of the foregoing.

 

 

TENANT

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 


 

Schedule 5.2

 

Portfolio Pre-Closing Claims

 

203 Ridgewood :  Claim against DHL for waste (lease expires in March).

 

15 Progress :  Claim against the adjoining property owner for water damage run-off that destroyed the electrical service in to the building.

 

470 Bridgeport :  Claim for trespass and damage as a result of adjoining property owner clearing a portion of the property.

 

36 Midland :                              Claim for rent against Perfecto, a tenant who vacated prior to the end of the lease term (4/30/13)

 

269 Lambert :  Claim for holdover.

 

Post Cut-Off Date Leasing Payables

 

See Attached.

 

Schedule 5.2

 

GTJ Pre-Closing Claims

 

Varsity Transit, Inc. v. Sprague Energy Corp. and Dwayne Leisenheimer (Supreme Court    Nassau County, Index No. 09-009997)

 

Notice of Claim in the matter of 85-01 24 th  Avenue, LLC v. City of New York for breach of contract and monetary damages arising out of the City’s failure to repair, restore and/or replace property located at the premises known as 85-01 24 th  Avenue, East Elmhurst, New York.

 

Deferred Maintenance Claim versus The Hartford Fire Insurance Company’s tenancy at 8 Farm Springs Road settlement and release dated September 14, 2012.

 


 

Schedule 5.4

 

GTJ Tax Proceedings

 


 

Schedule 6.3

 

Apportionment of Losses

 

Individual

 

Percent

 

 

 

 

 

Jeffrey Wu

 

80

%

Paul Cooper

 

6

%

Louis Sheinker

 

6.666

%

Jerome Cooper

 

0.666

%

Jeffrey Ravetz

 

5.74

%

Sarah Ravetz

 

0.928

%

 

Exhibit 10.2

 

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

GTJ REALTY, LP

 

a Delaware limited partnership

 

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED

UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR

THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,

TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH

REGISTRATION, UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE

PARTNERSHIP THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE

EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER

APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.

 

dated as of January 1, 2013

 


 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

ARTICLE 1

 

DEFINED TERMS

1

 

 

 

 

ARTICLE 2

 

ORGANIZATIONAL MATTERS

20

Section 2.1

 

Formation

20

Section 2.2

 

Name

20

Section 2.3

 

Principal Office and Resident Agent; Principal Executive Office

20

Section 2.4

 

Power of Attorney

21

Section 2.5

 

Term

22

 

 

 

 

ARTICLE 3

 

PURPOSE

22

Section 3.1

 

Purpose and Business

22

Section 3.2

 

Powers

22

Section 3.3

 

Partnership Only for Purposes Specified

23

Section 3.4

 

Representations and Warranties by the Partners

23

 

 

 

 

ARTICLE 4

 

CAPITAL CONTRIBUTIONS

26

Section 4.1

 

Capital Contributions of the Partners

26

Section 4.2

 

Issuances of Additional Partnership Interests

26

Section 4.3

 

Additional Funds and Capital Contributions

27

Section 4.4

 

Stock Option Plans

28

Section 4.5

 

Dividend Reinvestment Plan, Cash Option Purchase Plan, Stock Incentive Plan or Other Plan

29

Section 4.6

 

No Interest; No Return

29

Section 4.7

 

Conversion or Redemption of Capital Shares

29

 

 

 

 

ARTICLE 5

 

DISTRIBUTIONS

30

Section 5.1

 

Requirement and Characterization of Distributions

30

Section 5.2

 

Distributions in Kind

30

Section 5.3

 

Amounts Withheld

30

Section 5.4

 

Distributions Upon Liquidation

31

Section 5.5

 

Distributions to Reflect Additional Partnership Units

31

Section 5.6

 

Restricted Distributions

31

Section 5.7

 

M&T Line of Credit and Prohibition on Future REIT Borrowings

31

 

 

 

 

ARTICLE 6

 

ALLOCATIONS

31

Section 6.1

 

Timing and Amount of Allocations of Net Income and Net Loss

31

Section 6.2

 

Allocations of Net Income and Net Loss

32

Section 6.3

 

Additional Allocation Provisions

33

Section 6.4

 

Tax Allocations

35

 

i


 

TABLE OF CONTENTS

(continued)

 

 

 

 

Page

ARTICLE 7

 

MANAGEMENT AND OPERATIONS OF BUSINESS

36

Section 7.1

 

Management

36

Section 7.2

 

Certificate of Limited Partnership

40

Section 7.3

 

Restrictions on General Partner’s Authority

40

Section 7.4

 

Reimbursement of the General Partner

42

Section 7.5

 

Outside Activities of the General Partner

43

Section 7.6

 

Transactions with Affiliates

44

Section 7.7

 

Indemnification

44

Section 7.8

 

Liability of the General Partner

47

Section 7.9

 

Other Matters Concerning the General Partner

48

Section 7.10

 

Title to Partnership Assets

49

Section 7.11

 

Reliance by Third Parties

49

 

 

 

 

ARTICLE 8

 

RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

50

Section 8.1

 

Limitation of Liability

50

Section 8.2

 

Management of Business

50

Section 8.3

 

Outside Activities of Limited Partners

50

Section 8.4

 

Return of Capital

51

Section 8.5

 

Rights of Limited Partners Relating to the Partnership

51

Section 8.6

 

Partnership Right to Call Limited Partner Interests

52

Section 8.7

 

Appraisal Rights

52

 

 

 

 

ARTICLE 9

 

BOOKS, RECORDS, ACCOUNTING AND REPORTS

53

Section 9.1

 

Records and Accounting

53

Section 9.2

 

Partnership Year

53

Section 9.3

 

Reports

53

 

 

 

 

ARTICLE 10

 

TAX MATTERS

54

Section 10.1

 

Preparation of Tax Returns

54

Section 10.2

 

Tax Elections

54

Section 10.3

 

Tax Matters Partner

54

Section 10.4

 

Withholding

55

Section 10.5

 

Organizational Expenses

56

 

 

 

 

ARTICLE 11

 

PARTNER TRANSFERS AND WITHDRAWALS

56

Section 11.1

 

Transfer

56

Section 11.2

 

Transfer of General Partner’s Partnership Interest

57

Section 11.3

 

Limited Partners’ Rights to Transfer

58

Section 11.4

 

Admission of Substituted Limited Partners

60

Section 11.5

 

Assignees

60

Section 11.6

 

General Provisions

61

 

ii


 

TABLE OF CONTENTS

(continued)

 

 

 

 

Page

ARTICLE 12

 

ADMISSION OF PARTNERS

63

Section 12.1

 

Admission of Successor General Partner

63

Section 12.2

 

Admission of Additional Limited Partners

63

Section 12.3

 

Amendment of Agreement and Certificate of Limited Partnership

64

Section 12.4

 

Limit on Number of Partners

64

Section 12.5

 

Admission

64

 

 

 

 

ARTICLE 13

 

DISSOLUTION, LIQUIDATION AND TERMINATION

64

Section 13.1

 

Dissolution

64

Section 13.2

 

Winding Up

65

Section 13.3

 

Deemed Contribution and Distribution

67

Section 13.4

 

Rights of Holders

67

Section 13.5

 

Notice of Dissolution

67

Section 13.6

 

Cancellation of Certificate of Limited Partnership

67

Section 13.7

 

Reasonable Time for Winding-Up

68

 

 

 

 

ARTICLE 14

 

PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS

68

Section 14.1

 

Procedures for Actions and Consents of Partners

68

Section 14.2

 

Amendments

68

Section 14.3

 

Meetings of the Partners

68

 

 

 

 

ARTICLE 15

 

COMMON UNIT REDEMPTION RIGHTS

69

Section 15.1

 

Redemption Rights of Qualifying Parties

69

 

 

 

 

ARTICLE 16

 

CLASS B UNITS

73

Section 16.1

 

Designation and Number

73

Section 16.2

 

Rank

73

Section 16.3

 

Voting Rights

74

Section 16.4

 

Redemption Rights of Qualifying Class B Parties

74

 

 

 

 

ARTICLE 17

 

MISCELLANEOUS

77

Section 17.1

 

Addresses and Notice

77

Section 17.2

 

Titles and Captions

77

Section 17.3

 

Pronouns and Plurals

77

Section 17.4

 

Further Action

78

Section 17.5

 

Binding Effect

78

Section 17.6

 

Waiver

78

Section 17.7

 

Counterparts

78

Section 17.8

 

Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial

78

Section 17.9

 

Entire Agreement

79

Section 17.10

 

Invalidity of Provisions

79

 

iii


 

TABLE OF CONTENTS

(continued)

 

 

 

 

Page

Section 17.11

 

Limitation to Preserve REIT Status

79

Section 17.12

 

No Partition

80

Section 17.13

 

No Third-Party Rights Created Hereby

80

Section 17.14

 

No Rights as Stockholders

81

 

 

 

 

Exhibit List

 

 

 

Exhibit A

 

PARTNERS AND PARTNERSHIP UNITS

A-1

Exhibit B

 

GROSS ASSET VALUES

B-1

Exhibit C

 

EXAMPLES REGARDING ADJUSTMENT FACTOR

C-1

Exhibit D

 

COMMON NOTICE OF REDEMPTION

D-1

 

iv


 

AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP

OF GTJ REALTY, LP

 

THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF GTJ REALTY, LP, dated as of January 1, 2013, is made and entered into by and among, GTJ REIT, INC., a Maryland corporation, GTJ GP, LLC, a Maryland limited liability company, as the General Partner and the Persons whose names are set forth on Exhibit A attached hereto, as limited partners, and any Additional Limited Partner that is admitted from time to time to the Partnership and listed on Exhibit A attached hereto.

 

WHEREAS, a Certificate of Limited Partnership of the Partnership was filed with the Secretary of the State of Delaware on March 15, 2012 (the “ Formation Date ”) and the initial general partner and limited partners entered into an original agreement of limited partnership effective as of March 15, 2012 (the “ Original Partnership Agreement ”); and

 

WHEREAS, the Partners (as hereinafter defined) now desire to amend and restate the Original Partnership Agreement and admit the Persons whose names are set forth on Exhibit A attached hereto as limited partners of the Partnership by entering into this Agreement (as hereinafter defined);

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE 1

DEFINED TERMS

 

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement:

 

“ Act ” means the Delaware Revised Uniform Limited Partnership Act, Del. Code Ann. Tit.6 §17-101, et seq. as it may be amended from time to time, and any successor to such statute.

 

“ Actions ” has the meaning set forth in Section 7.7 hereof.

 

“ Additional Funds ” has the meaning set forth in Section 4.3.A hereof.

 

“ Additional Limited Partner ” means a Person who is admitted to the Partnership as a limited partner pursuant to the Act and Section 4.2 and Section 12.2 hereof and who is shown as such on the books and records of the Partnership.

 


 

“ Adjusted Capital Account ” means, with respect to any Partner, the balance in such Partner’s Capital Account as of the end of the relevant Partnership Year or other applicable period.

 

“ Adjusted Capital Account Deficit ” means, with respect to any Partner, the deficit balance, if any, in such Partner’s Adjusted Capital Account as of the end of the relevant Partnership Year or other applicable period after giving effect to the following adjustments:

 

(i)            decrease such deficit by any amounts which such Partner is obligated to restore pursuant to this Agreement or is deemed to be obligated to restore pursuant to Regulation Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Section 1.704-2(i)(5) and 1.704-2(g); and

 

(ii)           increase such deficit by the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(5), (5) and (6).

 

The foregoing definition of “Adjusted Capital Account Deficit” is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

 

“ Adjusted Net Income ” means for each Partnership Year or other applicable period, an amount equal to the Partnership’s Net Income or Net Loss for such year or other period, computed without regard to the items set forth below; provided , that if the Adjusted Net Income for such year or other period is a negative number (i.e., a net loss), then the Adjusted Net Income for that year or other period shall be treated as if it were zero:

 

(a)           Depreciation; and

 

(b)           Net gain or loss realized in connection with the actual or hypothetical sale of any or all of the assets of the Partnership, including but not limited to net gain or loss treated as realized in connection with an adjustment to the Gross Asset Value of the Partnership’s assets as set forth in the definition of “Gross Asset Value.”

 

“ Adjustment Factor ” means 1.0; provided , however , that in the event that:

 

(i)            GTJ REIT (a) declares or pays a dividend on its outstanding REIT Shares in REIT Shares or makes a distribution to all holders of its outstanding REIT Shares in REIT Shares, (b) splits or subdivides its outstanding REIT Shares or (c) effects a reverse stock split or otherwise combines its outstanding REIT Shares into a smaller number of REIT Shares, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction, (1) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination (assuming for such purposes that such dividend, distribution, split, subdivision, reverse split or combination has occurred as of such time) and (2) the denominator of which shall be the actual number of REIT Shares (determined without the above assumption) issued and outstanding on the record date for such dividend, distribution, split, subdivision, reverse split or combination;

 

2


 

(ii)           GTJ REIT distributes any rights, options or warrants to all holders of its REIT Shares to subscribe for or to purchase or to otherwise acquire REIT Shares, or other securities or rights convertible into, exchangeable for or exercisable for REIT Shares (other than REIT Shares issuable pursuant to a Qualified DRIP / COPP), at a price per share less than the Value of a REIT Share on the record date for such distribution (each a “ Distributed Right ”), then, as of the distribution date of such Distributed Rights or, if later, the time such Distributed Rights become exercisable, the Adjustment Factor shall be adjusted by multiplying the Adjustment Factor previously in effect by a fraction (a) the numerator of which shall be the number of REIT Shares issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus the maximum number of REIT Shares purchasable under such Distributed Rights and (b) the denominator of which shall be the number of REIT Shares issued and outstanding on the record date (or, if later, the date such Distributed Rights become exercisable) plus a fraction (1) the numerator of which is the maximum number of REIT Shares purchasable under such Distributed Rights times the minimum purchase price per REIT Share under such Distributed Rights and (2) the denominator of which is the Value of a REIT Share as of the record date (or, if later, the date such Distributed Rights become exercisable); provided , however , that, if any such Distributed Rights expire or become no longer exercisable, then the Adjustment Factor shall be adjusted, effective retroactive to the date of distribution of the Distributed Rights, to reflect a reduced maximum number of REIT Shares or any change in the minimum purchase price for the purposes of the above fraction; and

 

(iii)          GTJ REIT shall, by dividend or otherwise, distribute to all holders of its REIT Shares evidences of its indebtedness or assets (including securities, but excluding any dividend or distribution referred to in subsection (i) or (ii) above), which evidences of indebtedness or assets relate to assets not received by GTJ REIT pursuant to a pro rata distribution by the Partnership, then the Adjustment Factor shall be adjusted to equal the amount determined by multiplying the Adjustment Factor in effect immediately prior to the close of business as of the record date by a fraction (a) the numerator of which shall be such Value of a REIT Share as of the record date and (b) the denominator of which shall be the Value of a REIT Share as of the record date less the then fair market value (as determined by the General Partner, whose determination shall be conclusive) of the portion of the evidences of indebtedness or assets so distributed applicable to one REIT Share.

 

Notwithstanding the foregoing, no adjustments to the Adjustment Factor will be made for any class of Limited Partnership Interests to the extent that the Partnership makes or effects any correlative distribution or payment to all of the Limited Partners of such class, or effects any correlative split or reverse split in respect of its Limited Partnership Interests. Any adjustments to the Adjustment Factor shall become effective immediately after such event, retroactive to the record date, if any, for such event. For illustrative purposes, examples of adjustments to the Adjustment Factor are set forth on Exhibit B attached hereto.

 

“ Affiliate ” means, with respect to any Person, any Person directly or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, “control” when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

3

 

 


 

“ Agreement ” means this Amended and Restated Limited Partnership Agreement of GTJ Realty, LP, as now or hereafter amended, restated, modified, supplemented or replaced.

 

“ Applicable Percentage ” means the proportion of a Common Tendering Party’s Tendered Common Units that will be acquired by GTJ REIT for REIT Shares in accordance with Section 15.1 to the Tendering Party’s Tendered Common Units.

 

“ Appraisal ” means, with respect to any assets, the written opinion of an independent third party experienced in the valuation of similar assets, selected by the General Partner in good faith. Such opinion may be in the form of an opinion by such independent third party that the value for such property or asset as set by the General Partner is fair, from a financial point of view, to the Partnership.

 

“ Assignee ” means a Person to whom one or more Partnership Units have been Transferred in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5 hereof.

 

“ Available Cash ” means, with respect to any period for which such calculation is being made,

 

(i)            the sum, without duplication, of:

 

(1)           the Partnership’s Net Income or Net Loss (as the case may be) for such period,

 

(2)           Depreciation and all other noncash charges to the extent deducted in determining Net Income or Net Loss for such period,

 

(3)           the amount of any reduction in reserves of the Partnership referred to in clause (ii)(6) below (including, without limitation, reductions resulting because the General Partner determines such amounts are no longer necessary),

 

(4)           the excess, if any, of the net cash proceeds from the sale, exchange, disposition, financing or refinancing of Partnership property for such period over the gain (or loss, as the case may be) recognized from such sale, exchange, disposition, financing or refinancing during such period (excluding any Termination Event), and

 

(5)           all other cash received (including amounts previously accrued as Net Income and amounts of deferred income) or any net amounts borrowed by the Partnership for such period that was not included in determining Net Income or Net Loss for such period;

 

(ii)           less the sum, without duplication, of:

 

(1)           all principal debt payments made during such period by the Partnership,

 

(2)           capital expenditures made by the Partnership during such period,

 

(3)           investments in any entity (including loans made thereto) to the extent that such investments are not otherwise described in clause (ii)(1) or clause (ii)(2) above,

 

4


 

(4)           all other expenditures and payments not deducted in determining Net Income or Net Loss for such period (including amounts paid in respect of expenses previously accrued),

 

(5)           any amount included in determining Net Income or Net Loss for such period that was not received by the Partnership during such period,

 

(6)           the amount of any increase in reserves (including, without limitation, working capital reserves) established during such period that the General Partner determines are necessary or appropriate in its sole and absolute discretion,

 

(7)           any amount distributed or paid in redemption of any Limited Partner Interest or Partnership Units, including, without limitation, any Common Unit Cash Amount paid, and

 

(8)           the amount of any working capital accounts and other cash or similar balances which the General Partner determines to be necessary or appropriate in its sole and absolute discretion.

 

Notwithstanding the foregoing, Available Cash shall not include (a) any cash received or reductions in reserves, or take into account any disbursements made, or reserves established, after dissolution and the commencement of the liquidation and winding up of the Partnership or (b) any Capital Contributions, whenever received or any payments, expenditures or investments made with such Capital Contributions.

 

“ Board of Directors ” means the Board of Directors of GTJ REIT.

 

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

 

“ Capital Account ” means, with respect to any Partner, the capital account maintained by the General Partner for such Partner on the Partnership’s books and records in accordance with the following provisions:

 

(iii)          To each Partner’s Capital Account, there shall be added such Partner’s Capital Contributions, such Partner’s share of Net Income and any items in the nature of income or gain that are specially allocated pursuant to Section 6.3 hereof (or otherwise provided for under the Internal Revenue Code), and the amount of any Partnership liabilities assumed by such Partner or that are secured by any property distributed to such Partner.

 

(iv)          From each Partner’s Capital Account, there shall be subtracted the amount of cash and the Gross Asset Value of any Partnership property distributed to such Partner pursuant to any provision of this Agreement, such Partner’s share of Net Losses and any items in the nature of expenses or losses that are specially allocated pursuant to Section 6.3 hereof (or otherwise provided for under the Internal Revenue Code), and the amount of any liabilities of such Partner assumed by the Partnership or that are secured by any property contributed by such Partner to the Partnership.

 

(v)           In the event any interest in the Partnership is Transferred in accordance with the terms of this Agreement (which Transfer does not result in the termination

 

5


 

of the Partnership for Federal income tax purposes), the transferee shall succeed to the Capital Account of the transferor to the extent that it relates to the Transferred interest.

 

(vi)          In determining the amount of any liability for purposes of subsections (i) and (ii) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Treasury Regulations promulgated thereunder.

 

(vii)         The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations promulgated under Section 704 of the Code, and shall be interpreted and applied in a manner consistent with such Regulations. If the General Partner shall determine that it is necessary or prudent to modify the manner in which the Capital Accounts are maintained in order to comply with such Regulations, the General Partner may make such modification, provided that such modification is not likely to have any material effect on the amounts distributable to any Partner pursuant to Article 13 hereof upon the dissolution of the Partnership. The General Partner may, in its sole discretion, (a) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (b) make any appropriate modifications in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.

 

“ Capital Contribution ” means, with respect to any Partner, the amount of money and the initial Gross Asset Value of any Contributed Property that such Partner contributes or is deemed to contribute to the Partnership pursuant to Article 4 hereof.

 

“ Capital Share ” means a share of any class or series of stock of GTJ REIT now or hereafter authorized other than a REIT Share or Series B Preferred Stock.

 

“ Certificate ” means the Certificate of Limited Partnership of the Partnership filed with the SSD, as amended from time to time in accordance with the terms hereof and the Act.

 

“ Charity ” means an entity described in Section 501(c)(3) of the Code or any trust all the beneficiaries of which are such entities.

 

“ Charter ” means the charter of GTJ REIT, as defined in the Maryland General Corporation Law, as amended.

 

“ Class A Unit ” means the Partnership’s Class A Partnership Units, with rights, priorities and preferences set forth herein.

 

“ Class A Limited Partner ” means a Limited Partner that is the holder of Class A Units, including any Substituted Class A Partner, in its capacity as such.

 

“ Class B Limited Partner ” means any Limited Partner that is a Holder of Class B Units, including any Substituted Class B Limited Partner, in its capacity as such.

 

“ Class B Redemption ” has the meaning set forth in Section 16.4.A hereof.

 

6


 

“ Class B Redemption Right ” has the meaning set forth in Section 16.4.A hereto.

 

“ Class B Shares ” means a share of Series B Preferred Stock of GTJ REIT, Inc., $0.0001 par value per share.

 

“ Class B Tendering Party ” has the meaning set forth in Section 16.5 hereof.

 

“ Class B Unit ” means the Partnership’s Class B Partnership Units, with the rights, priorities and preferences set forth herein.

 

“ Class B Unit Cash Amount ” means an amount of cash equal to the product of (i) the Value of a REIT Share and (ii) the Class B Unit Shares Amount.

 

“ Class B Unit REIT Shares Amount ” means a number of Class B Shares equal to the product of (a) the number of Tendered Class B Units and (b) the Adjustment Factor; provided , however , that, in the event that GTJ REIT issues to all holders of Class B Shares as of a certain record date rights, options, warrants or convertible or exchangeable securities entitling GTJ REIT’s stockholders to subscribe for or purchase Class B Shares, or any other securities or property (collectively, the “ Class B Rights ”), with the record date for such Class B Rights issuance falling within the period starting on the date of the Class B Unit Notice of Redemption and ending on the day immediately preceding the Specified Redemption Date, the Class B Rights will not be distributed before the relevant Specified Redemption Date, then the Class B Unit Shares Amount shall also include such Class B Rights that a holder of that number of Class B Shares would be entitled to receive, expressed, where relevant hereunder, in a number of Class B Shares determined by the General Partner in good faith.

 

“ Class B Unit Notice of Redemption ” means the Common Unit Notice of Redemption substantially in the form of Exhibit D attached to this Agreement but with respect to a Class B Unit Redemption.

 

“ Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time or any successor statute thereto, as interpreted by the applicable Regulations thereunder. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.

 

“ Common Limited Partner ” means any Limited Partner that is a Holder of Common Units, including any Substituted Common Limited Partner, in its capacity as such.

 

“ Common Redemption ” has the meaning set forth in Section 15.1.A hereof.

 

“ Common Redemption Right ” has the meaning set forth in Section 15.1.A hereto.

 

“ Common Tendering Party ” has the meaning set forth in Section 15.1.A hereof.

 

“ Common Unit ” means a fractional, undivided share of the Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2 hereof, but does not include any other Partnership Unit specified in a Partnership Unit Designation as being other than a Common Unit;

 

7


 

provided , however , that the General Partner Interest and the Limited Partner Interests shall have the differences in rights and privileges as specified in this Agreement.

 

“ Common Unit Cash Amount ” means an amount of cash equal to the product of (i) the Value of a REIT Share and (ii) the Common Unit REIT Shares Amount determined as of the applicable Valuation Date.

 

“ Common Unit Notice of Redemption ” means the Common Unit Notice of Redemption substantially in the form of Exhibit D attached to this Agreement.

 

“ Common Unit REIT Shares Amount ” means a number of REIT Shares equal to the product of (a) the number of Tendered Common Units and (b) the Adjustment Factor; provided , however , that, in the event that GTJ REIT issues to all holders of REIT Shares as of a certain record date rights, options, warrants or convertible or exchangeable securities entitling GTJ REIT’s stockholders to subscribe for or purchase REIT Shares, or any other securities or property (collectively, the “ Rights ”), with the record date for such Rights issuance falling within the period starting on the date of the Common Unit Notice of Redemption and ending on the day immediately preceding the Specified Redemption Date, which Rights will not be distributed before the relevant Specified Redemption Date, then the Common Unit REIT Shares Amount shall also include such Rights that a holder of that number of REIT Shares would be entitled to receive, expressed, where relevant hereunder, in a number of REIT Shares determined by the General Partner in good faith.

 

“ Consent ” means the consent to, approval of, or vote in favor of a proposed action by a Partner given in accordance with Article 14 hereof.

 

“ Consent of the Common Limited Partners ” means the Consent of a Majority in Interest of the Common Limited Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by each Common Limited Partner, such consent not to be unreasonably withheld, delayed or conditioned.

 

“ Consent of the Limited Partners ” means the Consent of a Majority in Interest of the Limited Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by each Limited Partner, such consent not to be unreasonably withheld, delayed or conditioned.

 

“ Consent of the Partners ” means the Consent of the General Partner and the Consent of a Majority in Interest of the Limited Partners (other than the Class B Limited Partners), which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and, except as otherwise provided in this Agreement, may be given or withheld by the General Partner or the Limited Partners, such consent not to be unreasonably withheld, delayed or conditioned.

 

“ Contributed Property ” means each Property or other asset, in such form as may be permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership (or deemed contributed by the Partnership to a “new” partnership pursuant to Code Section 708).

 

8


 

“ Controlled Entity ” means, as to any Partner, (a) any corporation more than fifty percent (50%) of the outstanding voting stock of which is owned by such Partner or such Partner’s Family Members or Affiliates, (b) any trust, whether or not revocable, of which such Partner or such Partner’s Family Members or Affiliates are the sole beneficiaries, (c) any partnership of which such Partner or its Affiliates are the managing partners and in which such Partner, such Partner’s Family Members or Affiliates hold partnership interests representing at least twenty-five percent (25%) of such partnership’s capital and profits and (d) any limited liability company of which such Partner or its Affiliates are the managers and in which such Partner, such Partner’s Family Members or Affiliates hold membership interests representing at least twenty-five percent (25%) of such limited liability company’s capital and profits.

 

“ Conversion Limit ” means the largest percentage of outstanding REIT Shares then held by a single holder of REIT Shares.

 

“ Contribution Agreement ” means that certain Contribution Agreement dated of even date herewith by and among GTJ REIT, the Partnership, the General Partner, the Common Limited Partners listed on Exhibit A and the Class B Limited Partner listed on Exhibit A .

 

“ Cut-Off Date ” means the seventh (7th) Business Day after the Chief Financial Officer of the General Partner and GTJ REIT receives written notice from the Tendering Common Party or Class B Tendering Party, as applicable, of the General Partner’s failure to notify such party of the General Partner’s election to acquire some or all of the Tendered Common Units or Tendered Class B Units, as applicable, in exchange for REIT Shares or Class B Shares, respectively; provided , however , that such written notice shall not be given by the Tendering Common Party or Class B Tendering Party, as applicable, until at least the tenth (10) Business Day after the Chief Financial Officer of the General Partner and GTJ REIT receives a Common Unit Notice of Redemption or a Class B Unit Notice of Redemption, as applicable.

 

“ Debt ” means, as to any Person, as of any date of determination: (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all amounts owed by such person to banks or other persons in respect of (x) reimbursement obligations under letters of credit, (y) surety bonds, or  (z) guaranty agreements, together with other similar instruments guaranteeing payment or other performance of obligations by such person; (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person’s interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (iv) lease obligations of such Person that, in accordance with generally accepted accounting principles, should be capitalized.

 

“ D elaware Courts ” has the meaning set forth in Section 17.8 B hereof.

 

“ Depreciation ” means, for each Partnership Year or other applicable period, an amount equal to the Federal income tax depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for Federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization or other cost

 

9


 

recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided , however , that if the Federal income tax depreciation, amortization or other cost recovery deduction for such year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.

 

“ Disregarded Entity ” means, with respect to any Person, (i) any “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)) of such Person, (ii) any entity treated as a disregarded entity for Federal income tax purposes with respect to such Person, or (iii) any grantor trust if the sole owner of the assets of such trust for Federal income tax purposes is such Person.

 

“ Distributed Right ” has the meaning set forth in the definition of “Adjustment Factor.”

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder and any successor statute thereto.

 

“ Family Members ” means, as to a Person that is an individual, such Person’s spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters, nieces and nephews and inter vivos or testamentary trusts of which only such Person and his or her spouse, ancestors, descendants (whether by blood or by adoption or step-descendants by marriage), brothers and sisters and nieces and nephews are beneficiaries.

 

“ Final Adjustment ” has the meaning set forth in Section 10.3.B (2) hereof.

 

“ Flow-Through Partners ” has the meaning set forth in Section 3.4.C hereof.

 

“ Flow-Through Entity ” has the meaning set forth in Section 3.4.C hereof.

 

“ Formation Date ” has the meaning set forth in the Recitals hereof.

 

“ Funding Debt ” means any Debt incurred by or on behalf of the General Partner for the purpose of providing funds to the Partnership.

 

“ General Partner ” means GTJ GP, LLC, a Maryland limited liability company and its successors and assigns, in each case, that is admitted from time to time to the Partnership as a general partner pursuant to the Act and this Agreement and is listed as a general partner on Exhibit A , as such Exhibit A may be amended from time to time, in such Person’s capacity as a general partner of the Partnership.  GTJ GP, LLC is wholly owned by GTJ REIT and that entity is a Disregarded Entity.

 

“ General Partner Interest ” means the entire Partnership Interest held by a General Partner hereof, which Partnership Interest may be expressed as a number of Common Units, Class A Units, Class B Units or any other Partnership Units.

 

“ General Partner Loan ” has the meaning set forth in Section 4.3.D hereof.

 

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“ Gross Asset Value ” means, with respect to any asset, the asset’s adjusted basis for Federal income tax purposes, except as follows:

 

(a)           The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset on the date of contribution, as set forth in Exhibit B .

 

(b)           The Gross Asset Values of all Partnership assets immediately prior to the occurrence of any event described in clauses (i) through (v) below shall be adjusted to equal their respective gross fair market values, as determined by the General Partner using such reasonable method of valuation as it may adopt, as of the following times:

 

(i)            the acquisition of an additional interest in the Partnership (other than in connection with the execution of this Agreement but including, without limitation, acquisitions pursuant to Section 4.2 hereof or contributions or deemed contributions by the General Partner pursuant to Section 4.2 hereof) by a new or existing Partner in exchange for more than a de minimis Capital Contribution, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;

 

(ii)           the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for an interest in the Partnership if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;

 

(iii)          the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

 

(iv)          the grant of an interest in the Partnership (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity, or by a new Partner acting in a partner capacity or in anticipation of becoming a Partner of the Partnership, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership; and

 

(v)           at such other times as the General Partner shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2, including, without limitation, if the General Partner so determines, upon the conversion of any Class B Units into Common Units, provided that in connection with such adjustment, the Gross Asset Value of the Partnership’s assets shall be determined by taking into account the Value of REIT Shares used for purposes of such conversion.

 

(c)           The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution, as determined by the distributee and the General Partner; provided , however , that if the distributee is the General Partner or if the distributee and the General Partner cannot agree on such a determination, such gross fair market value shall be determined by Appraisal.

 

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(d)           The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided , however , that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the General Partner reasonably determines that an adjustment pursuant to subsection (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d).

 

(e)           If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant to subsection (a), subsection (b) or subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Losses.

 

“ GTJ M&T Debt ” means the Debt in the amount of $2,000,000 incurred by GTJ REIT under the M&T Credit Line to pay for transaction costs due and payable by GTJ under the Contribution Agreement (it being understood that the GTJ M&T Debt shall not include the Partnership Closing Obligation Amount under Section 5.7 of this Agremeent).

 

“ GTJ REIT ” means GTJ REIT, Inc., a Maryland corporation and the sole member of the General Partner, and any successor thereto.

 

“ Hart-Scott-Rodino Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“ Holder ” means either (a) a Partner or (b) an Assignee owning a Partnership Unit.

 

“ Incapacity ” or “ Incapacitated ” means: (i) as to any Partner who is an individual, death, total physical disability or entry by a court of competent jurisdiction adjudicating such Partner incompetent to manage his or her person or his or her estate; (ii) as to any Partner that is a corporation or limited liability company, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any Partner that is a partnership, the dissolution and commencement of winding up of the partnership; (iv) as to any Partner that is an estate, the distribution by the fiduciary of the estate’s entire interest in the Partnership; (v) as to any trustee of a trust that is a Partner, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief of or against such Partner under any bankruptcy, insolvency or other similar law now or hereafter in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and non-appealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner, (c) the Partner executes and delivers a general assignment for the benefit of the Partner’s creditors, (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (b) above, (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for the Partner or for all or any substantial part of the Partner’s properties, (f) any proceeding seeking liquidation, reorganization or other relief

 

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under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120) days after the commencement thereof, (g) the appointment without the Partner’s consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such appointment, or (h) an appointment referred to in clause (g) above is not vacated within ninety (90) days after the expiration of any such stay.

 

“ Indemnitee ” means (i) GTJ REIT or any director, officer or employee of GTJ REIT, (ii) any Person subject to a claim or demand, or made a party or threatened to be made a party to a proceeding, by reason of its status as (a) the General Partner or (b) a director of the General Partner or an officer or employee of the Partnership or the General Partner, and (iii) such other Persons (including Affiliates of the General Partner or the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion.

 

“ IRS ” means the United States Internal Revenue Service.

 

“ Legal Requirements ” has the meaning set forth in Section 7.3.C(6) hereof.

 

“ Limited Partner ” means any Person that is admitted from time to time to the Partnership as a limited partner pursuant to the Act and this Agreement and is listed as a limited partner on Exhibit A attached hereto, as such Exhibit A may be amended from time to time, including any Substituted Limited Partner or Additional Limited Partner, in such Person’s capacity as a limited partner of the Partnership. Limited Partners may be Common Limited Partners, Class A Limited Partners, Class B Limited Partners or any other class or group of Partners that is designated or defined herein.

 

“ Limited Partner Interest ” means a Partnership Interest of a Limited Partner in the Partnership representing a fractional part of the Partnership Interests of all Limited Partners and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Limited Partner Interest may be expressed as a number of Common Units, Class A Units, Class B Units or other Partnership Units.

 

“ Liquidating Event ” has the meaning set forth in Section 13.1 hereof.

 

“ Liquidator ” has the meaning set forth in Section 13.2.A hereof.

 

“ Loan Document ” means any document securing and/or evidencing Debt of the UPREIT as permitted under this Agreement.

 

“ Majority in Interest of the Common Limited Partners ” means Common Limited Partners holding in the aggregate Percentage Interests that are greater than fifty percent (50%) of the aggregate Percentage Interests of all such Common Limited Partners entitled to Consent to or withhold Consent from a proposed action.

 

“ Majority in Interest of the Partners ” means Partners (other than the General Partner and the Class A Limited Partners) holding in the aggregate Percentage Interests that are greater

 

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than fifty percent (50%) of the aggregate Percentage Interests of all Partners entitled to Consent to or withhold Consent from a proposed action.

 

“ Market Price ” has the meaning set forth in the definition of “Value.”

 

“ M&T Credit Line ” means that certain credit agreement dated August 26, 2011 between GTJ REIT and Manufacturers and Traders Trust Company in the amount of $10,000,000.

 

“ Net Income ” or “ Net Loss ” means, for each Partnership Year or other applicable period, an amount equal to the Partnership’s taxable income or loss for such year or other period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

 

(f)                                    Any income of the Partnership that is exempt from Federal income tax and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss” shall be added to (or subtracted from, as the case may be) such taxable income (or loss);

 

(g)                                   Any expenditure of the Partnership described in Code Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income (or Net Loss) pursuant to this definition of “Net Income” or “Net Loss,” shall be subtracted from (or added to, as the case may be) such taxable income (or loss);

 

(h)                                  In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subsection (b) or subsection (c) of the definition of “Gross Asset Value,” the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;

 

(i)                                      Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for Federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

 

(j)                                     In lieu of the depreciation, amortization and other cost recovery deductions that would otherwise be taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Partnership Year or other applicable period;

 

(k)                                  To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner’s interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss;

 

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(l)                                      Notwithstanding any other provision of this definition of “Net Income” or “Net Loss,” any item that is specially allocated pursuant to Article 6 hereof shall not be taken into account in computing Net Income or Net Loss. The amounts of the items of Partnership income, gain, loss or deduction available to be specially allocated pursuant to Article 6 hereof shall be determined by applying rules analogous to those set forth in this definition of “Net Income” or “Net Loss;” and

 

(m)                              To the extent any Adjusted Net Income is or will be allocated for a Partnership Year or other applicable period, the terms Net Income and Net Loss for that year or other period shall refer to the remaining items of Net Income or Net Loss, as applicable.

 

“ New Securities ” means (i) any rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase REIT Shares or Preferred Shares, excluding grants under the Stock Option Plans, or (ii) any Debt issued by GTJ REIT that provides any of the rights described in clause (i).

 

“ Nonrecourse Deductions ” has the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).

 

“ Nonrecourse Liability ” has the meaning set forth in Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2).

 

“ Optionee ” means a Person to whom a stock option is granted under the Stock Option Plan.

 

“ Original Limited Partner ” means any Person that is a Limited Partner as of the date of the closing of the issuance of REIT Shares pursuant to the first follow-on public offering of securities of GTJ REIT.

 

“ Ownership Limit ” means the applicable restriction or restrictions on the ownership and transfer of stock of GTJ REIT imposed under the Charter.

 

“ Partner ” means the General Partner or a Limited Partner, and “Partners” means the General Partner and the Limited Partners.

 

“ Partner Minimum Gain ” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

 

“ Partner Nonrecourse Debt ” has the meaning set forth in Regulations Section 1.704-2(b)(4).

 

“ Partner Nonrecourse Deductions ” has the meaning set forth in Regulations Section 1.704-2(i)(1), and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(2).

 

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“ Partnership ” means the limited partnership formed and continued under the Act and pursuant to this Agreement, and any successor thereto.

 

“ Partnership Equivalent Units ” shall have the meaning set forth in 4.7.A hereof.

 

“ Partnership Interest ” means an ownership interest in the Partnership held by either a Limited Partner or a General Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. There may be one or more classes or series of Partnership Interests. A Partnership Interest may be expressed as a number of Common Units, Class A Units, Class B Units or other Partnership Units. The Partnership Interests represented by the Common Units and the Class B Units and each such type of Unit is a separate class of Partnership Interest for purposes of this Agreement.

 

“ Partnership Minimum Gain ” has the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).

 

“ Partnership Record Date ” means the record date established by the General Partner for the distribution of Available Cash pursuant to Section 5.1 hereof, which record date shall generally be the same as the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such distribution.

 

“ Partnership Unit ” means a Common Unit, a Class A Unit, a Class B Unit or any other partnership unit or fractional, undivided share of the Partnership Interests that the General Partner has authorized pursuant to Section 4.1, Section 4.2 or Section 4.3 hereof.

 

“ Partnership Unit Designation ” shall have the meaning set forth in Section 4.2.A hereof.

 

“ Partnership Year ” has the meaning set forth in Section 9.2 hereof.

 

“ Percentage Interest ” means, with respect to each Partner, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Partnership Units of all classes and series, or the aggregate number of Partnership Units of any specified class or series or specified group of classes and/or series, as applicable, held by such Partner and the denominator of which is the total number of Partnership Units of all classes and series, or the total number of Partnership Units of such specified class or series or specified group of classes and/or series, as applicable, held by all Partners.

 

“ Permitted Transfer ” has the meaning set forth in Section 11.3.A hereof.

 

“ Person ” means an individual or a corporation, partnership, trust, unincorporated organization, association, limited liability company or other entity.

 

“ Pledge ” has the meaning set forth in Section 11.3.A hereof.

 

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“ Preferred Share ” means a share of preferred stock of GTJ REIT of any class or series now or hereafter authorized that is not a REIT Share.

 

“ Properties ” means any assets and property of the Partnership such as, but not limited to, interests in real property and personal property, including, without limitation, fee interests, interests in ground leases, easements and rights of way, interests in limited liability companies, joint ventures or partnerships, interests in mortgages, and Debt instruments as the Partnership may hold from time to time and “Property” means any one such asset or property.

 

“ Publicly Traded ” means having common equity securities listed or admitted to trading on any U.S. national securities exchange.

 

“ Qualified DRIP/ COPP ” means a dividend reinvestment plan or a cash option purchase plan of GTJ REIT that permits participants to acquire REIT Shares using the proceeds of dividends paid by GTJ REIT or cash of the participant, respectively; provided , however , that if such shares are offered at a discount, such discount must (i) be designed to pass along to the stockholders of GTJ REIT the savings enjoyed by GTJ REIT in connection with the avoidance of stock issuance costs, and (ii) not exceed 5% of the value of a REIT Share as computed under the terms of such plan.

 

“ Qualified Transferee ” means an “accredited investor” as defined in Rule 501 promulgated under the Securities Act.

 

“ Qualifying Common Party ” means (a) a Common Limited Partner, (b) an Assignee of a Common Limited Partner, (c) a Class B Limited Partner who becomes a Common Limited Partner under Section 11.2(B), or (d) a Person, including a lending institution as the pledgee of a Pledge, who is the transferee of a Common Limited Partner Interest in a Permitted Transfer; provided , however , that a Qualifying Common Party shall not include the General Partner.

 

“ Qualifying Class B Party ” means (a) a Class B Limited Partner, (b) an Assignee of a Class B Limited Partner, or (c) a Person, including a lending institution as the pledgee of a Pledge, who is the transferee of a Class B Limited Partner Interest in a Permitted Transfer.

 

“ Redemption ” means a Common Redemption or a Class B Redemption.

 

“ Registered REIT Share ” means any REIT Share issued by GTJ REIT pursuant to an effective registration statement under the Securities Act.

 

“ Regulations ” means the income tax regulations under the Code, whether such regulations are in proposed, temporary or final form, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

“ Regulatory Allocations ” has the meaning set forth in Section 6.3.A(viii) hereof.

 

“ REIT ” means a real estate investment trust qualifying under Code Section 856.

 

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“ REIT Partner ” means (a) the General Partner or any Affiliate of the General Partner to the extent such Person has in place an election to qualify as a REIT and, (b) any Disregarded Entity with respect to any such Person.

 

“ REIT Payment ” has the meaning set forth in Section 15.12 hereof.

 

“ REIT Requirements ” has the meaning set forth in Section 5.1 hereof.

 

“ REIT Share ” means a share of common stock of GTJ REIT, $.0001 par value per share (but shall not include any series or class of GTJ REIT’s common stock classified after the date of this Agreement).

 

“ Related Party ” means, with respect to any Person, any other Person to whom ownership of shares of the General Partner’s stock by the first such Person would be attributed under Code Section 544 (as modified by Code Section 856(h)(1)(B)) or Code Section 318 (as modified by Code Section 856(d)(5)).

 

“ Rights ” has the meaning set forth in the definition of “Common Unit REIT Shares Amount.”

 

“ Safe Harbors ” shall have the meaning set forth in Section 11.3.C hereof.

 

“ SSD ” means the Department of the Secretary of the State of Delaware.

 

“ SEC ” means the Securities and Exchange Commission.

 

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“ Specified Redemption Date ” means the fifth (5th) Business Day after the Cut-Off Date.

 

“ Stock Option Plan ” means the 2007 Incentive Award Plan of GTJ REIT (the “2007 Incentive Plan”), as the same may be amended by GTJ REIT, and any future equity incentive plan of GTJ REIT, adopted by the Board of Directors of GTJ REIT and approved by the stockholders of GTJ REIT.

 

“ Subsidiary ” means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person; provided , however , that, with respect to the Partnership, “Subsidiary” means solely a partnership or limited liability company (taxed, for Federal income tax purposes, as a partnership or as a Disregarded Entity and not as an association or publicly traded partnership taxable as a corporation) of which the Partnership is a member or any “taxable REIT subsidiary” (within the meaning of the Code) of GTJ REIT in which the Partnership owns shares of stock, unless the ownership of shares of stock of a corporation or other entity (other than a “taxable REIT subsidiary”) will not jeopardize GTJ REIT’s status as a REIT or any GTJ REIT Affiliate’s status as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), in which event the term “Subsidiary” shall include such corporation or other entity.

 

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“ Substituted Class A Limited Partner ” means a Person who is admitted as a Class A Limited Partner pursuant to the Act and Section 11.4 hereof.

 

“ Substituted Class B Limited Partner ” means a Person who is admitted as a Class B Limited Partner pursuant to the Act and Section 11.4 hereof.

 

“ Substituted Common Limited Partner ” means a Person who is admitted as a Common Limited Partner to the Partnership pursuant to the Act and Section 11.4 hereof.

 

“ Substituted Limited Partner ” means (i) a Substituted Common Limited Partner, (ii) a Substituted Class A Limited Partner; (iii) a Substituted Class B Limited Partner, or (iv) a Person who is admitted as a Limited Partner to the Partnership pursuant to the Act and any Partnership Unit Designation.

 

“ Tax Items ” has the meaning set forth in Section 6.4.A hereof.

 

“ Tendered Class B Units ” has the meaning set forth in Section 16.4.A hereof.

 

“ Tendered Common Units ” has the meaning set forth in Section 15.1.A hereof.

 

“ Termination Event ” has the meaning set forth in Section 11.2.B hereof.

 

“ Transfer ” means any sale, assignment, bequest, conveyance, devise, gift (outright or in trust), Pledge, encumbrance, hypothecation, mortgage, exchange, transfer or other disposition or act of alienation, whether voluntary, involuntary or by operation of law; provided , however , that when the term is used in Article 11 hereof, “Transfer” does not include (a) any Common Redemption by the Partnership or acquisition of Tendered Common Units by GTJ REIT, pursuant to Section 15.1, as applicable,  (b) any Class B Redemption by the Partnership or acquisition of Tendered Class B Units by GTJ REIT, pursuant to Section 16.4, as applicable, or (c)  any redemption of Partnership Units pursuant to any Partnership Unit Designation. The terms “Transferred” and “Transferring” have correlative meanings.

 

“ Valuation Date ” means the date of receipt by the General Partner of (i) a Common Unit Notice of Redemption pursuant to Section 15.1 herein or (ii) such other date as specified herein; provided , in each case, that if such date is not a Business Day, then the Valuation Date shall be the immediately preceding Business Day.

 

“ Value ” means, on any Valuation Date with respect to a REIT Share, the average of the daily Market Prices for ten (10) consecutive trading days immediately preceding the Valuation Date (except that the Market Price for the trading day immediately preceding the date of exercise of a stock option under any Stock Option Plans shall be substituted for such average of daily market prices for purposes of Section 4.4 hereof). The term “Market Price” on any date means, with respect to any class or series of outstanding REIT Shares, the Closing Price for such REIT Shares on such date. The “Closing Price” on any date means the last sale price for such REIT Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such REIT Shares, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on any national securities exchange or, if such REIT Shares are not listed or admitted to

 

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trading on any national securities exchange, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such REIT Shares are listed or admitted to trading or, if such REIT Shares 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 the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such REIT Shares 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 such REIT Shares selected by the Board of Directors or, in the event that no trading price is available for such REIT Shares, the fair market value of the REIT Shares, as determined on a quarterly basis by GTJ REIT’s regularly engaged third-party valuation consultant, and such third-party valuation shall be updated accordingly on the Valuation Date.

 

ARTICLE 2
ORGANIZATIONAL MATTERS

 

Section 2.1                                     Formation .  The Partnership is a limited partnership heretofore formed and continued pursuant to the provisions of the Act and upon the terms and subject to the conditions set forth in this Agreement. Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. The Partnership Interest of each Partner shall be personal property for all purposes.

 

Section 2.2                                     Name .  The name of the Partnership is “GTJ Realty, LP” The Partnership’s business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof; provided, however , that the name of the General Partner (or any Subsidiary thereof) may not include the name (or any derivative thereof) of any Limited Partner without such Limited Partner’s prior written consent. The words “Limited Partnership,” “LP,” “Ltd.” or similar words or letters shall be included in the Partnership’s name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Partners of such change in the next regular communication to the Partners.

 

Section 2.3                                     Principal Office and Resident Agent; Principal Executive Office .  The address of the principal office of the Partnership in the State of Delaware is located at c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808, or such other place within the State of Delaware as the General Partner may from time to time designate, and the resident agent of the Partnership in the State of Delaware is Corporation Service Company, or such other resident of the State of Delaware as the General Partner may from time to time designate. The principal executive office of the Partnership is located at 444 Merrick Road, Suite 370, Lynbrook, New York 11563 or such other place as the General Partner may from time to time designate by notice to the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems advisable.

 

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Section 2.4                                     Power of Attorney .

 

A.                                     Each Limited Partner and Assignee hereby irrevocably constitutes and appoints the General Partner, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to:

 

(1)                                  execute, swear to, seal, acknowledge, deliver, file and record in the appropriate public offices: (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments, supplements or restatements thereof) that the General Partner or the Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability to the extent provided by applicable law) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property; (b) all instruments that the General Partner or any Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (c) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all conveyances and other instruments or documents that the General Partner or the Liquidator deems appropriate or necessary to reflect the distribution or exchange of assets of the Partnership pursuant to the terms of this Agreement; (e) all instruments relating to the admission, acceptance, withdrawal, removal or substitution of any Partner pursuant to the terms of this Agreement or the Capital Contribution of any Partner; and (f) all certificates, documents and other instruments relating to the determination, in accordance with the terms hereof, of the rights, preferences and privileges relating to Partnership Interests; and

 

(2)                                  execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the General Partner or any Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made or given by the Partners hereunder or is consistent with the terms of this Agreement.

 

Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to amend this Agreement except in accordance with Section 14.2 hereof or as may be otherwise expressly provided for in this Agreement.

 

B.                                     The foregoing power of attorney is hereby declared to be irrevocable and a special power coupled with an interest, in recognition of the fact that each of the Limited Partners and Assignees will be relying upon the power of the General Partner or the Liquidator to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee and the Transfer of all or any portion of such Person’s Partnership Units or Partnership Interest (as the case may be) and shall extend to such Person’s heirs, successors, assigns and personal representatives. Each such Limited Partner and Assignee hereby agrees to be bound by any representation made by the General Partner or the Liquidator, acting in good faith pursuant

 

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to such power of attorney; and each such Limited Partner and Assignee hereby waives any and all defenses that may be available to contest, negate or disaffirm the action of the General Partner or the Liquidator, taken in good faith under such power of attorney. Each Limited Partner and Assignee shall execute and deliver to the General Partner or the Liquidator, within fifteen (15) days after receipt of the General Partner’s or the Liquidator’s request therefor, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator (as the case may be) deems necessary to effectuate this Agreement and the purposes of the Partnership. Notwithstanding anything else set forth in this Section 2.4.B, no Limited Partner shall incur any personal liability for any action of the General Partner or the Liquidator taken under such power of attorney.

 

Section 2.5                                     Term .  The term of the Partnership commenced on March 15, 2012, the date that the original Certificate was filed with the SSD in accordance with the Act, and shall continue indefinitely unless the Partnership is dissolved sooner pursuant to the provisions of Article 13 hereof or as otherwise provided by law.

 

ARTICLE 3
PURPOSE

 

Section 3.1                                     Purpose and Business .  The purpose and nature of the Partnership is to conduct any business, enterprise or activity permitted by or under the Act, including, without limitation, (i) to conduct the business of ownership, construction, reconstruction, development, redevelopment, alteration, improvement, maintenance, operation, sale, leasing, transfer, encumbrance, conveyance and exchange of the Properties, (ii) to acquire and invest in any securities and/or loans relating to the Properties, (iii) to enter into any partnership, joint venture, business trust arrangement, limited liability company or other similar arrangement to engage in any business permitted by or under the Act, or to own interests in any entity engaged in any business permitted by or under the Act, (iv) to conduct the business of providing property and asset management and brokerage services, whether directly or through one or more partnerships, joint ventures, Subsidiaries, business trusts, limited liability companies or similar arrangements, and (v) to do anything necessary or incidental to the foregoing.

 

Section 3.2                                     Powers .

 

A.                                     The Partnership shall be empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Partnership including, without limitation, full power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, to borrow and lend money and to issue evidence of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and develop real property and lease, sell, transfer and dispose of real property.

 

B.                                     Notwithstanding any other provision in this Agreement, the Partnership shall not take, or to refrain from taking, any action that, in the judgment of GTJ REIT, in its sole and absolute discretion, (i) could adversely affect the ability of GTJ REIT to continue to qualify as a REIT, (ii) could subject the General Partner to any taxes under Code Section 857 or Code

 

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Section 4981 or any other related or successor provision under the Code, or (iii) could violate any law or regulation of any governmental body or agency having jurisdiction over the General Partner, its securities or the Partnership, unless, in any such case, such action (or inaction) under clause (i), clause (ii), or clause (iii) above shall have been specifically consented to by the General Partner which consent may be given or withheld in its sole and absolute discretion.

 

Section 3.3                                     Partnership Only for Purposes Specified .  The Partnership shall be a limited partnership only for the purposes specified in Section 3.1 hereof, and this Agreement shall not be deemed to create a company, venture or partnership between or among the Partners or any other Persons with respect to any activities whatsoever other than the activities within the purposes of the Partnership as specified in Section 3.1 hereof. Except as otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act.

 

Section 3.4                                     Representations and Warranties by the Partners .

 

A.                                     Each Partner that is an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to, and covenants with (severally, and not jointly or jointly and severally with any other Person), each other Partner that (i) the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any material agreement by which such Partner or any of such Partner’s property is bound, or any statute, regulation, order or other law to which such Partner is subject, (ii) if five percent (5%) or more (by value) of the Partnership’s interests are or will be owned by such Partner within the meaning of Code Section 7704(d)(3), such Partner does not, and for so long as it is a Partner will not, own, directly or indirectly, (a) stock of any corporation that is a tenant of (I) the General Partner or any Disregarded Entity with respect to the General Partner, (II) the Partnership or (III) any partnership, venture or limited liability company of which the General Partner, any Disregarded Entity with respect to the General Partner, or the Partnership is a direct or indirect member or (b) an interest in the assets or net profits of any non-corporate tenant of (I) the General Partner or any Disregarded Entity with respect to the General Partner, (II) the Partnership or (III) any partnership, venture, or limited liability company of which the General Partner, any Disregarded Entity with respect to the General Partner, or the Partnership is a direct or indirect member, (iii) such Partner has the legal capacity to enter into this Agreement and perform such Partner’s obligations hereunder, and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms, as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity and the discretion of the court before which any proceeding therefor may be brought. Notwithstanding the foregoing, a Partner that is an individual shall not be subject to the ownership restrictions set

 

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forth in clause (ii) of the immediately preceding sentence to the extent such Partner obtains the written consent of the General Partner prior to violating any such restrictions, which consent the General Partner may give or withhold in its sole and absolute discretion. Each Partner that is an individual shall also represent and warrant to the Partnership that such Partner is neither a “foreign person” within the meaning of Code Section 1445(f) nor a foreign partner within the meaning of Code Section 1446(e).

 

B.                                     Each Partner that is not an individual (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or a Substituted Limited Partner) represents and warrants to, and covenants with (severally, and not jointly or jointly and severally with any other Person), each other Partner that (i) the consummation of the transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including, without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s) (as the case may be) as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws (as the case may be) any material agreement by which such Partner or any of such Partner’s properties or any of its partners, members, beneficiaries, trustees or stockholders (as the case may be) is or are bound, or any statute, regulation, order or other law to which such Partner or any of its partners, members, trustees, beneficiaries or stockholders (as the case may be) is or are subject, (iii) if five percent (5%) or more (by value) of the Partnership’s interests are or will be owned by such Partner within the meaning of Code Section 7704(d)(3), such Partner does not, and for so long as it is a Partner will not, own, directly or indirectly, (a) stock of any corporation that is a tenant of (I) the General Partner or any Disregarded Entity with respect to the General Partner, (II) the Partnership or (III) any partnership, venture or limited liability company of which the General Partner, any General Partner, any Disregarded Entity with respect to the General Partner, or the Partnership is a direct or indirect member or (b) an interest in the assets or net profits of any non-corporate tenant of (I) the General Partner, or any Disregarded Entity with respect to the General Partner, (II) the Partnership or (III) any partnership, venture or limited liability company for which the General Partner, any General Partner, any Disregarded Entity with respect to the General Partner, or the Partnership is a direct or indirect member, and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms, as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity and the discretion of the court before which any proceeding therefor may be brought. Notwithstanding the foregoing, a Partner that is not an individual shall not be subject to the ownership restrictions set forth in clause (iii) of the immediately preceding sentence to the extent such Partner obtains the written consent of the General Partner prior to violating any such restrictions, which consent the General Partner may give or withhold in its sole and absolute discretion. Each Partner that is not an individual shall also represent and warrant to the Partnership that such Partner is neither a “foreign person” within the meaning of Code Section 1445(f) nor a foreign partner within the meaning of Code Section 1446(e).

 

C.                                     Each Partner (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner) represents, warrants and agrees that (i) it has acquired and continues

 

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to hold its interest in the Partnership for its own account for investment purposes only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof in violation of applicable laws, and not with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances in violation of applicable laws, (ii) it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment, and (iii) without the consent of the General Partner, which consent may be given or withheld in the General Partner’s sole discretion, it shall not take any action that would cause (a) the Partnership at any time to have more than 100 partners, including for these purposes as partners those Persons (“ Flow-Through Partners ”) indirectly owning an interest in the Partnership through an entity treated as a partnership, Disregarded Entity or S corporation (each such entity, a “ Flow-Through Entity ”), but only if substantially all of the value of such Person’s interest in the Flow-Through Entity is attributable to the Flow-Through Entity’s interest (direct or indirect) in the Partnership; or (b) the Partnership Interest initially issued by the Partnership to such Partner or its predecessors to be held by more than three (3) partners, including as partners any Flow-Through Partners.

 

D.                                     The representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C hereof shall survive the execution and delivery of this Agreement by each Partner (and, in the case of an Additional Limited Partner or a Substituted Limited Partner, the admission of such Additional Limited Partner or Substituted Limited Partner as a Limited Partner in the Partnership) and the dissolution, liquidation and termination of the Partnership.

 

E.                                      Each Partner (including, without limitation, each Additional Limited Partner or Substituted Limited Partner as a condition to becoming an Additional Limited Partner or Substituted Limited Partner) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership or the General Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, that may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied.

 

F.                                       Notwithstanding the foregoing, the General Partner may, in its sole and absolute discretion and subject to Section 7.3 (D) below, permit the modification of any of the representations and warranties contained in Sections 3.4.A, 3.4.B and 3.4.C above as applicable to any Partner (including, without limitation any Additional Limited Partner or Substituted Limited Partner or any transferee of either), provided that such representations and warranties, as modified, shall (x) be set forth in either (i) a Partnership Unit Designation applicable to the Partnership Units held by such Partner or (ii) a separate writing addressed to the Partnership and the General Partner and (y) not adversely affect the taxable status of GTJ REIT as a real estate investment trust.

 

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ARTICLE 4
CAPITAL CONTRIBUTIONS

 

Section 4.1                                     Capital Contributions of the Partners .  The Partners have heretofore made Capital Contributions to the Partnership. Each Partner owns Partnership Units in the amount set forth for such Partner on Exhibit A , as the same may be amended from time to time by the General Partner to the extent necessary to reflect accurately sales, exchanges or other Transfers, redemptions, Capital Contributions, the issuance of additional Partnership Units, or similar events having an effect on a Partner’s ownership of Partnership Units. Except as provided by law or in Section 4.2, 4.3, or 10.4 hereof, the Partners shall have no obligation or, except with the prior written consent of the General Partner, right to make any additional Capital Contributions or loans to the Partnership.

 

Section 4.2                                     Issuances of Additional Partnership Interests .  Subject to the rights of any Holder of other Partnership Units set forth in a Partnership Unit Designation:

 

A.                                     General . In conjunction with the following events, the General Partner is hereby authorized to cause the Partnership to issue additional Partnership Interests, in the form of Partnership Units, at any time or from time to time, to the Partners (including the General Partner) or to other Persons, and to admit such Persons as Additional Limited Partners, for fair market value and on such terms and conditions as shall be established by the General Partner so long as the General Partner concludes in good faith that such issuance is in the best interests of the General Partner, GTJ REIT and the Partnership: (i) the conversion, redemption or exchange of any Debt, Partnership Units, or other securities issued by the Partnership pursuant to this Agreement; or (ii) any merger of any other Person into the Partnership in accordance with this Agreement.  Any additional Partnership Interests may be issued in one or more classes, or one or more series of any of such classes, with such designations, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption (including, without limitation, terms that may be senior or otherwise entitled to preference over existing Partnership Units) as shall be determined by the General Partner in good faith to be in the best interest of the General Partner, GTJ REIT and the Partnership, and set forth in a written document thereafter attached to and made an exhibit to this Agreement, which exhibit shall be an amendment to this Agreement and shall be incorporated herein by this reference (each, a “ Partnership Unit Designation ”). Without limiting the generality of the foregoing, the General Partner shall have authority to specify: (a) the allocations of items of Partnership income, gain, loss, deduction and credit to each such class or series of Partnership Interests; (b) the right of each such class or series of Partnership Interests to share (on a pari passu , junior or preferred basis) in Partnership distributions; (c) the rights of each such class or series of Partnership Interests upon dissolution and liquidation of the Partnership; (d) the voting rights, if any, of each such class or series of Partnership Interests; and (e) the conversion, redemption or exchange rights applicable to each such class or series of Partnership Interests. Upon the issuance of any additional Partnership Interest, the General Partner shall amend Exhibit A and the books and records of the Partnership as appropriate to reflect such issuance.

 

B.                                     Issuances to the General Partner . No additional Partnership Units shall be issued to the General Partner or GTJ REIT unless (i) the additional Partnership Units are issued to all Partners in proportion to their respective Percentage Interests, (ii) (a) the additional Partnership

 

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Units are Common Units issued in connection with an issuance of REIT Shares, and (b) the General Partner contributes to the Partnership the cash proceeds or other consideration received in connection with the issuance of such REIT Shares, Preferred Shares, New Securities or other interests in the General Partner, (iii) the additional Partnership Units are issued upon the conversion, redemption or exchange of Debt, Partnership Units or other securities issued by the Partnership, or (iv) the additional Partnership Units are issued pursuant to Section 4.3.B, Section 4.3.E, Section 4.4 or Section 4.5.

 

C.                                     No Preemptive Rights . No Person, including, without limitation, any Partner or Assignee, shall have any preemptive, preferential, participation or similar right or rights to subscribe for or acquire any Partnership Interest.

 

Section 4.3                                     Additional Funds and Capital Contributions .

 

A.                                     General . The General Partner may, at any time and from time to time, determine that the Partnership requires additional funds (“ Additional Funds ”) for the acquisition or development of additional Properties, for the redemption of Partnership Units or for such other purposes of the Partnership as the General Partner may determine, in its sole and absolute discretion. Additional Funds may be obtained by the Partnership, at the election of the General Partner, in any manner provided in, and in accordance with, the terms of this Section 4.3 without the approval of any Limited Partner or any other Person.

 

B.                                     Additional Capital Contributions . The General Partner, on behalf of the Partnership, may obtain any Additional Funds by accepting Capital Contributions from any Partners or other Persons. In connection with any such Capital Contribution (of cash or property), the General Partner is hereby authorized to cause the Partnership from time to time to issue additional Partnership Units (as set forth in Section 4.2 above) in consideration therefor and the Percentage Interests of the General Partner and the Limited Partners shall be adjusted to reflect the issuance of such additional Partnership Units.

 

C.                                     Loans by Third Parties . The General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to any Person (other than the General Partner) upon such terms as the General Partner determines appropriate, including making such Debt convertible, redeemable or exchangeable for Partnership Units or REIT Shares; provided , however , that the Partnership shall not incur any such Debt if any Partner (or any Affiliate, partner, member, stockholder, principal, director, officer, adviser, beneficiary or trustee of any Partner) would be personally liable for the repayment of such Debt (unless such Partner or other affected Person otherwise agrees in writing).

 

D.                                     General Partner Loans . The General Partner, on behalf of the Partnership, may obtain any Additional Funds by causing the Partnership to incur Debt to the General Partner (a “ General Partner Loan ”) if (i) such Debt is, to the extent permitted by law, on substantially the same terms and conditions (including interest rate, repayment schedule, and conversion, redemption, repurchase and exchange rights) as Funding Debt incurred by the General Partner, the net proceeds of which are loaned to the Partnership to provide such Additional Funds, or (ii) such Debt is on terms and conditions no less favorable to the Partnership than would be available to the Partnership from any third party; provided , however , that the Partnership shall not incur

 

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any such Debt if (a) any Partner (or any Affiliate, partner, member, stockholder, principal, director, officer, adviser, beneficiary or trustee of any Partner) would be personally liable for the repayment of such Debt (unless such Partner or other affected Person otherwise agrees in writing) or (b) a breach or violation of, or default under, the terms of such Debt would be deemed to occur by virtue of the Transfer of any Partnership Units or Partnership Interest held by any Person other than the General Partner.

 

E.                                      Issuance of Securities by GTJ REIT . The GTJ REIT shall not issue any additional REIT Shares, Capital Shares or New Securities unless GTJ REIT contributes the cash proceeds or other consideration received from the issuance of such additional REIT Shares, Capital Shares or New Securities (as the case may be) and from the exercise of the rights contained in any such additional Capital Shares or New Securities to the Partnership in exchange for (x) in the case of an issuance of REIT Shares, Common Units, or (y) in the case of an issuance of Capital Shares or New Securities, Partnership Equivalent Units; provided , however , that notwithstanding the foregoing, GTJ REIT may issue REIT Shares, Capital Shares or New Securities (a) pursuant to Section 4.4 or Section 15.1.B hereof, (b) pursuant to a dividend or distribution (including any stock split) of REIT Shares, Capital Shares or New Securities to all of the holders of REIT Shares, Capital Shares or New Securities (as the case may be), (c) upon a conversion, redemption or exchange of Capital Shares, (d) upon a conversion, redemption, exchange or exercise of New Securities, or (e) in connection with an acquisition of Partnership Units or a property or other asset to be owned, directly or indirectly, by the General Partner if the General Partner determines that such acquisition is in the best interests of the Partnership; and provided , further , that in the event that GTJ REIT issues REIT Shares, Capital Shares or New Securities pursuant to the foregoing clauses (c) or (d), GTJ REIT shall contribute to the Partnership the cash proceeds or other consideration received from such issuance (or property acquired with such proceeds). In the event of any issuance of additional REIT Shares, Capital Shares or New Securities by GTJ REIT, and the contribution to the Partnership, by GTJ REIT, of the cash proceeds or other consideration received from such issuance (or property acquired with such proceeds), if the cash proceeds actually received by GTJ REIT are less than the gross proceeds of such issuance as a result of any underwriter’s discount or other expenses paid or incurred in connection with such issuance, then GTJ REIT shall be deemed to have made a Capital Contribution to the Partnership in the amount equal to the sum of the cash proceeds of such issuance plus the amount of such underwriter’s discount and other expenses paid by GTJ REIT (which discount and expense shall be treated as an expense for the benefit of the Partnership for purposes of Section 7.4).

 

Section 4.4                                     Stock Option Plans .

 

A.                                     Options Granted to Persons other than Partnership Employees . If at any time or from time to time, in connection with any Stock Option Plan, a stock option granted for stock in GTJ REIT to a Person is duly exercised:

 

(1)                                  The GTJ REIT, shall, as soon as practicable after such exercise, make a Capital Contribution to the Partnership in an amount equal to the exercise price paid to GTJ REIT by such exercising party in connection with the exercise of such stock option.

 

(2)                                  Notwithstanding the amount of the Capital Contribution actually made pursuant to Section 4.4.A(1) hereof, GTJ REIT shall be deemed to have contributed to the Partnership as a

 

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Capital Contribution, in lieu of the Capital Contribution actually made and in consideration of an additional Limited Partner Interest (expressed in and as additional Common Units), an amount equal to the Value of a REIT Share as of the date of exercise multiplied by the number of REIT Shares then being issued in connection with the exercise of such stock option.

 

(3)                                  An equitable Percentage Interest adjustment shall be made in which GTJ REIT shall be treated as having made a cash contribution equal to the amount described in Section 4.4.A(2) hereof.

 

B.                                     Stock Incentive Plans . GTJ REIT may not increase the number of its shares subject to the 2007 Incentive Plan, or adopt any new stock incentive plan for the benefit of employees, directors or other business associates of the General Partner, GTJ REIT or the Partnership, without the approval of the stockholders of GTJ REIT. The Partners acknowledge and agree that, in the event that any such plan is adopted, modified or terminated by GTJ REIT, amendments to this Section 4.4 may become necessary or advisable and that any approval or Consent to any such amendments requested by GTJ REIT shall be deemed granted by the Limited Partners.

 

Section 4.5                                     Dividend Reinvestment Plan, Cash Option Purchase Plan, Stock Incentive Plan or Other Plan .  Except as may otherwise be provided in this Article 4, all amounts received or deemed received by GTJ REIT in respect of any dividend reinvestment plan, cash option purchase plan, stock incentive or other stock or subscription plan or agreement, either (a) shall be utilized by GTJ REIT to effect open market purchases of REIT Shares, or (b) if GTJ REIT elects instead to issue new REIT Shares with respect to such amounts, shall be contributed by GTJ REIT to the Partnership in exchange for additional Class A Units. Upon such contribution, the Partnership will issue to GTJ REIT a number of Class A Units equal in value to the product of (i) the Value as of the date of issuance of each REIT Share so issued by GTJ REIT multiplied by (ii) the number of REIT Shares so issued.

 

Section 4.6                                     No Interest; No Return .  No Partner shall be entitled to interest on its Capital Contribution or on such Partner’s Capital Account. Except as provided herein or by law, no Partner shall have any right to demand or receive the return of its Capital Contribution from the Partnership.

 

Section 4.7                                     Conversion or Redemption of Capital Shares .

 

A.                                     Conversion of Capital Shares . If, at any time, any of the Capital Shares are converted into REIT Shares, in whole or in part, then a number of Partnership Units with preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption that are substantially the same as the preferences, conversion and other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption of such Capital Shares (“ Partnership Equivalent Units ”) equal to the number of Capital Shares so converted shall automatically be converted into a number of Common Units equal to (i) the number of REIT Shares issued upon such conversion divided by (ii) the Adjustment Factor then in effect. The Percentage Interests of the General Partner and the Limited Partners shall be adjusted to reflect such conversion.

 

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B.                                     Redemption of Capital Shares or REIT Shares . If, at any time, any Capital Shares are redeemed (whether by exercise of a put or call, automatically or by means of another arrangement) by GTJ REIT for cash, the Partnership shall, immediately prior to such redemption of Capital Shares, redeem an equal number of Partnership Equivalent Units held by GTJ REIT upon the same terms and for the same price per Partnership Equivalent Unit as such Capital Shares are redeemed. If, at any time, any REIT Shares are redeemed or otherwise repurchased by GTJ REIT for cash pursuant to Article 5 of the Charter, the Partnership shall, immediately prior to such redemption of REIT Shares, redeem an equal number of Common Units held by GTJ REIT upon the same terms and for the same price per Common Unit as such REIT Shares are redeemed.

 

ARTICLE 5
DISTRIBUTIONS

 

Section 5.1                                     Requirement and Characterization of Distributions .  Subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, the General Partner shall cause the Partnership to distribute quarterly all, or such portion as the General Partner may in its sole and absolute discretion determine, of Available Cash generated by the Partnership during such quarter to the Holders on the Partnership Record Date with respect to such quarter pro rata in proportion to their respective Percentage Interests.

 

Distributions payable with respect to any Partnership Units that were not outstanding during the entire quarterly period in respect of which any distribution is made, other than any Partnership Units issued to GTJ REIT in connection with the issuance of REIT Shares by GTJ REIT, shall be prorated based on the portion of the period that such Partnership Units were outstanding. Notwithstanding the foregoing, the General Partner, in its sole and absolute discretion, may cause the Partnership to distribute Available Cash to the Holders on a more or less frequent basis than quarterly and provide for an appropriate record date. The General Partner shall make such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with GTJ REIT’s qualification as a REIT, to cause the Partnership to distribute sufficient amounts to enable the General Partner, for so long as GTJ REIT has determined to qualify as a REIT, to pay stockholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the Code and Regulations (the “ REIT Requirements ”) and (b) except to the extent otherwise determined by the General Partner, eliminate any Federal income or excise tax liability of the General Partner.

 

Section 5.2                                     Distributions in Kind .  Except as expressly provided herein, no right is given to any Holder to demand and receive property other than cash as provided in this Agreement. The General Partner may determine, in its sole and absolute discretion, to make a distribution in kind of Partnership assets to the Holders, and such assets shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5, 6 and 10 hereof; provided , however , that the General Partner shall not make a distribution in kind to any Holder unless the Holder has been given 90 days prior written notice of such distribution.

 

Section 5.3                                     Amounts Withheld .  All amounts withheld pursuant to the Code or any provisions of any state, local or non-United States tax law and Section 10.4 hereof with respect

 

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to any allocation, payment or distribution to any Holder shall be treated as amounts paid or distributed to such Holder pursuant to Section 5.1 hereof for all purposes under this Agreement.

 

Section 5.4                                     Distributions Upon Liquidation .  Notwithstanding the other provisions of this Article 5, net proceeds from a Termination Event, and any other cash received or reductions in reserves made after commencement of the liquidation of the Partnership, shall be distributed to the Holders in accordance with Section 13.2 hereof.

 

Section 5.5                                     Distributions to Reflect Additional Partnership Units .  In the event that the Partnership issues additional Partnership Units pursuant to the provisions of Article 4 hereof, the General Partner is hereby authorized to make such revisions to Articles 5, 6 and 12 hereof as it determines are necessary or desirable to reflect the issuance of such additional Partnership Units, including, without limitation, making preferential distributions to certain classes of Partnership Units.

 

Section 5.6                                     Restricted Distributions .  Notwithstanding any provision to the contrary contained in this Agreement, neither the Partnership nor the General Partner, on behalf of the Partnership, shall make a distribution to any Holder if such distribution would violate the Act or other applicable law.

 

Section 5.7                                     M&T Line of Credit and Prohibition on Future REIT Borrowings .  The Partners acknowledge and agree that (i) the closing adjustments due under Sections 5.2 (h), 5.2 (i) and 5.5 of the Contribution Agreement in the aggregate amount of approximately $8,000,000 (collectively, the “ Partnership Closing Obligation Amount ”) are the responsibility of the Partnership and that in order to pay for the same, the General Partner has borrowed the Partnership Closing Obligation Amount from the M&T Line of Credit and (ii) the debt service for that portion of the M&T Credit Line and repayment of the same shall be the responsibility of the Partnership.  The General Partner and GTJ REIT acknowledge and agree that (i) to the extent GTJ M&T Debt exists as of the date hereof, the debt service for GTJ M&T Debt and repayment of the same shall be the sole responsibility of GTJ REIT; and (ii) from and after the date hereof, GTJ REIT and the General Partner shall be prohibited from incurring Debt (including, without limitation, further borrowings under the M&T Line of Credit) unless such borrowings are by the General Partner, on behalf of the Partnership, and in such event, the repayment of any such borrowings shall be the sole responsibility of the Partnership.  In the event GTJ REIT requires additional funds, the Partnership or General Partner, on behalf of the Partnership, may incur Debt provided the net proceeds of the same are distributed to the Holders on the Partnership Record Date pro rata in proportion to their respective Percentage Interests.

 

ARTICLE 6
ALLOCATIONS

 

Section 6.1                                     Timing and Amount of Allocations of Net Income and Net Loss .  Net Income and Net Loss of the Partnership shall be determined and allocated with respect to each Partnership Year as of the end of each such year, provided , that the General Partner may in its discretion allocate Net Income and Net Loss for a shorter period as of the end of such period (and, for purposes of this Article 6, references to the term “Partnership Year” may include such shorter periods). Except to the extent otherwise provided in this Article 6, and subject to Section

 

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11.6.C hereof, an allocation to a Holder of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss.

 

Section 6.2                                     Allocations of Net Income and Net Loss .

 

A.                                     In General . Except as otherwise provided in this Article 6 and Section 11.6.C, Net Income and Net Loss allocable with respect to a class of Partnership Interests shall be allocated to each of the Holders in accordance with their respective Percentage Interests.

 

B.                                     Net Income . Except as provided in Sections 6.2.E, 6.2.F and 6.3, Net Income for any Partnership Year shall be allocated in the following manner and order of priority:

 

(i)                                      First, 100% to the General Partner in an amount equal to the remainder, if any, of the cumulative Net Losses allocated to the General Partner pursuant to clause (iii) in Section 6.2.C for all prior Partnership Years minus the cumulative Net Income allocated to the General Partner pursuant to this clause (i) for all prior Partnership Years;

 

(ii)                                   Second, 100% to each Holder in an amount equal to the remainder, if any, of the cumulative Net Losses allocated to each such Holder pursuant to clause (ii) in Section 6.2.C for all prior Partnership Years minus the cumulative Net Income allocated to such Holder pursuant to this clause (ii) for all prior Partnership Years;

 

(iii)                                Third, 100% to each Holder in an amount equal to the remainder, if any, of the cumulative Net Losses allocated to each such Holder pursuant to clause (i) in Section 6.2.C for all prior Partnership Years minus the cumulative Net Income allocated to each Holder pursuant to this clause (iii) for all prior Partnership Years; and

 

(iv)                               Four th, 100% to the Holders of Partnership Units in accordance with their respective Percentage Interests.

 

To the extent the allocations of Net Income set forth above in any paragraph of this Section 6.2.B are not sufficient to entirely satisfy the allocation set forth in such paragraph, such allocation shall be made in proportion to the total amount that would have been allocated pursuant to such paragraph without regard to such shortfall.

 

C.                                     Net Loss . Except as provided in Sections 6.2.E, 6.2.F and 6.3, Net Losses for any Partnership Year shall be allocated in the following manner and order of priority:

 

(i)                                      First, 100% to the Holders in accordance with their respective Percentage Interests (to the extent consistent with this clause (i)) until the Adjusted Capital Account of all such Holders is zero;

 

(ii)                                   Second, 100% to the Holders to the extent of, and in proportion to, the positive balance (if any) in their Adjusted Capital Accounts; and

 

(iii)                                Third , 100% to the General Partner.

 

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D.                                     Allocations to Reflect Issuance of Additional Partnership Interests . In the event that the Partnership issues additional Partnership Interests to the General Partner or any Additional Limited Partner pursuant to Section 4.2 or 4.3, the General Partner shall make such revisions to this Section 6.2 or to Section 12.2.C or 13.2.A as it determines are necessary to reflect the terms of the issuance of such additional Partnership Interests, including making preferential allocations to certain classes of Partnership Interests, subject to Article 16 below and the terms of any Partnership Unit Designation with respect to Partnership Interests then outstanding.

 

E.                                      Special Allocations Upon Liquidation . Notwithstanding any provision in this Article 6 to the contrary but subject to Section 6.3, in the event that the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Partnership pursuant to Article 13 hereof, then any Net Income or Net Loss realized in connection with such transaction and thereafter (and, in the discretion of the General Partner, constituent items of income, gain, loss and deduction) shall be specially allocated for such Partnership Year (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding Partnership Year) among the Holders as required so as to cause liquidating distributions pursuant to Section 13.2.A hereof to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article 5 hereof.

 

F.                                       Offsetting Allocations . Notwithstanding the provisions of Sections 6.1, 6.2.B and 6.2.C, but subject to Sections 6.3 and 6.4, in the event Net Income or items thereof are being allocated to a Partner to offset prior Net Loss or items thereof which have been allocated to such Partner, the General Partner shall attempt to allocate such offsetting Net Income or items thereof which are of the same or similar character (including without limitation Section 704(b) book items versus tax items) to the original allocations with respect to such Partner.

 

Section 6.3                                     Additional Allocation Provisions .  Notwithstanding the foregoing provisions of this Article 6:

 

A.                                     Regulatory Allocations .

 

(i)                                      Minimum Gain Chargeback . Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2 hereof, or any other provision of this Article 6, if there is a net decrease in Partnership Minimum Gain during any Partnership Year, each Holder shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder’s share of the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3.A(i) is intended to qualify as a “minimum gain chargeback” within the meaning of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.  Regulation Section 1.704-2(f) shall be controlling in the event of a conflict between such Regulation and this Section 6.3A(i).

 

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(ii)           Partner Minimum Gain Chargeback . Except as otherwise provided in Regulations Section 1.704-2(i)(4) or in Section 6.3.A(i) hereof, if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership Year, each Holder who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Holder’s share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Holder pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.A(ii) is intended to qualify as a “chargeback of partner nonrecourse debt minimum gain” within the meaning of Regulations Section 1.704-2(i) and shall be interpreted consistently therewith. Regulation Section 1.704-2(i) shall be controlling in the event of a conflict between such Regulation and this Section 6.3A(ii).

 

(iii)          Nonrecourse Deductions and Partner Nonrecourse Deductions . Any Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Holders in accordance with their respective Percentage Interests with respect to Common Units. Any Partner Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Holder(s) who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable, in accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).

 

(iv)          Qualified Income Offset . If any Holder unexpectedly receives an adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated, in accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient to eliminate, to the extent required by such Regulations, the Adjusted Capital Account Deficit of such Holder as quickly as possible; provided , that an allocation pursuant to this Section 6.3.A(iv) shall be made if and only to the extent that such Holder would have an Adjusted Capital Account Deficit after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3.A(iv) were not in the Agreement. It is intended that this Section 6.3.A(iv) qualify and be construed as a “qualified income offset” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. Regulation Section 1.704-1(b)(2)(ii)(d) shall be controlling in the event of a conflict between such Regulation and this Section 6.3A(iv).

 

(v)           Gross Income Allocation . In the event that any Holder has a deficit Capital Account at the end of any Partnership Year that is in excess of the sum of (1) the amount (if any) that such Holder is obligated to restore to the Partnership upon complete liquidation of such Holder’s Partnership Interest and (2) the amount that such Holder is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be specially allocated items of Partnership income and gain in the amount of such excess to eliminate such deficit as quickly as possible; provided , that an allocation pursuant to this Section 6.3.A(v) shall be made if and only to the extent that such Holder would have a deficit Capital Account in

 

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excess of such sum after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3.A(v) and Section 6.3.A(iv) hereof were not in the Agreement.

 

(vi)          Limitation on Allocation of Net Loss . To the extent that any allocation of Net Loss would cause or increase an Adjusted Capital Account Deficit as to any Holder, such allocation of Net Loss shall be reallocated (x) first, among the other Holders of Common Units in accordance with their respective Percentage Interests with respect to Common Units and (y) thereafter, among the Holders of other classes of Partnership Units as determined by the General Partner, subject to the limitations of this Section 6.3.A(vi).

 

(vii)         Section 754 Adjustment . To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Holder in complete liquidation of its interest in the Partnership, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Holders in accordance with their interests in the Partnership in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Holder(s) to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

 

(viii)        Curative Allocations . The allocations set forth in Sections 6.3.A(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the “ Regulatory Allocations ”) are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Sections 6.1 and 6.2 hereof, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Holders so that to the extent possible without violating the requirements giving rise to the Regulatory Allocations, the net amount of such allocations of other items and the Regulatory Allocations to each Holder shall be equal to the net amount that would have been allocated to each such Holder if the Regulatory Allocations had not occurred.

 

B.            Allocation of Excess Nonrecourse Liabilities . For purposes of determining a Holder’s proportional share of the “excess nonrecourse liabilities” of the Partnership within the meaning of Regulations Section 1.752-3(a)(3), each Holder’s respective interest in Partnership profits shall be equal to such Holder’s Percentage Interest with respect to Common Units, except as otherwise determined by the General Partner.

 

Section 6.4            Tax Allocations .

 

A.            In General . Except as otherwise provided in this Section 6.4, for income tax purposes under the Code and the Regulations, each Partnership item of income, gain, loss and deduction (collectively, “ Tax Items ”) shall be allocated among the Holders in the same manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to Sections 6.2 and 6.3 hereof.

 

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B.            Section 704(c) Allocations . Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that is contributed to the Partnership with a Gross Asset Value that varies from its adjusted tax basis in the hands of the contributing Partner immediately preceding the date of contribution shall be allocated among the Holders for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take into account such variation. With respect to Partnership property that is initially contributed to the Partnership upon its formation pursuant to Section 4.1, such variation between adjusted tax basis and initial Gross Asset Value shall be taken into account under the “traditional method with curative allocations” as described in Regulation Section 1.704-3(c).  With respect to properties subsequently contributed to the Partnership, the Partnership shall account for such variation under any method approved under Section 704(c) of the Code and applicable regulations as chosen by the General Partner. In the event that the Gross Asset Value of any Partnership asset is adjusted pursuant to subsection (b) of the definition of “Gross Asset Value” (provided in Article 1 hereof), subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted tax basis of such asset and its Gross Asset Value in the same manner as under Code Section 704(c) and the applicable Regulations and using any allowable method as chosen by the General Partner. Allocations pursuant to this Section 6.4.B are solely for purposes of Federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Partner’s Capital Account or share of Net Income, Net Loss, or any other items or distributions pursuant to any provision of this Agreement.

 

ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS

 

Section 7.1            Management .

 

A.            Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner shall have any right or obligation to participate in or exercise control or management power over the business and affairs of the Partnership, or any liability in connection with the General Partner’s exercise of such control and management power. The General Partner may not be removed by the Partners, with or without cause, except with the consent of the General Partner.

 

In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or that are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including, without limitation, Section 3.1, Section 3.2, and Section 7.3, shall have full and exclusive power and authority, without the consent or approval of any Limited Partner, to do all things deemed necessary or desirable by it to conduct the business of the Partnership, to exercise or direct the exercise of all of the powers of the Partnership under the Act and this Agreement and to effectuate the purposes set forth in Section 3.1 hereof, including, without limitation:

 

(1)           the making of any expenditures of Partnership funds (including, without limitation, payments to GTJ REIT for expenses associated with the furtherance of the business of the Partnership and permitted under this Agreement or to satisfy GTJ REIT’s obligations under securities laws, rules and regulations), the lending or borrowing of money or selling of assets

 

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(including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to the Holders in such amounts as will permit the General Partner (so long as GTJ REIT qualifies as a REIT) to prevent the imposition of any Federal income tax on GTJ REIT (including, for this purpose, any excise tax pursuant to Code Section 4981) and to make distributions to stockholders of GTJ REIT sufficient to permit GTJ REIT to maintain REIT status or otherwise to satisfy the REIT Requirements), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness (including the securing of same by deed to secure debt, mortgage, deed of trust or other lien or encumbrance on the Partnership’s assets) and the incurring of any obligations that the General Partner deems necessary for the conduct of the activities of the Partnership;

 

(2)           the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership;

 

(3)           the taking of any and all acts necessary or prudent to ensure that the Partnership will not be classified as a “publicly traded partnership” taxable as a corporation under Code Section 7704;

 

(4)           subject to Section 11.2 hereof, the acquisition, sale, transfer, exchange or other disposition of any, all or substantially all of the assets (including the goodwill) of the Partnership (including, but not limited to, the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Partnership) or the merger, consolidation, reorganization or other combination of the Partnership with or into another entity;

 

(5)           the mortgage, pledge, encumbrance or hypothecation of any assets of the Partnership, the assignment of any assets of the Partnership in trust for creditors or on the promise of the assignee to pay the debts of the Partnership, the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms that the General Partner sees fit, including, without limitation, the financing of the operations and activities of the General Partner, the Partnership or any of the Partnership’s Subsidiaries, the lending of funds to other Persons (including, without limitation, the General Partner and/or the Partnership’s Subsidiaries) and the repayment of obligations of the Partnership, its Subsidiaries and any other Person in which the Partnership has an equity investment, and the making of capital contributions to and equity investments in the Partnership’s Subsidiaries;

 

(6)           the management, operation, leasing, landscaping, repair, alteration, demolition, replacement or improvement of any Property or assets;

 

(7)           the negotiation, execution and performance of any contracts, including leases (including ground leases), easements, management agreements, rights of way and other property-related agreements, conveyances or other instruments that the General Partner considers useful or necessary to the conduct of the Partnership’s operations or the implementation of the General Partner’s powers under this Agreement, including contracting with contractors, developers,

 

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consultants, governmental authorities, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation, as applicable, out of the Partnership’s assets;

 

(8)           the distribution of Partnership cash or other Partnership assets in accordance with this Agreement, the holding, management, investment and reinvestment of cash and other assets of the Partnership, and the collection and receipt of revenues, rents and income of the Partnership;

 

(9)           the selection and dismissal of employees of the Partnership (if any) or the General Partner (including, without limitation, employees having titles or offices such as “president,” “vice president,” “secretary” and “treasurer”), and agents, outside attorneys, accountants, consultants and contractors of the Partnership or the General Partner and the determination of their compensation and other terms of employment or hiring;

 

(10)         the maintenance of such insurance (including, without limitation, directors and officers insurance) for the benefit of the Partnership and the Partners (including, without limitation, the General Partner) as the General Partner deems necessary or appropriate;

 

(11)         the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general partnerships, limited liability companies, joint ventures or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, any Subsidiary and any other Person in which the General Partner has an equity investment from time to time); provided , however , that, as long as GTJ REIT has determined to continue to qualify as a REIT, the Partnership will not engage in any such formation, acquisition or contribution that would cause GTJ REIT to fail to qualify as a REIT within the meaning of Section 856(a) of the Code;

 

(12)         the control of any matters affecting the rights and obligations of the Partnership, including the settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment, of any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, and the representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of legal expense, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

 

(13)         the undertaking of any action in connection with the Partnership’s direct or indirect investment in any Subsidiary or any other Person (including, without limitation, the contribution or loan of funds by the Partnership to such Persons);

 

(14)         the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of valuation as the General Partner may adopt; provided , however , that such methods are otherwise consistent with the requirements of this Agreement;

 

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(15)         the enforcement of any rights against any Partner pursuant to representations, warranties, covenants and indemnities relating to such Partner’s contribution of property or assets to the Partnership;

 

(16)         the exercise, directly or indirectly, through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership;

 

(17)         the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person;

 

(18)         the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest, pursuant to contractual or other arrangements with such Person;

 

(19)         the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases, confessions of judgment or any other legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement;

 

(20)         the issuance of additional Partnership Units in connection with Capital Contributions by Additional Limited Partners and additional Capital Contributions by Partners pursuant to Article 4 hereof;

 

(21)         an election to dissolve the Partnership pursuant to Section 13.1.B hereof;

 

(22)         the distribution of cash to acquire Common Units held by a Common Limited Partner in connection with a Common Redemption under Section 15.1 hereof; and

 

(23)         an election to acquire Tendered Common Units in exchange for REIT Shares.

 

B.            Each of the Limited Partners agrees that, except as provided in Section 7.3 hereof, the General Partner is authorized to execute, deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership without any further act, approval or vote of the Partners or any other Persons, notwithstanding any other provision of the Act or any applicable law, rule or regulation.

 

C.            At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the Properties of the Partnership and (ii) liability insurance for the Indemnitees hereunder.

 

D.            At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the

 

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General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time.

 

E.            In exercising its authority under this Agreement and subject to Section 7.8.B, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner of any action taken (or not taken) by it. The General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of any tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement.

 

F.             Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties on behalf of the Partnership, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligations on behalf of the Partnership.

 

Section 7.2            Certificate of Limited Partnership .  To the extent that such action is determined by the General Partner to be reasonable and necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate and do all the things to maintain the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) under the laws of the State of Delaware and each other state, the District of Columbia or any other jurisdiction, in which the Partnership may elect to do business or own property. Subject to the terms of Section 8.5.A hereof, the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Limited Partner. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents as may be reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the limited partners have limited liability to the extent provided by applicable law) in the State of Delaware and any other state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property.

 

Section 7.3            Restrictions on General Partner’s Authority .

 

A.            Proscriptions . The General Partner and GTJ REIT may not take any action in contravention of this Agreement, including, without limitation:

 

(1)           take any action that would make it impossible to carry on the ordinary business of the Partnership, except as otherwise provided in this Agreement;

 

(2)           possess Partnership property, or assign any rights in specific Partnership property, for other than a Partnership purpose except as otherwise provided in this Agreement, including, without limitation, Section 7.10;

 

(3)           admit a Person as a Partner, except as otherwise provided in this Agreement;

 

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(4)           perform any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability except as provided herein or under the Act; or

 

(5)           enter into any contract, mortgage, loan or other agreement that expressly prohibits or restricts, or that has the effect of prohibiting or restricting, (a) the General Partner or the Partnership from performing its specific obligations under Sections 15.1 or 16.4 hereof in full, or (b) a Common Limited Partner from exercising its rights under Section 15.1 hereof to effect a Common Redemption in full, or (c)  a Class B Limited Partner from exercising its rights under Section 16.4 hereof to effect a Class B Redemption in full except, in the case of any of clauses (a) or (b), with the written consent of any Limited Partner affected by the prohibition or restriction.

 

B.            Actions Requiring Consent of the Partners . Except as provided in Section 7.3.C hereof (or as is otherwise consistent with the intent of this Agreement), the General Partner shall not, without the prior Consent of the Partners, amend, modify or terminate this Agreement.

 

C.            Amendments without Consent . Notwithstanding Sections 7.3.B and 14.2 hereof but subject to the terms of any Partnership Unit Designation with respect to Partnership Interests then outstanding, the General Partner shall have the power, without the Consent of the Partners, to amend this Agreement as may be required to facilitate or implement any of the following purposes:

 

(1)           to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;

 

(2)           to reflect the admission, substitution or withdrawal of Partners, the Transfer of any Partnership Interest or the termination of the Partnership in accordance with this Agreement, and to amend Exhibit A in connection with such admission, substitution, withdrawal or Transfer;

 

(3)           to reflect a change that is of an inconsequential nature or does not adversely affect the Limited Partners in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions of this Agreement;

 

(4)           to set forth or amend the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of the Holders of any additional Partnership Interests issued pursuant to Article 4;

 

(5)           to reflect the termination of the class of Class B Units if and from the time that all of the Class B Units shall no longer be, or be deemed to be, outstanding for any purpose;

 

(6)           to satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a Federal or state agency or contained in Federal or state law (collectively, “ Legal Requirements ”);

 

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(7)           (a) to reflect such changes as are reasonably necessary for GTJ REIT to maintain its status as a REIT or to satisfy the REIT Requirements or (b) to reflect the Transfer of all or any part of a Partnership Interest among the General Partner and any Disregarded Entity with respect to the General Partner;

 

(8)           to modify either or both of the manner in which items of Net Income or Net Loss are allocated pursuant to Article 6 or the manner in which Capital Accounts are adjusted, computed, or maintained (but in each case only to the extent otherwise provided in this Agreement); or

 

(9)           the issuance of additional Partnership Interests in accordance with Section 4.2.

 

The General Partner will provide reasonably prompt advance written notice to the Limited Partners whenever the General Partner proposes to take any of the foregoing actions under this Section 7.3.C.

 

D.            Actions Requiring Consent of Affected Partners . Notwithstanding Sections 7.3.B, 7.3.C and 14.2 hereof, this Agreement shall not be amended, and no action may be taken by the General Partner, without the consent of each Partner adversely affected thereby, if such amendment or action would: (i) convert a Limited Partner Interest in the Partnership into a General Partner Interest (except as a result of the General Partner acquiring such Partnership Interest); (ii) modify the limited liability of a Limited Partner; (iii) alter the rights of any Partner to receive the distributions to which such Partner is entitled, pursuant to Article 5, Section 13.2.A, or Article 16 hereof, or alter the allocations specified in Article 6 hereof (except, in any case, as permitted pursuant to Sections 4.2, 7.3.C and Article 6 hereof); (iv) alter or modify the redemption rights, conversion rights, Common Unit Cash Amount or Common Unit REIT Shares Amount as set forth in Section 15.1, or amend or modify any related definitions; (v) alter or modify Section 11.2 hereof; (vi) remove, alter or amend the powers and restrictions related to REIT Requirements or permitting the General Partner to reduce or eliminate the tax liability under Code Sections 857 or 4981 contained in Sections 3.1, 3.2, 7.1 and 7.3; (vii) reduce any Limited Partner’s rights to indemnification; (viii) create any liability of any Limited Partner not already provided in this Agreement; or (ix) amend this Section 7.3.D. Further, no amendment may alter the restrictions on the General Partner’s authority set forth elsewhere in this Agreement without the consent specified therein. Any such amendment or action consented to by any Partner shall be effective as to that Partner, notwithstanding the absence of such consent by any other Partner.

 

Section 7.4            Reimbursement of the General Partner .

 

A.            The General Partner shall not be compensated for its services as General Partner of the Partnership except as provided in this Agreement (including the provisions of Articles 5 and 6 hereof regarding distributions, payments and allocations to which the General Partner may be entitled in its capacity as the General Partner).

 

B.            Subject to Sections 7.4.C and 15.12 hereof, the Partnership shall be liable for, and shall reimburse the General Partner or GTJ REIT, as the case may be, on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all

 

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sums expended in connection with the Partnership’s business, including, without limitation, (i) expenses relating to the ownership of interests in and management and operation of, or for the benefit of, the Partnership, (ii) compensation of officers and employees, including, without limitation, payments under future compensation plans, of GTJ REIT that may provide for stock units, or phantom stock, pursuant to which employees of GTJ REIT will receive payments based upon dividends on or the value of REIT Shares, (iii) director or manager fees and expenses of GTJ REIT or its Affiliates, and (iv) all costs and expenses of GTJ REIT being a public company, including costs of filings with the SEC, reports and other distributions to its stockholders; provided , however , that the amount of any reimbursement shall be reduced by any interest earned by the General Partner with respect to bank accounts or other instruments or accounts held by it on behalf of the Partnership as permitted pursuant to Section 7.1 hereof; and, provided , further , that the General Partner shall not be reimbursed for expenses it incurs relating to the formation or organization of the Partnership. Such reimbursements shall be in addition to any reimbursement of the General Partner as a result of indemnification pursuant to Section 7.7 hereof.

 

C.            To the extent practicable, Partnership expenses shall be billed directly to and paid by the Partnership and, subject to Section 15.12 hereof, if and to the extent any reimbursements to the General Partner or any of its Affiliates by the Partnership pursuant to this Section 7.4 constitute gross income to such Person (as opposed to the repayment of advances made by such Person on behalf of the Partnership), such amounts shall be treated as “guaranteed payments” within the meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing the Partners’ Capital Accounts.

 

Section 7.5            Outside Activities of the General Partner .   Neither the General Partner nor GTJ REIT shall directly or indirectly, enter into or conduct any business, other than in connection with, (a) the ownership, acquisition and disposition of Partnership Interests, (b) the management of the business of the Partnership, (c) the operation of GTJ REIT as a reporting company with a class (or classes) of securities registered under the Exchange Act, (d) its operations as a REIT, (e) the offering, sale, syndication, private placement or public offering of stock, bonds, securities or other interests of the Partnership or its assets of GTJ REIT or their respective associates, (f) financing or refinancing of any type related to the Partnership or its assets or activities, (g) as otherwise contemplated herein, and (h) such activities as are incidental thereto; provided , however , that, except as otherwise provided herein, any funds raised by GTJ REIT pursuant to the preceding clauses (e) and (h) shall be made available to the Partnership, whether as Capital Contributions, loans or otherwise, as appropriate; and, provided , further , that the General Partner or GTJ REIT may, in its sole and absolute discretion, from time to time hold or acquire assets in its own name or otherwise other than through the Partnership so long as the General Partner or GTJ REIT, as applicable, takes commercially reasonable measures to ensure that the economic benefits and burdens of such Property are otherwise vested in the Partnership, whether through assignment, mortgage loan or otherwise. Nothing contained herein shall be deemed to prohibit the General Partner from executing guarantees of Partnership debt. GTJ REIT and all Disregarded Entities with respect to GTJ REIT, taken as a group, shall not own any assets or take title to assets (other than temporarily in connection with an acquisition prior to contributing such assets to the Partnership) other than (i) interests in Disregarded Entities with respect to the General Partner, (ii) Partnership Interests as the General Partner and (iii) such cash and cash equivalents, bank accounts or similar instruments or accounts as such group deems reasonably necessary, taking into account Section 7.1.D hereof and the requirements necessary

 

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for GTJ REIT to qualify as a REIT and for the General Partner to carry out its responsibilities contemplated under this Agreement and GTJ REIT under the Charter. Any Limited Partner Interests acquired by the General Partner, whether pursuant to the exercise by a Limited Partner of its right to Redemption, or otherwise, shall be automatically converted into a General Partner Interest comprised of an identical number of Partnership Units with the same terms as the class or series so acquired.  Nothing contained herein shall prohibit GTJ REIT from engaging in any activity reasonably required to complete its divestiture and wind down of its taxable REIT subsidiaries.

 

Section 7.6             Transactions with Affiliates .

 

A.                                     The Partnership may lend or contribute funds to, and borrow funds from, Persons in which the Partnership has an equity investment, and such Persons may borrow funds from, and lend or contribute funds to, the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner. The foregoing authority shall not create any right or benefit in favor of any Person.

 

B.                                     Except as provided in Section 7.5 hereof and subject to Section 3.1 hereof, the Partnership may transfer assets to joint ventures, limited liability companies, partnerships, corporations, business trusts or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law as the General Partner, believes, in good faith, to be advisable.

 

C.                                     Except as expressly permitted by this Agreement, neither the General Partner nor any of its Affiliates may sell, transfer or convey any property to, or purchase any property from, the Partnership, directly or indirectly, except pursuant to transactions that are determined by the General Partner in good faith to be fair and reasonable.

 

D.                                     The General Partner or GTJ REIT, as the case may be, in its sole and absolute discretion and without the approval of the Partners or any of them or any other Persons, may propose and adopt (on behalf of the Partnership) employee benefit plans funded by the Partnership for the benefit of employees of GTJ REIT, the General Partner, the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the General Partner, the Partnership or any of the Partnership’s Subsidiaries.

 

Section 7.7                                     Indemnification .

 

A.                                     To the fullest extent permitted by applicable law, the Partnership shall indemnify each Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including, without limitation, reasonable attorney’s fees and other reasonable legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership (“ Actions ”) as set forth in this Agreement in which such Indemnitee may be involved, or is threatened to be involved, as a party or otherwise; provided , however , that the Partnership shall not indemnify an Indemnitee (i) if the act or omission of the Indemnitee was material to the matter giving rise to the Action and either was

 

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committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, if the Indemnitee had reasonable cause to believe that the act or omission was unlawful; or (iii) for any transaction for which such Indemnitee actually received an improper personal benefit in money, property or services or otherwise, in violation or breach of any provision of this Agreement; and provided , further , that (x) no payments pursuant to this Agreement shall be made by the Partnership to indemnify or advance funds to any Indemnitee with respect to any Action initiated or brought voluntarily by such Indemnitee (and not by way of defense) unless (I) approved or authorized by the General Partner or (II) incurred to establish or enforce such Indemnitee’s right to indemnification under this Agreement, and (y) the Partnership shall not be liable for any expenses incurred by an Indemnitee in connection with one or more Actions or claims brought by the Partnership or involving such Indemnitee if such Indemnitee is found liable to the Partnership on any portion of any claim in any such Action.

 

Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. It is the intention of this Section 7.7.A that the Partnership shall indemnify each Indemnitee to the fullest extent permitted by law and this Agreement. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7.A. The termination of any proceeding by conviction of an Indemnitee or upon a plea of nolo contendere or its equivalent by an Indemnitee, or an entry of an order of probation against an Indemnitee prior to judgment, does not create a presumption that such Indemnitee acted in a manner contrary to that specified in this Section 7.7.A with respect to the subject matter of such proceeding. Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, and neither the General Partner nor any other Holder shall have any obligation to contribute to the capital of the Partnership or otherwise provide funds to enable the Partnership to fund its obligations under this Section 7.7.

 

B.                                     To the fullest extent permitted by law, expenses incurred by an Indemnitee who is a party to a proceeding or otherwise subject to or the focus of or is involved in any Action shall be paid or reimbursed by the Partnership as incurred by the Indemnitee in advance of the final disposition of the Action upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in Section 7.7.A has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.

 

C.                                     The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee unless otherwise provided in a written

 

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agreement with such Indemnitee or in the writing pursuant to which such Indemnitee is indemnified.

 

D.                                     The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of any of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership’s activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

 

E.                                      Any liabilities which an Indemnitee incurs as a result of acting on behalf of GTJ REIT, the Partnership or the General Partner (whether as a fiduciary or otherwise) in connection with the operation, administration or maintenance of an employee benefit plan or any related trust or funding mechanism (whether such liabilities are in the form of excise taxes assessed by the IRS, penalties assessed by the U.S. Department of Labor, restitutions to such a plan or trust or other funding mechanism or to a participant or beneficiary of such plan, trust or other funding mechanism, or otherwise) shall be treated as liabilities or judgments or fines under this Section 7.7, unless such liabilities arise as a result of (i) an act or omission of such Indemnitee that was material to the matter giving rise to the Action and either was committed in bad faith or was the result of active and deliberate dishonesty; (ii) in the case of any criminal proceeding, an act or omission that such Indemnitee had reasonable cause to believe was unlawful, or (iii) any transaction in which such Indemnitee actually received an improper personal benefit in money, property or services or otherwise, in violation or breach of any provision of this Agreement or applicable law.

 

F.                                       Notwithstanding anything to the contrary in this Agreement, in no event may an Indemnitee subject any of the Holders to personal liability by reason of the indemnification provisions set forth in this Agreement, and any such indemnification shall be satisfied solely out of the assets of the Partnership.

 

G.                                     An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

 

H.                                    The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Partnership’s liability to any Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

 

I.                                         It is the intent of the parties that any amounts paid by the Partnership to the General Partner pursuant to this Section 7.7 shall be treated as “guaranteed payments” within the

 

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meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing the Partners’ Capital Accounts.

 

J.                                         The Partnership shall indemnify each Limited Partner and its Affiliates, their respective directors, officers, stockholders and any other individual acting on its or their behalf, from and against any costs (including costs of defense) incurred by it as a result of any litigation or other proceeding in which any Limited Partner is named as a defendant or any claim threatened or asserted against any Limited Partner, in either case which relates to the operations of the Partnership or any obligation assumed by the Partnership, unless such costs are the result of intentional harm or gross negligence on the part of, or a breach of this Agreement by, such Limited Partner; provided , however , that no Partner shall have any personal liability with respect to the foregoing indemnification, any such indemnification to be satisfied solely out of the assets of the Partnership.

 

K.                                    Any obligation or liability whatsoever of the General Partner which may arise at any time under this Agreement or any other instrument, transaction, or undertaking contemplated hereby shall be satisfied, if at all, out of the assets of the General Partner or the Partnership only. No such obligation or liability shall be personally binding upon, nor shall resort for the enforcement thereof be had to, any of the General Partner’s managers, members, officers, employees, or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise.

 

Section 7.8                                     Liability of the General Partner .

 

A.                                     Notwithstanding anything to the contrary set forth in this Agreement, neither the General Partner nor any of its managers or officers shall be liable or accountable in damages or otherwise to the Partnership, any Partners, or any Assignees for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or of any act or omission if the General Partner or such manager or officer acted in good faith.

 

B.                                     Subject to its obligations and duties as General Partner set forth in the Act and this Agreement, the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its employees or agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.

 

C.                                     Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the General Partner’s and its officers’ and directors’ liability to the Partnership and the Limited Partners under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

 

D.                                     Notwithstanding anything herein to the contrary, except for liability for willful misconduct or gross negligence, or pursuant to any express indemnities given to the Partnership by any Partner pursuant to any other written instrument, no Partner shall have any personal

 

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liability whatsoever, to the Partnership or to the other Partners, or for the debts or liabilities of the Partnership or the Partnership’s obligations hereunder, and the full recourse of the other Partner(s) shall be limited to the interest of that Partner in the Partnership. Without limitation of the foregoing, and except for liability for willful misconduct or gross negligence, or pursuant to any such express indemnity, no property or assets of any Partner, other than its interest in the Partnership, shall be subject to levy, execution or other enforcement procedures for the satisfaction of any judgment (or other judicial process) in favor of any other Partner(s) and arising out of, or in connection with, this Agreement. This Agreement is executed by the officers of the General Partner solely as officers of the same and not in their own individual capacities.

 

E.                                      To the extent that, under applicable law, the General Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or the Limited Partners, the General Partner shall not be liable to the Partnership or to any other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict or modify the duties and liabilities of the General Partner under the Act or otherwise existing under applicable law, are agreed by the Partners to replace such other duties and liabilities of such General Partner.

 

F.                                       Whenever in this Agreement the General Partner is permitted or required to make a decision (i) in its “sole and absolute discretion,” “sole discretion” or “discretion” or under a grant of similar authority or latitude, the General Partner shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest or factors affecting the Partnership or the Partners or any of them, or (ii) in its “good faith” or under another expressed standard, the General Partner shall act under such express standard and shall not be subject to any other or different standards imposed by this Agreement or any other agreement contemplated herein or by relevant provisions of law or in equity or otherwise. If any question should arise with respect to the operation of the Partnership, which is not otherwise specifically provided for in this Agreement or the Act, or with respect to the interpretation of this Agreement, the General Partner is hereby authorized to make a final determination with respect to any such question and to interpret this Agreement in such a manner as it shall deem, in its sole discretion, to be fair and equitable, and its determination and interpretations so made shall be final and binding on all parties. The General Partner’s “sole and absolute discretion,” “sole discretion” and “discretion” under this Agreement shall be exercised in good faith.

 

Section 7.9                                     Other Matters Concerning the General Partner .

 

A.                                     The General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties.

 

B.                                     The General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers, architects, engineers, environmental consultants and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as to matters that the General Partner reasonably

 

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believes to be within such Person’s professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

 

C.                                     The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers or agents and a duly appointed attorney or attorneys-in-fact (including, without limitation, officers and directors of the General Partner). Each such attorney shall, to the extent provided by the General Partner in the power of attorney, have full power and authority to do and perform all and every act and duty that is permitted or required to be done by the General Partner hereunder.

 

D.                                     Notwithstanding any other provision of this Agreement or any non-mandatory provision of the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of GTJ REIT to continue to qualify as a REIT, (ii) for GTJ REIT otherwise to satisfy the REIT Requirements, (iii) for GTJ REIT to avoid incurring any taxes under Code Section 857 or Code Section 4981, or (iv) for any Affiliate of GTJ REIT to continue to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)), is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.

 

Section 7.10                              Title to Partnership Assets.   Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively with other Partners or Persons, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner; provided , that in all cases the General Partner shall use its reasonable efforts to cause beneficial title to such assets to be vested, directly or indirectly, in the Partnership as soon as practicable and beneficial to the Partnership and the General Partner; and provided , further , that the General Partner hereby declares and warrants that (i) any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner or such nominee or Affiliate for the use and benefit of the Partnership in accordance with the provisions of this Agreement and (ii) the General Partner shall use its reasonable efforts to cause beneficial title to such assets to be vested, directly or indirectly, in the Partnership as soon as practicable and beneficial to the Partnership and the General Partner. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.

 

Section 7.11                              Reliance by Third Parties .  Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority, without the consent or approval of any other Partner, or Person, to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner as if it were the Partnership’s sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies that may be available

 

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against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expediency of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

 

ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

 

Section 8.1                                     Limitation of Liability.   No Limited Partner shall have any liability under this Agreement except as expressly provided in this Agreement (including, without limitation, Section 10.4 hereof) or under the Act.

 

Section 8.2                                     Management of Business.   No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any officer, director, member, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in, or have any liability in respect of, the operations, management or control (within the meaning of the Act) of the Partnership’s business, transact any business in the Partnership’s name or have the power to sign documents for or otherwise bind the Partnership. The transaction of any such business by the General Partner, any of its Affiliates or any officer, director, member, employee, partner, agent, representative, or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners or Assignees under this Agreement.

 

Section 8.3                                     Outside Activities of Limited Partners.   Subject to any agreements entered into pursuant to Section 7.6 hereof, Section 8 of that certain employment agreement, of even date herewith, by and between Paul A. Cooper and GTJ REIT, Section 8 of that certain employment agreement, of even date herewith, by and between Louis Sheinker and GTJ REIT, and any other agreements entered into by a Limited Partner or any of its Affiliates with the General Partner, the Partnership or a Subsidiary (including, without limitation, any employment agreement), any Limited Partner and any Assignee, officer, director, employee, agent, trustee, Affiliate, member or stockholder of any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities that are in direct or indirect competition with the Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor any Partner shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person (other than the General Partner), and such Person shall

 

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have no obligation pursuant to this Agreement, subject to Section 7.6 hereof and any other agreements entered into by a Limited Partner or its Affiliates with the General Partner, the Partnership or a Subsidiary, to offer any interest in any such business ventures to the Partnership, any Limited Partner, or any such other Person, even if such opportunity is of a character that, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person. In deciding whether to take any actions in such capacity, the Limited Partners and their respective Affiliates shall be under no obligation to consider the separate interests of the Partnership or Subsidiary Entities and to the maximum extent permitted by applicable law shall have no fiduciary duties or similar obligations to the Partnership or any other Partners, or to any Subsidiary Entities, and shall not be liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by the other Partners in connection with such acts except for liability for intentional harm or gross negligence.

 

Section 8.4                                     Return of Capital.   Except pursuant to the rights of Common Redemption set forth in Section 15.1, no Limited Partner shall be entitled to the withdrawal or return of its Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon termination of the Partnership as provided herein. Except to the extent provided in Articles 5 and 6 hereof or otherwise expressly provided in this Agreement, no Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee either as to the return of Capital Contributions or as to profits, losses or distributions.

 

Section 8.5                                     Rights of Limited Partners Relating to the Partnership .

 

A.                                     In addition to other rights provided by this Agreement or by the Act, and except as limited by Section 8.5.C hereof, (i) the General Partner shall deliver to each Limited Partner a copy of any information mailed to all of the common stockholders of the General Partner as soon as practicable after such mailing and (ii) each Limited Partner shall have the right, for a purpose reasonably related to such Limited Partner’s interest as a limited partner in the Partnership, upon written demand with a statement of the purpose of such demand and at the Partnership’s expense:

 

(1)                                  to obtain a copy of the most recent annual and quarterly reports of the General Partner;

 

(2)                                  to obtain a copy of the Partnership’s Federal, state and local income tax returns for each Partnership Year;

 

(3)                                  to obtain a current list of the name and last known business, residence or mailing address of each Partner;

 

(4)                                  to obtain a copy of this Agreement and the Certificate and all amendments thereto, together with executed copies of all powers of attorney pursuant to which this Agreement, the Certificate and all amendments thereto have been executed; and

 

(5)                                  to obtain true and full information regarding the amount of cash and a description and statement of any other property or services contributed by each Partner and which each Partner has agreed to contribute in the future, and the date on which each became a Partner.

 

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B.                                     The Partnership shall notify any Limited Partner that is a Qualifying Common Party, on request, of the then current Adjustment Factor and any change made to the Adjustment Factor shall be set forth in the quarterly report required by Section 9.3.B hereof immediately following the date such change becomes effective.

 

C.                                     Notwithstanding any other provision of this Section 8.5, the General Partner may keep confidential from the Limited Partners (or any of them), for such period of time as the General Partner determines in its sole and absolute discretion to be reasonable, any information that (i) the General Partner believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or the General Partner or (ii) the Partnership or the General Partner is required by law or by agreement to keep confidential.

 

D.                                     Upon written request by any Limited Partner, the General Partner shall cause the ownership of Partnership Units by such Limited Partner to be evidenced by a certificate for units substantially the form as the General Partner may determine with respect to any class of Partnership Units issued from time to time under this Agreement. Any officer of the General Partner may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Partnership alleged to have been lost, destroyed, stolen or mutilated, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed, stolen or mutilated. Unless otherwise determined by an officer of the General Partner, the owner of such lost, destroyed, stolen or mutilated certificate or certificates, or his or her legal representative, shall be required, as a condition precedent to the issuance of a new certificate or certificates, to give the Partnership a bond in such sums as the General Partner may direct as indemnity against any claim that may be made against the Partnership.

 

Section 8.6                                     Partnership Right to Call Limited Partner Interests.   Notwithstanding any other provision of this Agreement, on and after the date on which the aggregate Percentage Interests of the Limited Partners are less than one percent (1%) (treating Class B Units as converted to Common Units), the Partnership shall have the right, but not the obligation, from time to time and at any time to redeem any and all outstanding Limited Partner Interests by treating any Limited Partner as a Common Tendering Party, who has delivered a Common Unit Notice of Redemption for the amount of Common Units to be specified by the General Partner, in its sole and absolute discretion, by notice to such Limited Partner that the Partnership has elected to exercise its rights under this Section 8.6. Such notice given by the General Partner to a Limited Partner pursuant to this Section 8.6 shall be treated as if it were a Common Unit Notice of Redemption delivered to the General Partner by such Limited Partner. For purposes of this Section 8.6, (a) any Limited Partner (whether or not otherwise a Qualifying Common Party or Qualifying Class B Party) may, in the General Partner’s sole and absolute discretion, be treated as a Qualifying Common Party that is a Common Tendering Party, and (b) the provisions of Sections 15.1.F(2) and 15.1.F(3) hereof shall not apply, but the remainder of Section 15.1 hereof shall apply, mutatis mutandis.

 

Section 8.7                                     Appraisal Rights.   No Limited Partner and no Holder of a Partnership Interest shall be entitled to any appraisal rights provided for under Section 262 of the Delaware General Corporation Law or any successor statute in connection with a merger of the Partnership.

 

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ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 9.1                                     Records and Accounting .

 

A.                                     The General Partner shall keep or cause to be kept at the principal place of business of the Partnership any records and documents required to be maintained by the Act and other books and records deemed by the General Partner to be appropriate with respect to the Partnership’s business, including, without limitation, all books and records necessary to provide to the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 8.5.A, Section 9.3 or Article 13 hereof. Any records maintained by or on behalf of the Partnership in the regular course of its business may be kept on any information storage device, provided , that the records so maintained are convertible into clearly legible written form within a reasonable period of time.

 

B.                                     The books of the Partnership shall be maintained, for financial and tax reporting purposes, on an accrual basis in accordance with generally accepted accounting principles, or on such other basis as the General Partner determines to be necessary or appropriate. To the extent permitted by sound accounting practices and principles, the Partnership and the General Partner may operate with integrated or consolidated accounting records, operations and principles.

 

Section 9.2                                     Partnership Year.   For purposes of this Agreement, “Partnership Year” means the fiscal year of the Partnership, which shall be the calendar year unless otherwise required by the Code.

 

Section 9.3                                     Reports .

 

A.                                     As soon as practicable, but in no event later than one hundred five (105) days after the close of each Partnership Year, the General Partner shall cause to be mailed to each Limited Partner of record as of the close of the Partnership Year, financial statements of the Partnership, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, for such Partnership Year, presented in accordance with generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the General Partner.

 

B.                                     As soon as practicable, but in no event later than sixty (60) days after the close of each calendar quarter (except the last calendar quarter of each year), the General Partner shall cause to be mailed to each Limited Partner of record as of the last day of the calendar quarter, a report containing unaudited financial statements of the Partnership for such calendar quarter, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, and such other information as may be required by applicable law or regulation or as the General Partner determines to be appropriate.

 

C.                                     The General Partner shall have satisfied its obligations under Section 9.3.A and Section 9.3.B by posting or making available the reports required by this Section 9.3 on the website maintained from time to time by the Partnership or the General Partner, provided , that such reports are able to be printed or downloaded from such website.

 

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D.            At the request of any Limited Partner, the General Partner shall provide access to the books, records and workpapers upon which the reports required by this Section 9.3 are based, to the extent required by the Act.

 

E.            Notwithstanding the provisions of Sections 9.1 and 9.3, the General Partner may keep confidential from the Limited Partners any information that the General Partner reasonably believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or which the Partnership is required by law or by agreements with unaffiliated third parties to keep confidential.

 

ARTICLE 10
TAX MATTERS

 

Section 10.1          Preparation of Tax Returns.   The General Partner shall arrange for the preparation of draft Schedule K-1s with respect to Partnership income, gains, deductions, losses and other items required of the Partnership for Federal and state income tax purposes and shall use all reasonable efforts to furnish, within ninety (90) days of the close of each taxable year (or within any valid extension period), the tax information reasonably required by Limited Partners for Federal and state income tax and any other tax reporting purposes (including final Schedule K-1’s). The Limited Partners shall promptly provide the General Partner with such information relating to the Contributed Properties as is readily available to the Limited Partners, including tax basis and other relevant information, as may be reasonably requested by the General Partner from time to time.

 

Section 10.2          Tax Elections.   Except as otherwise provided herein, the General Partner shall, in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including, but not limited to, the election under Code Section 754. The General Partner shall have the right to seek to revoke any such election (including, without limitation, any election under Code Section 754) upon the General Partner’s determination in its sole and absolute discretion that such revocation is in the best interests of the Partners.

 

Section 10.3          Tax Matters Partner .

 

A.            The General Partner shall be the “tax matters partner” of the Partnership for Federal income tax purposes. The tax matters partner shall receive no compensation for its services. All third-party costs and expenses incurred by the tax matters partner in performing its duties as such (including legal and accounting fees and expenses) shall be borne by the Partnership in addition to any reimbursement pursuant to Section 7.4 hereof. Nothing herein shall be construed to restrict the Partnership from engaging an accounting firm to assist the tax matters partner in discharging its duties hereunder.

 

B.            The tax matters partner is authorized, but not required:

 

(1)           to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a “tax audit” and such judicial proceedings being referred to as “judicial review”), and in the settlement

 

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agreement the tax matters partner may expressly state that such agreement shall bind all Partners, except that such settlement agreement shall not bind any Partner (i) who (within the time prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such Partner (as the case may be) or (ii) who is a “notice partner” (as defined in Code Section 6231) or a member of a “notice group” (as defined in Code Section 6223(b)(2));

 

(2)           in the event that a notice of a final administrative adjustment at the Partnership level of any item required to be taken into account by a Partner for tax purposes (a “ Final Adjustment ”) is mailed to the tax matters partner, to seek judicial review of such Final Adjustment, including the filing of a petition for readjustment with the United States Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnership’s principal place of business is located;

 

(3)           to intervene in any action brought by any other Partner for judicial review of a Final Adjustment;

 

(4)           to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;

 

(5)           to enter into an agreement with the IRS to extend the period for assessing any tax that is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item; and

 

(6)           to take any other action on behalf of the Partners or any of them in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations.

 

The taking of any action and the incurring of any expense by the tax matters partner in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the tax matters partner and the provisions relating to indemnification of the General Partner set forth in Section 7.7 hereof shall be fully applicable to the tax matters partner in its capacity as such.

 

Section 10.4          Withholding.   Each Limited Partner hereby authorizes the Partnership to withhold from or pay on behalf of or with respect to such Limited Partner any amount of Federal, state, local or foreign taxes that the General Partner determines the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Limited Partner pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Partnership pursuant to Code Section 1441, Code Section 1442, Code Section 1445 or Code Section 1446. Any amount withheld with respect to a Limited Partner pursuant to this Section 10.4 shall be treated as paid or distributed, as applicable, to such Limited Partner for all purposes under this Agreement. Any amount paid on behalf of or with respect to a Limited Partner, in excess of any such withheld amount, shall constitute a loan by the Partnership to such Limited Partner, which loan shall be repaid by such Limited Partner within thirty (30) days after

 

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the affected Limited Partner receives written notice from the General Partner that such payment must be made; provided , that the Limited Partner shall not be required to repay such deemed loan if either (i) the Partnership withholds such payment from a distribution that would otherwise be made to the Limited Partner or (ii) the General Partner determines, in its sole and absolute discretion, that such payment may be satisfied out of the Available Cash of the Partnership that would, but for such payment, be distributed to the Limited Partner. Any amounts payable by a Limited Partner hereunder shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate) from the date such amount is due (i.e., thirty (30) days after the Limited Partner receives written notice of such amount) until such amount is paid in full.

 

Section 10.5          Organizational Expenses .  The General Partner may cause the Partnership to deduct expenses, if any, incurred by it in organizing the Partnership ratably over a 180-month period as provided in Section 709 of the Code.

 

ARTICLE 11
PARTNER TRANSFERS AND WITHDRAWALS

 

Section 11.1          Transfer .

 

A.            No part of the interest of a Partner shall be subject to the claims of any creditor, to any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement.

 

B.            No Partnership Interest shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11. Any Transfer or purported Transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void ab initio .

 

C.            No Transfer of any Partnership Interest may be made to a lender to the Partnership or any Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability, without the consent of the General Partner in its sole and absolute discretion; provided , however , that as a condition to such consent, the lender may be required to enter into an arrangement with the Partnership and the General Partner to redeem or exchange for the Common Unit REIT Shares Amount or Class B Unit REIT Shares Amount, as applicable, any Partnership Units in which a security interest is held by such lender simultaneously with the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code ( provided , that for purpose of calculating the Common Unit REIT Shares Amount or Class B Unit REIT Shares Amount, as applicable, in this Section 11.1.C, “Tendered Common Units” or “Tendered Class B Units,” as applicable, shall mean all such Partnership Units in which a security interest is held by such lender).

 

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Section 11.2          Transfer of General Partner’s Partnership Interest .

 

A.            Except as provided in this Section 11.2 and subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, the General Partner shall not voluntarily withdraw from the Partnership and shall not Transfer all or any portion of its interest in the Partnership (whether by sale, disposition, statutory merger or consolidation, liquidation or otherwise) without the Consent of the Common Limited Partners, which may be given or withheld by each such Common Limited Partner in its sole and absolute discretion. It is a condition to any Transfer of a Partnership Interest of a General Partner otherwise permitted hereunder (including any Transfer permitted pursuant to Section 11.2.B) that: (i) the transferee is admitted as a General Partner pursuant to Section 12.1 hereof; (ii) the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor General Partner under this Agreement with respect to such Transferred Partnership Interest; and (iii) the transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Partnership Interest so acquired and the admission of such transferee as a General Partner.

 

B.            Certain Transactions of GTJ REIT . Subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, GTJ REIT may not (a) merge, consolidate or otherwise combine its assets with another entity, (b) sell all or substantially all of its assets not in the ordinary course of GTJ REIT’s business, (c) reclassify, recapitalize or change any outstanding shares of GTJ REIT’s stock or other outstanding equity interests, other than in connection with a stock split, reverse stock split, stock dividend, change in par value, increase in authorized shares, designation or issuance of new classes of equity securities (each, a “ Termination Event ”) unless the Termination Event has been approved by the Consent of the Partners and, in connection with such Termination Event, all of the Common Limited Partners and Class B Limited Partners will receive, or will have the right to elect to receive, for each Partnership Unit an amount of cash, securities or other property equal to the product of the Adjustment Factor and the greatest amount of cash, securities or other property paid to a holder of one REIT Share in consideration of one REIT Share pursuant to the terms of such Termination Event; provided , that if, in connection with such Termination Event, a purchase, tender or exchange offer shall have been made to and accepted by the holders of the outstanding REIT Shares, each holder of Partnership Units shall receive, or shall have the right to elect to receive, the greatest amount of cash, securities or other property which such holder of Partnership Units would have received had it exercised its right to redemption pursuant to Articles 15 or 16 hereof, as the case may be, and received REIT Shares in exchange for its Partnership Units immediately prior to the expiration of such purchase, tender or exchange offer and had thereupon accepted such purchase, tender or exchange offer and then such Termination Event shall have been consummated.

 

C.            In connection with any transaction permitted by Section 11.2.B hereof, the relative fair market values shall be reasonably determined by the General Partner as of the time of such transaction and, to the extent applicable, shall be no less favorable to the Limited Partners than the relative values reflected in the terms of such transaction.

 

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Section 11.3          Limited Partners’ Rights to Transfer .

 

A.            General . A Subject to any limitations set forth in any Loan Document, Limited Partner may, at any time, without the consent of the General Partner, (i) Transfer all or part of its Partnership Interest to any Family Member, any Charity, any Controlled Entity or any Affiliate, or, in the case of an Original Limited Partner, to such Original Limited Partner’s shareholders, members, partners or beneficiaries, as the case may be, or (ii) pledge (a “ Pledge ”) all or any portion of its Partnership Interest to a lending institution that is not an Affiliate of such Limited Partner as collateral or security for any Debt, and, except as provided in Section 11.1.C, Transfer such pledged Partnership Interest to such lending institution in connection with the exercise of remedies under such loan or extension of credit (any Transfer or Pledge permitted by this clause (A) is hereinafter referred to as a “ Permitted Transfer ”). Each Limited Partner, and each transferee of Partnership Units or Assignee pursuant to a Permitted Transfer, shall have the right to Transfer all or any portion of its Partnership Interest to any Person without the consent of the General Partner, subject to the provisions of Sections 11.1.C and 11.4 hereof and to satisfaction of each of the following conditions (in addition to the right of such Limited Partner or permitted transferee thereof to continue to make Permitted Transfers without the need to satisfy clauses (i) through (v) below):

 

(i)            General Partner Right of First Offer . The transferring Partner (or the Partner’s estate in the event of the Partner’s death) shall give written notice of the proposed Transfer to the General Partner, which notice shall state the amount and type of consideration proposed to be received for the Transferred Partnership Units. Other than in connection with a Transfer pursuant to Section 11.3 (A) (i) above, the General Partner shall have ten (10) Business Days upon which to give the Transferring Partner notice of its election to acquire the Partnership Units on the terms set forth in such notice. If it so elects, it shall purchase the Partnership Units on such terms within ten (10) Business Days after giving notice of such election; provided , however , that such closing may be deferred for up to forty-five (45) days to the extent necessary to effect compliance with the Hart-Scott-Rodino Antitrust Act, if applicable, and any other applicable requirements of law. If it does not so elect, the Transferring Partner may Transfer such Partnership Units to a third party, on terms no less favorable to the transferee than the proposed terms, subject to the other conditions of this Section 11.3.

 

(ii)           Qualified Transferee . Any Transfer of a Partnership Interest shall be made only to a Qualified Transferee.

 

(iii)          Opinion of Counsel . The Transferor shall deliver or cause to be delivered to the General Partner an opinion of counsel reasonably satisfactory to it to the effect that the proposed Transfer may be effected without registration under the Securities Act and will not otherwise violate the registration provisions of the Securities Act and the regulations promulgated thereunder or violate any state securities laws or regulations applicable to the Partnership or the Partnership Interests Transferred; provided , however , that the General Partner may, in its sole discretion, waive this condition upon the request of the Transferor. If, in the opinion of such counsel, such Transfer would require the filing of a registration statement under the Securities Act or would otherwise violate any Federal or state securities laws or regulations applicable to the Partnership or the Partnership Units, the General Partner may prohibit any Transfer otherwise permitted under this Section 11.3 by a Limited Partner of Partnership Interests.

 

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(iv)          Intentionally Omitted

 

(v)           Exception for Permitted Transfers . The conditions of Sections 11.3.A (i) through 11.3.A (iv) hereof shall not apply in the case of a Permitted Transfer. It is a condition to any Transfer otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such Transferred Partnership Interest, and no such Transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval of the General Partner, in its sole and absolute discretion. Notwithstanding the foregoing, any transferee of any Transferred Partnership Interest shall be subject to any and all restrictions on ownership or transfer of stock of the General Partner contained in the Charter that may limit or restrict such transferee’s ability to exercise its redemption rights, including, without limitation, the Ownership Limit. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substituted Limited Partner, no transferee, whether by a voluntary Transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in Section 11.5 hereof.

 

B.            Incapacity . If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator or receiver of such Limited Partner’s estate shall have all the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate, and such power as the Incapacitated Limited Partner possessed to Transfer all or any part of its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.

 

C.            Adverse Tax Consequences . Notwithstanding anything to the contrary in this Agreement, the General Partner shall have the authority (but shall not be required) to take any steps it determines are necessary or appropriate in its sole and absolute discretion to prevent the Partnership from being taxable as a corporation for Federal income tax purposes. In furtherance of the foregoing, except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, no Transfer by a Limited Partner of its Partnership Interests (including any redemption, any other acquisition of Partnership Units by the General Partner or any acquisition of Partnership Units by the Partnership) may be made to or by any Person if such Transfer could (i) result in the Partnership being treated as an association taxable as a corporation; (ii) result in a termination of the Partnership under Code Section 708; (iii) be treated as effectuated through an “established securities market” or a “secondary market (or the substantial equivalent thereof)” within the meaning of Code Section 7704 and the Regulations promulgated thereunder, or (iv) result in the Partnership being unable to qualify for one or more of the “safe harbors” set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the IRS setting forth safe harbors under which interests will not be treated as “readily tradable on a secondary market (or the substantial equivalent thereof)” within the meaning of Section 7704 of the Code) (the “ Safe Harbors ”).

 

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D.            Restrictions Not Applicable to Redemptions or Conversions . The provisions of this Section 11.3 (other than Section 11.3.C) shall not apply to the redemption of Common Units pursuant to Section 15.1, the redemption or conversion of Class B Units pursuant to Section 16.5 or 16.6 or the redemption or conversion of any other Partnership Units pursuant to the terms of any Partnership Unit Designation.

 

Section 11.4          Admission of Substituted Limited Partners .

 

A.            No Limited Partner shall have the right to substitute a transferee (including any transferees pursuant to Transfers permitted by Section 11.3 hereof) as a Limited Partner in its place. A transferee of the Partnership Interest of a Limited Partner may be admitted as a Substituted Limited Partner only with the consent of the General Partner, which consent may be given or withheld by the General Partner in its sole and absolute discretion. The failure or refusal by the General Partner to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action against the Partnership or the General Partner. Subject to the foregoing, an Assignee shall not be admitted as a Substituted Limited Partner until and unless it furnishes to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the General Partner, of all the terms, conditions and applicable obligations of this Agreement, (ii) a counterpart signature page to this Agreement executed by such Assignee and (iii) such other documents and instruments as may be required or advisable, in the sole and absolute discretion of the General Partner, to effect such Assignee’s admission as a Substituted Limited Partner.

 

B.            Concurrently with, and as evidence of, the admission of a Substituted Limited Partner, the General Partner shall amend Exhibit A and the books and records of the Partnership to reflect the name, address and number and class and/or series of Partnership Units of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and number of Partnership Units of the predecessor of such Substituted Limited Partner.

 

C.            A transferee who has been admitted as a Substituted Common Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Common Limited Partner under this Agreement.

 

D.            A transferee who has been admitted as a Substituted Class A Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Class A Limited Partner under this Agreement.

 

E.            A transferee who has been admitted as a Substituted Class B Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Class B Limited Partner under this Agreement.

 

Section 11.5          Assignees .  If the General Partner, in its sole and absolute discretion, does not consent to the admission of any permitted transferee under Section 11.3 hereof as a Substituted Limited Partner, as described in Section 11.4 hereof, or in the event that any Interest is deemed to be Transferred notwithstanding the restrictions set forth in this Article 11, such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including

 

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the right to receive distributions from the Partnership and the share of Net Income, Net Losses and other items of income, gain, loss, deduction and credit of the Partnership attributable to the Partnership Units assigned to such transferee and the rights to Transfer the Partnership Units provided in this Article 11, but shall not be deemed to be a holder of Partnership Units for any other purpose under this Agreement (other than as expressly provided in Section 15.1, Section 16.5 and Section 16.6 hereof), and shall not be entitled to effect a Consent or vote with respect to such Partnership Units on any matter presented to the Limited Partners for approval (such right to Consent or vote, to the extent provided in this Agreement or under the Act, fully remaining with the transferor Limited Partner). In the event that any such transferee desires to make a further Transfer of any such Partnership Units, such Transfer shall be subject to all the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make a Transfer of Partnership Units.

 

Section 11.6          General Provisions .

 

A.            No Limited Partner may withdraw from the Partnership other than as a result of (i) a permitted Transfer of all of such Limited Partner’s Partnership Units in accordance with this Article 11, with respect to which the transferee becomes a Substituted Limited Partner, or (ii) pursuant to a redemption (or acquisition by the General Partner) of all of its Partnership Units pursuant to a redemption under Section 15.1 hereof and/or pursuant to any Partnership Unit Designation.

 

B.            Any Limited Partner who shall Transfer all of its Partnership Units in a Transfer (i) permitted pursuant to this Article 11 where such transferee was admitted as a Substituted Limited Partner, (ii) pursuant to the exercise of its rights to effect a redemption of all of its Partnership Units pursuant to Sections 15.1 or 16.5 hereof and/or pursuant to any Partnership Unit Designation or (iii) to the General Partner, whether or not pursuant to Section 15.1.B hereof, shall cease to be a Limited Partner.

 

C.            If any Partnership Unit is Transferred in compliance with the provisions of this Article 11, or is redeemed by the Partnership, or acquired by the General Partner pursuant to Section 15.1, on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit attributable to such Partnership Unit for such Partnership Year shall be allocated to the transferor Partner, or the Common Tendering Party and, in the case of a Transfer other than a redemption, to the transferee Partner, by taking into account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible method selected by the General Partner. Solely for purposes of making such allocations, unless the General Partner decides to use another method permitted under the Code, each of such items for the calendar month in which a Transfer occurs shall be allocated to the transferee Partner and none of such items for the calendar month in which a Transfer or a redemption occurs shall be allocated to the transferor Partner, or the Common Tendering Party, if such Transfer occurs on or before the fifteenth (15th) day of the month, otherwise such items shall be allocated to the transferor. All distributions of Available Cash attributable to such Partnership Unit with respect to which the Partnership Record Date is before the date of such Transfer, assignment or redemption shall be made to the transferor Partner or the Common Tendering Party and, in the case of a Transfer other than a redemption, all distributions of

 

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Available Cash thereafter attributable to such Partnership Unit shall be made to the transferee Partner.

 

D.            Notwithstanding anything to the contrary in this Agreement and in addition to any other restrictions on Transfer herein contained, in no event may any Transfer of a Partnership Interest by any Partner (including any redemption, any acquisition of Partnership Units by the General Partner or any other acquisition of Partnership Units by the Partnership) be made: (i) to any person or entity who lacks the legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, of any component portion of a Partnership Interest, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Partnership Interest; (iv) in the event that such Transfer could cause either GTJ REIT or any GTJ REIT Affiliate to cease to comply with the REIT Requirements or to cease to qualify as a “qualified REIT subsidiary” (within the meaning of Code Section 856(i)(2)); (v) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if such Transfer could, based on the advice of counsel to the Partnership or the General Partner, cause a termination of the Partnership for Federal or state income tax purposes (except as a result of the redemption (or acquisition by the General Partner) of all Partnership Units held by all Limited Partners); (vi) if such Transfer could, based on the advice of legal counsel to the Partnership, cause the Partnership to cease to be classified as a partnership for Federal income tax purposes (except as a result of the redemption (or acquisition by the General Partner) of all Partnership Units held by all Limited Partners); (vii) if such Transfer would cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in ERISA Section 3(14)) or a “disqualified person” (as defined in Code Section 4975(c)); (viii) if such Transfer could, based on the advice of counsel to the Partnership or the General Partner, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.3-101; (ix) if such Transfer requires the registration of such Partnership Interest pursuant to any applicable Federal or state securities laws; (x) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if such Transfer (1) could be treated as effectuated through an “established securities market” or a “secondary market” (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code and the Regulations promulgated thereunder, (2) could cause the Partnership to become a “publicly traded partnership,” as such term is defined in Sections 469(k)(2) or 7704(b) of the Code, (3) could be in violation of Section 3.4.C(iii) , or (4) could cause the Partnership to fail one or more of the Safe Harbors; (xi) if such Transfer causes the Partnership (as opposed to the General Partner) to become a reporting company under the Exchange Act; or (xii) if such Transfer subjects the Partnership to regulation under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or ERISA, each as amended.

 

E.            Transfers pursuant to this Article 11 may only be made on the first day of a fiscal quarter of the Partnership, unless the General Partner otherwise agrees.

 

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ARTICLE 12
ADMISSION OF PARTNERS

 

Section 12.1          Admission of Successor General Partner.   A successor to all of the General Partner’s General Partner Interest pursuant to Section 11.2 hereof who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately upon such Transfer. Any such successor shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. Upon any such Transfer, the transferee shall become the successor General Partner for all purposes herein, and shall be vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner. Upon any such Transfer and the admission of any such transferee as a successor General Partner, the transferor shall be relieved of its obligations under this Agreement and shall cease to be a general partner of the Partnership without the separate Consent of the Common Limited Partners or the consent or approval of any other Partners. Concurrently with, and as evidence of, the admission of such a successor General Partner, the General Partner shall amend Exhibit A and the books and records of the Partnership to reflect the name, address and number and class and/or series of Partnership Units of such successor General Partner.

 

Section 12.2          Admission of Additional Limited Partners .

 

A.            After the admission to the Partnership of the Original Limited Partners, a Person (other than an existing Partner) who makes a Capital Contribution to the Partnership in exchange for Partnership Units and in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i) evidence of acceptance, in form and substance satisfactory to the General Partner, of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 hereof, (ii) a counterpart signature page to this Agreement executed by such Person and (iii) such other documents or instruments as may be required in the sole and absolute discretion of the General Partner in order to effect such Person’s admission as an Additional Limited Partner. Concurrently with, and as evidence of, the admission of an Additional Limited Partner, the General Partner shall amend Exhibit A and the books and records of the Partnership to reflect the name, address and number and class and/or series of Partnership Units of such Additional Limited Partner.

 

B.            Notwithstanding anything to the contrary in this Section 12.2, no Person shall be admitted as an Additional Limited Partner without the consent of the General Partner, which consent may be given or withheld in the General Partner’s sole and absolute discretion. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the consent of the General Partner to such admission and the satisfaction of all the conditions set forth in Section 12.2.A.

 

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C.            If any Additional Limited Partner is admitted to the Partnership on any day other than the first day of a Partnership Year, then Net Income, Net Losses, each item thereof and all other items of income, gain, loss, deduction and credit allocable among Holders for such Partnership Year shall be allocated among such Additional Limited Partner and all other Holders by taking into account their varying interests during the Partnership Year in accordance with Code Section 706(d), using the “interim closing of the books” method or another permissible method selected by the General Partner. Solely for purposes of making such allocations, each of such items for the calendar month in which an admission of any Additional Limited Partner occurs shall be allocated among all the Holders including such Additional Limited Partner, in accordance with the principles described in Section 11.6.C hereof. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees other than the Additional Limited Partner, and all distributions of Available Cash thereafter shall be made to all the Partners and Assignees including such Additional Limited Partner.

 

D.            [Intentionally omitted.]

 

Section 12.3          Amendment of Agreement and Certificate of Limited Partnership.   For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to amend the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement (including an amendment of Exhibit A ) and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4 hereof.

 

Section 12.4          Limit on Number of Partners.   Unless otherwise permitted by the General Partner in its sole and absolute discretion, no Person shall be admitted to the Partnership as an Additional Limited Partner if the effect of such admission would be to cause the Partnership to have a number of Partners that would cause the Partnership to become a reporting company under the Exchange Act.

 

Section 12.5          Admission.   A Person shall be admitted to the Partnership as a limited partner of the Partnership or a general partner of the Partnership only upon strict compliance, and not upon substantial compliance, with the requirements set forth in this Agreement for admission to the Partnership as a Limited Partner or a General Partner.

 

ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION

 

Section 13.1          Dissolution.   The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners, or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General Partner shall continue the business of the Partnership without dissolution. However, the Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (each a “ Liquidating Event ”):

 

A.            an event of withdrawal as defined in Section 17-402(a)(2)—(12) of the Act (including, without limitation, bankruptcy), or the withdrawal in violation of this Agreement, of

 

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the last remaining General Partner unless, within ninety (90) days after the withdrawal, a Majority in Interest of the Limited Partners remaining agree in writing, in their sole and absolute discretion, to continue the business of the Partnership and to the appointment, effective as of the date of withdrawal, of a successor General Partner;

 

B.            an election to dissolve the Partnership made by the General Partner in its sole and absolute discretion, with or without the Consent of the Partners;

 

C.            entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act;

 

D.            any sale or other disposition of all or substantially all of the assets of the Partnership not in the ordinary course of the Partnership’s business or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership not in the ordinary course of the Partnership’s business; or

 

E.            the redemption or other acquisition by the Partnership or the General Partner of all Partnership Units other than Partnership Units held by the General Partner.

 

Section 13.2          Winding Up .

 

A.            Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets and satisfying the claims of its creditors and the Holders. After the occurrence of a Liquidating Event, no Holder shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership’s business and affairs. The General Partner (or, in the event that there is no remaining General Partner or the General Partner has dissolved, become bankrupt within the meaning of the Act or ceased to operate, any Person elected by a Majority in Interest of the Limited Partners (the General Partner or such other Person being referred to herein as the “ Liquidator ”)) shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnership’s liabilities and property, and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the General Partner, include shares of stock in the General Partner) shall be applied and distributed in the following order:

 

(1)           First , to the satisfaction of all of the Partnership’s debts and liabilities to creditors other than the Holders (whether by payment or the making of reasonable provision for payment thereof);

 

(2)           Second , to the satisfaction of all of the Partnership’s debts and liabilities to the General Partner (whether by payment or the making of reasonable provision for payment thereof), including, but not limited to, amounts due as reimbursements under Section 7.4 hereof;

 

(3)           Third , to the satisfaction of all of the Partnership’s debts and liabilities to the other Holders (whether by payment or the making of reasonable provision for payment thereof); and

 

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(4)           Fourth , to the Partners in accordance with their positive Capital Account balances, determined after taking into account all Capital Account adjustments for all prior periods and the Partnership taxable year during which the liquidation occurs (other than those made as a result of the liquidating distribution set forth in this Section 13.2.A(4) ).

 

The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 13, other than reimbursement of its expenses as set forth in Section 7.4.

 

B.            Notwithstanding the provisions of Section 13.2.A hereof that require liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Partnership, the Liquidator determines that an immediate sale of part or all of the Partnership’s assets would be impractical or would cause undue loss to the Holders, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including to those Holders as creditors) and/or distribute to the Holders, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2.A hereof, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Holders, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.

 

C.            If any Holder has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), except as otherwise agreed to by such Holder, such Holder shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever.

 

D.            In the sole and absolute discretion of the General Partner or the Liquidator, a pro rata portion of the distributions that would otherwise be made to the Holders pursuant to this Article 13 may be:

 

(1)           distributed to a trust established for the benefit of the General Partner and the Holders for the purpose of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the General Partner arising out of or in connection with the Partnership and/or Partnership activities. The assets of any such trust shall be distributed to the Holders, from time to time, in the reasonable discretion of the General Partner, in the same proportions and amounts as would otherwise have been distributed to the Holders pursuant to this Agreement; or

 

(2)           withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided that such withheld or escrowed amounts shall be distributed to

 

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the Holders in the manner and order of priority set forth in Section 13.2.A hereof as soon as practicable.

 

E.            In the event of the liquidation of the Partnership in accordance with the terms of this Agreement, the Liquidator may sell Partnership property. The liquidation of the Partnership shall not be deemed finally terminated until the Partnership shall have received cash payments in full with respect to obligations such as notes, purchase money mortgages, installment sale contracts or other similar receivables received by the Partnership in connection with the sale of Partnership assets and all obligations of the Partnership have been satisfied or assumed by the General Partner. The Liquidator shall continue to act to enforce all of the rights of the Partnership pursuant to any such obligations until paid in full or otherwise discharged or settled.

 

Section 13.3          Deemed Contribution and Distribution .  Notwithstanding any other provision of this Article 13, in the event that the Partnership is liquidated within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership’s Property shall not be liquidated, the Partnership’s liabilities shall not be paid or discharged and the Partnership’s affairs shall not be wound up. Instead, for Federal income tax purposes the Partnership shall be deemed to have contributed all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership; and immediately thereafter, distributed Partnership Units to the Partners in the new partnership in accordance with their respective Capital Accounts in liquidation of the Partnership, and the new partnership is deemed to continue the business of the Partnership. Nothing in this Section 13.3 shall be deemed to have constituted a Transfer to an Assignee as a Substituted Limited Partner without compliance with the provisions of Section 11.4 or Section 13.3 hereof.

 

Section 13.4          Rights of Holders .  Except as otherwise provided in this Agreement (including Section 16.4 below) and subject to the rights of any Holder of any Partnership Interest set forth in a Partnership Unit Designation, (a) each Holder shall look solely to the assets of the Partnership for the return of its Capital Contribution, (b) no Holder shall have the right or power to demand or receive property other than cash from the Partnership and (c) no Holder shall have priority over any other Holder as to the return of its Capital Contributions, distributions or allocations.

 

Section 13.5          Notice of Dissolution .  In the event that a Liquidating Event occurs or an event occurs that would, but for an election or objection by one or more Partners pursuant to Section 13.1 hereof, result in a dissolution of the Partnership, the General Partner shall, within thirty (30) days thereafter, provide written notice thereof to each Holder and, in the General Partner’s sole and absolute discretion or as required by the Act, to all other parties with whom the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner), and the General Partner may, or, if required by the Act, shall, publish notice thereof in a newspaper of general circulation in each place in which the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner).

 

Section 13.6          Cancellation of Certificate of Limited Partnership .  Upon the completion of the liquidation of the Partnership cash and property as provided in Section 13.2 hereof, the Partnership shall be terminated, a certificate of cancellation shall be filed with the SSD, all

 

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qualifications of the Partnership as a foreign limited partnership or association in jurisdictions other than the State of Delaware shall be cancelled, and such other actions as may be necessary to terminate the Partnership shall be taken.

 

Section 13.7          Reasonable Time for Winding-Up .  A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2 hereof, in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect between and among the Partners during the period of liquidation.

 

ARTICLE 14
PROCEDURES FOR ACTIONS AND CONSENTS
OF PARTNERS; AMENDMENTS; MEETINGS

 

Section 14.1          Procedures for Actions and Consents of Partners .  The actions requiring consent or approval of Partners pursuant to this Agreement, including Sections 7.3, or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 14.

 

Section 14.2          Amendments .  Amendments to this Agreement may be proposed by the General Partner or by Limited Partners holding thirty percent (30%) or more of the Partnership Interests held by Limited Partners and, except as set forth in Section 7.3.C and subject to Sections 7.3.D, shall be approved by the Consent of the Majority in Interest of the Limited Partners. Following such proposal, the General Partner shall submit to the Limited Partners holding Partnership Interests entitled to vote thereon any proposed amendment that, pursuant to the terms of this Agreement, requires the consent, approval or vote of such Limited Partners. The General Partner shall seek the written consent, approval or vote of the Limited Partners on any such proposed amendment or shall call a meeting to vote thereon and to transact any other business that the General Partner may deem appropriate. For purposes of obtaining a written Consent, the General Partner may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a Consent that is consistent with the General Partner’s recommendation (if the General Partner shall have made a recommendation) with respect to the proposal; provided , however , that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.

 

Section 14.3          Meetings of the Partners .

 

A.            Meetings of the Partners may be called by the General Partner at any time in its own discretion, and shall be called by the General Partner upon its receipt of a written request by Limited Partners holding thirty percent (30%) or more of the Partnership Interests held by Limited Partners. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners entitled to act at the meeting not less than seven (7) days nor more than sixty (60) days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Whenever the vote, consent or approval of Partners is permitted or required under this Agreement, such vote, consent or approval may be given at a meeting of Partners or may be given in accordance with the procedure prescribed in Section 14.3.B hereof.

 

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B.            Any action required or permitted to be taken at a meeting of the Partners may be taken without a meeting with the written Consent of the Partners, or such other applicable percentage or Consent as is expressly required by this Agreement for action on the matter in question, entitled to act on such matter at such a meeting. Such consent may be in one instrument or in several instruments, and shall have the same force and effect as a vote of the applicable percentage of Partners entitled to act at the meeting. Such consent shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified.

 

C.            Each Partner entitled to act at the meeting may authorize any Person or Persons to act for it by proxy on all matters in which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Partner executing it, such revocation to be effective upon the Partnership’s receipt of written notice of such revocation from the Partner executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.

 

D.            The General Partner may fix, in advance, a record date for determining the Partners entitled to vote at any meeting of the Partners or consent to any matter. Such date shall not be before the close of business on the day the record date is fixed and shall be not more than ninety days nor less than five days before the date on which such meeting is to be held or consent to be given. If no record date is fixed, the record date for the determination of Partners entitled to notice of or to vote at a meeting of the Partners shall be at the close of business on the day on which the notice of the meeting is sent, and the record date for any action taken by the Partners without a meeting shall be the effective date of such Partner action. When a determination of the Partners entitled to vote at any meeting of the Partners has been made as provided in this section, such determination shall apply to any adjournment thereof.

 

E.            Each meeting of Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate in its sole and absolute discretion. Without limitation, meetings of Partners may be conducted in the same manner as meetings of the General Partner’s stockholders and may be held at the same time as, and as part of, the meetings of the General Partner’s stockholders.

 

ARTICLE 15
COMMON UNIT REDEMPTION RIGHTS

 

Section 15.1          Redemption Rights of Qualifying Parties .

 

A.            A Qualifying Common Party shall have the right (subject to the terms and conditions set forth herein) (the “ Common Redemption Right ”) to require the Partnership to redeem all or a portion of the Common Units held by a Common Tendering Party (Common Units that have in fact been tendered for redemption being hereafter referred to as “ Tendered Common Units ”) in exchange (a “ Common Redemption ”) for the Common Unit Cash Amount

 

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payable on the Specified Redemption Date. Any Common Redemption shall be exercised pursuant to a Common Unit Notice of Redemption delivered to the Chief Financial Officer of the General Partner by the Qualifying Common Party when exercising the Redemption right (the “ Common Tendering Party ”). The Partnership’s obligation to effect a Common Redemption, however, shall not arise or be binding against the Partnership until the earlier of (i) the date the General Partner notifies the Common Tendering Party that it declines to acquire some or all of the Tendered Common Units under Section 15.1.B hereof following receipt of a Common Unit Notice of Redemption and (ii) the Business Day following the Cut-Off Date. In the event of a Common Redemption, the Common Unit Cash Amount shall be delivered as a certified or bank check payable to the Common Tendering Party or, in the General Partner’s sole and absolute discretion, in immediately available funds, in each case, on or before the Specified Redemption Date.

 

B.            Notwithstanding the provisions of Section 15.1.A hereof, on or before the close of business on the Cut-Off Date, the General Partner may, in its sole and absolute discretion but subject to the Ownership Limit and the Conversion Limit, elect to acquire some or all of the Tendered Common Units from the Common Tendering Party in exchange for REIT Shares. If the General Partner elects to acquire some or all of the Tendered Common Units pursuant to this Section 15.1.B, the General Partner shall give written notice thereof to the Common Tendering Party on or before the close of business on the Cut-Off Date. If the General Partner elects to acquire any of the Tendered Common Units for REIT Shares, GTJ REIT shall issue and deliver such REIT Shares to the Common Tendering Party pursuant to the terms of this Section 15.1.B, in which case (1) the General Partner shall assume directly the obligation with respect thereto and shall satisfy the Common Tendering Party’s exercise of its Common Redemption Right with respect to such Tendered Common Units and (2) such transaction shall be treated, for Federal income tax purposes, as a transfer by the Common Tendering Party of such Tendered Common Units to the General Partner in exchange for the Common Unit REIT Shares Amount. If the General Partner so elects, on the Specified Redemption Date, the Common Tendering Party shall sell such number of the Tendered Common Units to the General Partner in exchange for a number of REIT Shares equal to the product of the Common Unit REIT Shares Amount and the Applicable Percentage. The Common Tendering Party shall submit (i) such information, certification or affidavit as the General Partner may reasonably require in connection with the application of the Ownership Limit and/or the Conversion Limit to any such acquisition and (ii) such written representations and investment letters as reasonably necessary, in the General Partner’s view, to effect compliance with the Securities Act. In the event of a purchase of the Tendered Common Units by the General Partner pursuant to this Section 15.1.B, the Common Tendering Party shall no longer have the right to cause the Partnership to effect a Redemption of such Tendered Common Units and, upon notice to the Common Tendering Party by the General Partner, given on or before the close of business on the Cut-Off Date, that the General Partner has elected to acquire some or all of the Tendered Common Units pursuant to this Section 15.1.B, the obligation of the Partnership to effect a Redemption of the Tendered Common Units as to which the General Partner’s notice relates shall not accrue or arise. A number of REIT Shares equal to the product of the Common Unit REIT Shares Amount and the Applicable Percentage shall be delivered by the General Partner as duly authorized, validly issued, fully paid and non-assessable REIT Shares and, if applicable, Rights, free of any pledge, lien, encumbrance or restriction, other than the Ownership Limit and, to the extent applicable, the Securities Act and relevant state securities or “blue sky” laws. Except as otherwise provided in this Agreement,

 

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neither any Common Tendering Party whose Tendered Common Units are acquired by the General Partner pursuant to this Section 15.1.B, any Partner, any Assignee nor any other interested Person shall have any right to require or cause the General Partner to register, qualify or list any REIT Shares owned or held by such Person, whether or not such REIT Shares are issued pursuant to this Section 15.1.B, with the SEC, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock exchange; provided , however , that this limitation shall not be in derogation of any registration or similar rights granted pursuant to any other written agreement between the General Partner and any such Person. Notwithstanding any delay in such delivery, the Common Tendering Party shall be deemed the owner of such REIT Shares and Rights for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise rights, as of the Specified Redemption Date. REIT Shares issued upon an acquisition of the Tendered Common Units by the General Partner pursuant to this Section 15.1.B may contain such legends regarding restrictions under the Securities Act and applicable state securities laws as the General Partner in good faith determines to be necessary or advisable in order to ensure compliance with such laws.

 

C.            Notwithstanding the provisions of Section 15.1.A and 15.1.B hereof, the Common Tendering Parties shall have no rights under this Agreement that would otherwise be prohibited by the Ownership Limit or the Conversion Limit. To the extent that any attempted Redemption or acquisition of the Tendered Common Units by the General Partner pursuant to Section 15.1.B hereof would be in violation of this Section 15.1.C, it shall be null and void ab initio , and the Common Tendering Party shall not acquire any rights or economic interests in REIT Shares otherwise issuable by the General Partner under Section 15.1.B hereof or cash otherwise payable under Section 15.1.A hereof.

 

D.            If the General Partner does not elect to acquire the Tendered Common Units pursuant to Section 15.1.B hereof:

 

(1)           The Partnership may elect to raise funds for the payment of the Common Unit Cash Amount either (a) by requiring that the General Partner contribute to the Partnership funds from the proceeds of a registered public offering by the General Partner of REIT Shares sufficient to purchase the Tendered Common Units or (b) from any other sources (including, but not limited to, the sale of any Property and the incurrence of additional Debt) available to the Partnership. Any proceeds from a public offering that are in excess of the Common Unit Cash Amount shall be for the sole benefit of the General Partner. The General Partner shall make a Capital Contribution of any such amounts to the Partnership for an additional General Partner Interest. Any such contribution shall entitle the General Partner to an equitable Percentage Interest adjustment.

 

(2)           If the Common Unit Cash Amount is not paid on or before the Specified Redemption Date, interest shall accrue with respect to the Common Unit Cash Amount from the day after the Specified Redemption Date to and including the date on which the Common Unit Cash Amount is paid at a rate equal to the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate).

 

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E.            Notwithstanding the provisions of Section 15.1.B hereof, the General Partner shall not, under any circumstances, elect to acquire any Tendered Common Units in exchange for REIT Shares if such exchange would be prohibited under the Charter.

 

F.             Notwithstanding anything herein to the contrary (but subject to Section 15.1.C hereof), with respect to any Redemption (or any tender of Common Units for Redemption if the Tendered Common Units are acquired by the General Partner pursuant to Section 15.1.B hereof) pursuant to this Section 15.1:

 

(1)           All Common Units acquired by the General Partner pursuant to Section 15.1.B hereof shall automatically, and without further action required, be converted into and deemed to be a General Partner Interest comprised of the same number of Common Units.

 

(2)           Intentionally Omitted.

 

(3)           If (i) a Common Tendering Party surrenders its Tendered Common Units during the period after the Partnership Record Date with respect to a distribution and before the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such Partnership distribution, and (ii) the General Partner elects to acquire any of such Tendered Common Units in exchange for REIT Shares pursuant to Section 15.1.B, such Common Tendering Party shall pay to the General Partner on the Specified Redemption Date an amount in cash equal to the portion of the Partnership distribution in respect of the Tendered Common Units exchanged for REIT Shares, insofar as such distribution relates to the same period for which such Common Tendering Party would receive a distribution in respect of such REIT Shares.

 

(4)           The consummation of such Redemption (or an acquisition of Tendered Common Units by the General Partner pursuant to Section 15.1.B hereof, as the case may be) shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Act.

 

(5)           The Common Tendering Party shall continue to own (subject, in the case of an Assignee, to the provisions of Section  11.5 hereof) all Common Units subject to any Redemption, and be treated as a Common Limited Partner or an Assignee, as applicable, with respect to such Common Units for all purposes of this Agreement, until such Common Units are either paid for by the Partnership pursuant to Section 15.1.A hereof or transferred to the General Partner and paid for, by the issuance of the REIT Shares, pursuant to Section 15.1.B hereof on the Specified Redemption Date. Until a Specified Redemption Date and an acquisition of the Tendered Common Units by the General Partner pursuant to Section 15.1.B hereof, the Common Tendering Party shall have no rights as a stockholder of the General Partner with respect to the REIT Shares issuable in connection with such acquisition.

 

G.            In connection with an exercise of the Common Redemption Right pursuant to this Section 15.1, except as otherwise agreed by the General Partner, in its sole and absolute discretion, the Common Tendering Party shall submit the following to the General Partner, in addition to the Common Unit Notice of Redemption:

 

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(1)           A written affidavit, dated the same date as the Common Unit Notice of Redemption, (a) disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) such Common Tendering Party and (ii) to the best of their knowledge any Related Party and (b) representing that, after giving effect to the Redemption or an acquisition of the Tendered Common Units by the General Partner pursuant to Section 15.1.B hereof, neither the Common Tendering Party nor to the best of their knowledge any Related Party will own REIT Shares in violation of the Ownership Limit or the Conversion Limit;

 

(2)           A written representation that neither the Common Tendering Party nor to the best of their knowledge any Related Party has any intention to acquire any additional REIT Shares prior to the closing of the Redemption or an acquisition of the Tendered Common Units by the General Partner pursuant to Section 15.1.B hereof on the Specified Redemption Date; and

 

(3)           An undertaking to certify, at and as a condition to the closing of (i) the Redemption or (ii) the acquisition of the Tendered Common Units by the General Partner pursuant to Section 15.1.B hereof on the Specified Redemption Date, that either (a) the actual and constructive ownership of REIT Shares by the Common Tendering Party and to the best of their knowledge any Related Party remain unchanged from that disclosed in the affidavit required by Section 15.1.G(1) or (b) after giving effect to the Redemption or an acquisition of the Tendered Common Units by the General Partner pursuant to Section 15.1.B hereof, neither the Common Tendering Party nor to the best of their knowledge any Related Party shall own REIT Shares in violation of the Ownership Limit or the Conversion Limit.

 

(4)           In connection with any Common Redemption, the General Partner shall have the right to receive an opinion of counsel reasonably satisfactory to it to the effect that the proposed Common Redemption will not cause the Partnership or the General Partner to violate any Federal or state securities laws or regulations applicable to the Common Redemption, the issuance and sale of the Tendered Common Units to the Common Tendering Party or the issuance and sale of REIT Shares to the Common Tendering Party pursuant to Section 15.1.B of this Agreement and if, in the opinion of such counsel, the Common Redemption would require the filing of a registration statement under the Securities Act, the General Partner shall promptly file the same.

 

ARTICLE 16
CLASS B UNITS

 

Section 16.1          Designation and Number .  A series of Partnership Units in the Partnership designated as the “Class B Units” (the “ Class B Units ”) is hereby established. The number of Class B Units shall be 24,413.

 

Section 16.2          Rank .  The parties hereto intend that the Class B Units shall, with respect to rights to the payment of distributions in accordance with Section 5.1 and the distribution of assets upon voluntary or involuntary liquidation, dissolution or winding up of the General Partner, rank pari passu with all other Partnership Units.

 

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Section 16.3          Voting Rights .

 

Except as required by any non-waivable provision of the law of the State of Delaware or any action that expressly provides for the Consent of the Limited Partners, the Class B Limited Partners shall have no voting rights whatsoever on any matter relating to the Partnership, whether under the Act, at law, in equity or otherwise, and the Consent of the Class B Limited Partners shall not be required for the taking of any action by the Partnership or the General Partner, regardless of the effect that such action may have upon the rights, preferences or privileges of the Class B Units.

 

Section 16.4          Redemption Rights of Qualifying Class B Parties .

 

A.            A Qualifying Class B Party shall have the right (subject to the terms and conditions set forth herein) (the “ Class B Redemption Right ”) to require the Partnership to redeem all or a portion of the Class B Units held by a Class B Tendering Party (Class B Units that have in fact been tendered for redemption being hereafter referred to as “ Tendered Class B Units ”) in exchange (a “ Class B Redemption ”) for the Class B Unit Cash Amount payable on the Specified Redemption Date. Any Class B Redemption shall be exercised pursuant to a Class B Unit Notice of Redemption delivered to the General Partner by the Qualifying Class B Party when exercising the Redemption right (the “ Class B Tendering Party ”). The Partnership’s obligation to effect a Class B Redemption, however, shall not arise or be binding against the Partnership until the earlier of (i) the date the General Partner notifies the Class B Tendering Party that it declines to acquire some or all of the Tendered Class B Units under Section 16.4.B hereof following receipt of a Class B Unit Notice of Redemption and (ii) the Business Day following the Cut-Off Date. In the event of a Class B Redemption, the Class B Unit Cash Amount shall be delivered as a certified or bank check payable to the Class B Tendering Party or, in the General Partner’s sole and absolute discretion, in immediately available funds, in each case, on or before the tenth (10th) Business Day following the date on which the General Partner receives a Class B Unit Notice of Redemption from the Class B Tendering Party.

 

B.            Notwithstanding the provisions of Section 16.4.A hereof, on or before the close of business on the Cut-Off Date, the General Partner may, in its sole and absolute, elect to acquire some or all of the Tendered Class B Units from the Class B Tendering Party in exchange for Class B Shares. If the General Partner elects to acquire some or all of the Tendered Class B Units pursuant to this Section 16.4.B, the General Partner shall give written notice thereof to the Class B Tendering Party on or before the close of business on the Cut-Off Date. If the General Partner elects to acquire any of the Tendered Class B Units for Class B Shares, GTJ REIT shall issue and deliver such Class B Shares to the Class B Tendering Party pursuant to the terms of this Section 16.4.B, in which case (1) the General Partner shall assume directly the obligation with respect thereto and shall satisfy the Class B Tendering Party’s exercise of its Class B Redemption Right with respect to such Tendered Class B Units and (2) such transaction shall be treated, for Federal income tax purposes, as a transfer by the Class B Tendering Party of such Tendered Class B Units to the General Partner in exchange for the Class B Unit Shares Amount. If the General Partner so elects, on the Specified Redemption Date, the Class B Tendering Party shall sell such number of the Tendered Class B Units to the General Partner in exchange for a number of Class B Shares equal to the product of the Class B Unit Shares Amount and the Applicable Percentage. The Class B Tendering Party shall submit such written representations and investment letters as reasonably necessary, in the General Partner’s view, to effect compliance with the Securities Act. In the event of a purchase of the Tendered Class B Units by the General Partner pursuant to this

 

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Section 16.4.B, the Class B Tendering Party shall no longer have the right to cause the Partnership to effect a Redemption of such Tendered Class B Units and, upon notice to the Class B Tendering Party by the General Partner, given on or before the close of business on the Cut-Off Date, that the General Partner has elected to acquire some or all of the Tendered Class B Units pursuant to this Section 16.4.B, the obligation of the Partnership to effect a Redemption of the Tendered Class B Units as to which the General Partner’s notice relates shall not accrue or arise. A number of Class B Shares equal to the product of the Class B Unit Shares Amount and the Applicable Percentage shall be delivered by the General Partner as duly authorized, validly issued, fully paid and non-assessable Class B Shares, and if applicable, Class B Rights, free of any pledge, lien, encumbrance or restriction, and, to the extent applicable, the Securities Act and relevant state securities or “blue sky” laws. Except as otherwise provided in this Agreement. neither any Class B Tendering Party whose Tendered Class B Units are acquired by the General Partner pursuant to this Section 16.4.B, any Partner, any Assignee nor any other interested Person shall have any right to require or cause the General Partner to register, qualify or list any Class B Shares owned or held by such Person, whether or not such Class B Shares are issued pursuant to this Section 16.4.B, with the SEC, with any state securities commissioner, department or agency, under the Securities Act or the Exchange Act or with any stock exchange; provided , however , that this limitation shall not be in derogation of any registration or similar rights granted pursuant to any other written agreement between the General Partner and any such Person. Notwithstanding any delay in such delivery, the Class B Tendering Party shall be deemed the owner of such Class B Shares, and if applicable, Class B rights, for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise rights, as of the Specified Redemption Date. Class B Shares issued upon an acquisition of the Tendered Class B Units by the General Partner pursuant to this Section 16.4.B may contain such legends regarding restrictions under the Securities Act and applicable state securities laws as the General Partner in good faith determines to be necessary or advisable in order to ensure compliance with such laws.

 

C.            If the General Partner does not elect to acquire the Tendered Class B Units pursuant to Section 16.4.B hereof:

 

(1)           The Partnership may elect to raise funds for the payment of the Class B Unit Cash Amount either (a) by requiring that the General Partner contribute to the Partnership funds from the proceeds of a registered public offering by the General Partner of Class B Shares sufficient to purchase the Tendered Class B Units or (b) from any other sources (including, but not limited to, the sale of any Property and the incurrence of additional Debt) available to the Partnership. Any proceeds from a public offering that are in excess of the Class B Unit Cash Amount shall be for the sole benefit of the General Partner. The General Partner shall make a Capital Contribution of any such amounts to the Partnership for an additional General Partner Interest. Any such contribution shall entitle the General Partner to an equitable Percentage Interest adjustment.

 

(2)           If the Class B Unit Cash Amount is not paid on or before the Specified Redemption Date, interest shall accrue with respect to the Class B Unit Cash Amount from the day after the Specified Redemption Date to and including the date on which the Class B Unit Cash Amount is paid at a rate equal to the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal (but not higher than the maximum lawful rate).

 

75


 

D.            Notwithstanding the provisions of Section 16.4.B hereof, the General Partner shall not, under any circumstances, elect to acquire any Tendered Class B Units in exchange for REIT Shares if such exchange would be prohibited under the Charter.

 

E.            Notwithstanding anything herein to the contrary (but subject to Section 16.4.C hereof), with respect to any Redemption (or any tender of Class B Units for Redemption if the Tendered Class B Units are acquired by the General Partner pursuant to Section 16.4.B hereof) pursuant to this Section 16.4:

 

(1)           All Class B Units acquired by the General Partner pursuant to Section 16.4.B hereof shall automatically, and without further action required, be converted into and deemed to be a General Partner Interest comprised of the same number of Class B Units.

 

(2)           Intentionally Omitted

 

(3)           If (i) a Class B Tendering Party surrenders its Tendered Class B Units during the period after the Partnership Record Date with respect to a distribution and before the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such Partnership distribution, and (ii) the General Partner elects to acquire any of such Tendered Class B Units in exchange for Class B Shares pursuant to Section 16.4.B, such Class B Tendering Party shall pay to the General Partner on the Specified Redemption Date an amount in cash equal to the portion of the Partnership distribution in respect of the Tendered Class B Units exchanged for Class B Shares, insofar as such distribution relates to the same period for which such Class B Tendering Party would receive a distribution in respect of such Class B Shares.

 

(4)           The consummation of such Redemption (or an acquisition of Tendered Class B Units by the General Partner pursuant to Section 16.4.B hereof, as the case may be) shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Act.

 

(5)           The Class B Tendering Party shall continue to own (subject, in the case of an Assignee, to the provisions of Section  11.5 hereof) all Class B Units subject to any Redemption, and be treated as a Class B Limited Partner or an Assignee, as applicable, with respect to such Class B Units for all purposes of this Agreement, until such Class B Units are either paid for by the Partnership pursuant to Section 16.4.A hereof or transferred to the General Partner and paid for, by the issuance of the Class B Shares, pursuant to Section 16.4.B hereof on the Specified Redemption Date. Until a Specified Redemption Date and an acquisition of the Tendered Class B Units by the General Partner pursuant to Section 16.4.B hereof, the Class B Tendering Party shall have no rights as a stockholder of the General Partner with respect to the Class B Shares issuable in connection with such acquisition.

 

F.             In connection with an exercise of the Class B Redemption Right pursuant to this Section 16.4, except as otherwise agreed by the General Partner, in its sole and absolute discretion, the Class B Tendering Party shall submit the following to the General Partner, in addition to the Class B Unit Notice of Redemption:

 

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(1)           A written affidavit, dated the same date as the Class B Unit Notice of Redemption, disclosing the actual and constructive ownership, as determined for purposes of Code Sections 856(a)(6) and 856(h), of Class B Shares by  such Class B Tendering Party;

 

(2)           A written representation that neither the Class B Tendering Party nor to the best of their knowledge any Related Party has any intention to acquire any additional Class B Shares prior to the closing of the Redemption or an acquisition of the Tendered Class B Units by the General Partner pursuant to Sections 16.4.A and 16.4.B herein on the Specified Redemption Date;

 

(3)           An undertaking to certify, at and as a condition to the closing of (i) the Redemption or (ii) the acquisition of the Tendered Class B Units by the General Partner pursuant to Section 16.4.B hereof on the Specified Redemption Date, that the actual and constructive ownership of Class B Shares by the Class B Tendering Party and to the best of their knowledge any Related Party remain unchanged from that disclosed in the affidavit required by Section 16.4.G(1); and

 

(4)           In connection with any Class B Unit Redemption, the General Partner shall have the right to receive an opinion of counsel reasonably satisfactory to it to the effect that the proposed Class B Unit Redemption will not cause the Partnership or the General Partner to violate any Federal or state securities laws or regulations applicable to the Class B Unit Redemption, the issuance and sale of the Tendered Class B Units to the Class B Tendering Party or the issuance and sale of Class B Shares to the Class B Tendering Party pursuant to Section 16.4.B of this Agreement and if, in the opinion of such counsel, the Class B Unit Redemption would require the filing of a registration statement under the Securities Act, the General Partner shall promptly file the same.

 

ARTICLE 17

MISCELLANEOUS

 

Section 17.1          Addresses and Notice .  Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by nationally recognized overnight courier service or by facsimile or electronic mail to the Partner, or Assignee at the address set forth in Exhibit A or Exhibit D (as applicable) or such other address of which the Partner shall notify the General Partner in accordance with this Section 17.1.

 

Section 17.2          Titles and Captions .  All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to “Articles” or “Sections” are to Articles and Sections of this Agreement.

 

Section 17.3          Pronouns and Plurals .  Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

 

77


 

Section 17.4          Further Action .  The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

 

Section 17.5          Binding Effect .  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

Section 17.6          Waiver .

 

A.            No failure or delay by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

 

B.            The restrictions, conditions and other limitations on the rights and benefits of the Limited Partners contained in this Agreement, and the duties, covenants and other requirements of performance or notice by the Limited Partners, are for the benefit of the Partnership and, except for an obligation to pay money to the Partnership, may be waived or relinquished by the General Partner, in its sole and absolute discretion, on behalf of the Partnership in one or more instances from time to time and at any time; provided , however , that any such waiver or relinquishment may not be made if it would have the effect of (i) creating liability for any other Limited Partner, (ii) causing the Partnership to cease to qualify as a limited partnership, (iii) reducing the amount of cash otherwise distributable to the Limited Partners (other than any such reduction that affects all of the Limited Partners holding the same class or series of Partnership Units on a uniform or pro rata basis, if approved by a Majority in Interest of the Partners holding such class or series of Partnership Units), (iv) resulting in the classification of the Partnership as an association or publicly traded partnership taxable as a corporation or (v) violating the Securities Act, the Exchange Act or any state “blue sky” or other securities laws; and provided , further , that any waiver relating to compliance with the Ownership Limit or other restrictions in the Charter shall be made and shall be effective only as provided in the Charter.

 

Section 17.7          Counterparts .  This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto.

 

Section 17.8          Applicable Law; Consent to Jurisdiction; Waiver of Jury Trial .

 

A.            This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law. In the event of a conflict between any provision of this Agreement and any non-mandatory provision of the Act, the provisions of this Agreement shall control and take precedence.

 

B.            Each Partner hereby (i) submits to the non-exclusive jurisdiction of any state or federal court sitting in the State of Delaware (collectively, the “ Delaware Courts ”), with respect to any dispute arising out of this Agreement or any transaction contemplated hereby to the extent such courts would have subject matter jurisdiction with respect to such dispute, (ii) irrevocably

 

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waives, and agrees not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of any of the Delaware Courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, or that the venue of the action is improper, (iii) agrees that notice or the service of process in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall be properly served or delivered if delivered to such Partner at such Partner’s last known address as set forth in the Partnership’s books and records, and (iv) irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby.

 

Section 17.9          Entire Agreement .  This Agreement contains all of the understandings and agreements between and among the Partners with respect to the subject matter of this Agreement and the rights, interests and obligations of the Partners with respect to the Partnership. Notwithstanding the immediately preceding sentence, the Partners hereby acknowledge and agree that the General Partner, without the approval of any Limited Partner, may enter into side letters or similar written agreements with Limited Partners that are not Affiliates of the General Partner, executed contemporaneously with the admission of such Limited Partner to the Partnership, affecting the terms hereof, as negotiated with such Limited Partner and which the General Partner in its sole discretion deems necessary, desirable or appropriate. The parties hereto agree that any terms, conditions or provisions contained in such side letters or similar written agreements with a Limited Partner shall govern with respect to such Limited Partner notwithstanding the provisions of this Agreement.

 

Section 17.10       Invalidity of Provisions .  If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

 

Section 17.11       Limitation to Preserve REIT Status .  Notwithstanding anything else in this Agreement, to the extent that the amount to be paid, credited, distributed or reimbursed by the Partnership to any REIT Partner or its officers, directors, employees or agents, whether as a reimbursement, fee, expense or indemnity (a “ REIT Payment ”), would constitute gross income to the REIT Partner for purposes of Code Section 856(c)(2) or Code Section 856(c)(3), then, notwithstanding any other provision of this Agreement, the amount of such REIT Payments, as selected by the General Partner in its discretion from among items of potential distribution, reimbursement, fees, expenses and indemnities, shall be reduced for any Partnership Year so that the REIT Payments, as so reduced, for or with respect to such REIT Partner shall not exceed the lesser of:

 

(i)            an amount equal to the excess, if any, of (a) four and nine-tenths percent (4.9%) of the REIT Partner’s total gross income (but excluding the amount of any REIT Payments) for the Partnership Year that is described in subsections (A) through (I) of Code Section 856(c)(2) over (b) the amount of gross income (within the meaning of Code Section 856(c)(2)) derived by the REIT Partner from sources other than those described in subsections (A) through (I) of Code Section 856(c)(2) (but not including the amount of any REIT Payments); or

 

79


 

(ii)           an amount equal to the excess, if any, of (a) twenty-four percent (24%) of the REIT Partner’s total gross income (but excluding the amount of any REIT Payments) for the Partnership Year that is described in subsections (A) through (I) of Code Section 856(c)(3) over (b) the amount of gross income (within the meaning of Code Section 856(c)(3)) derived by the REIT Partner from sources other than those described in subsections (A) through (I) of Code Section 856(c)(3) (but not including the amount of any REIT Payments); provided , however , that REIT Payments in excess of the amounts set forth in clauses (i) and (ii) above may be made if the General Partner, as a condition precedent, obtains an opinion of tax counsel that the receipt of such excess amounts should not adversely affect the REIT Partner’s ability to qualify as a REIT. To the extent that REIT Payments may not be made in a Partnership Year as a consequence of the limitations set forth in this Section 15.12, such REIT Payments shall carry over and shall be treated as arising in the following Partnership Year if such carry over does not adversely affect the REIT Partner’s ability to qualify as a REIT , provided , however , that any such REIT Payment shall not be carried over more than three Partnership Years, and any such remaining payments shall no longer be due and payable. The purpose of the limitations contained in this Section 15.12 is to prevent any REIT Partner from failing to qualify as a REIT under the Code by reason of such REIT Partner’s share of items, including distributions, reimbursements, fees, expenses or indemnities, receivable directly or indirectly from the Partnership, and this Section 15.12 shall be interpreted and applied to effectuate such purpose.

 

Section 17.12       No Partition.   No Partner nor any successor-in-interest to a Partner shall have the right while this Agreement remains in effect to have any property of the Partnership partitioned, or to file a complaint or institute any proceeding at law or in equity to have such property of the Partnership partitioned, and each Partner, on behalf of itself and its successors and assigns hereby waives any such right. It is the intention of the Partners that the rights of the parties hereto and their successors-in-interest to Partnership property, as among themselves, shall be governed by the terms of this Agreement, and that the rights of the Partners and their respective successors-in-interest shall be subject to the limitations and restrictions as set forth in this Agreement.

 

Section 17.13       No Third-Party Rights Created Hereby.   The provisions of this Agreement are solely for the purpose of defining the interests of the Holders, inter se ; and no other person, firm or entity (i.e., a party who is not a signatory hereto or a permitted successor to such signatory hereto including, without limitation, a creditor of the Partnership or any Partner or other third party having dealings with the Partnership) shall have any right, power, title or interest by way of subrogation or otherwise, in and to the rights, powers, title and provisions of this Agreement. No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans to the Partnership or to pursue any other right or remedy hereunder or at law or in equity. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may any such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or any of the Partners.

 

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Section 17.14       No Rights as Stockholders.   Nothing contained in this Agreement shall be construed as conferring upon the Holders of Partnership Units any rights whatsoever as stockholders of the General Partner, including without limitation any right to receive dividends or other distributions made to stockholders of the General Partner or to vote or to consent or receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the General Partner or any other matter.

 

[Remainder of Page Left Blank Intentionally]

 

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

 

 

 

GENERAL PARTNER:

 

 

 

GTJ GP, LLC

 

 

 

By:

GTJ REIT, INC., a Maryland corporation

 

 

 

By:

/s/ David J. Oplanich

 

Name:

David J. Oplanich

 

Title:

Chief Financial Officer

 

 

 

LIMITED PARTNERS:

 

 

 

By:

/s/ Jeffrey Wu

 

 

Jeffrey Wu

 

 

 

 

By:

/s/ Paul Cooper

 

 

Paul Cooper

 

 

 

 

By:

/s/ Jerome Cooper

 

 

Jerome Cooper

 

 

 

 

By:

/s/ Jeffrey Ravetz

 

 

Jeffrey Ravetz

 

 

 

 

By:

/s/ Sarah Ravetz

 

 

Sarah Ravetz

 

 

 

 

By:

/s/ Louis Sheinker

 

 

Louis Sheinker

 

 

 

 

 

GTJ REIT, INC.

 

 

 

 

By:

/s/ David J. Oplanich

 

Name:

David J. Oplanich

 

Title:

Chief Financial Officer

 


 

 

WU FAMILY 2012 GIFT TRUST

 

 

 

 

By:

/s/ Gene Greenfest

 

 

Gene Greenfest, Trustee

 

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EXHIBIT A

PARTNERS AND PARTNERSHIP UNITS

Unit Ledger

 

Limited Partners

 

Addresses

 

Common Units

 

Class B Units

 

Class A Units

 

 

 

 

 

 

 

 

 

 

 

GTJ REIT, Inc.

 

444 Merrick Road,
 Suite 370
Lynbrook, NY 11563
Attn: Chief Financial Officer****

 

—

 

—

 

65,710

 

 

 

 

 

 

 

 

 

 

 

Jeffrey Wu

 

56-72 49 th  Place
Maspeth, New York 11378*

 

2,219

 

21,753

 

—

 

 

 

 

 

 

 

 

 

 

 

Wu Family 2012 Gift Trust

 

56-72 49 th  Place
Maspeth, New York 11378*

 

 

 

2,660

 

—

 

 

 

 

 

 

 

 

 

 

 

Paul Cooper

 

**

 

1,997

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jerome Cooper

 

**

 

222

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Jeffrey Ravetz

 

***

 

1,911

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Sarah Ravetz

 

***

 

309

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

Louis Sheinker

 

**

 

2,219

 

—

 

—

 

 

 

 

 

8,877

 

24,413

 

65,710

 

General Partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GTJ GP, LLC

 

444 Merrick Road,
Suite 370
Lynbrook, NY 11563
Attn: Chief Financial Officer****

 

1,000

 

—

 

—

 

 

 

 

 

9,877

 

24,413

 

65,710

 

 

 

 

 

 

 

 

 

100,000

 

 

*With a copy to: Schiff Hardin, LLP, 666 Fifth Avenue, NY, NY 10103, Attention: Christine McGuinness, Esq.

 


 

**c/o Green Holland Ventures, 444 Merrick Road, Lynbrook, NY 11563, Attention:  Louis Sheinker

 

With a copy to: Schiff Hardin, LLP, 666 Fifth Avenue, NY, NY 10103, Attention: Christine McGuinness, Esq.

 

***c/o Girona Ventures, 1841 Broadway, Suite 1201, NY, NY 10023

 

With a copy to: Schiff Hardin, LLP, 666 Fifth Avenue, NY, NY 10103, Attention: Christine McGuinness, Esq.

 

****Copies of notices to GTJ REIT, Inc. and GTJ GP, LLC shall go to:

 

Ruskin Moscou Faltischek, P.C.

1425 RXR Plaza

East Tower, 15 th  Floor

Uniondale, NY 11556

Attention:  Adam P. Silvers, Esq.

Fax: 516-663-6719

email: asilvers@rmfpc.com

 

and

 

Saul Ewing, LLP

500 East Pratt Street

Baltimore, Maryland 21202

Attention: John J. Ghingher, Esq.

fax:

email: jgingher@saul.com]

 

2


 

EXHIBIT B

 

GROSS ASSET VALUES

 

Property Description

 

Contributor

 

Asset Type

 

Gross Asset
Value

 

114-15 Guy Brewer Blvd.

 

GTJ REIT

 

Depreciable Assets

 

2,082,425

 

114-15 Guy Brewer Blvd.

 

GTJ REIT

 

Land

 

24,931,575

 

165-25 147th Avenue

 

GTJ REIT

 

Lease Commissions

 

677,272

 

165-25 147th Avenue

 

GTJ REIT

 

Land

 

21,903,050

 

165-25 147th Avenue

 

GTJ REIT

 

Depreciable Assets

 

27,225,678

 

23-85 87th Street

 

GTJ REIT

 

Building

 

9,525,008

 

23-85 87th Street

 

GTJ REIT

 

Land

 

15,725,992

 

49-19 Rockaway Blvd.

 

GTJ REIT

 

Land

 

3,219,002

 

49-19 Rockaway Blvd.

 

GTJ REIT

 

Depreciable Assets

 

7,572,998

 

612 Wortman Avenue

 

GTJ REIT

 

Building

 

5,073,759

 

612 Wortman Avenue

 

GTJ REIT

 

Land

 

9,151,241

 

8 Farm Springs

 

GTJ REIT

 

Land

 

4,033,035

 

8 Farm Springs

 

GTJ REIT

 

Depreciable Assets

 

14,569,965

 

85-01 24th Avenue

 

GTJ REIT

 

Depreciable Assets

 

6,081,943

 

85-01 24th Avenue

 

GTJ REIT

 

Land

 

40,040,057

 

 

 

 

 

 

 

 

 

Total GTJ REIT Properties - Gross Asset Values

 

 

 

 

 

191,813,000

 

 

Property Description

 

Contributor

 

Asset Type

 

Gross Asset
Value

 

466 Bridgeport

 

WU/LH

 

Building

 

822,010

 

466 Bridgeport

 

WU/LH

 

Land

 

750,145

 

466 Bridgeport

 

WU/LH

 

Lease Improvement

 

103,152

 

466 Bridgeport

 

WU/LH

 

Org Cost

 

1,145

 

466 Bridgeport

 

WU/LH

 

Equipment

 

692

 

466 Bridgeport

 

WU/LH

 

Equipment

 

125

 

100 American Road

 

WU/LH

 

Building

 

12,483,683

 

100 American Road

 

WU/LH

 

Land

 

2,034,653

 

100 American Road

 

WU/LH

 

Lease Improvement

 

537,903

 

100 American Road

 

WU/LH

 

Tenant Improvement

 

166,695

 

100 American Road

 

WU/LH

 

Tenant Improvement

 

126,891

 

100 American Road

 

WU/LH

 

Equipment

 

41,076

 

100 American Road

 

WU/LH

 

Mortgage Cost

 

94,114

 

100 American Road

 

WU/LH

 

Lease

 

83,539

 

100 American Road

 

WU/LH

 

Lobby

 

97,286

 

100 American Road

 

WU/LH

 

Lease Improvement

 

86,318

 

100 American Road

 

WU/LH

 

Leasing

 

58,533

 

100 American Road

 

WU/LH

 

Lease

 

42,197

 

100 American Road

 

WU/LH

 

Equipment

 

26,284

 

100 American Road

 

WU/LH

 

Tenant Improvement

 

8,512

 

100 American Road

 

WU/LH

 

Org Cost

 

4,300

 

 


 

100-110 Midland Avenue

 

WU/LH

 

Land

 

3,890,247

 

100-110 Midland Avenue

 

WU/LH

 

Building

 

20,219,536

 

100-110 Midland Avenue

 

WU/LH

 

Mortgage Cost

 

318,912

 

100-110 Midland Avenue

 

WU/LH

 

Leasing

 

50,658

 

100-110 Midland Avenue

 

WU/LH

 

Tenant Improvement

 

48,166

 

100-110 Midland Avenue

 

WU/LH

 

Org Cost

 

4,300

 

103 Fairview Park Drive

 

WU/LH

 

Building

 

9,863,261

 

103 Fairview Park Drive

 

WU/LH

 

Land

 

2,380,695

 

103 Fairview Park Drive

 

WU/LH

 

Lease Improvement

 

369,211

 

103 Fairview Park Drive

 

WU/LH

 

Deferred Lease

 

286,863

 

103 Fairview Park Drive

 

WU/LH

 

Mortgage Cost

 

160,030

 

103 Fairview Park Drive

 

WU/LH

 

Equipment

 

9,094

 

103 Fairview Park Drive

 

WU/LH

 

Org Cost

 

4,300

 

103 Fairview Park Drive

 

WU/LH

 

Equipment

 

1,027

 

103 Fairview Park Drive

 

WU/LH

 

Tenant Improvement

 

—

 

112 Midland Avenue

 

WU/LH

 

Lease Improvement

 

141,669

 

112 Midland Avenue

 

WU/LH

 

Equipment

 

46,830

 

112 Midland Avenue

 

WU/LH

 

Land

 

726,903

 

112 Midland Avenue

 

WU/LH

 

Lease Improvement

 

25,179

 

112 Midland Avenue

 

WU/LH

 

Mortgage Cost

 

19,004

 

112 Midland Avenue

 

WU/LH

 

Equipment

 

3,731

 

112 Midland Avenue

 

WU/LH

 

Org Cost

 

4,300

 

112 Midland Avenue

 

WU/LH

 

Building

 

362,934

 

12 Cascade Boulevard

 

WU/LH

 

Building

 

3,738,660

 

12 Cascade Boulevard

 

WU/LH

 

Land

 

1,594,105

 

12 Cascade Boulevard

 

WU/LH

 

Lease Improvement

 

147,223

 

12 Cascade Boulevard

 

WU/LH

 

Paving

 

16,378

 

12 Cascade Boulevard

 

WU/LH

 

Equipment

 

4,127

 

12 Cascade Boulevard

 

WU/LH

 

Equipment

 

7,131

 

12 Cascade Boulevard

 

WU/LH

 

Org Cost

 

6,655

 

12 Cascade Boulevard

 

WU/LH

 

Leasing

 

4,895

 

12 Cascade Boulevard

 

WU/LH

 

Leasing

 

5,108

 

12 Cascade Boulevard

 

WU/LH

 

Tenant Improvement

 

4,115

 

15 Executive Boulevard

 

WU/LH

 

Building

 

5,455,418

 

15 Executive Boulevard

 

WU/LH

 

Land

 

1,711,510

 

15 Executive Boulevard

 

WU/LH

 

Lease Improvement

 

157,055

 

15 Executive Boulevard

 

WU/LH

 

Lobby

 

97,698

 

15 Executive Boulevard

 

WU/LH

 

Tenant Improvement

 

69,319

 

15 Executive Boulevard

 

WU/LH

 

Leasing

 

8,301

 

15 Executive Boulevard

 

WU/LH

 

Tenant Improvement

 

7,805

 

15 Executive Boulevard

 

WU/LH

 

Leasing

 

7,382

 

15 Executive Boulevard

 

WU/LH

 

Equipment

 

3,111

 

15 Executive Boulevard

 

WU/LH

 

Leasing

 

3,783

 

15 Executive Boulevard

 

WU/LH

 

Equipment

 

1,225

 

15 Progress Drive

 

WU/LH

 

Land

 

3,108,987

 

15 Progress Drive

 

WU/LH

 

Building

 

2,190,887

 

15 Progress Drive

 

WU/LH

 

Leasing

 

206,139

 

15 Progress Drive

 

WU/LH

 

Lease Improvement

 

45,020

 

15 Progress Drive

 

WU/LH

 

Tenant Improvement

 

1,229

 

 

2


 

15 Progress Drive

 

WU/LH

 

Equipment

 

47

 

15 Progress Drive

 

WU/LH

 

Tenant Improvement

 

—

 

199 Ridgewood Drive

 

WU/LH

 

Land

 

1,556,444

 

199 Ridgewood Drive

 

WU/LH

 

Building

 

1,298,114

 

199 Ridgewood Drive

 

WU/LH

 

Lease Improvement

 

57,005

 

199 Ridgewood Drive

 

WU/LH

 

Mortgage Cost

 

41,101

 

199 Ridgewood Drive

 

WU/LH

 

Org Cost

 

4,300

 

199 Ridgewood Drive

 

WU/LH

 

Equipment

 

2,538

 

199 Ridgewood Drive

 

WU/LH

 

Equipment

 

380

 

200 American Road

 

WU/LH

 

Building

 

4,575,006

 

200 American Road

 

WU/LH

 

Land

 

1,169,156

 

200 American Road

 

WU/LH

 

Lease Improvement

 

409,964

 

200 American Road

 

WU/LH

 

Mortgage Cost

 

44,909

 

200 American Road

 

WU/LH

 

Equipment

 

15,245

 

200 American Road

 

WU/LH

 

Equipment

 

5,023

 

200 American Road

 

WU/LH

 

Org Cost

 

4,300

 

203 Ridgewood Drive

 

WU/LH

 

Land

 

2,283,026

 

203 Ridgewood Drive

 

WU/LH

 

Building

 

820,623

 

203 Ridgewood Drive

 

WU/LH

 

Mortgage Cost

 

76,786

 

203 Ridgewood Drive

 

WU/LH

 

Lease Improvement

 

61,775

 

203 Ridgewood Drive

 

WU/LH

 

Org Cost

 

4,300

 

203 Ridgewood Drive

 

WU/LH

 

Equipment

 

1,127

 

203 Ridgewood Drive

 

WU/LH

 

Equipment

 

303

 

22 Marsh Hill Road

 

WU/LH

 

Building

 

2,341,972

 

22 Marsh Hill Road

 

WU/LH

 

Land

 

1,801,669

 

22 Marsh Hill Road

 

WU/LH

 

Lease Improvement

 

161,527

 

22 Marsh Hill Road

 

WU/LH

 

Mortgage Cost

 

21,915

 

22 Marsh Hill Road

 

WU/LH

 

Leasing

 

8,067

 

22 Marsh Hill Road

 

WU/LH

 

Org Cost

 

6,410

 

22 Marsh Hill Road

 

WU/LH

 

Equipment

 

825

 

25 Executive Boulevard

 

WU/LH

 

Building

 

1,091,706

 

25 Executive Boulevard

 

WU/LH

 

Land

 

745,854

 

25 Executive Boulevard

 

WU/LH

 

Lease Improvement

 

65,757

 

25 Executive Boulevard

 

WU/LH

 

Equipment

 

5,062

 

25 Executive Boulevard

 

WU/LH

 

Org Cost

 

5,346

 

269 Lambert Road

 

WU/LH

 

Building

 

3,538,777

 

269 Lambert Road

 

WU/LH

 

Land

 

2,073,183

 

269 Lambert Road

 

WU/LH

 

Lease Improvement

 

156,118

 

269 Lambert Road

 

WU/LH

 

Mortgage Cost

 

62,494

 

269 Lambert Road

 

WU/LH

 

Equipment

 

21,131

 

269 Lambert Road

 

WU/LH

 

Org Cost

 

6,777

 

300 American Road

 

WU/LH

 

Building

 

7,347,092

 

300 American Road

 

WU/LH

 

Land

 

1,861,016

 

300 American Road

 

WU/LH

 

Lease Improvement

 

500,529

 

300 American Road

 

WU/LH

 

Equipment

 

32,150

 

300 American Road

 

WU/LH

 

Org Cost

 

53,830

 

300 American Road

 

WU/LH

 

Mortgage Cost

 

44,058

 

300 American Road

 

WU/LH

 

Lease Improvement

 

35,036

 

300 American Road

 

WU/LH

 

Org Cost

 

4,300

 

 

3


 

300 American Road

 

WU/LH

 

Equipment

 

1,879

 

35 Executive Boulevard

 

WU/LH

 

Building

 

9,139,320

 

35 Executive Boulevard

 

WU/LH

 

Land

 

1,786,030

 

35 Executive Boulevard

 

WU/LH

 

Lease Improvement

 

234,368

 

35 Executive Boulevard

 

WU/LH

 

Mortgage Cost

 

88,425

 

35 Executive Boulevard

 

WU/LH

 

Mortgage Cost

 

72,233

 

35 Executive Boulevard

 

WU/LH

 

Equipment

 

48,742

 

35 Executive Boulevard

 

WU/LH

 

Equipment

 

8,974

 

35 Executive Boulevard

 

WU/LH

 

Leasing

 

5,663

 

35 Executive Boulevard

 

WU/LH

 

Org Cost

 

2,977

 

35 Executive Boulevard

 

WU/LH

 

Tenant Improvement

 

—

 

36 Midland Avenue

 

WU/LH

 

Building

 

7,442,367

 

36 Midland Avenue

 

WU/LH

 

Land

 

1,404,640

 

36 Midland Avenue

 

WU/LH

 

Deferred Lease

 

220,130

 

36 Midland Avenue

 

WU/LH

 

Lease Improvement

 

180,561

 

36 Midland Avenue

 

WU/LH

 

Mortgage Cost

 

123,926

 

36 Midland Avenue

 

WU/LH

 

Leasing

 

78,454

 

36 Midland Avenue

 

WU/LH

 

Leasing

 

65,540

 

36 Midland Avenue

 

WU/LH

 

Equipment

 

10,424

 

36 Midland Avenue

 

WU/LH

 

Paving

 

18,001

 

36 Midland Avenue

 

WU/LH

 

Equipment

 

12,170

 

36 Midland Avenue

 

WU/LH

 

Leasing

 

8,157

 

36 Midland Avenue

 

WU/LH

 

Lease Improvement

 

7,895

 

36 Midland Avenue

 

WU/LH

 

Tenant Improvement

 

6,595

 

36 Midland Avenue

 

WU/LH

 

Org Cost

 

4,300

 

400 American Road

 

WU/LH

 

Building

 

10,256,310

 

400 American Road

 

WU/LH

 

Land

 

1,783,329

 

400 American Road

 

WU/LH

 

Lease Improvement

 

459,483

 

400 American Road

 

WU/LH

 

Mortgage Cost

 

69,151

 

400 American Road

 

WU/LH

 

Equipment

 

18,871

 

400 American Road

 

WU/LH

 

Equipment

 

29,532

 

400 American Road

 

WU/LH

 

Deferred Lease

 

4,782

 

400 American Road

 

WU/LH

 

Org Cost

 

4,300

 

401 Fieldcrest Drive

 

WU/LH

 

Land

 

4,958,096

 

401 Fieldcrest Drive

 

WU/LH

 

Mortgage Cost

 

54,827

 

401 Fieldcrest Drive

 

WU/LH

 

Org Cost

 

4,300

 

404 Fieldcrest Avenue

 

WU/LH

 

Building

 

6,651,516

 

404 Fieldcrest Avenue

 

WU/LH

 

Land

 

3,560,777

 

404 Fieldcrest Avenue

 

WU/LH

 

Lease Improvement

 

359,066

 

404 Fieldcrest Avenue

 

WU/LH

 

Mortgage Cost

 

158,018

 

404 Fieldcrest Avenue

 

WU/LH

 

Org Cost

 

4,300

 

404 Fieldcrest Avenue

 

WU/LH

 

Equipment

 

1,266

 

404 Fieldcrest Avenue

 

WU/LH

 

Equipment

 

2,575

 

412 Fairview Park Drive

 

WU/LH

 

Land

 

4,657,792

 

412 Fairview Park Drive

 

WU/LH

 

Mortgage Cost

 

48,734

 

412 Fairview Park Drive

 

WU/LH

 

Org Cost

 

4,300

 

470 Bridgeport Avenue

 

WU/LH

 

Land

 

2,063,305

 

470 Bridgeport Avenue

 

WU/LH

 

Building

 

5,958,387

 

470 Bridgeport Avenue

 

WU/LH

 

Equipment

 

93,456

 

 

4


 

470 Bridgeport Avenue

 

WU/LH

 

Mortgage Cost

 

42,328

 

470 Bridgeport Avenue

 

WU/LH

 

Leasing

 

31,415

 

470 Bridgeport Avenue

 

WU/LH

 

Equipment

 

4,050

 

470 Bridgeport Avenue

 

WU/LH

 

Org Cost

 

7,931

 

500 American Road

 

WU/LH

 

Building

 

7,746,994

 

500 American Road

 

WU/LH

 

Land

 

1,988,183

 

500 American Road

 

WU/LH

 

Lease Improvement

 

363,747

 

500 American Road

 

WU/LH

 

Mortgage Cost

 

58,775

 

500 American Road

 

WU/LH

 

Equipment

 

6,848

 

500 American Road

 

WU/LH

 

Org Cost

 

4,300

 

500 American Road

 

WU/LH

 

Equipment

 

115

 

8 Slater Street

 

WU/LH

 

Building

 

3,677,669

 

8 Slater Street

 

WU/LH

 

Land

 

2,422,870

 

8 Slater Street

 

WU/LH

 

Lobby

 

292,203

 

8 Slater Street

 

WU/LH

 

Org Cost

 

95,565

 

8 Slater Street

 

WU/LH

 

Mortgage Cost

 

96,844

 

8 Slater Street

 

WU/LH

 

Leasing

 

53,670

 

8 Slater Street

 

WU/LH

 

Lease Improvement

 

56,956

 

8 Slater Street

 

WU/LH

 

Tenant Improvement

 

50,925

 

8 Slater Street

 

WU/LH

 

Leasing

 

37,668

 

8 Slater Street

 

WU/LH

 

Leasing

 

30,356

 

8 Slater Street

 

WU/LH

 

Equipment

 

18,656

 

8 Slater Street

 

WU/LH

 

Equipment

 

3,848

 

8 Slater Street

 

WU/LH

 

Tenant Improvement

 

6,857

 

8 Slater Street

 

WU/LH

 

Carpeting

 

4,513

 

8 Slater Street

 

WU/LH

 

Org Cost

 

4,300

 

950 Bridgeport Avenue

 

WU/LH

 

Land

 

3,724,062

 

950 Bridgeport Avenue

 

WU/LH

 

Building

 

1,376,526

 

950 Bridgeport Avenue

 

WU/LH

 

Lease Improvement

 

61,748

 

950 Bridgeport Avenue

 

WU/LH

 

Mortgage Cost

 

39,300

 

950 Bridgeport Avenue

 

WU/LH

 

Mortgage Cost

 

30,695

 

950 Bridgeport Avenue

 

WU/LH

 

Mortgage Cost

 

31,967

 

950 Bridgeport Avenue

 

WU/LH

 

Equipment

 

2,843

 

950 Bridgeport Avenue

 

WU/LH

 

Org Cost

 

5,971

 

950 Bridgeport Avenue

 

WU/LH

 

Mortgage Cost

 

4,775

 

950 Bridgeport Avenue

 

WU/LH

 

Equipment

 

844

 

 

 

 

 

 

 

 

 

Total Lighthouse Properties - Gross Asset Value

 

 

 

 

 

194,098,003

 

 

5


 

EXHIBIT C

EXAMPLES REGARDING ADJUSTMENT FACTOR

 

For purposes of the following examples, it is assumed that (a) the Adjustment Factor in effect on January 1, 2013 is 1.0 and (b) on January 1, 2013 (the “Partnership Record Date” for purposes of these examples), prior to the events described in the examples, there are 100 REIT Shares issued and outstanding.

 

Example 1

 

On the Partnership Record Date, GTJ REIT declares a dividend on its outstanding REIT Shares in REIT Shares. The amount of the dividend is one REIT Share paid in respect of each REIT Share owned. Pursuant to Paragraph (i) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the stock dividend is declared, as follows:

1.0 * 200/100 = 2.0

 

Accordingly, the Adjustment Factor after the stock dividend is declared is 2.0.

 

Example 2

 

On the Partnership Record Date, GTJ REIT distributes options to purchase REIT Shares to all holders of its REIT Shares. The amount of the distribution is one option to acquire one REIT Share in respect of each REIT Share owned. The strike price is $4.00 a share. The Value of a REIT Share on the Partnership Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the options are distributed, as follows:

1.0 * (100 + 100)/(100 + [100 * $4.00/$5.00]) = 1.1111

 

Accordingly, the Adjustment Factor after the options are distributed is 1.1111. If the options expire or become no longer exercisable, then the retroactive adjustment specified in Paragraph (ii) of the definition of “Adjustment Factor” shall apply.

 

Example 3

 

On the Partnership Record Date, GTJ REIT distributes assets to all holders of its REIT Shares. The amount of the distribution is one asset with a fair market value (as determined by the General Partner) of $1.00 in respect of each REIT Share owned. It is also assumed that the assets do not relate to assets received by GTJ REIT pursuant to a pro rata distribution by the Partnership. The Value of a REIT Share on the Partnership Record Date is $5.00 a share. Pursuant to Paragraph (iii) of the definition of “Adjustment Factor,” the Adjustment Factor shall be adjusted on the Partnership Record Date, effective immediately after the assets are distributed, as follows:

1.0 * $5.00/($5.00 - $1.00) = 1.25

 

Accordingly, the Adjustment Factor after the assets are distributed is 1.25.

 


 

EXHIBIT D

COMMON UNIT NOTICE OF REDEMPTION

 

To: GTJ GP, LLC.

 

 

The undersigned Common Limited Partner or Assignee hereby irrevocably tenders for redemption [ ] Common Units in GTJ REIT, INC. in accordance with the terms of the Amended and Restated Agreement of Limited Partnership of GTJ REALTY, LP, dated as of January 1, 2013 as amended (the “ Agreement ”), and the Common Redemption Right referred to therein. The undersigned Common Limited Partner or Assignee:

 

(a)           undertakes (i) to surrender such Common Units and any certificate therefor at the closing of the Common Redemption and (ii) to furnish to the General Partner, prior to the Specified Redemption Date, the documentation, instruments and information required under Section 15.1.G of the Agreement;

 

(b)           directs that the certified check representing the Common Unit Cash Amount, or the Common Unit REIT Shares Amount, as applicable, deliverable upon the closing of such Redemption be delivered to the address specified below;

 

(c)           represents, warrants, certifies and agrees that:

 

(ii)           the undersigned Common Limited Partner or Assignee is a Qualifying Common Party,

 

(iii)          the undersigned Common Limited Partner or Assignee has, and at the closing of the Common Redemption will have, good, marketable and unencumbered title to such Common Units, free and clear of the rights or interests of any other person or entity,

 

(iv)          the undersigned Common Limited Partner or Assignee has, and at the closing of the Common Redemption will have, the full right, power and authority to tender and surrender such Common Units as provided herein, and

 

(v)           the undersigned Common Limited Partner or Assignee has obtained the consent or approval of all persons and entities, if any, having the right to consent to or approve such tender and surrender; and

 

(d)           acknowledges that he will continue to own such Common Units until and unless either (1) such Common Units are acquired by the General Partner pursuant to Section 15.1.B of the Agreement or (2) such redemption transaction closes.

 

All capitalized terms used herein and not otherwise defined shall have the same meaning ascribed to them respectively in the Agreement.

 

Dated:

Name of Common Limited Partner or Assignee:

 

 

 

                                                                                

 

 

 


 

 

(Signature of Common Limited Partner or Assignee)

 

 

 

 

 

(Street Address)

 

 

 

 

 

(City) (State) (Zip Code)

 

 

 

Signature Guaranteed by:

 

 

 

 

 

 

 

 

Issue Check Payable to:

                                                                                

 

 

Please insert social security or identifying number:

                                                                                

 

2

Exhibit 10.3

 

TAX PROTECTION AGREEMENT

 

THIS TAX PROTECTION AGREEMENT (this “Agreement”) is made and entered into as of January 1, 2013 by and among GTJ REIT, INC., a Maryland real estate investment trust (the “REIT”), GTJ REALTY, LP (the “Partnership”), JEFFREY WU, WU FAMILY 2012 GIFT TRUST, PAUL COOPER, JEROME COOPER, JEFFREY RAVETZ, SARAH RAVETZ and LOUIS SHEINKER (each a “Protected Partner and collectively the “Protected Partners”).

 

WHEREAS, pursuant to that certain Contribution Agreement, dated as of January 1, 2013 (the “Contribution Agreement”), the Protected Partners caused to be transferred to the Partnership all of such Protected Partner’s beneficial ownership interests in the various entities that own real estate properties, as identified in said Contribution Agreement, subject to specified liabilities, in exchange for units of limited partnership interests in the Partnership (“Units”) (the “Transaction”);

 

WHEREAS, it is intended for federal income tax purposes that the Transaction be treated as a contribution by the Protected Partners of all of the contributed assets, subject to the assumed liabilities, to the Partnership in exchange for Partnership interests under Section 721 of the Internal Revenue Code of 1986, as amended (the “Code”)

 

WHEREAS, in accordance with the Contribution Agreement and in consideration for the agreement of the Protected Partners to consummate the Transaction, the parties desire to enter into this Agreement regarding certain tax matters associated with the Transaction; and

 

WHEREAS, the REIT and the Partnership desire to evidence their agreement regarding amounts that may be payable as a result of certain actions being taken by the Partnership regarding the deposition of certain of the contributed assets and certain debt obligations of the Partnership and its subsidiaries.

 

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein and in the Contribution Agreement, the parties hereto hereby agree as follows:

 

ARTICLE 1
DEFINITIONS

 

To the extent not otherwise defined herein, capitalized terms used in this Agreement have the meanings ascribed to them in the Partnership Agreement (as defined below).

 

“ Closing Date ” means January 1, 2013.

 

“ Code ” means the Internal Revenue Code of 1986, as amended.

 


 

“ Partnership ” means GTJ Realty, L.P., a Delaware limited partnership.

 

“ Consent ” means the prior written consent to do the act or thing for which the consent is required or solicited, which consent may be executed by a duly authorized officer or agent of the party granting such consent.

 

“ Contributed Assets ” means the assets contributed, directly or indirectly, to the Partnership by the Protected Partners.

 

“ Excess Protected Gain ” means for a Gain Limitation Year, the amount by which the Protected Gain recognized by the Protected Partners, as a group, with respect to such Gain Limitation Year with respect to the Gain Limitation Properties exceeds the Annual Gain Limitation for such Gain Limitation Year.

 

“ Gain Limitation Property ” means (i) each of the properties identified on Schedule 2.1(b)  hereto as a Gain Limitation Property; (ii) any other properties or assets hereafter acquired by the Partnership or any direct or indirect interest owned by the Partnership in any entity that owns an interest in a Gain Limitation Property, if the disposition of that interest would result in the recognition of Protected Gain by a Protected Partner; and (iii) any other property that the Partnership directly or indirectly receives that is in whole or in part a “substituted basis property” as defined in Section 7701(a)(42) of the Code with respect to a Gain Limitation Property.

 

“ Gain Limitation Year ” means a taxable year of the Partnership ending on or before the expiration of the Tax Protection Period.

 

“ Guaranteed Amount ” means the aggregate amount of each Guaranteed Debt that is guaranteed at any time by Partner Guarantors.

 

“ Guaranteed Debt ” means any loans incurred (or assumed) by the Partnership or any of its subsidiaries that are guaranteed by Partner Guarantors at any time after the Closing Date pursuant to Article 3 hereof.

 

“ Minimum Liability Amount ” means, for each Protected Partner, the amount set forth on Schedule 3.1 hereto next to such Protected Partner’s name and as decreased at a particular time to the extent that, at such time, any reduction in the Minimum Liability Amount would not have any adverse consequences on any Protected Partner.

 

“ Nonrecourse Liability ” has the meaning set forth in Treasury Regulations §1.752-1(a)(2).

 

“ Partner Guarantors ” means those Protected Partners who have guaranteed any portion of the Guaranteed Debt. The Partner Guarantors and each Partner Guarantor’s dollar amount share of the Guaranteed Amount with respect to the Guaranteed Debt is zero as of the Closing Date and will be set forth amended from time to time Schedule 3.2 hereto.

 

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“ Partnership Agreement ” means the Amended and Restated Agreement of Limited Partnership of GTJ Realty, L.P., dated as of January 1, 2013, and as the same may be further amended in accordance with the terms thereof.

 

“ Protected Gain ” shall mean the gain that would be allocable to and recognized by a Protected Partner under Section 704(c) of the Code in the event of the sale of a Protected Property or Gain Limitation Property in a fully taxable transaction (excluding its corresponding share of “book gain,” if any). The initial amount of Protected Gain with respect to each Protected Partner shall be determined as if the Partnership sold a Protected Property or Gain Limitation Property in a fully taxable transaction on the Closing Date for consideration equal to the Section 704(b) Value of such Protected Property or Gain Limitation Property on the Closing Date, and is set forth on Schedule 2.1(b)  hereto. Gain that would be allocated to a Protected Partner upon a sale of a Protected Property or Gain Limitation Property that is “book gain” (for example, gain attributable to appreciation in the actual value of the Protected Property or Gain Limitation Property following the Closing Date or gain resulting from reductions in the “book value of the Protected Property or Gain Limitation Property following the Closing Date) would not be considered Protected Gain. (As used in this definition, “book gain” is any gain that would not be required under Section 704(c) of the Code and the applicable regulations to be specially allocated to the Protected Partners, but rather would be allocated to all Partners in the Partnership, including the REIT, in accordance with their respective economic interests in the Partnership.)

 

“ Protected Partner ” means those persons set forth on Schedule 2.1(a)  hereto as “Protected Partners,” any person who acquires Units from a Protected Partner in a transaction in which gain or loss is not recognized in whole or in part and in which such transferee’s adjusted basis, as determined for federal income tax purposes, is determined in whole or in part by reference to the adjusted basis of a Protected Partner in such Units.

 

“ Protected Property ” means (i) each of the properties identified as a Protected Property on Schedule 2.1(b)  hereto; (ii) any direct or indirect interest owned by the Partnership in any Subsidiary that owns an interest in a Protected Property, if the disposition of such properties, assets or interest would result in the recognition of Protected Gain with respect to a Protected Property by a Protected Partner; and (iii) any other property that the Partnership directly or indirectly receives that is in whole or in part a “substituted basis property” as defined in Section 7701(a)(42) of the Code with respect to a Protected Property.

 

“ Qualified Guarantee ” has the meaning set forth in Section 3.2.

 

“ Qualified Guarantee Indebtedness ” has the meaning set forth in Section 3.2.

 

“ Section 704(b) Value ” means the fair market value of any Protected Property or Gain Limitation Property as agreed to by the Partnership and the Protected Partners and as forth next to each Protected Property on Schedule 2.1(b) . For purposes of this Agreement, the aggregate Section 704(b) Value for all properties contributed to the Partnership by the Protected Partners in the Transaction will be the agreed value of the Units to be issued in the Transaction plus the mortgage debt secured by or allocable to such properties outstanding on the Closing Date that is assumed by the Partnership pursuant to the Contribution Agreement. The Section 704(b) Value for each Protected Property and each Gain Limitation Property shall be as

 

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determined by agreement between the Protected Partners and the Partnership pursuant to this Agreement. The Partnership shall initially carry the Protected Property or Gain Limitation Property on its books at a value equal to the Section 704(b) Value as set forth above.

 

“ Subsidiary ” means any entity in which the Partnership owns a direct or indirect interest that owns a Protected Property or a Gain Limitation Property on the Closing Date, after giving effect to the Transaction, or that thereafter is a successor to the Partnership’s direct or indirect interests in a Protected Property or Gain Limitation Property.

 

“ Tax Protection Period ” means the period commencing on the Closing Date and ending at 12:01 AM on a date which is seven (7) years from the Closing Date.

 

“ Units ” means the units of limited partnership of the Partnership, as described in the Partnership Agreement.

 

ARTICLE 2
RESTRICTIONS ON DISPOSITIONS OF PROTECTED PROPERTIES

 

2.1           General Prohibition on Disposition of Protected Properties . The Partnership agrees for the benefit of each Protected Partner, for the term of the Tax Protection Period, not to directly or indirectly sell, exchange, transfer, or otherwise dispose of a Protected Property or any interest therein (without regard to whether such disposition is voluntary or involuntary) in a transaction that would cause any of the Protected Partners to recognize any remaining Protected Gain.

 

Without limiting the foregoing, the term “sale, exchange, transfer or disposition” by the Partnership shall be deemed to include, and the prohibition shall extend to:

 

(a)                                  any direct or indirect disposition by any direct or indirect Subsidiary of any Protected Property or any interest therein;

 

(b)                                  any direct or indirect disposition by the Partnership of any Protected Property (or any direct or indirect interest therein) that is subject to Section 704(c)(1)(B) of the Code and the Treasury Regulations thereunder; and

 

(c)                                   any distribution by the Partnership to a Protected Partner that is subject to Section 737 of the Code and the Treasury Regulations thereunder;

 

Without limiting the foregoing, a disposition shall include any transfer, voluntary or involuntary, by the Partnership or any Subsidiary in a foreclosure proceeding, pursuant to a deed in lieu of foreclosure, or in a bankruptcy proceeding.

 

Notwithstanding the foregoing, this Section 2.1 shall not apply to a voluntary, actual disposition by a Protected Partner of Units in connection with a merger or consolidation of the Partnership pursuant to which (1) the Protected Partner is offered either cash or property treated as cash pursuant to Section 731 of the Code (“Cash Consideration”) or partnership interests in a partnership that would be treated as the continuing partnership under the principles

 

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of Section 708 of the Code and the receipt of such partnership interests would not result in the recognition of gain for federal income tax purposes by the Protected Partner (“Partnership Interest Consideration”); (2) the Protected Partner has the ability to elect to receive solely Partnership Interest Consideration in exchange for his Units and the continuing partnership has agreed in writing to assume the obligations of the Partnership under this Agreement; (3) no Protected Gain is recognized by the Partnership as a result of any partner of the Partnership receiving Cash Consideration; and (4) the Protected Partner elects to receive Cash Consideration.

 

2.2           The restriction set forth in Section 2.1 shall not apply to any sale, exchange, transfer or disposition by the Partnership of any Protected Property, or any interest therein (or in the entity owning, directly or indirectly, the Protected Property), as a result of the condemnation or taking of any Protected Property by a governmental entity in an eminent domain proceeding or otherwise, provided that the Partnership shall use commercially reasonable efforts to structure such disposition as either a tax-free like-kind exchange under Section 1031 of the Code or a tax-free investment of proceeds under Section 1033 of the Code, provided that in no event shall the Partnership be obligated to acquire or invest in any property that it would otherwise not have acquired or invested in accordance with its historical or stated investment practices.  The exception provided for in this Section 2.2 shall not apply in the event the Board of Directors of the REIT (including a majority of the disinterested directors) makes a determination in good faith that it is not in the best interests of the REIT and its Stockholders to effect a tax-free, like-kind exchange under Section 1031 of the Code or tax-free investment of proceeds under Section 1033 of the Code, or any successor provisions of the Code.

 

2.3           Exceptions Where No Gain Recognized . Notwithstanding the restriction set forth in Section 2.1, the Partnership or any Subsidiary may dispose of any Protected Property (or any interest therein) if such disposition qualifies as a like-kind exchange under Section 1031 of the Code, or an involuntary conversion under Section 1033 of the Code, or other transaction (including, but not limited to, a contribution of property to any entity that qualifies for the non-recognition of gain under Section 721 or Section 351 of the Code, or a merger or consolidation of the Partnership with or into another entity that qualifies for taxation as a “partnership” for federal income tax purposes (a “Successor Partnership”)) that, as to each of the foregoing, does not result in the recognition of any taxable income or gain to any Protected Partner with respect to any of the Units; provided, however, that:

 

(a)                                  in the case of a Section 1031 like-kind exchange, if such exchange is with a “related party” within the meaning of Section 1031(f)(3) of the Code, any direct or indirect disposition by such related party of the Protected Property or any other transaction prior to the expiration of the two (2) year period following such exchange that would cause Section 1031(f)(1) to apply with respect to such Protected Property (including by reason of the application of Section 1031(f)(4)) shall be considered a violation of Section 2.1 by the Partnership; and

 

(b)                                  in the event that at the time of the exchange or other disposition the Protected Property is secured, directly or indirectly, by indebtedness that is guaranteed by a Protected Partner (or for which a Protected Partner otherwise has personal liability) and that is not then in default and the

 

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transferee is not a Subsidiary of the Partnership that both is more than 50% owned, directly or indirectly by the Partnership and is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly owned subsidiary of the Partnership is the sole managing general partner or sole managing Partner, as applicable), (a) either (I) such indebtedness shall be repaid in full or (II) the Partnership shall obtain from the lenders with respect to such indebtedness a full and complete release of liability for each of the Protected Partners that has guaranteed, or otherwise has liability for, such indebtedness, and (b) if such indebtedness is a Guaranteed Debt and the Tax Protection Period shall not have expired, the Partnership shall comply with its covenants set forth in

 

Article 3 below with respect to such Guaranteed Debt and the Partner Guarantors that are considered to have liability for such Guaranteed Debt (determined under Section 3.4 treating such events as a repayment of the Guaranteed Debt).

 

ARTICLE 3
ALLOCATION OF LIABILITIES; GUARANTEE OPPORTUNITY AND DEFICIT RESTORATION OBLIGATIONS

 

3.1           Minimum Liability Allocation . During the Tax Protection Period, the Partnership will offer to each Protected Partner the opportunity to enter into Qualified Guarantees of Qualified Guarantee Indebtedness in such amount or amounts so as to cause the amount of partnership liabilities allocated to such Protected Partner for purposes of Section 752 of the Code to be not less than such Protected Partner’s Minimum Liability Amount and to cause the amount of partnership liabilities with respect to which such Protected Partner will be considered to be “at risk” for purposes of Section 465 of the Code (without taking into account any action of the Protected Partner that would preclude such liability from being so considered) to be not less than such Protected Partner’s Partner’s Minimum Liability Amount, as provided in this Article 3.  In order to minimize the need for Protected Partners to enter into Qualified Guarantees, the Partnership will use the additional method under Treasury Regulations Section 1.752-3(a)(3) to allocate excess Nonrecourse Liabilities considered secured by a Protected Property or Gain Limitation Property to the Protected Partners to the extent that the “built-in gain” with respect to those properties exceeds the amount of the Nonrecourse Liabilities considered secured by such Protected Property or Gain Limitation Property allocated to the Protected Partners under Treasury Regulations Section 1.752-3(a)(2). The Partnership may choose to allocate excess Nonrecourse Liabilities under one of the other available methods under Treasury Regulation Section 1.752-3(a)(3) providing such method does not result in any adverse consequences to a Protected Partner.

 

3.2           Qualified Guarantee Indebtedness and Qualified Guarantee; Treatment of Qualified Guarantee Indebtedness as Guaranteed Debt . In order for an offer by the Partnership of an opportunity to guarantee indebtedness to satisfy the requirements of this Article 3, (1) the

 

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indebtedness to be guaranteed must satisfy all of the conditions set forth in this Section 3.2 (indebtedness satisfying all such conditions is referred to as “Qualified Guarantee Indebtedness”); (2) the guarantee by the Partner Guarantors must be pursuant to a Guarantee Agreement substantially in the form attached hereto as Schedule 3.7 that satisfies the conditions set forth in Sections 3.2 (i) and (iii) (a “Qualified Guarantee”); (3) the amount of debt required to be guaranteed by the Partner Guarantor must not exceed the portion of the Guaranteed Amount for which a replacement guarantee is being offered; and (4) the debt to be guaranteed must be considered indebtedness of the Partnership for purposes of determining the adjusted tax basis of the interests of partners in the Partnership in their partnership interests determined in accordance with the Code . If, and to the extent that, a Partner Guarantor elects to guarantee Qualified Guarantee Indebtedness pursuant to an offer made in accordance with this Article 3, such indebtedness thereafter shall be considered a Guaranteed Debt and subject to all of this Article 3. The conditions that must be satisfied at all times with respect to any additional or replacement Guaranteed Debt offered pursuant to this Article 3 hereof and the guarantees with respect thereto are as follows:

 

(i)                                      each such guarantee shall be a “bottom dollar guarantee” in that the lender for the Guaranteed Debt is required to pursue all other collateral and security for the Guaranteed Debt (other than any “bottom dollar guarantees” permitted pursuant to this clause (i) and/or Section 3.3 below) prior to seeking to collect on such a guarantee, and the lender shall have recourse against the guarantee only if, and solely to the extent that, the total amount recovered by the lender with respect to the Guaranteed Debt after the lender has exhausted its remedies as set forth above is less than the aggregate of the Guaranteed Amounts with respect to such Guaranteed Debt (plus the aggregate amounts of any other guarantees (x) that are in effect with respect to such Guaranteed Debt at the time the guarantees pursuant to this Article 3 are entered into, or (y) that are entered into after the date the guarantees pursuant to this Article 3 are entered into with respect to such Guaranteed Debt and that comply with Section 3.5 below, but only to the extent that, in either case, such guarantees are “bottom dollar guarantees” with respect to the Guaranteed Debt), and the maximum aggregate liability of each Partner Guarantor for all Guaranteed Debt shall be limited to the amount actually guaranteed by such Partner Guarantor;

 

(ii)                                   the fair market value of the collateral against which the lender has recourse pursuant to the Guaranteed Debt, determined as of the time the guarantee is entered into (an independent appraisal relied upon by the lender in making the loan shall be conclusive evidence of such fair market value when the guarantee is being entered into in connection with the closing of such loan), shall not be less than 150% of the sum of (x) the aggregate of the Guaranteed Amounts with respect to such Guaranteed Debt, plus (y) the dollar amount of any other indebtedness that is senior to or pari passu with the Guaranteed Debt and as to which the lender thereunder has recourse against property that is collateral of the Guaranteed Debt, plus (z) the aggregate amounts of any other guarantees

 

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(A) that are in effect with respect to such Guaranteed Debt at the time the guarantees pursuant to this Article 3 are entered into with respect to such Guaranteed Debt and that comply with Section 3(e) below, but only to the extent that such guarantees are “bottom dollar guarantees” with respect to the Guaranteed Debt);

 

(iii)                                (A) the executed guarantee must be delivered to the lender and (B) the execution of the guarantee by the Partner Guarantors must be acknowledged by the lender as an inducement to it to make a new loan, to continue an existing loan (which continuation is not otherwise required), or to grant a material consent under an existing loan (which consent is not otherwise required to be granted) or, alternatively, the guarantee otherwise must be enforceable under the laws of the state governing the loan and in which the property securing the loan is located or in which the lender has a significant place of business (with any bona fide branch or office of the lender through which the loan is made, negotiated, or administered being deemed a “significant place of business” for the purposes hereof);

 

(iv)                               as to each Partner Guarantor that is executing a guarantee pursuant to this Agreement, there must be no other Person that would be considered to “bear the economic risk of loss,” within the meaning of Treasury Regulation §1.752-2; or could be considered to be “at risk” for purposes of Section 465(b) with respect to that portion of such debt for which such Partner Guarantor is being made liable for purposes of satisfying the Partnership’s obligations to such Partner Guarantor under this Article 3;

 

(v)                                  the aggregate Guaranteed Amounts with respect to the Guaranteed Debt will not exceed 25% of the amount of the Guaranteed Debt outstanding at the time the guarantee is executed. Except for guarantees already in place at the time a guarantee opportunity is presented to the Protected Partners, at no time can there be guarantees with respect to the Guaranteed Debt that are provided by other persons that are “pari passu” with or at a lower level of risk than the guarantees provided by the Protected Partners. If there are guarantees already in place at the time a guarantee opportunity is presented to the Protected Partners that are “pari passu” with or at a lower level of risk than the guarantees provided by the Protected Partners, then the amount of Guaranteed Debt subject to such existing guarantees shall be added to the Guaranteed Amount for purposes of calculating the 25% limitation set forth in this Section 3.2(v); and

 

(vi)                               the obligor with respect to the Guaranteed Debt is the Partnership or an entity which is and will continue to be under the legal control of the Partnership (which shall include a partnership or limited liability company in which the Partnership or a wholly-owned subsidiary of the Partnership is the sole managing general partner or sole managing Partner, as applicable).

 

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3.3           Covenant With Respect to Guaranteed Debt Collateral . The Partnership covenants with the Partner Guarantors with respect to the Guaranteed Debt that (A) it will comply with the requirements set forth in Section 3.2(b) upon any disposition of any collateral for a Guaranteed Debt, during the Guarantee Protection Period, and (B) it will not at any time, during the Guarantee Protection Period, pledge the collateral with respect to a Guaranteed Debt to secure any other indebtedness (unless such other indebtedness is, by its terms, subordinate in all respects to the Guaranteed Debt for which such collateral is security) or otherwise voluntarily dispose of or reduce the amount of such collateral unless either (i) after giving effect thereto the conditions in Section 3.2(ii) would continue to be satisfied with respect to the Guaranteed Debt and the Guaranteed Debt otherwise would continue to be Qualified Guarantee Indebtedness, or (ii) the Partnership (A) obtains from the lender with respect to the original Guaranteed Debt a full and complete release of any Partner Guarantor unless the Partner Guarantor expressly requests that it not be released, and (B) if the Tax Protection Period has not expired, offers to each Partner Guarantor with respect to such original Guaranteed Debt, not less than 30 days prior to such pledge or disposition, the opportunity to enter into a Qualified Guarantee of other the Partnership indebtedness that constitutes Qualified Guarantee Indebtedness (with such replacement indebtedness thereafter being considered a Guaranteed Debt and subject to this Article 3) in an amount equal to the amount of such original Guaranteed Debt that was guaranteed by such Partner Guarantor.

 

3.4           Repayment or Refinancing of Guaranteed Debt . The Partnership shall not, at any time during the Tax Protection Period applicable to a Partner Guarantor, repay or refinance all or any portion of any Guaranteed Debt unless (i) after taking into account such repayment, each Partner Guarantor would be entitled to include in its tax basis for its Units an amount of Guaranteed Debt equal to its Minimum Liability Amount, or (ii) alternatively, the Partnership, not less than 30 days prior to such repayment or refinancing, offers to the applicable Partner Guarantors the opportunity either to enter into a Qualified Guarantee with respect to other Qualified Guarantee Indebtedness in an amount sufficient so that, taking into account such guarantees of such other Qualified Guarantee Indebtedness, each Partner Guarantor who guarantees such other Qualified Guarantee Indebtedness in the amount specified by the Partnership would be entitled to include in its adjusted tax basis for its Units debt equal to the Minimum Liability Amount for such Partner Guarantor.

 

3.5           Limitation on Additional Guarantees With Respect to Debt Secured by Collateral for Guaranteed Debt . The Partnership shall not offer the opportunity or make available to any person or entity other than a Protected Partner a guarantee of any Guaranteed Debt or other debt that is secured, directly or indirectly, by any collateral for Guaranteed Debt unless (i) such debt by its terms is subordinate in all respects to the Guaranteed Debt or, if such other guarantees are of the Guaranteed Debt itself, such guarantees by their terms must be paid in full before the lender can have recourse to the Partner Guarantors (i.e., the first dollar amount of recovery by the applicable lenders must be applied to the Guaranteed Amount); provided that the foregoing shall not apply with respect to additional guarantees of Guaranteed Debt so long as the conditions set forth in Sections 3.2(ii) and (v) would be satisfied immediately after the implementation of such additional guarantee (determined in the case of Section 3.2(ii), based upon the fair market value of the collateral for such Guaranteed Debt at the time the additional guarantee is entered into and adding the amount of such additional guarantee(s) to the sum of the applicable Guaranteed Amounts plus any other preexisting “bottom dollar guarantee” previously

 

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permitted pursuant to this Section 3.5 or Sections 3.2(i) and (ii) above, for purposes of making the computation provided for in Section 3.2(ii)), and (ii) and such other guarantees do not have the effect of reducing the amount of the Guaranteed Debt that is includible by any Partner Guarantor in its adjusted tax basis for its Units pursuant to Treasury Regulation §1.752-2.

 

3.6          Process . Whenever the Partnership is required under this Article 3 to offer to one or more of the Partner Guarantors an opportunity either to guarantee Qualified Guarantee Indebtedness, the Partnership shall be considered to have satisfied its obligation if the other conditions in this Article 3 are satisfied and, not less than thirty (30) days prior to the date that such guarantee would be required to be executed in order to satisfy this Article 3, the Partnership sends by first class mail, return receipt requested, to the last known address of each such Partner Guarantor (as reflected in the records of the Partnership) the Guarantee Agreement (which shall be substantially in the form of Schedule 3.7 hereto, with such changes thereto as are necessary to reflect the relevant facts) and a brief letter explaining the relevant circumstances (including, as applicable, that the offer is being made pursuant to this Article 3, the circumstances giving rise to the offer, a brief summary of the terms of the Qualified Guarantee Indebtedness to be guaranteed, a brief description of the collateral for the Qualified Guarantee Indebtedness, a statement of the amount to be guaranteed, the address to which the executed Guarantee Agreement, as applicable, must be sent and the date by which it must be received, and a statement to the effect that, if the Protected Partner fails to execute and return such Agreement within the time period specified, the Partner Guarantor thereafter would lose its rights under this Article 3 with respect to the amount of debt that the Partnership is required to offer to be guaranteed, and depending upon the Partner Guarantor’s circumstances and other circumstances related to the Partnership, the Partner Guarantor could be required to recognize taxable gain as a result thereof, either currently or prior to the expiration of the Tax Protection Period, that otherwise would have been deferred). If a notice is properly sent in accordance with this procedure, the Partnership shall have not responsibility as a result of the failure of a Partner Guarantor either to receive such notice or to respond thereto within the specified time period.

 

3.7          Presumption as to Schedule 3.7 . The form of the Guarantee Agreement attached hereto as Schedule 3.7 shall be conclusively presumed to satisfy the conditions set forth in Section 3.2(i) and to have caused the Guaranteed Debt to be considered allocable to the Partner Guarantor who enters into such Guarantee Agreement pursuant to Treasury Regulation §1.752-2 so long as all of the following conditions are met with respect such Guaranteed Debt:

 

(i)             there are no other guarantees in effect with respect to such Guaranteed Debt (other than the guarantees contemporaneously being entered into by the Partner Guarantors pursuant to this Article 3);

 

(ii)            the collateral securing such Guaranteed Debt is not, and shall not thereafter become, collateral for any other indebtedness that is senior to or pari passu with such Guaranteed Debt;

 

(iii)           no additional guarantees with respect to such Guaranteed Debt will be entered into during the applicable Tax Protection Period pursuant to the proviso set forth in Section 3.3;

 

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(iv)           the lender with respect to such Guaranteed Debt is not the Partnership, any Subsidiary or other entity in which the Partnership owns a direct or indirect interest, the REIT, any other partner in the Partnership, or any person related to any partner in the Partnership as determined for purposes of Treasury Regulation §1.752-2 or any person that would be considered a “related party” as determined for purposes of Section 465 of the Code; and

 

(v)            none of the REIT, nor any other partner in the Partnership, nor any person related to any partner in the Partnership as determined for purposes of Treasury Regulation §1.752-2 shall have provided, or shall thereafter provide, collateral for, or otherwise shall have entered into, or shall thereafter enter into, a relationship that would cause such person or entity to be considered to bear the risk of loss with respect to such Guaranteed Debt, as determined for purposes of Treasury Regulation §1.752-2 or that would cause such entity to be considered “at risk” with respect to such Guaranteed Debt, as determined for purposes of Section 465 of the Code.

 

3.8          Additional Guarantee Opportunities . Without limiting any of the other obligations of the Partnership under this Agreement, from and after the expiration of the Tax Protection Period, the Partnership shall, upon a request from a Protected Partner, use commercially reasonable efforts to permit such Protected Partner to enter into an agreement with the Partnership to bear the economic risk of loss as to a portion of the Partnership’s recourse indebtedness by undertaking an obligation to restore a portion of its negative capital account balance upon liquidation of such Protected Partner’s interest in the Partnership and/or to bear financial liability under a Guarantee Agreement substantially in the form of Exhibit 3.7 hereto for indebtedness that would be considered Qualifying Guarantee Indebtedness under Section 3.2 hereof, if such Protected Partner shall provide information from its professional tax advisor satisfactory to the Partnership showing that, in the absence of such agreement, such Protected Partner likely would not be allocated from the Partnership sufficient indebtedness under Section 752 of the Code and the at-risk provisions under Section 465 of the Code to avoid the recognition of gain (other than gain required to be recognized by reason of actual cash distributions from the Partnership or dispositions of Contributed Property occurring after the Tax Protection Period). The Partnership and its professional tax advisors shall cooperate in good faith with such Protected Partner and its professional tax advisors to provide such information regarding the allocation of the Partnership liabilities and the nature of such liabilities as is reasonably necessary in order to determine the Protected Partner’s adjusted tax basis in its Units and at-risk amount. If the Partnership permits a Protected Partner to enter into an agreement under this Section 3.9, the Partnership shall be under no further obligation with respect thereto, and the Partnership shall not be required to indemnify such Protected Partner for any damage incurred, in connection with or as a result of such agreement or the indebtedness, including without limitation a refinancing or prepayment thereof or taking any of the other actions required by Article 3 hereof with respect to Qualified Indebtedness.  Furthermore, the Partnership makes no representation or warranty to any Protected Partner concerning the treatment or effect of any guarantee under federal, state, local or foreign tax law, and bears no responsibility for any tax liability of any Protected Partner or affiliate thereof that is attributable to a reallocation, by a taxing authority, of debt subject to a guarantee (other than an act or omission that is expressly indemnifiable under this Agreement). The amount of Additional Guarantee Opportunities

 

11


 

provided to the Protected Partners after expiration of the Tax Protection Period may be limited at the Partnership’s option to the extent any such Additional Guarantee Opportunities would cause taxable income recognition to the REIT in an amount exceeding the taxable income that would be recognized if the general nonrecourse liability allocation rules of Treasury Regulation Section 1.751-3 were applied without application of this Article 3.8.

 

ARTICLE 4
REMEDIES FOR BREACH

 

4.1          Monetary Damages . In the event that the Partnership breaches its obligations set forth in Article 2, Article 3, or Article 6 with respect to a Protected Partner the Protected Partner’s sole right shall be to receive from the Partnership, and the Partnership shall pay to such Protected Partner as damages, an amount equal to:

 

(a)                                  in the case of a violation of Articles 3 or 6, the aggregate federal, state and local income taxes incurred by the Protected Partner as a result of the income or gain allocated to, or otherwise recognized by, such Protected Partner with respect to its Units by reason of such breach;

 

(b)                                  in the case of a violation of Article 2, the aggregate federal state, and local income taxes incurred with respect the Protected Gain incurred with respect to the Protected Property that is allocable to such Protected Partner under the Operating Agreement;

 

plus in the case of either (a) or (b), an amount equal to the aggregate federal, state, and local income taxes payable by the Protected Partner as a result of the receipt of any payment required under this Section 4.1.

 

For purposes of computing the amount of federal, state, and local income taxes required to be paid by a Protected Partner, (i) any deduction for state income taxes payable as a result thereof actually allowed in computing federal income taxes shall be taken into account, and (ii) a Protected Partner’s tax liability shall be computed using the highest federal, state and local marginal income tax rates that would be applicable to such Protected Partner’s taxable income (taking into account the character and type of such income or gain) for the year with respect to which the taxes must be paid, without regard to any (a) additional income of the Protected Partner, and (b) deductions, losses or credits that may be available to such Protected Partner that would reduce or offset its actual taxable income or actual tax liability if such deductions, losses or credits could be utilized by the Protected Partner to offset other income, gain or taxes of the Protected Partner, either in the current year, in earlier years, or in later years).

 

4.2          Process for Determining Damages . If the Partnership has breached or violated any of the covenants set forth in Article 2, Article 3 or Article 6 (or a Protected Partner asserts that the Partnership has breached or violated any of the covenants set forth in Article 2, Article 3 or Article 6), the Partnership and the Protected Partner agree to negotiate in good faith to resolve any disagreements regarding any such breach or violation and the amount of damages, if any, payable to such Protected Partner under Section 4.1. If any such disagreement cannot be resolved by the Partnership and such Protected Partner within sixty (60) days after the receipt of notice

 

12


 

from the Partnership of such breach and the amount of income to be recognized by reason thereof (or, if applicable, receipt by the Partnership of an assertion by a Protected Partner that the Partnership has breached or violated the covenants set forth in Article 2, Article 3 or Article 6), then

 

(a)                                  with respect to computational points of disagreement, the Partnership and the Protected Partner shall jointly retain a nationally recognized independent public accounting firm (an “Accounting Firm”) to act as an arbitrator to resolve as expeditiously as possible all computation points of any such disagreement.  All determinations made by the Accounting Firm with respect to Article 2 and the amount of damages payable to the Protected Partner under Section 4.1 shall be final, conclusive and binding on the Partnership and the Protected Partner.  The fees and expenses of any Accounting Firm incurred in connection with any such determination shall be shared equally by the Partnership and the Protected Partner, provided that if the amount determined by the Accounting Firm to be owed by the Partnership to the Protected Partner is more than five percent (5%) higher than the amount proposed by the Partnership to be owed to such Protected Partner prior to the submission of the matter to the Accounting Firm, then all of the fees and expenses of any Accounting Firm incurred in connection with any such determination shall be paid by the Partnership and if the amount determined by the Accounting Firm to be owed by the Partnership to the Protected Partner is not more than five percent (5%) higher than the amount proposed by the Partnership to be owed to such Protected Partner prior to the submission of the matter to the Accounting Firm, then all of the fees and expenses of any Accounting Firm incurred in connection with any such determination shall be paid by the Protected Partner.

 

(b)                                  with respect to all other points of disagreement, any controversy, dispute or claim under, arising out of, in connection with or in relation to this Agreement including without limitation the negotiation, execution, interpretation, construction, coverage, scope, performance, non-performance, breach, termination, validity or enforceability of this Agreement (“Dispute”) will be finally settled, at the request of any party, by binding arbitration conducted in accordance with this Section 4.2 and the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) then in effect (the “Rules”).  The arbitration shall be held in New York, New York before a panel of three neutral and impartial arbitrators, one of whom will be selected by the Indemnitor, the second of whom will be selected by the Protected Partner, within thirty days of receipt by respondent(s) of the demand for arbitration.  The third arbitrator, who will chair the arbitral tribunal, will be selected by the other two arbitrators within thirty (30) days of the appointment of the second arbitrator, on the request of any party such arbitrator shall be appointed by the AAA in accordance with the listing, ranking and striking procedure in the Rules.  Decisions of the tribunal will be made by not less than a

 

13


 

majority of the arbitrators comprising such tribunal.  The arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq. ).  The award shall be final and binding upon the parties to the maximum extent permitted by law and shall be the sole and exclusive remedy between the parties regarding any claims, counter-claims, issues or accounting submitted to the arbitral tribunal.  Arbitration under this Section 4.2 will be conducted in accordance with the following provisions:

 

(i)             The arbitration will be conducted in accordance with rules of procedure adopted by the arbitrators to allow the parties to the Dispute to present evidence and argument to the arbitrators;

 

(ii)            Except as may be otherwise provided in this Agreement, the statutes of limitations of the State of New York applicable to the commencement of a lawsuit will apply to the commencement of an arbitration hereunder;

 

(iii)           Upon the request of any party, the arbitrators shall order such discovery (including third-party discovery) as the arbitrators determine to be reasonable under the circumstances.  The arbitrators will, however, impose reasonable schedules and deadlines to ensure that discovery is conducted and concluded on a timely basis and may impose sanctions on any party for abuse or delay of discovery;

 

(iv)           The arbitrators will, in all cases, as promptly as possible hold hearings and reach a final determination with regard to the Dispute.  A determination and award of damages (if any) of the majority of the arbitrators, will be conclusive and binding upon the parties to the maximum extent permitted by law.  Such award shall be in writing, and shall state the finds of fact and conclusions of law on which it is based.  Judgment upon any award rendered by the arbitrators shall be final and binding on the parties and may be enforced by any court having jurisdiction thereof; and

 

(v)            By agreeing to arbitration, the parties doe not intend to deprive any court of its jurisdiction to issue a pre-arbitral injunction, pre-arbitral attachment or other order in aid of arbitration proceedings and the enforcement of any award.  Without prejudice to such provisional remedies as may be available under the jurisdiction of a court, the arbitral tribunal shall have full authority to grant provisional remedies or order the parties to request that a court modify or vacate any temporary or preliminary relief issued by a such court, and to award damages for the failure of any party to respect the arbitral tribunal’s orders to that effect.

 

4.3          Required Notices; Time for Payment . In the event that there has been a breach of Article 2, Article 3 or Article 6 the Partnership shall provide to the Protected Partner notice of the transaction or event giving rise to such breach not later than at such time as the Partnership provides to the Protected Partners the Schedule K-1’s to the Partnership’s federal income tax return as required in accordance with Section 6.4 below. All payments required under this Article

 

14


 

4 to any Protected Partner shall be made to such Protected Partner on or before April15 of the year following the year in which the gain recognition event giving rise to such payment took place; provided that, if the Protected Partner is required to make estimated tax payments that would include such gain, the Partnership shall make a payment to the Protected Partner on or before the due date for such estimated tax payment and such payment from the Partnership shall be in an amount that corresponds to the amount of the estimated tax being paid by such Protected Partner at such time. In the event of a payment required after the date required pursuant to this Section 4.3, interest shall accrue on the aggregate amount required to be paid from such date to the date of actual payment at a rate equal to the “prime rate” of interest, as published in the Wall Street Journal (or if no longer published there, as announced by Citibank) effective as of the date the payment is required to be made.

 

4.4          Additional Damages for Breaches of Section 2.2(b), Section 3.2 and/or Section 3.3. Notwithstanding any of the foregoing in this Article 4, in the event that the Partnership should breach any of its covenants set forth in Section 2.2(b), Section 3.2 and/or Sections 3.3 (i), (ii) and/or (iii) and a Protected Partner is required to make a payment in respect of such indebtedness that it would not have had to make if such breach had not occurred (an “Excess Payment”), then, in addition to the damages provided for in the other Section s of this Article 4, the Partnership shall pay to such Protected Partner an amount equal to the sum of (i) the Excess Payment plus (ii) the aggregate federal, state and local income taxes, if any, computed or set forth in Section 4.1, required to be paid by such Protected Partner by reason of Section 4.4 becoming operative (for example, because the breach by the Partnership and this Section 4.4 caused all or any portion of the indebtedness in question no longer to be considered debt includible in basis by the affected Protected Partner pursuant to Treasury Regulations §1.752-2(a)), plus (iii) an amount equal to the aggregate federal, state and local income taxes required to be paid by the Protected Partner (computed as set forth in Section 5.1) as a result of any payment required under this Section 4.4.

 

ARTICLE 5
SECTION 704(C) METHOD AND ALLOCATIONS

 

5.1          Application of “Traditional Method .” Notwithstanding any provision of the Operating Agreement, the Partnership shall use the “traditional method” under Regulations §1.704-3(b) for purposes of making all allocations under Section 704(c) of the Code with respect to the Contributed Assets (with no “curative allocations” to offset the effects of the “ceiling rule,” including upon any sale of a Protected Property or Gain Limitation Property).

 

ARTICLE 6
ALLOCATIONS OF LIABILITIES PURSUANT TO REGULATIONS UNDER SECTION 752

 

6.1          Allocation Methods to be Followed . Except as provided in Section 6.2, all tax returns prepared by the Partnership with respect to the Protected Period (and to the extent arrangements have been entered into pursuant to Section 3.9, for so long thereafter as such arrangements are in effect) that allocate liabilities of the Partnership for purposes of Section 752 and the Treasury Regulations thereunder shall treat each Partner Guarantor as being allocated for federal income tax purposes an amount of recourse debt (in addition to any nonrecourse debt

 

15


 

otherwise allocable to such Partner Guarantor in accordance with the Partnership Agreement and Treasury Regulations §1.752-3 and any other recourse liabilities allocable to such Partner Guarantor by reason of guarantees of indebtedness entered into pursuant other agreements with the Partnership) pursuant to Treasury Regulation §1.752-2 equal to such Partner Guarantor’s Minimum Liability Amount, as set forth on Schedule B hereto and as may be reduced pursuant to the terms of this Agreement, and the Partnership and the REIT shall not, during or with respect to the Protected Period, take any contrary or inconsistent position in any federal or state income tax returns (including, without limitation, information returns, such as Forms K-1, provided to partners in the Partnership and returns of Subsidiaries of the Partnership) or any dealings involving the Internal Revenue Service (including, without limitation, any audit, administrative appeal or any judicial proceeding involving the income tax returns of the Partnership or the tax treatment of any holder of partnership interests the Partnership)..

 

6.2          Exception to Required Allocation Method . Notwithstanding the provisions of this Agreement, the Partnership shall not be required to make allocations of Guaranteed Debt or other recourse debt of the Partnership to the Protected Partners as set forth in this Agreement if and to the extent that the Partnership determines in good faith that there may not “substantial authority (within the meaning of Section 6664(d)(3)(C)) of the Code for such allocation; provided that the Partnership shall provide to each Protected Partner (or in the event of their death or disability, their executor, guardian or custodian, as applicable), notice of such determination and if, within forty-five (45) days after the receipt thereof, the Partnership is provided an opinion of a law firm recognized as expert in such matters or a nationally recognized public accounting firm to the effect that there is substantial authority (within the meaning of Section 6664(d)(3)(C) of the Code) for such allocations, the Partnership shall continue to make allocations of Guaranteed Debt or other recourse debt of the Partnership to the Protected Partners as set forth in this Agreement; provided further that if there shall have been a judicial determination in a proceeding to which the Partnership is a party and as to which the REIT have been allowed to participate as and to the extent contemplated in Article 7 to the effect that such allocations are not correct, Section 6.1 shall not apply unless the matter is being appealed to an applicable court of appeals and the opinion described above from counsel or accountants engaged by a Protected Partner shall have been provided, except that such opinion shall be to the effect that it is more likely than not that such allocations will be respected. In no event shall this Section 6.2 be construed to relieve the Partnership for liability arising from a failure by the Partnership to comply with one or more of the provisions of Article 3 of this Agreement.

 

6.3          Cooperation in the Event of a Change . If a change in the Partnership’s allocations of Guaranteed Debt or other recourse debt of the Partnership to the Protected Partners is required by reason of circumstances described in Section 6.2, the Partnership and its professional tax advisors shall cooperate in good faith with each Protected Partner (or in the event of their death or disability, their executor, guardian or custodian, as applicable) and their professional tax advisors to develop alternative allocation arrangements and/or other mechanisms that protect the federal income tax positions of the Protected Partners in the manner contemplated by the allocations of Guaranteed Debt or other recourse debt of the Partnership to the Protected Partners as set forth in this Agreement. Fees paid to the Partnership’s professional tax advisors or otherwise incurred by the Partnership will be borne entirely by the Partnership.

 

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ARTICLE 7
TAX PROCEEDINGS

 

7.1          Notice of Tax Audits . If any claim, demand, assessment (including a notice of proposed assessment) or other assertion is made with respect to taxes against the Protected Partners or the Partnership the calculation of which involves a matter covered in this Agreement that could result in tax liability to a Protected Partner (“Tax Claim”) or if the REIT or the Partnership receives any notice from any jurisdiction with respect to any current or future audit, examination, investigation or other proceeding (“Tax Proceeding”) involving the Protected Partners or the Partnership or that otherwise could involve a matter covered in this Agreement and could directly or indirectly affect the Protected Partners (adversely or otherwise), then the REIT or the Partnership, as applicable shall promptly notify the Protected Partners of such Tax Claim or Tax Proceeding.

 

7.2          Control of Tax Proceedings . The REIT, as the general partner of the Partnership shall have the right to control the defense, settlement or compromise of any Proceeding or Tax Claim; provided, however, that the Partnership shall keep the Protected Partners duly informed of the progress thereof to the extent that such Proceeding or Tax Claim could directly or indirectly affect (adversely or otherwise) the Protected Partners and that the Protected Partners shall have the right to review and comment on any proposed settlement with respect to such Tax Claim or Tax Proceeding and all such comments made by the Protected Partner shall be considered by the Partnership in good faith. The Protected Partners shall have the right to request the Partnership to pursue alternatives to any proposed judgment or settlement provided, however, that such Protected Partner agrees to reimbursement the Partnership or REIT for all additional costs expended in connection with such alternative pursuits.

 

7.3          Timing of Tax Returns; Periodic Tax Information . The Partnership shall cause to be delivered to each Protected Partner, as soon as practicable each year, the Forms K-1 that the Partnership is required to deliver to such Protected Partners with respect to the prior taxable year. In addition, the Partnership agrees, at its cost, to provide to the Protected Partners upon request, an estimate of the taxable income expected to be allocable for a specified taxable year from the Partnership to each Protected Partner and the entities that they control, provided that such estimates shall not be required to be provided more frequently than once each calendar year. Further, such estimates will be provided within 45 days of receipt of the request. Costs incurred in connection with the preparation of such estimates will be reimbursed by the Protected Partners.

 

ARTICLE 8
AMENDMENT OF THIS AGREEMENT; WAIVER OF CERTAIN PROVISIONS; APPROVAL OF CERTAIN TRANSACTIONS

 

8.1          Amendment . This Agreement may not be amended, directly or indirectly (including by reason of a merger between the Partnership and another entity) except by a written instrument signed by both the REIT, as general partner of the Partnership, and each of the Protected Partners.

 

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8.2          Waiver . Notwithstanding the foregoing, upon written request by the Partnership, each Protected Partner, in its sole discretion, may waive the payment of any damages that is otherwise payable to such Protected Partner pursuant to Article 4 hereof. Such a waiver shall be effective only if obtained in writing from the affected Protected Partner.

 

ARTICLE 9
MISCELLANEOUS

 

9.1          Additional Actions and Documents . Each of the parties hereto hereby agrees to take or cause to be taken such further actions, to execute, deliver, and file or cause to be executed, delivered and filed such further documents, and will obtain such consents, as may be necessary or as may be reasonably requested in order to fully effectuate the purposes, terms and conditions of this Agreement.

 

9.2          Assignment . No party hereto shall assign its or his rights or obligations under this Agreement, in whole or in part, except by operation of law, without the prior written consent of the other parties hereto, and any such assignment contrary to the terms hereof shall be null and void and of no force and effect.

 

9.3          Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the Protected Partners and their respective successors and permitted assigns, whether so expressed or not. This Agreement shall be binding upon the REIT, the Partnership, and any entity that is a direct or indirect successor, whether by merger, transfer, spin-off or otherwise, to all or substantially all of the assets of either the REIT or the Partnership (or any prior successor thereto as set forth in the preceding portion of this sentence), provided that none of the foregoing shall result in the release of liability of the REIT and the Partnership hereunder. The REIT and the Partnership covenant with and for the benefit of the Protected Partners not to undertake any transfer of all or substantially all of the assets of either entity (whether by merger, transfer, spin-off or otherwise) unless the transferee has acknowledged in writing and agreed in writing to be bound by this Agreement, provided that the foregoing shall not be deemed to permit any transaction otherwise prohibited by this Agreement.

 

9.4          Modification; Waiver . No failure or delay on the part of any party hereto in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and not exclusive of any rights or remedies which they would otherwise have. No modification or waiver of any provision of this Agreement, nor consent to any departure by any party therefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any party in any case shall entitle such party to any other or further notice or demand in similar or other circumstances.

 

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9.5          Representations and Warranties Regarding Authority; Noncontravention .

 

9.5.1          Representations and Warranties of the REIT and the Partnership . Each of the REIT and the Partnership has the requisite corporate or other (as the case may be) power and authority to enter into this Agreement and to perform its respective obligations hereunder. The execution and delivery of this Agreement by each of the REIT and the Partnership and the performance of each of its respective obligations hereunder have been duly authorized by all necessary trust, partnership, or other (as the case may be) action on the part of each of the REIT and the Partnership. This Agreement has been duly executed and delivered by each of the REIT and the Partnership and constitutes a valid and binding obligation of each of the REIT and the Partnership, enforceable against each of the REIT and the Partnership in accordance with its terms, except as such enforcement may be limited by (i) applicable bankruptcy or insolvency laws (or other laws affecting creditors’ rights generally) or (ii) general principles of equity. The execution and delivery of this Agreement by each of the REIT and the Partnership does not, and the performance by each of its respective obligations hereunder will not, conflict with, or result in any violation of (i) the Partnership Agreement or (ii) any other agreement applicable to the REIT and/or the Partnership, other than, in the case of clause (ii), any such conflicts or violations that would not materially adversely affect the performance by the Partnership and the REIT of their obligations hereunder..

 

9.5.2          Representations and Warranties of the Protected Partners . Each of the Protected Partners has the requisite corporate or other (as the case may be) power and authority to enter into this Agreement and to perform its respective obligations hereunder. The execution and delivery of this Agreement by each of the Protected Partners and the performance of each of its respective obligations hereunder have been duly authorized by all necessary trust, partnership, or other (as the case may be) action on the part of each of the Protected Partners. This Agreement has been duly executed and delivered by each of the Protected Partners and constitutes a valid and binding obligation of each of the Protected Partners.

 

9.6          Captions . The Article and Section headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

 

9.7          Notices . All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given or made as of the date delivered, mailed or transmitted, and shall be effective upon receipt, if delivered personally, mailed by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses (or at such other address for a party as shall be specified by like changes of address) or sent by electronic transmission to the telecopier number specified below:

 

(i)                                      if to the Partnership or the REIT, to:

 

GTJ REIT, Inc.

444 Merrick Road

Suite 370

Lynbrook, New York 11563

Attn: David J. Oplanich, CFO

Facsimile: (516) 887-2029

 

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with a copy to:

 

Saul Ewing LLP

500 E. Pratt Street, Suite 900

Baltimore, MD  21202-3133

Attn:  Eric Orlinsky, Esq.

Facsimile: (410) 332-8688

 

and

 

Ruskin Moscou Faltischek, P.C.

1425 RXR Plaza

East Tower, 15 th  Floor

Uniondale, New York  11556

Attn: Adam P. Silvers

Facsimile: (516) 663-6719

 

(ii)                                   if to a Protected Partner, to the address on file with the Partnership.

 

with a copy to:

 

Schiff Hardin LLP

666 Fifth Avenue

Suite 1700

New York, NY 10103

Attn:  Christine A. McGuinness

Facsimile:  (212) 753-5044

 

Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request, or communication which shall be hand delivered, sent, mailed, telecopied or telexed in the manner described above, or which shall be delivered to a telegraph company, shall be deemed sufficiently given, served, sent, received or delivered for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, or (with respect to a telecopy or telex) the answerback being deemed conclusive, but not exclusive, evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

 

9.8          Counterparts . This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and each of which shall be deemed an original.

 

9.9          Governing Law . The interpretation and construction of this Agreement, and all matters relating thereto, shall be governed by the laws of the State of New York, without regard to the choice of law provisions thereof.

 

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9.10        Consent to Jurisdiction; Enforceability .

 

9.10.1        This Agreement and the duties and obligations of the parties hereunder shall be enforceable against any of the parties in the courts of the State of New York. For such purpose, each party hereto hereby irrevocably submits to the nonexclusive jurisdiction of such courts and agrees that all claims in respect of this Agreement may be heard and determined in any of such courts.

 

9.10.2        Each party hereto hereby irrevocably agrees that a final judgment of any of the courts specified above in any action or proceeding relating to this Agreement shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

9.11        Severability . If any part of any provision of this Agreement shall be invalid or unenforceable in any respect, such part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of such provision or the remaining provisions of this Agreement.

 

9.12        Costs of Disputes . Except as otherwise expressly set forth in this Agreement, the nonprevailing party in any dispute arising hereunder shall bear and pay the costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred by the prevailing party or parties in connection with resolving such dispute.

 

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IN WITNESS WHEREOF, the REIT, the Partnership, and the Protected Partners have caused this Agreement to be signed by and duly authorized all as of the date first written above.

 

 

 

GTJ GP, LLC, a Maryland limited liability company

 

 

 

By:

GTJ REIT, INC.

 

 

 

 

By:

/s/ David J. Oplanich

 

 

 

 

 

GTJ REALTY, L.P., a Delaware limited partnership

 

 

 

By:

GTJ GP, LLC

 

 

 

 

 

By:

/s/ David J. Oplanich

 

 

 

 

 

/s/ Jeffrey Wu

 

Jeffrey Wu

 

 

 

 

 

/s/ Paul Cooper

 

Paul Cooper

 

 

 

 

 

/s/ Jerome Cooper

 

Jerome Cooper

 

 

 

 

 

/s/ Jeffrey Ravetz

 

Jeffrey Ravetz

 

 

 

 

 

/s/ Sarah Ravetz

 

Sarah Ravetz

 

 

 

 

 

/s/ Louis Sheinker

 

Louis Sheinker

 


 

 

WU FAMILY 2012 GIFT TRUST

 

 

 

By

/s/ Gene Greenfest

 

 

Gene Greenfest

 

 

Trustee

 


 

SCHEDULES AND EXHIBITS TO THE TAX PROTECTION AGREEMENT

 

Schedule 2.1(a)

 

List of Protected Partners

 

 

 

Schedule 2.1(b)

 

Protected Properties and Estimated Initial Protected Gain for Protected Partners

Schedule 3.1

 

Minimum Liability Amount

Schedule 3.7

 

Form of Guarantee Agreement

 


 

Schedule 2.1(a)

 

List of Protected Partners

 

1.             Jeffrey Wu

2.             Paul Cooper

3.             Louis Sheinker

4.             Jerome Cooper

5.             Jeffrey Ravetz

6.             Sarah Ravetz

7.             Wu Family 2012 Gift Trust

 


 

Schedule 2.1(b)

 

Protected Properties and Estimated Initial Protected Gain for Protected Partners

 

Gain Limitation Property

 

Portfolio
Property #

 

Asset #

 

Asset Type

 

Protected Gain
Amount

 

466 Bridgeport

 

26

 

000219

 

Building

 

168,596

 

466 Bridgeport

 

26

 

000160

 

Land

 

116,449

 

100 American Road

 

10

 

000141

 

Building

 

7,961,867

 

100 American Road

 

10

 

000145

 

Land

 

1,042,720

 

100-110 Midland Avenue

 

19

 

0

 

Building

 

13,561,213

 

100-110 Midland Avenue

 

19

 

000156

 

Land

 

2,351,892

 

103 Fairview Park Drive

 

23

 

000189

 

Building

 

5,851,640

 

103 Fairview Park Drive

 

23

 

000150

 

Land

 

1,226,717

 

112 Midland Avenue

 

20

 

000155

 

Land

 

440,702

 

112 Midland Avenue

 

20

 

000200

 

Building

 

256,781

 

12 Cascade Boulevard

 

12

 

000230

 

Building

 

2,342,800

 

12 Cascade Boulevard

 

12

 

000163

 

Land

 

865,956

 

15 Executive Boulevard

 

28

 

000234

 

Building

 

3,342,476

 

15 Executive Boulevard

 

28

 

000164

 

Land

 

927,931

 

15 Progress Drive

 

32

 

000250

 

Building

 

1,939,058

 

15 Progress Drive

 

32

 

000169

 

Land

 

1,824,276

 

199 Ridgewood Drive

 

16

 

000207

 

Building

 

920,475

 

199 Ridgewood Drive

 

16

 

000157

 

Land

 

445,620

 

200 American Road

 

9

 

000173

 

Building

 

3,117,551

 

200 American Road

 

9

 

000146

 

Land

 

651,278

 

203 Ridgewood Drive

 

17

 

000158

 

Land

 

873,369

 

203 Ridgewood Drive

 

17

 

000211

 

Building

 

378,605

 

22 Marsh Hill Road

 

27

 

000244

 

Building

 

1,317,474

 

22 Marsh Hill Road

 

27

 

000167

 

Land

 

859,416

 

25 Executive Boulevard

 

11

 

000237

 

Building

 

593,144

 

25 Executive Boulevard

 

11

 

000165

 

Land

 

326,159

 

269 Lambert Road

 

13

 

000247

 

Building

 

2,217,018

 

269 Lambert Road

 

13

 

000168

 

Land

 

1,126,900

 

300 American Road

 

21

 

000174

 

Building

 

5,641,289

 

300 American Road

 

21

 

000147

 

Land

 

1,170,532

 

35 Executive Boulevard

 

29

 

000241

 

Building

 

7,117,143

 

35 Executive Boulevard

 

29

 

000166

 

Land

 

1,224,459

 

36 Midland Avenue

 

18

 

000197

 

Building

 

4,067,354

 

36 Midland Avenue

 

18

 

000154

 

Land

 

678,683

 

400 American Road

 

8

 

000181

 

Building

 

6,742,920

 

400 American Road

 

8

 

000148

 

Land

 

1,006,502

 

401 Fieldcrest Drive

 

14

 

000152

 

Land

 

3,458,740

 

404 Fieldcrest Avenue

 

24

 

000193

 

Building

 

3,891,573

 

404 Fieldcrest Avenue

 

24

 

000153

 

Land

 

1,808,921

 

412 Fairview Park Drive

 

15

 

000151

 

Land

 

3,185,607

 

470 Bridgeport Avenue

 

25

 

000222

 

Building

 

3,448,305

 

470 Bridgeport Avenue

 

25

 

000161

 

Land

 

1,088,356

 

500 American Road

 

22

 

000185

 

Building

 

4,681,788

 

500 American Road

 

22

 

000149

 

Land

 

1,047,300

 

8 Slater Street

 

31

 

000215

 

Building

 

1,645,627

 

8 Slater Street

 

31

 

000159

 

Land

 

884,978

 

950 Bridgeport Avenue

 

30

 

000162

 

Land

 

2,396,462

 

950 Bridgeport Avenue

 

30

 

000226

 

Building

 

1,016,843

 

 

 

 

 

 

 

 

 

 

 

Total Protected Gain Amount - All Properties

 

 

 

 

 

 

113,251,468

 

 


 

Schedule 3.1

 

Gain Limitation Properties and Estimated Initial Protected Gain for Protected Partners

 

Protected Property

 

Portfolio
Property #

 

Asset #

 

Asset Type

 

Protected Gain 

Amount

 

466 Bridgeport

 

26

 

000219

 

Building

 

168,596

 

466 Bridgeport

 

26

 

000160

 

Land

 

116,449

 

100 American Road

 

10

 

000141

 

Building

 

7,961,867

 

100 American Road

 

10

 

000145

 

Land

 

1,042,720

 

100-110 Midland Avenue

 

19

 

0

 

Building

 

13,561,213

 

100-110 Midland Avenue

 

19

 

000156

 

Land

 

2,351,892

 

103 Fairview Park Drive

 

23

 

000189

 

Building

 

5,851,640

 

103 Fairview Park Drive

 

23

 

000150

 

Land

 

1,226,717

 

112 Midland Avenue

 

20

 

000155

 

Land

 

440,702

 

112 Midland Avenue

 

20

 

000200

 

Building

 

256,781

 

12 Cascade Boulevard

 

12

 

000230

 

Building

 

2,342,800

 

12 Cascade Boulevard

 

12

 

000163

 

Land

 

865,956

 

15 Executive Boulevard

 

28

 

000234

 

Building

 

3,342,476

 

15 Executive Boulevard

 

28

 

000164

 

Land

 

927,931

 

15 Progress Drive

 

32

 

000250

 

Building

 

1,939,058

 

15 Progress Drive

 

32

 

000169

 

Land

 

1,824,276

 

199 Ridgewood Drive

 

16

 

000207

 

Building

 

920,475

 

199 Ridgewood Drive

 

16

 

000157

 

Land

 

445,620

 

200 American Road

 

9

 

000173

 

Building

 

3,117,551

 

200 American Road

 

9

 

000146

 

Land

 

651,278

 

203 Ridgewood Drive

 

17

 

000158

 

Land

 

873,369

 

203 Ridgewood Drive

 

17

 

000211

 

Building

 

378,605

 

22 Marsh Hill Road

 

27

 

000244

 

Building

 

1,317,474

 

22 Marsh Hill Road

 

27

 

000167

 

Land

 

859,416

 

25 Executive Boulevard

 

11

 

000237

 

Building

 

593,144

 

25 Executive Boulevard

 

11

 

000165

 

Land

 

326,159

 

269 Lambert Road

 

13

 

000247

 

Building

 

2,217,018

 

269 Lambert Road

 

13

 

000168

 

Land

 

1,126,900

 

300 American Road

 

21

 

000174

 

Building

 

5,641,289

 

300 American Road

 

21

 

000147

 

Land

 

1,170,532

 

35 Executive Boulevard

 

29

 

000241

 

Building

 

7,117,143

 

35 Executive Boulevard

 

29

 

000166

 

Land

 

1,224,459

 

36 Midland Avenue

 

18

 

000197

 

Building

 

4,067,354

 

36 Midland Avenue

 

18

 

000154

 

Land

 

678,683

 

400 American Road

 

8

 

000181

 

Building

 

6,742,920

 

400 American Road

 

8

 

000148

 

Land

 

1,006,502

 

401 Fieldcrest Drive

 

14

 

000152

 

Land

 

3,458,740

 

404 Fieldcrest Avenue

 

24

 

000193

 

Building

 

3,891,573

 

404 Fieldcrest Avenue

 

24

 

000153

 

Land

 

1,808,921

 

412 Fairview Park Drive

 

15

 

000151

 

Land

 

3,185,607

 

470 Bridgeport Avenue

 

25

 

000222

 

Building

 

3,448,305

 

470 Bridgeport Avenue

 

25

 

000161

 

Land

 

1,088,356

 

500 American Road

 

22

 

000185

 

Building

 

4,681,788

 

500 American Road

 

22

 

000149

 

Land

 

1,047,300

 

8 Slater Street

 

31

 

000215

 

Building

 

1,645,627

 

8 Slater Street

 

31

 

000159

 

Land

 

884,978

 

950 Bridgeport Avenue

 

30

 

000162

 

Land

 

2,396,462

 

950 Bridgeport Avenue

 

30

 

000226

 

Building

 

1,016,843

 

 

 

 

 

 

 

 

 

 

 

Total Protected Gain Amount - All Properties

 

 

 

 

 

 

113,251,468

 

 

 

 


 

Schedule 3.1

 

Minimum Liability Amount

 

Protected Partner

 

Minimum Liability
Amount

 

Jeffrey Wu

 

23,763,304

 

Wu Family 2012 Gift Trust

 

2,940,696

 

Paul Cooper

 

2,179,000

 

Jerome Cooper

 

301,000

 

Jeffrey Ravetz

 

2,053,000

 

Sarah Ravetz

 

398,000

 

Louis Sheinker

 

2,467,000

 

 

 

34,102,000

 

 


 

Schedule 3.7

 

Form of Guarantee Agreement

 

This Guarantee is made and entered into as of the        day of                  20    , by the persons listed on Exhibit A annexed hereto (the “ Guarantors ”) for the benefit of the Lender set forth on Exhibit B annexed hereto and made a part hereof (the “ Lender ,” which term shall include any person or entity who hereafter holds the Note (as defined below) in accordance with the terms thereof).

 

This Form of the Guarantee Agreement is for Guaranteed Debt where the following conditions all are applicable:

 

(i)                                      there are no other guarantees in effect with respect to such Guaranteed Debt;

 

(ii)                                   the collateral securing such Guaranteed Debt is not collateral for any other indebtedness that is senior to or pari passu with such Guaranteed Debt;

 

(iii)                                no additional guarantees with respect to such Guaranteed Debt will be entered into during the applicable Tax Protection Period pursuant to the proviso set forth in Section 3.5;

 

(iv)                               the lender with respect to such Guaranteed Debt is not the Partnership, any Subsidiary or other entity in which the Partnership owns a direct or indirect interest, the REIT, any other partner in the Partnership, or any person related to any partner in the Partnership as determined for purposes of Treasury Regulation § 1.752-2; and

 

(v)                                  none of the REIT, nor any other partner in the Partnership, nor any person related to any partner in the Partnership as determined for purposes of Treasury Regulation § 1.752-2 shall have provided, or shall thereafter provide, collateral for, or otherwise shall have entered, or thereafter shall enter, into a relationship that would cause such person or entity to be considered to bear risk of loss with respect to such Guaranteed Debt, as determined for purposes of Treasury Regulation § 1.752-2.

 

(vi)                               the lender has not required the REIT to guarantee an amount that would otherwise be subject to this Guarantee (in such event, a provision should be added requiring the Guarantors to reimburse the REIT to the extent that the REIT is called on to guarantee an amount that would be subject to this Guarantee).

 

If, and to the extent that, one or more of these conditions is not applicable, appropriate changes to the attached form of Guarantee will be required in order to cause the various conditions set forth in Article 3 of the Tax Protection Agreement to be satisfied.

 

RECITALS

 

WHEREAS, the Lender has loaned to the borrower set forth on Exhibit B (the “ Borrower ”) the amount set forth opposite such Lender’s name on Exhibit B, which loan (i) is

 


 

evidenced by the promissory note described on Exhibit C hereto (the “ Note ”), (ii) has a current outstanding balance in the amount set forth on Exhibit B annexed hereto, and (iii) is secured by a mortgage or deed of trust on the collateral described on Exhibit D annexed hereto (the “Mortgage,” with the property and other assets securing such Mortgage referred to as the “Collateral”);

 

WHEREAS, the Borrower is either GTJ Realty, LP, a Delaware limited partnership (the “Partnership”) or a wholly owned subsidiary of the Partnership;

 

WHEREAS, the Guarantors are limited partners in the Partnership; and

 

WHEREAS, the Guarantors are executing and delivering this Guarantee to guarantee a portion of the Borrower’s payments with respect to the Note, subject to and otherwise in accordance with the terms and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of the foregoing recitals and facts and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, each of the Guarantors hereby agree as follows:

 

1.                                       Guarantee and Performance of Payment .

 

(a)                                  The Guarantors hereby irrevocably and unconditionally guarantee the collection by the Lender of, and hereby agree to pay to the Lender upon demand (following (1) foreclosure of the Mortgage, exercise of the powers of sale thereunder and/or acceptance by the Lender of a deed to the Collateral in lieu of foreclosure, and (2) the exhaustion of the exercise of any and all remedies available to the Lender against the Borrower, including, without limitation, realizing upon the assets of the Borrower other than the Collateral against which the Lender may have recourse), an amount equal to the excess, if any, of the Guaranteed Amount set forth on Exhibit B over the Lender Proceeds (as hereinafter defined) (which excess is referred to as the “ Aggregate Guarantee Liability ”). The amounts payable by each Guarantor in respect of the guarantee obligations hereunder shall be in the same proportion as the dollar amounts listed next to such Guarantor’s name on Exhibit A attached hereto bears to the total Guaranteed Amount set forth on Exhibit A , provided that, notwithstanding anything to the contrary contained in this Guarantee, each Guarantor’s aggregate obligation under this Guarantee shall be limited to the dollar amount set forth on Exhibit A attached hereto next to such Guarantor’s name. The Guarantors’ obligations as set forth in this paragraph 1 (a) are hereinafter referred to as the “ Guaranteed Obligations .”

 

(b)                                  For the purposes of this Guarantee, the term “ Lender Proceeds ” shall mean the aggregate of: (i) the Foreclosure Proceeds (as hereinafter defined) plus (ii) all amounts collected by the Lender from the Borrower (other than payments of principal, interest or other amounts required to be paid by the Borrower to Lender under the terms of the Note that are paid by the Borrower to the Lender at a time when no default has occurred under the Note and is continuing) or realized by the Lender from the sale of assets of the Borrower other than the Collateral.

 


 

(c)                                   For the purposes of this Guarantee, the term “ Foreclosure Proceeds ” shall have the applicable meaning set forth below with respect to the Collateral:

 

(i)                                      If at least one bona fide third party unrelated to the Lender (and including, without limitation, any of the Guarantors) bids for such Collateral at a sale thereof, conducted upon foreclosure of the related Mortgage or exercise of the power of sale thereunder, Foreclosure Proceeds shall mean the highest amount bid for such Collateral by the party that acquires title thereto (directly or through a nominee) at or pursuant to such sale. For the purposes of determining such highest bid, amounts bid for the Collateral by the Lender shall be taken into account notwithstanding the fact that such bids may constitute credit bids which offset against the amount due to the Lender under the Note.

 

(ii)                                   If there is no such unrelated third-party at such sale of the Collateral so that the only bidder at such sale is the Lender or its designee, the Foreclosure Proceeds shall be deemed to be fair market value (the “ Fair Market Value ”) of the Collateral as of the date of the foreclosure sale, as such Fair Market Value shall be mutually agreed upon by the Lender and the Guarantor or determined pursuant to subparagraph 1(d).

 

(iii)                                If the Lender receives and accepts a deed to the Collateral in lieu of foreclosure in partial satisfaction of the Borrower’s obligations under the Note, the Foreclosure Proceeds shall be deemed to be the Fair Market Value of such Collateral as of the date of delivery of the deed-in-lieu of foreclosure, as such Fair Market Value shall be mutually agreed upon by the Lender and the Guarantor or determined pursuant to subparagraph l (d).

 

(d)                                  Fair Market Value of the Collateral (or any item thereof) shall be the price at which a willing seller not compelled to sell would sell such Collateral, and a willing buyer not compelled to buy would purchase such Collateral, free and clear of all mortgages but subject to all leases and reciprocal easements and operating agreements.  If the Lender and the Guarantor are unable to agree upon the Fair Market Value of any Collateral in accordance with subparagraphs 1(c)(ii) or (iii) above, as applicable, within twenty (20) days after the date of the foreclosure sale or the delivery of the deed-in-lieu of foreclosure, as applicable, relating to such Collateral, either party may have the Fair Market Value of such Collateral determined by appraisal by appointing an appraiser having the qualifications set forth below to determine the same and by notifying the other party of such appointment within twenty (20) days after the expiration of such twenty (20) day period. If the other party shall fail to notify the first party, within twenty (20) days after its receipt of notice of the appointment by the first party, of the appointment by the other party of an appraiser having the qualifications set forth below, the appraiser appointed by the first party shall alone make the determination of such Fair Market Value. Appraisers appointed by the parties shall be members of the Appraisal Institute (MAI) and shall have at least ten years’ experience in the valuation of properties similar to the Collateral being valued in the greater metropolitan area in which such Collateral is located. If each party shall appoint an appraiser having the aforesaid qualifications and if such appraisers cannot, within thirty (30) days after the appointment of the second appraiser, agree upon the determination hereinabove required, then they shall select a third appraiser which third appraiser shall have the aforesaid qualifications, and if they fail so to do within forty (40) days after the

 


 

appointment of the second appraiser they shall notify the parties hereto, and either party shall thereafter have the right, on notice to the other, to apply for the appointment of a third appraiser to the chapter of the American Arbitration Association or its successor organization located in the metropolitan area in which the Collateral is located or to which the Collateral is proximate or if no such chapter is located in such metropolitan area, in the metropolitan area closest to the Collateral in which such a chapter is located. Each appraiser shall render its decision as to the Fair Market Value of the Collateral in question within thirty (30) days after the appointment of the third appraiser and shall furnish a copy thereof to the Lender and the Guarantor. The Fair Market Value of the Collateral shall then be calculated as the average of (i) the Fair Market Value determined by the third appraiser and (ii) whichever of the Fair Market Values determined by the first two appraisers is closer to the Fair Market Value determined by the third appraiser; provided, however, that if the Fair Market Value determined by the third appraiser is higher or lower than both Fair Market Values determined by the first two appraisers, such Fair Market Value determined by the third appraiser shall be disregarded and the Fair Market Value of the Collateral shall then be calculated as the average of the Fair Market Value determined by the first two appraisers. The Fair Market Value oaf Property, as so determined, shall be binding and conclusive upon the Lender and the Guarantors. Guarantors shall bear the cost of its own appraiser and, subject to subparagraph I(e), shall bear all reasonable costs of appointing, and the expenses of, any other appraiser appointed pursuant to this subparagraph (1)(d).

 

(e)                                   Notwithstanding anything in the preceding subparagraphs of this paragraph 1, (i) in no event shall the aggregate amount required to be paid pursuant to this Guarantee by the Guarantors as a group with respect to all defaults under the Note and the Mortgage securing the obligations thereunder exceed the Guaranteed Amount set forth on Exhibit B hereto, and (ii) the aggregate obligation of each Guarantor hereunder with respect to the Guaranteed Obligation shall be limited to the lesser of (I) the product of: (x) the Individual Guarantee Percentage for such Guarantor set forth on Exhibit A hereto multiplied by (y) the Guaranteed Amount, or (II) the product of (x) such Guarantor’s Individual Guarantee Percentage multiplied by (y) the Aggregate Guarantee Liability.

 

(f)                                    In confirmation of the foregoing, and without limitation, the Lender must first exhaust all of its rights and remedies against all property of the Borrower as to which the Lender has (or may have) a right of recourse, including, without limitation, the institution and prosecution to completion of appropriate foreclosure proceedings under the Mortgage, before exercising any right or remedy or making any claim, under this Guarantee.

 

(g)                                   The obligations under this Guarantee shall be personal to each Guarantor and shall not be affected by any transfer of all or any part of a Guarantor’s interests in the Partnership. Further, no Guarantor shall have the right to recover from the Borrower any amounts such Guarantor pays pursuant to this Guarantee (except and only to the extent that the amount paid to the Lender by such Guarantor exceeds the amount required to be paid by such Guarantor under the terms of this Guarantee).

 

(h)                                  The obligations of any Guarantor who is an individual as a Guarantor hereunder shall terminate with respect to such Guarantor on the death of such Guaranty or if, as a result of the death of such Guarantor, all property held by the Guarantor on the date of death would have a

 


 

basis for federal income tax purposes equal to the fair market value of such property on such date (unless a later date were to be elected by the executor of the Guarantor’s estate in accordance with the applicable provisions of the Internal Revenue Code).

 

2.                                       Intent to Benefit Lender .  This Guarantee is expressly for the benefit of the Lender. The Guarantors intend that the Lender shall have the right to enforce the obligations of the Guarantors hereunder separately and independently of the Borrower, subject to the provisions of paragraph 1 hereof, without any requirement whatsoever of resort by the Lender to any other party. The Lender’s rights to enforce the obligations of the Guarantors hereunder are material elements of this Guarantee. This Guarantee shall not be modified, amended or terminated (other than as specifically provided herein) without the written consent of the Lender. The Borrower shall furnish a copy of this Guarantee to the Lender contemporaneously with its execution.

 

3.                                       Waivers .  Each Guarantor intends to bear the ultimate economic responsibility for the payment hereof of the Guaranteed Obligations to the extent set forth in Paragraph 1 above. Pursuant to such intent:

 

(a)                                  Except as expressly set forth in Paragraph 1 above, each Guarantor expressly waives any right (pursuant to any law, rule, arrangement or relationship) to compel the Lender, or any subsequent holder of the Note or any beneficiary of the Mortgage to sue or enforce payment thereof or pursue any other remedy in the power of the Borrower, the Lender or any subsequent holder of the Note or any beneficiary of the Mortgage whatsoever, and failure of the Borrower or the Lender or any subsequent holder of the Note or any beneficiary of the Mortgage to do so shall not exonerate, release or discharge a Guarantor from its absolute unconditional obligations under this Guarantee. Each Guarantor hereby binds and obligates itself, and its permitted successors and assignees, for performance of the Guaranteed Obligations according to the terms hereof, whether or not the Guaranteed Obligations or any portion thereof are valid now or hereafter enforceable against the Borrower or shall have been incurred in compliance with any of the conditions applicable thereto, subject, however, in all respects to the Guarantee Limit and the other limitations set forth in paragraph 1.

 

(b)                                  Each Guarantor expressly waives any right (pursuant to any law, rule, arrangement, or relationship) to compel any other person (including, but not limited to, the Borrower, the Partnership, any subsidiary of the Partnership or the Borrower, or any other partner or affiliate of the Partnership or the Borrower) to reimburse or indemnify such Guarantor for all or any portion of amounts paid by such Guarantor pursuant to this Guarantee to the extent such amounts do not exceed the amounts required to be paid by such Guarantor pursuant to paragraph 1 hereof (taking into account the limitations set forth therein).

 

(c)                                   Except as expressly set forth in Paragraph 1 above, if and only to the extent that the Borrower has made similar waivers under the Note or the Mortgage, each Guarantor expressly waives: (i) the defense of the statute of limitations in any action hereunder or for the collection or performance of the Note or the Mortgage; (ii) any defense that may arise by reason of: the incapacity, or lack of authority of the Borrower, the revocation or repudiation hereof by such Guarantor, the revocation or repudiation of the Note or the Mortgage by the Borrower, the failure of the Lender to file or enforce a claim against the estate (either in administration,

 


 

bankruptcy or any other proceeding) of the Borrower; the unenforceability in whole or in part of the Note, the Mortgage or any other document or instrument related thereto; the Lender’s election, in any proceeding by or against the Borrower under the federal Bankruptcy Code, of the application of Section 1111(b)(2) of the federal Bankruptcy Code; or any borrowing or grant of a security interest under Section 364 of the federal Bankruptcy Code; (iii) presentment, demand for payment, protest, notice of discharge, notice of acceptance of this Guarantee or occurrence of, or any default in connection with, the Note or the Mortgage, and indulgences and notices of any other kind whatsoever, including, without limitation, notice of the disposition of any collateral for the Note; (iv) any defense based upon an election of remedies (including, if available, an election to proceed by non-judicial foreclosure) or other action or omission by the Lender or any other person or entity which destroys or otherwise impairs any indemnification, contribution or subrogation rights of such Guarantor or the right of such Guarantor, if any, to proceed against the Borrower for reimbursement, or any combination thereof; (v) subject to Paragraph 4 below, any defense based upon any taking, modification or release of any collateral or guarantees for the Note, or any failure to create or perfect any security interest in, or the taking of or failure to take any other action with respect to any collateral securing payment or performance of the Note; (vi) any rights or defenses based upon any right to offset or claimed offset by such Guarantor against any indebtedness or obligation now or hereafter owed to such Guarantor by the Borrower; or (vii) any rights or defenses based upon any rights or defenses of the Borrower to the Note or the Mortgage (including, without limitation, the failure or value of consideration, any statute of limitations, accord and satisfaction, and the insolvency of the Borrower); it being intended, except as expressly set forth in Paragraph 1 above, that such Guarantor shall remain liable hereunder, to the extent set forth herein, notwithstanding any act, omission or thing which might otherwise operate as a legal or equitable discharge of any of such Guarantor or of the Borrower.

 

4.                                       Amendment of Note and Mortgage .  Without in any manner limiting the generality of the foregoing, the Lender or any subsequent holder of the Note or beneficiary of the Mortgage may, from time to time, without notice to or consent of the Guarantors, agree to any amendment, waiver, modification or alteration of the Note or the Mortgage relating to the Borrower and its rights and obligations thereunder (including, without limitation, renewal, waiver or variation of the maturity of the indebtedness evidenced by the Note, increase or reduction of the rate of interest payable under the Note, release, substitution or addition of any Guarantor or endorser and acceptance or release of any security for the Note), it being understood and agreed by the Lender, however, that the Guarantor’s obligations hereunder are subject, in all events, to the limitations set forth in Paragraph 1; provided that (i) in the event that the Lender consents to the release of any Collateral securing the Note pursuant to the Mortgage, the Guaranteed Amount shall be reduced by the Fair Market Value of such Collateral on the date of such release (determined as set forth in Section 1 (d); and (ii) upon any material change to the Note or the Mortgage, including, without limitation, the maturity date or the interest rate of the Note, or upon any release or substitution of any Collateral securing the Note, within thirty (30) days of any Guarantor’s receipt of actual notice of such event, subject to the following sentence, such Guarantor may elect to terminate such Guarantor’s obligations under this Guarantee by written notice to the Lender. Such termination shall take effect on the 31st day following such actual notice, provided that no default under the Guaranteed Obligation has occurred and is then continuing.

 


 

5.                                       Termination of Guarantee .  Subject to Paragraph 4, this Guarantee is irrevocable as to any and all of the Guaranteed Obligations.

 

6.                                       Independent Obligations .  Except as expressly set forth in Paragraph 1, the obligations of each Guarantor hereunder are independent of the obligations of the Borrower, and a separate action or actions may be brought by a Lender against the Guarantors, whether or not actions are brought against the Borrower. Each Guarantor expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which such Guarantor may now or hereafter have against the Borrower, or any other person directly or contingently liable for the payment or performance of the Note and the Mortgage arising from the existence or performance of this Guarantee (including, but not limited to, the Partnership, the REIT, or any other partner of the Partnership) (except and only to the extent that a Guarantor makes a payment to the Lender in excess of the amount required to be paid under paragraph 1 and the limitations set forth therein).

 

7.                                       Understanding With Respect to Waivers .  Each Guarantor warrants and represents that each of the waivers set forth above are made with full knowledge of their significance and consequences, and that under the circumstances, the waivers are reasonable and not contrary to public policy or law. If any of said waivers are determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the maximum extent permitted by law.

 

8.                                       No Assignment .  No Guarantor shall be entitled to assign his or her rights or obligations under this Guarantee to any other person without the written consent of the Lender.

 

9.                                       Entire Agreement .  The parties agree that this Guarantee contains the entire understanding and agreement between them with respect to the subject matter hereof and cannot be amended, modified or superseded, except by an agreement in writing signed by the parties.

 

10.                                Notices .  Any notice given pursuant to this Guarantee shall be in writing and shall be deemed given when delivered personally, or sent by registered or certified mail, postage prepaid, as follows:

 

If to the Partnership:

 

GTJ REIT, Inc.,

 

Attention: Paul Cooper

Facsimile:

 

With a copy to:

 

or to such other address with respect to which notice is subsequently provided in the manner set forth above; and

 


 

If to a Guarantor, to the address set forth on Exhibit A hereto, or to such other address with respect to which notice is subsequently provided in the manner set forth above.

 

11.                                Applicable Law .  This Guarantee shall be governed by, interpreted under and construed in accordance with the laws of the State of New York without reference to its choice of law provisions.

 

12.                                Consent to Jurisdiction; Enforceability .

 

(a)                                  This Guarantee and the duties and obligations of the parties hereto shall be enforceable against each Guarantor in the courts of the State of New York. For such purpose, each Guarantor hereby irrevocably submits to the nonexclusive jurisdiction of such courts and agrees that all claims in respect of this Guarantee may be heard and determined in any of such courts.

 

(b)                                  Each Guarantor hereby irrevocably agrees that a final judgment of any of the courts specified above in any action or proceeding relating to this Guarantee shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

13.                                Condition of Borrower .  Each Guarantor is fully aware of the financial condition of the Borrower and is executing and delivering this Guarantee based solely upon its own independent investigation of all matters pertinent hereto and is not relying in any manner upon any representation or statement of the Lender or the Borrower. Each Guarantor represents and warrants that it is in a position to obtain, and hereby assumes full responsibility for obtaining, any additional information concerning the Borrower’s financial conditions and any other matter pertinent hereto as it may desire, and it is not relying upon or expecting the Lender to furnish to it any information now or hereafter in the Lender’s possession concerning the same. By executing this Guarantee, each Guarantor knowingly accepts the full range of risks encompassed within a contract of this type, which risks it acknowledges.

 

14.                                Expenses .  Each Guarantor agrees that, promptly after receiving Lender’s notice therefor, such Guarantor shall reimburse Lender, subject to the limitation set forth in subparagraph 1(e) and to the extent that such reimbursement is not made by Borrower, for all reasonable expenses (including, without limitation, reasonable attorneys fees and disbursements) incurred by Lender in connection with the collection of the Guaranteed Obligations or any portion thereof or with the enforcement of this Guarantee.

 

15.                                Intent .  The rights and obligations contained in this Guarantee are intended (i) to cause the Guarantor or a person related to the Guarantor (within the meaning of U.S. Treasury Regulations Section 1.752-4(b)) who is a partner in the Partnership to bear or to be treated as bearing the economic risk of loss (within the meaning of U.S. Treasury Regulations Section 1.752-2) and (ii) to cause the Guarantor to be considered at-risk within the meaning of Section 465 of the Code with respect to the Obligations to the extent of the amount of the Aggregate Guarantee and shall be interpreted consistently therewith.

 


 

IN WITNESS WHEREOF, the parties hereto have executed this Guarantee the date and year first written above.

 

[INSERT SIGNATURE BLOCKS]

 

Exhibit 10.4

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “ Agreement ”), dated as of January1, 2013, is made and entered into by and among GTJ REIT, Inc., a Maryland corporation (the “ Company ”), and certain investors listed on Schedule 1 hereto (such investors, in their capacity as holders of Registrable Securities, the “ Holders ” and each the “ Holder ”).  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in Section 1 hereto.

 

RECITALS

 

WHEREAS , the Company, through its wholly-owned subsidiary, GTJ GP, LLC, a Maryland limited liability company (“ GTJ Realty ”), formed GTJ Realty, LP, a Delaware limited partnership (the “ Partnership ”), whereby GTJ Realty is the sole general partner and the Company is a limited partner;

 

WHEREAS , WU/Lighthouse Portfolio, LLC, a Delaware limited liability company (“ Portfolio ”), is making a capital contribution of certain real property to the Partnership in exchange for certain common limited partnership interests of the Partnership (the “ Common Limited Partnership Interests ”) and Class B limited partnership interests of the Partnership to be issued to the members of Portfolio pursuant to that certain Contribution Agreement, dated as of the date hereof, by and among GTJ Realty, the Company and Portfolio (“ Contribution Agreement ”);

 

WHEREAS , contemporaneously with the execution and delivery of this Agreement, Portfolio, GTJ Realty and the Company  entered into that certain Amended and Restated Limited Partnership Agreement, dated as of the date hereof (“ Partnership Agreement ”), to set forth the parties relative rights and obligations;

 

WHEREAS , the Holders constitute all of the members of Portfolio; and

 

WHEREAS , in order to induce Portfolio to enter into the Contribution Agreement and Partnership Agreement, the Company agrees to provide the registration rights provided for in this Agreement to each Holder and its direct and indirect transferees.

 

NOW, THEREFORE , in consideration of the premises and the mutual promises and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

Section 1.              Definitions .  As used in this Agreement, the following terms shall have the following meanings:

 


 

EXECUTION VERSION

 

“ Affiliate ”  shall mean, when used with reference to a specified Person, (i) any Person that directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the specified Person; (ii) any Person who, from time to time, is a member of the Immediate Family [defined?] of a specified Person; (iii) any Person who, from time to time, is an officer or director or manager of a specified Person; or (iv) any Person who, directly or indirectly, is the beneficial owner of 50% or more of any class of equity securities or other ownership interests of the specified Person, or of which the specified Person is directly or indirectly the owner of 50% or more of any class of equity securities or other ownership interests.

 

“ Agreement ” shall mean this Registration Rights Agreement as originally executed and as amended, supplemented or restated from time to time.

 

“ Board ” shall mean the Board of Directors of the Company.

 

“ Business Day ”  shall mean each day other than a Saturday, a Sunday or any other day on which banking institutions in the State of New York are authorized or obligated by law or executive order to be closed.

 

“ Class B Preferred Shares ” shall mean the shares of Class B Preferred Stock of the Company, par value $0.0001 per share

 

Common Limited Partnership Interests ” shall have the meaning set forth in the recitals hereof.

 

“ Common Shares ” shall mean the shares of common stock of the Company, par value $0.0001 per share.

 

“ Commission ” shall mean the Securities and Exchange Commission and any successor thereto.

 

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

 

“ Contribution Agreement ” shall have the meaning set forth in the recitals hereof.

 

“ Control ” (including the terms “ Controlling ,” “ Controlled by ” and “ under common Control with ”) shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person through the ownership of Voting Power, by contract or otherwise.

 

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended (or any corresponding provision of succeeding law) and the rules and regulations thereunder.

 

“ GTJ Realty ” shall have the meaning set forth in the recitals hereof.

 

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“ Holder ” shall mean each holder of the Common Shares listed in Schedule 1 hereto, in his, her or its capacity as a holder of Registrable Securities.  For purposes of this Agreement, the Company may deem and treat the registered holder of a Registrable Security as each Holder and absolute owner thereof, unless notified to the contrary in writing by the registered Holder thereof.

 

“ Partnership ” shall have the meaning set forth in the recitals hereof.

 

“ Partnership Agreement ” shall have the meaning set forth in the recitals hereof.

 

“ Person ” shall mean any individual, partnership, corporation, limited liability company, joint venture, association, trust, unincorporated organization or other governmental or legal entity.

 

“ Piggyback Registration ” shall have the meaning set forth in Section 2(a) hereof.

 

“ Portfolio ” shall have the meaning set forth in the recitals hereof.

 

“ Registrable Securities ” shall mean the Common Shares issuable upon  conversion of (i) the Common Limited Partnership Interests or (ii) the Class B Preferred Shares; provided, however, such Registrable Securities shall cease to be Registrable Securities when (A) a registration statement with respect to the sale of such Registrable Securities shall have become effective under the Securities Act and all such Registrable Securities shall have been disposed of in accordance with such registration statement, (B) such Registrable Securities shall have been sold in accordance with Rule 144 (or any successor provision) under the Securities Act, (C) such Registrable Securities become eligible to be publicly sold without limitation as to amount or manner of sale pursuant to Rule 144(b) (or any successor provision) under the Securities Act, or (D) such Registrable Securities have ceased to be outstanding.

 

“ Registration Expenses ” shall mean (i) the fees and disbursements of counsel and independent public accountants for the Company incurred in connection with the Company’s performance of or compliance with this Agreement, including the expenses of any special audits or “comfort” letters required by or incident to such performance and compliance, and any premiums and other costs of policies of insurance obtained by the Company against liabilities arising out of the sale of any securities and (ii) all registration, filing and stock exchange fees, all fees and expenses of complying with securities or “blue sky” laws, all FINRA fees, all fees and expenses of custodians, transfer agents and registrars, all printing expenses, messenger and delivery expenses; provided, however, “ Registration Expenses ” shall not include any out-of-pocket expenses of each Holder, legal fees and expenses of any counsel to a Holder or Portfolio, transfer taxes, underwriting or brokerage commissions or discounts associated with effecting any sales of Registrable Securities that may be offered, which expenses shall be borne by each Holder or Portfolio, as the case may be, of Registrable Securities individually or on a pro rata basis with respect to the Registrable Securities so sold.

 

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“ Securities Act ” shall mean the Securities Act of 1933, as amended (or any successor corresponding provision of succeeding law), and the rules and regulations thereunder.

 

“ Stand-Off Period ” shall have the meaning set forth in Section 6 hereof.

 

“ Voting Power ” shall mean voting securities or other voting interests ordinarily (and apart from rights accruing under special circumstances) having the right to vote in the election of board members or Persons performing substantially equivalent tasks and responsibilities with respect to a particular entity.

 

Section 2.              Piggyback Registration .

 

(a)   Whenever the Company proposes to register any of its Common Shares under the Securities Act (other than a registration effected solely to implement an employee benefit plan or a transaction to which Rule 145 of the Securities Act is applicable, or a Registration Statement on Form S-4, S-8 or any successor form thereto or another form not available for registering the Registrable Securities for sale to the public), whether for its own account or for the account of one or more stockholders of the Company and the form of Registration Statement to be used may be used for any registration of Registrable Securities (a “ Piggyback Registration ”), the Company shall give prompt written notice (in any event no later than thirty (30) days prior to the filing of such Registration Statement) to the holders of Registrable Securities of its intention to effect such a registration and, subject to Section 2(b) and Section 2(c), shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion from the holders of Registrable Securities within thirty (30) days after the Company’s notice has been given to each such holder.  The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion.

 

(b)   If a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company and the managing underwriter advises the Company and the holders of Registrable Securities (if any holders of Registrable Securities have elected to include Registrable Securities in such Piggyback Registration) in writing that in its opinion the number of Common Shares proposed to be included in such registration, including all Registrable Securities and all other Common Shares proposed to be included in such underwritten offering, exceeds the number of Common Shares which can be sold in such offering and/or that the number of Common Shares proposed to be included in any such registration would adversely affect the price per share of the Common Shares to be sold in such offering, the Company shall include in such registration (i) first, the number of Common Shares that the Company proposes to sell; (ii) second, the number of Common Shares requested to be included therein by holders of Registrable Securities, allocated pro rata among all such holders on the basis of the number of Registrable Securities owned by each such holder or in such manner as they may otherwise agree; and (iii) third, the number of Common Shares requested to be included therein by holders

 

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of Common Shares (other than holders of Registrable Securities), allocated among such holders in such manner as they may agree.

 

(c)   If a Piggyback Registration is initiated as an underwritten offering on behalf of a holder of Common Shares other than Registrable Securities, and the managing underwriter advises the Company in writing that in its opinion the number of Common Shares proposed to be included in such registration, including all Registrable Securities and all other Common Shares proposed to be included in such underwritten offering, exceeds the number of Common Shares which can be sold in such offering and/or that the number of Common Shares proposed to be included in any such registration would adversely affect the price per share of the Common Shares to be sold in such offering, the Company shall include in such registration (i) first, the number of Common Shares requested to be included therein by the holder(s) requesting such registration and by the holders of Registrable Securities, allocated pro rata among such holders on the basis of the number of Common Shares (on a fully diluted, as converted basis) and the number of Registrable Securities, as applicable, owned by all such holders or in such manner as they may otherwise agree; and (ii) second, the number of Common Shares requested to be included therein by other holders of Common Shares, allocated among such holders in such manner as they may agree.

 

(d)   If any Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company, the Company shall select the investment banking firm or firms to act as the managing underwriter or underwriters in connection with such offering.

 

Section 3.              Black-Out Periods . Notwithstanding anything herein to the contrary, the Company shall have the right, exercisable from time to time by delivery of a notice authorized by the Board, on not more than two occasions in any 12-month period, to require each Holder not to sell pursuant to a registration statement or similar document under the Securities Act filed pursuant to this Agreement or to suspend the effectiveness thereof if at the time of the delivery of such notice, the Board has considered a plan to engage no later than forty-five (45) days following the date of such notice in a firm commitment underwritten public offering or if the Board has reasonably and in good faith determined that such registration and offering, continued effectiveness or sale would materially interfere with any material transaction involving the Company; provided, however, that in no event shall the black-out period extend for more than forty-five (45) days on any such occasion.  The Company, as soon as practicable, shall (i) give each Holder prompt written notice in the event that the Company has suspended sales of Registrable Securities pursuant to this Section 3, (ii) give each Holder prompt written notice of the completion of such offering or material transaction and (iii) promptly file any amendment necessary for any registration statement or prospectus of each Holder in connection with the completion of such event.

 

The Holder agrees by acquisition of the Registrable Securities that upon receipt of any notice from the Company of the happening of any event of the kind described in this Section 3, such Holder will forthwith discontinue its disposition of Registrable Securities

 

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pursuant to the registration statement relating to such Registrable Securities until such Holder’s receipt of the notice of completion of such event.

 

Section 4.              Registration Procedures .

 

(a)   In connection with the filing of any registration statement as provided in this Agreement, the Company shall, as expeditiously as reasonably practicable:

 

(i)            prepare and file with the Commission the requisite registration statement (including a prospectus therein and any supplement thereto) to effect such registration and use its commercially reasonable efforts to cause such registration statement to become effective; provided, however, that before filing such registration statement or any amendments or supplements thereto, the Company will furnish copies of all such documents proposed to be filed to counsel for the sellers of Registrable Securities covered by such registration statement and provide reasonable time for such sellers and their counsel to comment upon such documents if so requested by a Holder;

 

(ii)           prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to maintain the effectiveness of such registration and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during the period in which such registration statement is required to be kept effective;

 

(iii)          furnish to each Holder of the securities being registered, without charge, such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits) other than those which are being incorporated into such registration statement by reference, such number of copies of the prospectus contained in such registration statements (including each complete prospectus and any summary prospectus) and any other prospectus filed under Rule 424 under the Securities Act in conformity with the requirements of the Securities Act, and such other documents, including documents incorporated by reference, as each Holder may reasonably request;

 

(iv)          use its commercially reasonable efforts to register or qualify all Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as each Holder and the underwriters of the securities being registered, if any, shall reasonably request, to keep such registration or qualification in effect for so long as such registration statement remains in effect, and take any other action which may be reasonably necessary or advisable to enable each Holder to consummate the disposition in such jurisdiction of the securities owned by each Holder, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign company or to register as a broker or dealer in any jurisdiction where it would not otherwise be

 

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required to qualify but for this Section 4(a)(iv), or to consent to general service of process in any such jurisdiction, or to be subject to any material tax obligation in any such jurisdiction where it is not then so subject;

 

(v)           promptly notify each Holder at any time when the Company becomes aware that a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, and, at the request of each Holder, promptly prepare and furnish to each Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made;

 

(vi)          use its commercially reasonable efforts to comply or continue to comply in all material respects with the Securities Act and the Exchange Act and with all applicable rules and regulations of the Commission thereunder so as to enable each Holder to sell its Registrable Securities pursuant to Rule 144 promulgated under the Securities Act, as further agreed to in Section 7 hereof;

 

(vii)         provide a transfer agent and registrar and a CUSIP number for all Registrable Securities covered by such registration statement not later than the effective date of such registration statement;

 

(viii)        use its commercially reasonable efforts to cooperate with each Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any Securities Act legend; and enable certificates for such Registrable Securities to be issued for such number of shares and registered in such names as each Holder may reasonably request in writing at least twenty (20) Business Days prior to any sale of Registrable Securities;

 

(ix)          use its commercially reasonable efforts to list all Registrable Securities covered by such registration statement on any securities exchange or national quotation system on which any such class of securities is then listed or quoted and cause to be satisfied all requirements and conditions of such securities exchange or national quotation system to the listing or quoting of such securities that are reasonably within the control of the Company including, without limitation, registering the applicable class of Registrable Securities under the Exchange Act, if appropriate, and using  commercially reasonable efforts to cause such registration to become effective pursuant to the rules of the Commission;

 

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(x)           in connection with any sale, transfer or other disposition by each Holder of any Registrable Securities pursuant to Rule 144 promulgated under the Securities Act, use its commercially reasonable efforts to cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing the Registrable Securities to be sold and not bearing any Securities Act legend, and enable certificates for such Registrable Securities to be for such number of shares and registered in such name as each Holder may reasonably request in writing at least ten (10) Business Days prior to any sale of Registrable Securities;

 

(xi)          notify each Holder, promptly after it shall receive notice thereof, of the time when such registration statement, or any post-effective amendments to the registration statement, shall have become effective, or a supplement to any prospectus forming part of such registration statement has been filed or when any document is filed with the Commission which would be incorporated by reference into the prospectus;

 

(xii)         notify each Holder of any request by the Commission for the amendment or supplement of such registration statement or prospectus for additional information;

 

(xiii)        advise each Holder, promptly after it shall receive notice or obtain knowledge thereof, of (A) the issuance of any stop order, injunction or other order or requirement by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and use all commercially reasonable efforts to prevent the issuance of any stop order, injunction or other order or requirement or to obtain its withdrawal if such stop order, injunction or other order or requirement should be issued, (B) the suspension of the registration of the subject shares of the Registrable Securities in any state jurisdiction and (C) the removal of any such stop order, injunction or other order or requirement or proceeding or the lifting of any such suspension; and

 

(xiv)        use its commercially reasonable efforts (taking into account the interests of the Company) to make available the executive officers of the Company to participate with the Holders of Registrable Securities and any underwriters in “road shows” or other selling efforts that may be reasonably requested by the Holders in connection with the methods of distribution for the Registrable Securities.

 

(xv)         a “comfort letter” dated the effective date of such registration statement from the independent public accountants certifying the financial statements in such registration statement, addressed to the underwriters and to each such selling Holder, stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements of the Company included in the registration

 

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statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five business days prior to the date of such letter) with respect to such registration as such underwriters and selling Holders reasonably may request.

 

(b)   In connection with the filing of any registration statement covering Registrable Securities, each Holder shall furnish in writing to the Company such information regarding itself (and any of its Affiliates), the Registrable Securities to be sold, the intended method of distribution of such Registrable Securities and such other information requested by the Company as is necessary or advisable for inclusion in the registration statement relating to such offering pursuant to the Securities Act.  Such writing shall expressly state that it is being furnished to the Company for use in the preparation of a registration statement, preliminary prospectus, supplementary prospectus, final prospectus or amendment or supplement thereto, as the case may be.

 

Each Holder agrees by acquisition of the Registrable Securities that (i) upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(a)(v), such Holder will forthwith discontinue its disposition of Registrable Securities pursuant to the registration statement relating to such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4(a)(v); (ii) upon receipt of any notice from the Company of the happening of any event of the kind described in clause (A) of Section 4(a)(xiii), such Holder will discontinue its disposition of Registrable Securities pursuant to such registration statement until such Holder’s receipt of the notice described in clause (C) of Section 4(a)(xiii); and (iii) upon receipt of any notice from the Company of the happening of any event of the kind described in clause (B) of Section 4(a)(xiii), each Holder will discontinue its disposition of Registrable Securities pursuant to such registration statement in the applicable state jurisdiction(s) until such Holder’s receipt of the notice described in clause (C) of Section 4(a)(xiv).

 

Section 5.              Indemnification .

 

(a)   Indemnification by the Company . The Company agrees to indemnify and hold harmless each Holder, its partners, officers, directors, trustees, stockholders, employees, agents and investment advisers, and each Person, if any, who controls each Holder within the meaning of the Securities Act or the Exchange Act, together with the partners, officers, directors, trustees, stockholders, employees, agents and investment advisers of such controlling person, against any losses, claims, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ fees), joint or several, to which each Holder or any such indemnitees may become subject under the Securities Act, the Exchange Act, any federal or state law or otherwise, insofar as such losses, claims, damages, liabilities and expenses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement under

 

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which such Registrable Securities were registered and sold under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, or arising out of or based upon any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading or any violation of the Securities Act or state securities laws or rules thereunder by the Company relating to any action or inaction by the Company in connection with such registration, and the Company will reimburse each Holder for any reasonable legal or any other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, liability, action or proceedings; provided, however, that the Company shall not be liable in any such case to a Holder to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Holder specifically stating that it is for use in the preparation thereof; and provided, further, that the Company shall not be liable to such Holder or any other Person who controls each Holder within the meaning of the Securities Act or the Exchange Act in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of such Person’s failure to send or give a copy of the final prospectus or supplement to the Persons asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of Registrable Securities to such Person if such statement or omission was corrected in such final prospectus or supplement.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of each Holder or any such controlling Person and shall survive the transfer of such securities by each Holder.

 

(b)   Indemnification by each Holder . The Holder agrees to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 5(a)) the Company, each member of the Board, each officer, employee, agent and investment adviser of the Company and each other Person, if any, who controls any of the foregoing within the meaning of the Securities Act or the Exchange Act, with respect to any untrue statement or alleged untrue statement of a material fact in or omission or alleged omission to state a material fact from such registration statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or any amendment or supplement thereto, if such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Holder regarding such Holder giving such indemnification specifically stating that it is for use in the preparation of such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such Board member, officer, employee, agent, investment adviser or controlling Person and shall survive the transfer of such securities by any Holder.  The obligation of a Holder to indemnify will be several

 

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and not joint, among the Holders of Registrable Securities and the liability of each Holder under this paragraph (c) shall be limited to the proceeds received by such Holder upon the sale of its Registrable Securities.

 

(c)   Notices of Claims, etc.   Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in the preceding paragraphs of this Section 5, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; provided, however, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding paragraphs of this Section 5, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice.  In case any such action is brought against an indemnified party, unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist in respect of such claimor such indemnified party has additional or different defenses from the indemnifying person, the indemnifying party shall be entitled to assume the defense thereof, for itself, if applicable, together with any other indemnified party similarly notified, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to the indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof.

 

(d)   Indemnification Payments .  To the extent that the indemnifying party does not assume the defense of an action brought against the indemnified party as provided in Section 5(c), the indemnified party (or parties if there is more than one) shall be entitled to the reasonable legal expenses of common counsel for the indemnified party (or parties) as well as one local counsel.  In such event, however, the indemnifying party will not be liable for any settlement effected without the written consent of such indemnifying party, which consent shall not be unreasonably withheld.  The indemnification required by this Section 5 shall be made by periodic payments of the amount thereof during the course of an investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.  The indemnifying party shall not settle any claim without the consent of the indemnified party unless such settlement involves a complete release of such indemnified party without any admission of liability by the indemnified party.

 

(e)   Contribution .  If, for any reason, the foregoing indemnity is unavailable, or is insufficient to hold harmless an indemnified party, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of the expense, loss, damage or liability, (i) in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other (determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission relates to information supplied by the indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission) or (ii) if the allocation provided by subclause (i) above is not permitted by applicable law or provides a lesser sum to the indemnified party than the amount

 

11


 

hereinafter calculated, in the proportion as is appropriate to reflect not only the relative fault of the indemnifying party and the indemnified party, but also the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other, as well as any other relevant equitable considerations.  No indemnified party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation, and the liability for contribution of each Holder of Registrable Securities will be in proportion to and limited in all events to the net amount received by each Holder from the sale of Registrable Securities pursuant to such registration statement.

 

Section 6.              Market Stand-Off Agreement .  The Holder hereby agrees that it shall not, to the extent requested by the Company or an underwriter of securities of the Company, directly or indirectly sell, offer to sell (including without limitation any short sale), grant any option or otherwise transfer or dispose of any Registrable Securities (other than to donees or partners of each Holder who agree to be similarly bound) within seven days prior to and for up to 90 days following the effective date of a registration statement of the Company filed under the Securities Act (except the Shelf Registration Statement filed for the benefit of the Holders pursuant to this Agreement) or the date of an underwriting agreement with respect to an underwritten public offering of the Company’s securities (the “ Stand-Off Period ”); provided, however, that:

 

(a)   with respect to the Stand-Off Period, such agreement shall not be applicable to the Registrable Securities to be sold on each Holder’s behalf to the public in an underwritten offering pursuant to such registration statement;

 

(b)   all executive officers and directors of the Company then holding Common Shares shall enter into similar agreements;

 

(c)   each Holder shall be allowed any concession or proportionate release allowed to any (i) officer or (ii) director of the Company that entered into similar agreements.

 

In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the Registrable Securities subject to this Section 6 and to impose stop transfer instructions with respect to the Registrable Securities and such other Common Shares of each Holder (and the Common Shares or securities of every other person subject to the foregoing restriction) until the end of such period.

 

Section 7.              Covenants Relating To Rule 144 .  The Company covenants that it will file any reports required to be filed by it under the Securities Act and the Exchange Act and that it will take such further action as each Holder may reasonably request, all to the extent required from time to time to enable each Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such rule may be amended from time to time or (b) any similar rule or regulation hereafter adopted by the Commission.

 

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Upon the request of each Holder, the Company will deliver to each Holder a written statement as to whether it has complied with such requirements.

 

Section 8.              Miscellaneous .

 

(a)   Termination; Survival .  The rights of each Holder under this Agreement shall terminate upon the date that all of the Registrable Securities held by each Holder may be sold during any three-month period in a single transaction or series of transactions without volume limitations under Rule 144 (or any successor provision) under the Securities Act.  Notwithstanding the foregoing, the obligations of the parties under Section 5 and paragraphs (d), (e) and (g) of this Section 8 shall survive the termination of this Agreement.

 

(b)   Expenses .  All Registration Expenses incurred in connection with any Registration Statement (including any prospectus or prospectus supplement) prepared and/or filed pursuant to this Agreement shall be borne by the Company, whether or not any registration statement related thereto becomes effective.

 

(c)   Counterparts .  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the parties and delivered to each of the other parties.

 

(d)   Applicable Law; Jurisdiction .  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.  The parties consent to the exclusive jurisdiction of the United States District Court for the Southern District of New York in connection with any civil action concerning any controversy, dispute or claim arising out of or relating to this Agreement, or any other agreement contemplated by, or otherwise with respect to, this Agreement or the breach hereof, unless such court would not have subject matter jurisdiction thereof, in which event the parties consent to the jurisdiction of the State of New York.  The parties hereby waive and agree not to assert in any litigation concerning this Agreement the doctrine of forum non conveniens .

 

(e)   Waiver Of Jury Trial .  THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

(f)    Prior Agreement; Construction; Entire Agreement .  This Agreement, including the exhibits and other documents referred to herein (which form a part hereof), constitutes the entire agreement of the parties with respect to the subject matter hereof, and supersedes all prior agreements and understandings between the parties, and all such prior agreements and understandings are merged herein and shall not survive the execution and delivery hereof.

 

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(g)   Notices . All notices or other communications required or permitted to be given hereunder shall be in writing and shall be delivered by hand or sent, postage prepaid, by registered, certified or express mail or reputable overnight courier service or be facsimile and shall be deemed given when so delivered by hand or, if mailed, three days after mailing (one Business Day in the case of express mail or overnight courier service), or upon receipt if sent by facsimile or electronic transmission, addressed as follows:

 

If to each Holder (See Schedule 1):

 

To the address indicated for such Holder in Schedule 1 hereto.

 

If to the Company:

 

GTJ REIT, Inc.

444 Merrick Rd, Suite 370

Lynbrook, NY 11563

Attention:  David Oplanich

Fax:  (516) 887-2029

 

With a copy to:

 

Saul Ewing, LLP

500 East Pratt Street

Baltimore, Maryland 21202

Attention: John J. Ghingher, Esq.

Fax:  (410) 332-8862

 

and

 

Ruskin Moscou Faltischek, P.C.

East Tower, 15 th  Floor

1425 RXR Plaza

Uniondale, NY 11556

Attn: Adam P. Silvers, Esq.

Fax:  (516) 663-6719

 

(h)   Successors and Assigns .  This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder.  The Company may assign its rights or obligations hereunder to any successor to the Company’s business or with the prior written consent of each Holder.  Notwithstanding the foregoing, no assignee of the Company shall have any of the rights granted under this Agreement until such assignee shall acknowledge its rights and obligations hereunder by a signed written agreement pursuant to which such assignee accepts such rights and obligations.  Each Holder may assign its rights or obligations hereunder in whole or in part in connection with the transfer, sale or other disposition of

 

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its Common Shares with the prior written consent of the Company so long as such assignee shall acknowledge its rights and obligations hereunder by a signed written agreement pursuant to which such assignee accepts such rights and obligations, upon which assignee shall be deemed to be a “Holder” for all purposes hereunder.

 

(i)    Headings .  Headings are included solely for convenience of reference and if there is any conflict between headings and the text of this Agreement, the text shall control.

 

(j)    Amendments And Waivers .  The provisions of this Agreement may be amended or waived at any time only by the written agreement of the Company and the Holders of a majority of the Registrable Securities.  Any waiver, permit, consent or approval of any kind or character on the part of each Holder of any provision or condition of this Agreement must be made in writing and shall be effective only to the extent specifically set forth in writing.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder of Registrable Securities and the Company.

 

(k)   Interpretation; Absence Of Presumption .  For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, paragraph or other references are to the Sections, paragraphs, or other references to this Agreement unless otherwise specified, (iii) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified, (iv) the word “or” shall not be exclusive and (v) provisions shall apply, when appropriate, to successive events and transactions.

 

This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instruments to be drafted.

 

(l)    Severability .  If any provision of this Agreement shall be or shall be held or deemed by a final order by a competent authority to be invalid, inoperative or unenforceable, such circumstance shall not have the effect of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable, but this Agreement shall be construed as if such invalid, inoperative or unenforceable provision had never been contained herein so as to give full force and effect to the remaining such terms and provisions.

 

(m)  Specific Performance; Other Rights .  The parties recognize that various other rights rendered under this Agreement are unique and, accordingly, the parties shall, in addition to such other remedies as may be available to them at law or in equity, have the

 

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right to enforce the rights under this Agreement by actions for injunctive relief and specific performance.

 

(n)   Further Assurances .  In connection with this Agreement, as well as all transactions and covenants contemplated by this Agreement, each party hereto agrees to execute and deliver or cause to be executed and delivered such additional documents and instruments and to perform or cause to be performed such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions and covenants contemplated by this Agreement.

 

(o)   No Waiver .  The waiver of any breach of any term or condition of this Agreement shall not operate as a waiver of any other breach of such term or condition or of any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF , the parties have caused this Agreement to be duly executed as of the date first written above.

 

 

 

GTJ REIT, INC.

 

 

 

 

 

By:

/s/ David J. Oplanich

 

Name:

David J. Oplanich

 

Title:

Chief Financial Officer

 

 

 

 

 

HOLDERS:

 

 

 

 

 

By:

/s/ Paul Cooper

 

Name:

Paul Cooper

 

 

 

 

 

By:

/s/ Jerome Cooper

 

Name:

Jerome Cooper

 

 

 

 

 

By:

/s/ Louis Sheinker

 

Name:

Louis Sheinker

 

 

 

 

 

By:

/s/ Jeffrey Ravetz

 

Name:

Jeffrey Ravetz

 

 

 

 

 

By:

/s/ Sarah Ravetz

 

Name:

Sarah Ravetz

 

 

 

 

 

By:

/s/ Jeffrey Wu

 

Name:

Jeffrey Wu

 

[Signature Page to Registration Rights Agreement]

 


 

 

WU FAMILY 2012 GIFT TRUST

 

 

 

 

 

By

/s/ Gene Greenfest

 

 

Gene Greenfest

 

 

Trustee

 

[Signature Page to Registration Rights Agreement]

 


 

Schedule 1

(As of January 1, 2013)

 

 

 

Name of the Holder

 

Address of the Holder

 

Limited Partnership Interests

 

 

 

 

 

 

 

1.

 

Jeffrey Wu

 

56-72 49 TH  Place

Maspeth, New York 11378

 

2,219 Common Units

21,753 Class B. Units

 

 

 

 

 

 

 

2.

 

Paul Cooper

 

c/o Green Holland Ventures

444 Merrick Road

Lynbrook, New York 11563

 

1,997 Common Units

 

 

 

 

 

 

 

3.

 

Jerome Cooper

 

c/o Green Holland Ventures

444 Merrick Road

Lynbrook, New York 11563

 

222, Common Units

 

 

 

 

 

 

 

4.

 

Jeffrey Ravetz

 

Girona Ventures

1841 Broadway

Suite 1201

New York, New York 10023

 

1,911 Common Units

 

 

 

 

 

 

 

5.

 

Sarah Ravetz

 

Girona Ventures

1841 Broadway

Suite 1201

New York, New York 10023

 

309 Common Units

 

 

 

 

 

 

 

6.

 

Louis Sheinker

 

c/o Green Holland Ventures

444 Merrick Road

Lynbrook, New York 11563

 

2,219 Common Units

 

 

 

 

 

 

 

7.

 

Wu Family 2012 Gift Trust

 

56-72 49 TH  Place

Maspeth, New York 11378

 

2,660 Class B. Units

 

Exhibit 10.5

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “ Agreement ”) is entered into as of the 1 st  day of January, 2013 by and between David J. Oplanich (“ Executive ”), an individual residing at 34-04 37 th  Street, Long Island City, New York  11101-1302, and GTJ REIT, Inc., a Maryland corporation (the “ Company ”) with principal offices at 444 Merrick Road, Suite 370, Lynbrook, New York 11563.  Executive and Company may be referred to collectively as the “Parties.”

 

WHEREAS , the Company desires to employ the Executive on the terms and conditions set forth herein and acknowledges and agrees that Executive has the professional and personal skills to perform under the terms and conditions of this Agreement; and

 

WHEREAS , the Executive desires to be employed by the Company on such terms and conditions.

 

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

 

Section 1.                                           Term .   The Company hereby employs Executive and Executive hereby accepts such employment, upon the terms and conditions hereinafter set forth, from January 1, 2013 (the “ Employment Commencement Date ”) through and including December 31, 2013 (the “ Initial Term ”).  This Agreement shall renew automatically for successive one (1) year periods (each, a “ Renewal Term ”) unless either party gives notice to the other party, in writing, at least sixty (60) days prior to the expiration of the Initial Term (or any Renewal Term) of its desire to terminate the Agreement at the end of such Initial Term or Renewal Term, as the case may be.  The term of this Agreement, including the Initial Term and any Renewal Term, shall be referred to hereinafter as the “ Term .”

 

Section 2.                                           Executive’s Duties .

 

(a)                                  Executive shall be the Chief Financial Officer of the Company and shall report directly to the Chief Executive Officer of the Company or such other executive of the Company as the Board of Directors of the Company (the “ Board ”) may designate. Executive shall faithfully and diligently perform his duties at the direction of the Board, or its designee, to the best of Executive’s ability.  Subject to Section 8(a) of this Agreement, Executive shall (i) devote his full-time business efforts, skill, ability and attention to the performance of the services customarily incident to such office, subject to vacations and sick leave as provided herein and in accordance with the Company policy, (ii) carry out his duties in a competent and professional manner; and (iii) generally promote the interests of the Company.

 

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(b)                                  Executive agrees to abide by all policies of the Company promulgated from time to time by the Company, which policies are generally enforced uniformly and applicable to all similar executives of the Company.

 

(c)                                   Except for such business travel as may be incident to his duties hereunder, Executive shall perform his duties at the Company’s offices at the address set forth in the preamble to this Agreement or at such other location as may be approved by the Company.

 

Section 3.                                           Compensation for Executive’s Services .    In consideration of the duties and services to be performed by Executive pursuant to Sections 1 and 2 hereof, Executive shall receive:

 

(a)                                  Salary .  Executive shall earn salary (the “ Salary ”) at the annual rate of Three Hundred Fifty Thousand ($350,000) Dollars, less all applicable federal, state, and local tax withholdings.  Such Salary shall be earned and shall be payable in periodic installments in accordance with the Company’s normal payroll practices.  During the Term, the Company shall review the Salary annually and may in its discretion increase the Salary, but may not reduce it during the Term.

 

(b)                                  Cash Bonus .  Executive will be eligible to receive an annual cash bonus in an amount to be determined at the Board’s discretion and in accordance with the terms established by the Board.  Any bonus payment will be paid subject to all applicable withholdings and deductions.

 

(c)                                   Equity Bonus .  Executive will be eligible to receive an annual equity incentive award in an amount to be determined at the Board’s discretion and in accordance with the terms established by the Board.

 

(d)                                  Benefits .  The Company shall provide Executive with the right to participate in and receive benefits from all life, accident, disability, medical and pension plans, and all similar benefits as are from time to time in effect and are generally made available to similar senior executive officers of the Company pursuant to the policies of the Company  (collectively, the “ Benefits ”).  Throughout the Term, and notwithstanding the Company’s rights to determine which specific benefit plan will be offered by the Company, Executive shall be entitled to, at a minimum: (i) medical insurance, including healthcare coverage for Executive, and if applicable, his immediate family, with the Company to pay such portion of Executive’s contribution as it pays for similarly situated executive officers of the Company; (ii) disability insurance of a type provided to other executives of the Company; (iii) premiums paid on a five hundred thousand ($500,000) dollar term life insurance policy, assuming satisfactory insurability, for a ten (10) year term; and (iv) participation in a 401(k) plan and/or other retirement plan to the extent available to the Company’s employees.

 

(e)                                   Expenses .  The Company shall promptly reimburse Executive for reasonable expenses for cellular telephone usage, entertainment, travel, meals, lodging and similar items incurred in the conduct of the Company’s business.  Such expenses shall be reimbursed in accordance with the Company’s normal expense reimbursement policies and guidelines.  The

 

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Company shall provide a corporate credit card to Executive to enable Executive to charge such reasonable Company expenses.

 

(f)                                    Vacation; Sick Leave .  During the Term, Executive shall be entitled to reasonable paid vacation commensurate with his position within the industry; paid holidays; paid sick leave; and similar benefits, to be earned and used in accordance with the Company’s policy and procedure for other similarly situated senior executive officers of the Company.

 

(g)                                   Vehicle .  During the Term, the Executive shall receive a reasonable automobile allowance commensurate with his position within the industry, which shall be paid monthly.

 

(h)                                  Modification .  Subject to the minimum coverages and/or benefit amounts set forth in Section 3(d) and elsewhere in this Agreement, the Company reserves the right to modify, suspend or discontinue any and all of the above plans, practices, policies and programs referenced in Sections 3(d) and (e) at any time in its discretion without recourse by Executive so long as such action is taken generally with respect to other similarly situated senior executive officers, and the minimum coverages and/or benefit amounts set forth in Section 3(d) and elsewhere in this Agreement are maintained. Any such modification, suspension or discontinuance of the plans, practices and policies referenced in Section 3(e) will not apply to otherwise reimbursable expenses incurred by Executive prior to any such modification, suspension or discontinuance.

 

Section 4.                                           Termination of Employment .  This Agreement may only be terminated by a method permitted under Section 4(a), (b), (c), (d), or (e) as follows:

 

(a)                                  Resignation by Executive .  Executive may voluntarily terminate his employment with the Company, at any time, with or without Good Reason (as defined below), upon written notice to the Company; provided, however, that any termination of Executive’s employment without Good Reason shall be upon not less than thirty (30) days prior written notice to the Company.

 

(b)                                  Non-Renewal by Company or Executive . The Company or Executive may terminate Executive’s employment effective at the end of the Initial Term, or any Renewal Term, in accordance with Section 1.

 

(c)                                   Executive’s Death or Disability .  Executive’s employment shall terminate immediately upon Executive’s death.  In the event the Company, in good faith, determines that Executive is unable to perform the functions of his position due to a Disability (as defined below), it may notify Executive in writing of its intention to terminate Executive’s employment and Executive’s employment with the Company shall terminate effective on the thirtieth (30th) day after receipt of such notice by Executive.  For the purposes of this Agreement, “ Disability ” shall mean a physical or mental impairment that renders Executive unable to perform the essential functions of his position (i) for a continuous period of ninety (90) days, not including any vacation days, holidays or sick days, (ii) for a cumulative period  of ninety (90) in any twelve-month period, not including any vacation days, holidays or sick days, or (iii) at such earlier time as Executive submits medical evidence satisfactory to the Company

 

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that the Executive has a physical or mental disability or infirmity that will likely prevent Executive from substantially performing his duties and responsibilities for ninety (90) days or longer.  In the event of any disagreement between the Executive and the Company as to whether the Executive is physically or mentally incapacitated so as to constitute a Disability under this Agreement, the question of such incapacity shall be submitted to an impartial and reputable physician selected by mutual agreement of the Company and the Executive, or, failing such agreement, a physician selected by two physicians, one of whom shall have been selected by the Company, and the other by the Executive, and the determination of the question of such incapacity by such physician shall be final and binding upon the Company and the Executive.  The Company shall pay the fees and expenses of such physicians, and the Executive shall submit to any medical examinations reasonably necessary to enable such physicians to make a determination as to whether the Executive’s incapacity constitutes a Disability under this Agreement.

 

(d)                                  Cause by the Company .  The Company may immediately terminate Executive’s employment for “Cause” by giving written notice to Executive.  For purposes of this Agreement, “ Cause ” shall mean:

 

(1)                                  Executive’s commission of an act of fraud, misappropriation or embezzlement, whether or not related to the Executive’s employment with the Company;

 

(2)                                  Executive’s commission of any act of gross negligence or willful misconduct act which injures the reputation, business, or any material business relationship of the Company;

 

(3)                                  Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent), or a crime that constitutes a misdemeanor involving dishonesty or moral turpitude;

 

(4)                                  Executive’s refusal or failure of Executive to perform Executive’s duties with the Company in a competent and professional manner that is not cured by Executive within fifteen (15) business days after a written demand therefor is delivered to Executive by the Board which identifies with reasonable specificity the manner in which the Board believes that Executive has not substantially performed Executive’s duties; provided, further, however, that if the refusal or failure by Executive is not susceptible of cure, then no cure period shall be required hereunder; or

 

(5)                                  Executive’s refusal or failure of Executive to comply with any of his material obligations under this Agreement (including any Exhibit hereto) that is not cured by Executive within fifteen (15) business days after a written demand therefor is delivered to Executive by the Board which identifies with reasonable specificity the manner in which the Board believes Executive has materially breached this Agreement; provided, further, however, that if the refusal or failure by Executive is not susceptible of cure, then no cure period shall be required hereunder.

 

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(e)                                   Good Reason by the Executive .  Executive may immediately terminate his employment for “ Good Reason ,” by giving written notice to the Company.  For purposes of this Agreement, “ Good Reason ” shall mean:

 

(1)                    the Company’s material breach, or any successor entity in the event of a Change in Control (as defined in Section 5(c)(2)), of any provision of this Agreement that is not cured by the Company within fifteen (15) business days after a written demand therefor is delivered to the Board by Executive which identifies with reasonable specificity the manner in which Executive believes that the Company, or successor entity, has breached this Agreement, provided, further, however, that if the material breach by the Company, or successor entity, is not susceptible of cure, then no cure period shall be required hereunder;

 

(2)                    a material reduction of Executive’s title, status, authority, responsibility or duties as Chief Financial Officer of the Company or the assignment to Executive of any duties materially inconsistent with the position of Chief Financial Officer; or

 

(3)                    any reduction in Executive’s Salary or material reduction in Executive’s benefits.

 

(f)                                    Continuing Obligations .  Executive acknowledges and agrees that any termination under this Section 4 is not intended, and shall not be deemed or construed, to affect in any way any of Executive’s covenants and obligations contained in Sections 6, 7, and 8 hereof, which shall continue in full force and effect beyond such termination for any reason.

 

Section 5.                                           Termination Obligations .

 

(a)                                  Resignation By Executive Without Good Reason .  If Executive’s employment is terminated voluntarily by Executive during the Term without Good Reason, Executive’s employment shall terminate without further obligations to Executive other than for payment of the sum of any unpaid Salary and reimbursable expenses accrued and owing to Executive prior to the termination.  The sum of such amounts shall hereinafter be referred to as the “ Accrued Obligations ,” which shall be paid to Executive or Executive’s estate or beneficiary within thirty (30) days of the date of termination.

 

(b)                                  Cause by Company .  If Executive’s employment is terminated by the Company during the Term for Cause, this Agreement shall terminate without further obligations to Executive other than for the payment of Accrued Obligations within thirty (30) days of Executive’s termination.

 

(c)                                   Non-Renewal by Company; By Executive for Good Reason; Change in Control .

 

(1)                            If (x) the Company elects (pursuant to Section 1) not to renew this Agreement after expiration of the Initial Term, or any Renewal Term, as the case may be; (y)

 

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Executive terminates his employment for Good Reason; or (z) following a Change in Control (as defined below): (I) the Company, or any successor entity, terminates the Executive without Cause, or (II) Executive terminates his employment for Good Reason, then the Company shall have no further obligations to Executive other than for:

 

(i)                                      the payment of Accrued Obligations;

 

(ii)                                   severance pay in an amount equal to the following:

 

(A) if Executive is terminated pursuant to clauses (y) or (z) above during the Initial Term, then:

 

(I)                                    one year of Executive’s Salary.

 

(B) if the Company elects not to extend this Agreement at the end of the Initial Term, then:

 

(I)                                    one times Executive’s Salary.

 

(C) if during a Renewal Term, then:

 

(I)                                    the Salary that the Executive would have earned during the remainder of the Renewal Term of this Agreement.

 

(iii)                                the accelerated vesting of any issued and unvested Equity Bonus granted to the Executive during the Term; and

 

(iv)                               the payment of COBRA premiums, if Executive elects COBRA, for the period equal to the remainder of the Initial Term.

 

The payments described in Sections 5(c)(1)(i) and 5(c)(1)(ii)(A)(I), if any, shall be made in a lump sum within thirty (30) days of the date of termination.

 

(2)                            For purposes of this Agreement, “ Change in Control ” shall mean the occurrence of any of the following:

 

(i)                                    one person (or more than one person acting as a group) acquires (during the twelve-month period ending on the date of the most recent acquisition) ownership of the Company’s stock possessing thirty percent (30%) or more of the total voting power of the stock of such corporation;

 

(ii)                                 one person (or more than one person acting as a group) acquires ownership of the Company’s stock possessing fifty percent (50%) or more of the total voting power of the stock of such corporation;

 

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(iii)                              a majority of the members of the Board are replaced as a result of three (3) successive elections with directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election;

 

(iv)                             any consolidation or merger of the Company or any subsidiary that would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation representing (either by remaining outstanding or by being converted into voting securities of the surviving entity) less than fifty (50%) percent of the total voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation or ceasing to have the power to elect at least a majority of the board of directors or other governing body of such surviving entity; or

 

(v)                                the sale, lease, exchange or transfer of all or substantially all of the Company’s assets to an unaffiliated entity.

 

(d)                                  Release .  Notwithstanding anything to the contrary contained herein, no severance payments required hereunder shall be made by the Company until such time as Executive shall execute a general release for the benefit of the Company in the form annexed to this Agreement as Exhibit A .

 

(e)                                   Exclusive Remedy .  Executive agrees that the payments set forth in Section 5 of this Agreement shall constitute the exclusive and sole remedy for any termination of Executive’s employment permitted under Section 4 of this Agreement, and Executive covenants not to assert or pursue any other remedies, at law or in equity, with respect to such termination provisions under this Agreement.

 

(f)                                    Termination of Executive’s Office .  Following the termination of Executive’s employment for any reason, Executive shall hold no further office or position with the Company.

 

Section 6.                                           Restrictions Respecting Confidential Information .  Executive hereby covenants and agrees that, during his employment and thereafter, Executive will not, under any circumstance, disclose in any way any Confidential Information (as defined below) to any other person other than at the direction of or for the benefit of the Company.  For the purposes of the foregoing, “ Confidential Information ” means information pertaining to the assets, business, rental information, tenant names, creditors, vendors, customers, data, employees, financial condition or affairs, formulae, licenses, methods, operations, procedures, reports, suppliers, systems and technologies of the Company, including (without limitation) the contracts, patents, trade secrets and customer lists developed or otherwise acquired by the Company; provided , however , that the term Confidential Information shall exclude any information that was, is, or becomes publicly available other than through disclosure by Executive or any other person known to Executive to be subject to confidentiality obligations to the Company.  All Confidential Information is and will remain the sole and exclusive property of the Company.  Following the termination of his

 

7


 

employment, Executive shall return all documents and other tangible items containing Confidential Information to the Company, without retaining any copies, notes or excerpts thereof.

 

Section 7.                                           Proprietary Matters .  Executive expressly understands and agrees that any and all improvements, inventions, discoveries, processes, or know-how that are generated or conceived by Executive during the Term (collectively, the “ Inventions ”) will be the sole and exclusive property of the Company, and Executive will, whenever requested to do so by the Company (either during the Term or thereafter), execute and assign any and all applications, assignments and/or other instruments and do all things which the Company may deem necessary or appropriate in order to apply for, obtain, maintain, enforce and defend patents, copyrights, trade names or trademarks of the United States or of foreign countries for said Inventions, or in order to assign and convey or otherwise make available to the Company the sole and exclusive right, title, and interest in and to said Inventions, applications, patents, copyrights, trade names or trademarks; provided , however , that the provisions of this Section 7 shall not apply to an Invention that Executive developed entirely on his own time without using the Company’s Confidential Information except for those Inventions that either (i) directly and materially relate, at the time of conception or reduction to practice of the invention, to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or (ii) directly and materially result from any work performed by Executive for the Company.  Executive shall promptly communicate and disclose to the Company all Inventions conceived, developed or made by him during his employment by the Company, whether solely or jointly with others, and whether or not patentable or copyrightable, (a) which relate to any matters or business of the type carried on or being developed by the Company, or (b) which result from or are suggested by any work done by him in the course of his employment by the Company.  Executive shall also promptly communicate and disclose to the Company all material other data obtained by him concerning the business or affairs of the Company in the course of his employment by the Company.

 

Section 8.                                           Nonsolicitation/Non-Compete .

 

(a)                                  Executive agrees that during the Term, he will not directly or indirectly, own (other than a passive investment), manage, operate, control, or participate in the ownership (other than a passive investment), management, operation, or control of, or be connected with, or have any financial interest in, any competitor.  The Parties further agree that during and after the Term, Executive shall not, directly or indirectly, own, manage, operate, control, or participate in the ownership, management, operation, or control of, or be connected with, or have any financial interest in, any business opportunity in which such opportunity or information pertaining thereto was obtained while he was employed by the Company.  In the event that Executive seeks to own, manage, operate, control or participate in the purchase of a real estate or other business activity during the Term that would otherwise constitute a violation of this Section 8(a), Executive shall first obtain the prior written consent of the Board, which consent shall be in the discretion of the Board.

 

(b)                                  Executive agrees that during the Term and for a period of twelve (12) months following the termination of his employment for any reason, he will not actively solicit or hire for employment, consulting or any other arrangement any employee of the Company, any of its subsidiaries or any of its other affiliates, present or future (while an affiliate).

 

8


 

(c)                                   Executive agrees that during the Term and for a period of twelve (12) months following the termination of his employment for any reason, he will not do business with, influence or attempt to influence customers of the Company or any of its present or future subsidiaries or affiliates, either directly or indirectly, to divert their business to any competitor.

 

(d)                                  The restrictions contained in this Section 8 are necessary for the protection of the business and goodwill of the Company and are considered by Executive to be reasonable for such purpose.  Further, Executive represents that these restrictions will not prevent him from earning a livelihood during the restricted period.

 

Section 9.                                           Equitable Relief .  Executive acknowledges and agrees that the Company will suffer irreparable damage which cannot be adequately compensated by money damages in the event of a breach, or threatened breach, of any of the terms and provisions of Sections 6, 7 and 8 of this Agreement, and that, in the event of any such breach, or threatened breach, the Company will not have an adequate remedy at law.  It is therefore agreed that the Company, in addition to all other such rights, powers, privileges and remedies that it may have, shall be entitled to seek injunctive relief, specific performance or such other equitable relief as the Company may request to enforce any of those terms and provisions and seek to enjoin or otherwise restrain any act prohibited thereby.  Executive agrees that the Company shall be entitled to seek such injunctive relief, without bond, in a court of competent jurisdiction and Executive hereby consents to the jurisdiction of the state and federal courts of New York for purposes of such an action.  The foregoing shall not constitute a waiver of any of the Company’s rights, powers, privileges and remedies against or in respect of a breaching party or any other person or thing under this Agreement, or applicable law.

 

Section 10.                                    Section 409A .  This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

 

Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date (the “ Specified Employee Payment Date ”). The aggregate of

 

9


 

any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to the Executive in a lump sum, with interest at the New York statutory rate, on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.  To the extent that any reimbursements pursuant to Section 3(e) are taxable to Executive, any such reimbursement payment due to the Executive shall be paid to the Executive as promptly as practicable consistent with Company practice following the Executive’s appropriate itemization and substantiation of expenses incurred, and in all events on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred.  The reimbursements pursuant to Section 3(e) are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that the Executive receives in one taxable year shall not affect the amount of such benefits or reimbursements that the Executive receives in any other taxable year.

 

Section 11.                                    Parachute Payments .

 

(a)                                  Notwithstanding any other provision of this Agreement, if all or any portion of the payments and benefits provided under this Agreement (including without limitation any accelerated vesting and any other payment or benefit received in connection with a Change in Control or the termination of Executive’s employment), or any other payments and benefits which Executive receives or is entitled to receive under any plan, program, arrangement or other agreement, whether from the Company or an affiliate of the Company, or any combination of the foregoing, would constitute an excess “parachute payment” within the meaning of Section 280G of the Code (whether or not under an existing plan, arrangement or other agreement) (each such parachute payment, a “ Parachute Payment ”), and would result in the imposition on Executive of an excise tax under Section 4999 of the Code or any successor thereto, then the following provisions shall apply:

 

(1)               If the Parachute Payment, reduced by the sum of (i) the Excise Tax (as defined below) and (ii) the total of the federal, state, and local income and employment taxes payable by Executive on the amount of the Parachute Payment which are in excess of the Threshold Amount (as defined below), are greater than or equal to the Threshold Amount, Executive shall be entitled to the full benefits payable under this Agreement.

 

(2)               If the Threshold Amount (as defined below) is less than (x) the Parachute Payment, but greater than (y) the Parachute Payment reduced by the sum of (1) the Excise Tax and (2) the total of the federal, state, and local income and employment taxes on the amount of the Parachute Payment which are in excess of the Threshold Amount, then the Parachute Payment shall be reduced (but not below zero) to the extent necessary so that the sum of all Parachute Payments shall not exceed the Threshold Amount.  In such event, the Parachute Payment shall be reduced in the following order:  (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash

 

10


 

forms of benefits.  To the extent any payment is to be made over time (e.g., in installments, etc.), then the payments shall be reduced in reverse chronological order.

 

(b)           For the purposes of this Section 11, “ Threshold Amount ” shall mean three times Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less one dollar ($1.00); and “ Excise Tax ” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by Executive with respect to such excise tax.

 

(c)           The determination as to which of the alternative provisions of Section 11(a) shall apply to Executive shall be made by a certified public accounting firm of national reputation reasonably selected by the Employer.  Executive and the Employer shall provide the accounting firm with all information which any accounting firm reasonably deems necessary in computing the Threshold Amount. For purposes of determining which of the alternative provisions of Section 11(a) shall apply, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive’s residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  Any determination by the accounting firm shall be binding upon the Employer and the Executive.

 

Section 12.            Notice .  Any notice, request, demand or other communication hereunder shall be in writing, shall be delivered by nationally recognized overnight delivery service, postage prepaid, to the addressee at the address set forth below (or at such other address as shall be designated hereunder by written notice to the other party hereto).  Notice shall be deemed received one day after dispatch by such overnight service.

 

All notices and other communications hereunder shall be addressed as follows:

 

 

If to Executive:

 

 

 

David J. Oplanich

 

34-04 37 th  Street

 

Long Island City

 

New York 11101-1302

 

 

 

With a copy to:

 

 

 

 

 

 

If to the Company:

 

 

 

GTJ REIT, Inc.

 

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444 Merrick Road, Suite 370

 

Lynbrook, New York 11563

 

 

 

With a copy to:

 

 

 

Ruskin Moscou Faltischek, P.C.

 

East Tower, 15 th  Floor

 

1425 RXR Plaza

 

Uniondale, New York 11556

 

Attention: Adam P. Silvers, Esq.

 

Section 13.            Legal Counsel .  In entering into this Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them.

 

Section 14.            Section and Other Headings .  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

Section 15.            Applicable Law; Jurisdiction .  This Agreement shall be construed in accordance with, and governed by, the laws of the State of New York, without resort to principles of conflicts of laws.  Each of the Parties hereby (i) agrees to submit to the exclusive jurisdiction of the Supreme Court of the State of New York, County of Nassau, and the United States District Court for the Eastern District of New York in any action, suit or other proceeding arising out of or related to the subject matter of this Agreement, and (ii) to the extent permitted by applicable law, waives and agrees not to assert by way of motion, as a defense or otherwise in any such action, suit or proceeding, any claim that such party is not personally subject to the jurisdiction of such courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or subject matter hereof may not be litigated in or by such courts.

 

Section 16.            Severability .  In the event that any term or provision of this Agreement shall be finally determined to be superseded, invalid, illegal or otherwise unenforceable pursuant to applicable law by a governmental authority having jurisdiction and venue, that determination shall not impair or otherwise affect the validity, legality or enforceability, to the maximum extent permissible by law, (i) by or before that authority of the remaining terms and provisions of this Agreement, which shall be enforced as if the unenforceable term or provision were deleted, or (ii) by or before any other authority of any of the terms and provisions of this Agreement.

 

Section 17.            Counterparts .  This Agreement may be executed in two counterpart copies of the entire document or of signature pages to the document, each of which may be executed by one of the parties hereto, but all of which, when taken together, shall constitute a single agreement binding upon both of the parties hereto.

 

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Section 18.            Benefit .  This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their legal representatives, successors and assigns.  Insofar as Executive is concerned, this Agreement, being personal, cannot be assigned; provided, however, that should Executive become entitled to payment pursuant to Section 5 hereof, he may assign his rights to such payment to his legal representatives, successors, and assigns.  Without limiting the generality of the foregoing, all representations, warranties, covenants and other agreements made by or on behalf of Executive in this Agreement shall inure to the benefit of the successors and assigns of the Company.

 

Section 19.            Modification .  This Agreement may not be amended or modified other than by a written agreement executed by all parties hereto.

 

Section 20.            Entire Agreement .  Except as provided in Section 5(e) hereof, this Agreement contains the entire agreement of the parties and supersedes all other representations, warranties, agreements and understandings, oral or otherwise, among the parties with respect to the matters contained herein.

 

Section 21.            Waiver of Jury Trial .  Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby. Each party to this Agreement certifies and acknowledges that (a) no representative of any other party has represented, expressly or otherwise, that such other party would not seek to enforce the foregoing waiver in the event of a legal action, (b) such party has considered the implications of this waiver, (c) such party makes this waiver voluntarily, and (d) such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 21.

 

Section 22.            Representations and Warranties of Executive .  In order to induce the Company to enter into this Agreement, Executive represents and warrants to the Company, to the best of his knowledge after the review of his personnel files, that:  (a) the execution and delivery of this Agreement by Executive and the performance of his obligations hereunder will not violate or be in conflict with any fiduciary or other duty, instrument, agreement, document, arrangement or other understanding to which Executive is a party or by which he is or may be bound or subject; and (b) Executive is not a party to any instrument, agreement, document, arrangement or other understanding with any person (other than the Company) requiring or restricting the use or disclosure of any confidential information or the provision of any employment, consulting or other services.

 

Section 23.            Waiver of Breach .  Except as may specifically provided herein, the failure of a party to insist on strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement.  Any waiver hereto must be in writing.

 

Section 24.            Conflict Between Agreement and Company Policy .  In the event of any inconsistency or conflict between any provision of this Agreement, on the one hand, and any Company policy or practice, on the other hand, such inconsistency or conflict shall be resolved in

 

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favor of the applicable provision(s) of this Agreement, which should in all cases prevail.

 

[Signature Page Follows]

 

14


 

IN WITNESS WHEREOF , the parties hereto have executed and delivered this Agreement as of the date first written above.

 

 

 

EXECUTIVE :

 

 

 

 

 

/s/ David J. Oplanich

 

DAVID J. OPLANICH

 

 

 

 

 

GTJ REIT, INC. :

 

 

 

 

 

By:

/s/ Paul Cooper

 

Name:

Paul Cooper

 

Title:

Chief Executive Officer

 

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Exhibit A

 

Form of General Release

 

Attached hereto

 


 

EXHIBIT B

 

GENERAL RELEASE

 

This General Release (the “Agreement”) is between GTJ REIT, Inc. (the “Company” or “we”) and David Oplanich (“Employee” or “you”).  The term “Company” includes parents, subsidiaries, divisions, and/or related companies, their directors, officers, shareholders, employees, agents, attorneys, and successors of the Company.

 

IT IS AGREED THAT:

 

1.                                       Your last date of employment with the Company is                     .

 

2.                                       The Company shall pay you severance payments as set forth in the Employment Agreement between you and the Company dated as of January 13, 2013 (which payments you would not otherwise be entitled to but for your execution of this Agreement) (the “Severance Payments”).

 

3.                                       In consideration of the Severance Payments, and for other good and valuable consideration described herein, receipt of which is hereby acknowledged, you understand that you voluntarily release and forever discharge the Company from any and all actions or causes of action, suits, claims, charges, complaints, contracts, agreements and promises, whatsoever, whether known or unknown, including but not limited to any claim under contract and/or equity and/or any law, relating in any way to your employment with the Company or the termination of that employment.  This waiver of claims includes any claims of discrimination on any grounds, whether or not you have previously filed such a claim.  You understand that you are giving up any rights or claims which you may have under the numerous laws and regulations regulating employment, whether on the federal, state, or local level, including, but not limited to, the Age Discrimination in Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the Fair Labor Standards Act, the Equal Pay Act, the Family and Medical Leave Act, the New York State Human Rights Laws, the New York State Labor Law, and any other federal, state or local civil or human rights or employment law alleging discrimination or retaliation, or any other alleged violation of any local, state or federal law, regulation or ordinance, and/or public policy or tort law, or claim of breach of contract or for personal injury that you ever had through the date of this Agreement.

 

4.                                       You agree that you will return to the Company any and all files, books, records, materials, equipment or documents in your possession that were provided to or obtained by you in connection with your employment.  Such documents and materials include all computer software, data base or customer information, publications, correspondence, notes and notebooks, drawings, prints, photographs, tape recordings, and other written, typed, printed or recorded materials to which the Employee had access or which the Employee developed during the course of Employee’s employment with the Company.

 

5.                                       It is understood and agreed that you will not talk about, discuss or communicate with anyone, orally or in writing, concerning the matter which is the subject of this Agreement except you may (i) discuss this Agreement with your spouse and children, (ii) permit your accountant to review this Agreement in connection with the filing of tax returns, (iii) permit attorney(s) of your choice to review this Agreement, and (iv) testify truthfully under oath pursuant to a subpoena (in which event you will provide the Company with prompt notice of the subpoena in advance of providing such testimony).

 


 

6.                                       You represent and agree that you have neither filed nor authorized the filing on your behalf of any claims against the Company with any state, federal, or local agency or court or in any other forum or tribunal with respect to anything that has happened up through the date of this Agreement.  Should any government agency or other third party pursue any actions or other claims on Employee’s behalf, Employee hereby agrees to waive any right to recovery or monetary award from such actions or proceedings.

 

7.                                       This Agreement is deemed to be made in the State of New York.  This Agreement is to be interpreted under the laws of the State of New York without regard to conflict of law principles.

 

8.                                       No waiver of any breach of any term or provision of this Agreement shall be construed to be, or shall be, a waiver of any other breach of this Agreement.  No waiver shall be binding unless in writing and signed by the party waiving the breach.

 

9.                                       This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, successors and permitted assigns.  The Company may assign this Agreement without notice in its sole discretion.

 

10.                                Employee acknowledges that Employee has received a copy of this Agreement and that the Company has informed Employee that Employee should consult with an attorney in connection with it.  Employee acknowledges that Employee’s decision to consult with an attorney or not to consult with any attorney was made without influence by the Company.  Employee further acknowledges that Employee has had at least 21 days in which to consider, execute, and return this Agreement.  Notwithstanding Employee’s right to consider this Agreement for 21 days, if Employee signs this Agreement before the expiration of the 21-day period, Employee will have done so knowingly and voluntarily, and will have expressly waived employee’s right to consider this Agreement for the balance of the 21 day period.  In addition, should Employee fail to return an executed copy of this Agreement within 21 days, the Company shall have no obligations under this Agreement.

 

11.                                This Agreement shall not become effective until seven (7) days after the date Employee executes the Agreement, and Employee may cancel this Agreement within seven (7) days of the date Employee executes it, except that any cancellation must be in writing, signed by Employee, and delivered to the Company prior to the expiration of the seven-day period.

 

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12.                                This Agreement may be executed by facsimile, and in counterparts, and shall be fully binding and enforceable upon the parties when so executed.

 

GTJ REIT, INC.

 

 

 

 

 

 

 

 

By:

 

 

Dated:

 

 

 

 

 

 

 

 

 

 

 

 

 

Dated:

 

DAVID OPLANICH

 

 

 

STATE OF

)

 

 

:ss.:

 

COUNTY OF

)

 

 

On the          day of                          before me personally appeared David Oplanich personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that s/he executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person on behalf of which the individual acted, executed the instrument and that such individual made such appearance before the undersigned.

 

 

 

 

 

NOTARY PUBLIC

 

3

Exhibit 10.6

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “ Agreement ”) is entered into as of the 1st day of January, 2013 by and between Paul Cooper (“ Executive ”), an individual residing at 46 Rose Lane, East Rockaway, New York 11518 , and GTJ REIT, Inc., a Maryland corporation (the “ Company ”) with principal offices at 444 Merrick Road, Suite 370, Lynbrook, New York 11563.  Executive and Company may be referred to collectively as the “Parties.”

 

WHEREAS , the Company desires to employ the Executive on the terms and conditions set forth herein and acknowledges and agrees that Executive has the professional and personal skills to perform under the terms and conditions of this Agreement; and

 

WHEREAS , the Executive desires to be employed by the Company on such terms and conditions.

 

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

 

Section 1.                                           Term .   The Company hereby employs Executive and Executive hereby accepts such employment, upon the terms and conditions hereinafter set forth, from January 1, 2013 (the “ Employment Commencement Date ”) through and including December 31, 2015 (the “ Initial Term ”).  This Agreement shall renew automatically for two (2) successive one (1) year periods (each, a “ Renewal Term ”) unless either party gives notice to the other party, in writing, at least sixty (60) days prior to the expiration of the Initial Term (or any Renewal Term) of its desire to terminate the Agreement at the end of such Initial Term or Renewal Term, as the case may be.  The term of this Agreement, including the Initial Term and any Renewal Term, shall be referred to hereinafter as the “ Term .”

 

Section 2.                                           Executive’s Duties .

 

(a)                                  Executive shall be the Chief Executive Officer of the Company and shall report directly to the Board of Directors of the Company (the “ Board ”) or its designee.  Executive shall faithfully and diligently perform his duties at the direction of the Board, or its designee, to the best of Executive’s ability.  Subject to Section 8(a) of this Agreement, Executive shall (i) devote his full-time business efforts, skill, ability and attention to the performance of the services customarily incident to such office, subject to vacations and sick leave as provided herein and in accordance with the Company policy, (ii) carry out his duties in a competent and professional manner; and (iii) generally promote the interests of the Company.

 

(b)                                  Executive agrees to abide by all policies of the Company promulgated from time to time by the Company, which policies are generally enforced uniformly and applicable to all similar executives of the Company.

 

(c)                                   Subject to Section 4(e)(4), and except for such business travel as may be incident to his duties hereunder, Executive shall perform his duties at the Company’s offices at the address set forth in the preamble to this Agreement or at such other location as may be approved by the Company.

 

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Section 3.                                           Compensation for Executive’s Services .    In consideration of the duties and services to be performed by Executive pursuant to Sections 1 and 2 hereof, Executive shall receive:

 

(a)                                  Salary .  Executive shall earn salary (the “ Salary ”) at the annual rate of Five Hundred Fifty Thousand ($550,000) Dollars, less all applicable federal, state, and local tax withholdings.  Such Salary shall be earned and shall be payable in periodic installments in accordance with the Company’s normal payroll practices.  During the Term, the Company shall review the Salary annually and may in its discretion increase the Salary, but may not reduce it during the Term.

 

(b)                                  Cash Bonus .  For each fiscal year of the Company ended December 31 (each, a “ Fiscal Year ”), Executive shall receive a cash bonus (“ Cash Bonus ”) from the Company in the amount of Two Hundred Fifty Thousand ($250,000) Dollars, provided that the Company achieves the Adjusted Funds From Operations (as defined below) benchmarks for such Fiscal Year as set forth in an annual budget approved by the Board and agreed to by Executive for each such Fiscal Year (the “ Bonus Criteria ”).  Solely in the event that the Company either (i) exceeds the Bonus Criteria for a particular Fiscal Year, or (ii) does not achieve the Bonus Criteria for a particular Fiscal Year, the Board or the Compensation Committee of the Board (the “ Compensation Committee ”) may, in its discretion, increase (in the case of (b)(i) of this paragraph) or decrease to as low as zero (in the case of (b)(ii) of this paragraph) the Cash Bonus for that Fiscal Year.  Any Cash Bonus earned and payable for each Fiscal year shall be paid within thirty (30) days following the completion of the Company’s annual audit.  “ Adjusted Funds From Operations ” means, the Company’s funds from operations calculated in accordance with the guidelines published by the National Association of Real Estate Investment Trusts, as adjusted for straight-lining of rent and purchase accounting under ASC 805.

 

(c)                                   Equity Bonus .                    For each Fiscal Year, Executive shall receive an annual equity incentive award in the form of shares of the Company’s restricted common stock (“ Equity Bonus ,” and together with the Cash Bonus, the “ Bonus ”) from the Company in the amount of One Hundred Fifty Thousand ($150,000) Dollars, based on the grant date value of any such award, provided that Executive achieves the Adjusted Funds From Operations benchmark or such Fiscal Year as set forth in the Bonus Criteria.  Solely in the event that Executive either (i) exceeds the Bonus Criteria for a particular Fiscal Year, or (ii) does not achieve the Bonus Criteria for a particular Fiscal Year,  the Compensation Committee may review the discretionary Equity Bonus on an annual basis and, in its discretion, increase (in the case of (c)(i) of this paragraph) or decrease to as low as zero (in the case of (c)(ii) of this paragraph) the Equity Bonus for any Fiscal Year.  All other terms and conditions applicable to such equity awards shall be determined by the Board and, if any such equity awards are granted, such terms and conditions shall be no less favorable than those that apply to similarly situated executive officers of the Company under the 2007 Incentive Award Plan.  The Equity Bonus earned and payable for each Fiscal year shall be paid within thirty (30) days following the completion of the Company’s annual audit.

 

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(d)                                  Benefits .  The Company shall provide Executive with the right to participate in and receive benefits from all life, accident, disability, medical and pension plans, and all similar benefits as are from time to time in effect and are generally made available to similar senior executive officers of the Company pursuant to the policies of the Company (collectively, the “ Benefits ”).  Throughout the Term, and notwithstanding the Company’s rights to determine which specific benefit plan will be offered by the Company, Executive shall be entitled to, at a minimum: (i) medical insurance, including healthcare coverage for his immediate family, with the Company to pay such portion of Executive’s contribution as it pays for similarly situated senior executive officers of the Company; (ii) disability insurance of a type provided to other executives of the Company; (iii) premiums paid on a five million ($5,000,000) dollar term life insurance policy, assuming satisfactory insurability, for a ten (10) year term; and (iv) participation in a 401(k) plan and/or other retirement plan to the extent available to the Company’s employees.

 

(e)                                   Expenses .  The Company shall promptly reimburse Executive for reasonable expenses for cellular telephone usage, entertainment, travel, meals, lodging and similar items incurred in the conduct of the Company’s business.  Such expenses shall be reimbursed in accordance with the Company’s normal expense reimbursement policies and guidelines.  The Company shall provide a corporate credit card to Executive to enable Executive to charge such reasonable Company expenses.

 

(f)                                    Vacation; Sick Leave .  During the Term, Executive shall be entitled to reasonable paid vacation commensurate with his position and within the industry; paid holidays; paid sick leave; and similar benefits, to be earned and used in accordance with the Company’s policy and procedure for other similarly situated senior executive officers of the Company.

 

(g)                                   Vehicle .  During the Term, the Executive shall receive a reasonable automobile allowance commensurate with his position within the industry, which shall be paid monthly.

 

(h)                                  Modification .  Subject to the minimum coverages and/or benefit amounts set forth in Section 3(d) and elsewhere in this Agreement, the Company reserves the right to modify, suspend or discontinue any and all of the above plans, practices, policies and programs referenced in Sections 3(d) and (e) at any time in its discretion without recourse by Executive so long as such action is taken generally with respect to other similarly situated senior executive officers, and the minimum coverages and/or benefit amounts set forth in Section 3(d) and elsewhere in this Agreement are maintained.  Any such modification, suspension or discontinuance of the plans, practices and policies referenced in Section 3(e) will not apply to otherwise reimbursable expenses incurred by Executive prior to any such modification, suspension or discontinuance.

 

Section 4.                                           Termination of Employment .  This Agreement may only be terminated by a method permitted under Section 4(a), (b), (c), (d), or (e) as follows:

 

(a)                                  Resignation by Executive .  Executive may voluntarily terminate his employment with the Company, at any time, with or without Good Reason (as defined below), upon written notice to the Company; provided, however, that any termination of Executive’s employment without Good Reason shall be upon not less than thirty (30)  days prior written notice to the Company.

 

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(b)                                        Non-Renewal by Company or Executive . The Company or Executive may terminate Executive’s employment effective at the end of the Initial Term, or any Renewal Term, in accordance with Section 1.

 

(c)                                         Executive’s Death or Disability .  Executive’s employment shall terminate immediately upon Executive’s death.  In the event the Company, in good faith, determines that Executive is unable to perform the functions of his position due to a Disability (as defined below), it may notify Executive in writing of its intention to terminate Executive’s employment and Executive’s employment with the Company shall terminate effective on the thirtieth (30th) day after receipt of such notice by Executive.  For the purposes of this Agreement, “ Disability ” shall mean a physical or mental impairment that renders Executive unable to perform the essential functions of his position (i) for a continuous period of ninety (90) days, not including any vacation days, holidays or sick days, (ii) for a cumulative period of ninety (90) in any twelve-month period, not including any vacation days, holidays or sick days, or (iii) at such earlier time as Executive submits medical evidence satisfactory to the Company that the Executive has a physical or mental disability or infirmity that will likely prevent Executive from substantially performing his duties and responsibilities for ninety (90) days or longer.  In the event of any disagreement between the Executive and the Company as to whether the Executive is physically or mentally incapacitated so as to constitute a Disability under this Agreement, the question of such incapacity shall be submitted to an impartial and reputable physician selected by mutual agreement of the Company and the Executive, or, failing such agreement, a physician selected by two physicians, one of whom shall have been selected by the Company, and the other by the Executive, and the determination of the question of such incapacity by such physician shall be final and binding upon the Company and the Executive.  The Company shall pay the fees and expenses of such physicians, and the Executive shall submit to any medical examinations reasonably necessary to enable such physicians to make a determination as to whether the Executive’s incapacity constitutes a Disability under this Agreement.

 

(d)                                        Cause by the Company .  The Company may immediately terminate Executive’s employment for “Cause” by giving written notice to Executive.  For purposes of this Agreement, “ Cause ” shall mean:

 

(1)                        Executive’s commission of an act of fraud, misappropriation or embezzlement, whether or not related to the Executive’s employment with the Company;

 

(2)                        Executive’s commission of any act of gross negligence or willful misconduct act which injures the reputation, business, or any material business relationship of the Company;

 

(3)                        Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent), or a crime that constitutes a misdemeanor involving dishonesty or moral turpitude;

 

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(4)                        Executive’s refusal or failure of Executive to perform Executive’s duties with the Company in a competent and professional manner that is not cured by Executive within fifteen (15) business days after a written demand therefor is delivered to Executive by the Board which identifies with reasonable specificity the manner in which the Board believes that Executive has not substantially performed Executive’s duties; provided, further, however, that if the refusal or failure by Executive is not susceptible of cure, then no cure period shall be required hereunder; or

 

(5)                        Executive’s refusal or failure of Executive to comply with any of his material obligations under this Agreement (including any Exhibit hereto) that is not cured by Executive within fifteen (15) business days after a written demand therefor is delivered to Executive by the Board which identifies with reasonable specificity the manner in which the Board believes Executive has materially breached this Agreement; provided, further, however, that if the refusal or failure by Executive is not susceptible of cure, then no cure period shall be required hereunder.

 

(e)                                         Good Reason by the Executive .  Executive may immediately terminate his employment for “ Good Reason ,” by giving written notice to the Company.  For purposes of this Agreement, “ Good Reason ” shall mean:

 

(1)               the Company’s material breach, or any successor entity in the event of a Change in Control (as defined in Section 5(c)(2)), of any provision of this Agreement that is not cured by the Company within fifteen (15) business days after a written demand therefor is delivered to the Board by Executive which identifies with reasonable specificity the manner in which Executive believes that the Company, or successor entity, has breached this Agreement, provided, further, however, that if the material breach by the Company, or successor entity, is not susceptible of cure, then no cure period shall be required hereunder;

 

(2)               a material reduction of Executive’s title, status, authority, responsibility or duties as Chief Executive Officer of the Company or the assignment to Executive of any duties materially inconsistent with the position of Chief Executive Officer;

 

(3)               any reduction in Executive’s Salary or material reduction in Executive’s benefits; or

 

(4)               the relocation of Executive to a facility or location outside the radius of more than fifty (50) miles from the Company’s principal offices at the address set forth in the preamble to this Agreement.  However, in the event that Executive does not terminate this Agreement for Good Reason under this Section 4(e)(4) within fifteen (15) business days of such relocation, and instead agrees to such relocation, then in that case the Company shall promptly pay all of Executive’s reasonable relocation expenses.

 

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(f)                                          Continuing Obligations .  Executive acknowledges and agrees that any termination under this Section 4 is not intended, and shall not be deemed or construed, to affect in any way any of Executive’s covenants and obligations contained in Sections 6, 7, and 8 hereof, which shall continue in full force and effect beyond such termination for any reason.

 

Section 5.                                           Termination Obligations .

 

(a)                                        Resignation By Executive Without Good Reason .  If Executive’s employment is terminated voluntarily by Executive during the Term without Good Reason, Executive’s employment shall terminate without further obligations to Executive other than for payment of the sum of any unpaid Salary and reimbursable expenses accrued and owing to Executive prior to the termination.  The sum of such amounts shall hereinafter be referred to as the “ Accrued Obligations ,” which shall be paid to Executive or Executive’s estate or beneficiary within thirty (30) days of the date of termination.

 

(b)                                        Cause by Company .  If Executive’s employment is terminated by the Company during the Term for Cause, this Agreement shall terminate without further obligations to Executive other than for the payment of Accrued Obligations within thirty (30) days of Executive’s termination.

 

(c)                                         Non-Renewal by Company; By Executive for Good Reason; Change in Control .

 

(1)                                       If (x) the Company elects (pursuant to Section 1) not to renew this Agreement after expiration of the Initial Term, or any Renewal Term, as the case may be; (y) Executive terminates his employment for Good Reason; or (z) following a Change in Control (as defined below): (I) the Company, or any successor entity, terminates the Executive without Cause, or (II) Executive terminates his employment for Good Reason, then the Company shall have no further obligations to Executive other than for:

 

(i)                                the payment of Accrued Obligations;

 

(ii)                             severance pay in an amount equal to the following:

 

(A) if Executive is terminated pursuant to clauses (y) or (z) above during the Initial Term, then:

 

(I)                                    the greater of the Salary that the Executive would have earned during the remainder of the Initial Term of this Agreement, or one year of Executive’s Salary, plus

 

(II)                               the greater of Executive’s Bonus that the Executive could have earned during the remainder of the Initial Term of this Agreement (assuming that Executive achieved the performance benchmarks for each remaining Fiscal Year), or one year of the Bonus (assuming that Executive achieved the performance benchmarks for such Fiscal Year);

 

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(B) if the Company elects not to extend this Agreement at the end of the Initial Term, and provided that the Company achieved the Bonus Criteria, on an aggregate basis for each specified criteria during the Initial Term, as of the end of “Year 3” on Exhibit A ; then:

 

(I)                                    one times Executive’s Salary, plus

 

(II)                               one times Executive’s Bonus;

 

and provided further that, if the Company fails to achieve the Bonus Criteria, on an aggregate basis for each specified criteria during the Initial Term, as of the end of “Year 3” on Exhibit A, then no payments described in clauses (B)(I) or (B)(II) above shall be payable to Executive.

 

(C) if during a Renewal Term, then:

 

(I)                                    the Salary that the Executive would have earned during the remainder of the Renewal Term of this Agreement, plus

 

(II)                               the Bonus that the Executive could have earned during the remainder of the Renewal Term of this Agreement (assuming that Executive achieved the performance benchmarks for such Fiscal Year).

 

(iii)                               the accelerated vesting of any issued and unvested Equity Bonus granted to the Executive during the Term; and

 

(iv)                              the payment of COBRA premiums, if Executive elects COBRA, for the period equal to the greater of the remainder of the Initial Term, or one year.  Notwithstanding the foregoing, if no severance shall be payable pursuant to Section 5(c)(1)(ii)(B), then the Company shall not be obligated to pay such COBRA premiums.

 

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The payments described in Sections 5(c)(1)(i) and 5(c)(1)(ii)(A)(I)-(II), if any, shall be made in a lump sum within thirty (30) days of the date of termination.  The payments described in Sections 5(c)(1)(ii)(A)(II) and 5(c)(1)(ii)(B)(II), if any, shall be made payable within thirty (30) days following the completion of the Company’s annual audit.

 

(2)                        For purposes of this Agreement, “ Change in Control ” shall mean the occurrence of any of the following:

 

(i)             one person (or more than one person acting as a group) acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) ownership of the Company’s stock possessing fifty percent (50%) or more of the total voting power of the stock of such corporation;

 

(ii)            a majority of the members of the Board are replaced during any twelve-month period with directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election;

 

(iii)           any consolidation or merger of the Company or any subsidiary that would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation representing (either by remaining outstanding or by being converted into voting securities of the surviving entity) less than fifty (50%) percent of the total voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation or ceasing to have the power to elect at least a majority of the board of directors or other governing body of such surviving entity; or

 

(iv)           the sale, lease, exchange or transfer of all or substantially all of the Company’s assets to an unaffiliated entity.

 

(d)                                                     Release .  Notwithstanding anything to the contrary contained herein, no severance payments required hereunder shall be made by the Company until such time as Executive shall execute a general release for the benefit of the Company in the form annexed to this Agreement as Exhibit B .

 

(e)                                                      Exclusive Remedy .  Executive agrees that the payments set forth in Section 5 of this Agreement shall constitute the exclusive and sole remedy for any termination of Executive’s employment permitted under Section 4 of this Agreement, and Executive covenants not to assert or pursue any other remedies, at law or in equity, with respect to such termination provisions under this Agreement.

 

(f)                                                       Termination of Executive’s Office .  Following the termination of Executive’s employment for any reason, Executive shall hold no further office or position with the Company.

 

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Section 6.                                           Restrictions Respecting Confidential Information .  Executive hereby covenants and agrees that, during his employment and thereafter, Executive will not, under any circumstance, disclose in any way any Confidential Information (as defined below) to any other person other than at the direction of or for the benefit of the Company.  For the purposes of the foregoing, “ Confidential Information ” means information pertaining to the assets, business, rental information, tenant names, creditors, vendors, customers, data, employees, financial condition or affairs, formulae, licenses, methods, operations, procedures, reports, suppliers, systems and technologies of the Company, including (without limitation) the contracts, patents, trade secrets and customer lists developed or otherwise acquired by the Company; provided , however , that the term Confidential Information shall exclude any information that was, is, or becomes publicly available other than through disclosure by Executive or any other person known to Executive to be subject to confidentiality obligations to the Company.  All Confidential Information is and will remain the sole and exclusive property of the Company.  Following the termination of his employment, Executive shall return all documents and other tangible items containing Confidential Information to the Company, without retaining any copies, notes or excerpts thereof.

 

Section 7.                                           Proprietary Matters .  Executive expressly understands and agrees that any and all improvements, inventions, discoveries, processes, or know-how that are generated or conceived by Executive during the Term (collectively, the “ Inventions ”) will be the sole and exclusive property of the Company, and Executive will, whenever requested to do so by the Company (either during the Term or thereafter), execute and assign any and all applications, assignments and/or other instruments and do all things which the Company may deem necessary or appropriate in order to apply for, obtain, maintain, enforce and defend patents, copyrights, trade names or trademarks of the United States or of foreign countries for said Inventions, or in order to assign and convey or otherwise make available to the Company the sole and exclusive right, title, and interest in and to said Inventions, applications, patents, copyrights, trade names or trademarks; provided , however , that the provisions of this Section 7 shall not apply to an Invention that Executive developed entirely on his own time without using the Company’s Confidential Information except for those Inventions that either (i) directly and materially relate, at the time of conception or reduction to practice of the invention, to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or (ii) directly and materially result from any work performed by Executive for the Company.  Executive shall promptly communicate and disclose to the Company all Inventions conceived, developed or made by him during his employment by the Company, whether solely or jointly with others, and whether or not patentable or copyrightable, (a) which relate to any matters or business of the type carried on or being developed by the Company, or (b) which result from or are suggested by any work done by him in the course of his employment by the Company.  Executive shall also promptly communicate and disclose to the Company all material other data obtained by him concerning the business or affairs of the Company in the course of his employment by the Company.

 

Section 8.                                           Nonsolicitation/Non-Compete .

 

(a)                                  Executive agrees that during the Term, he will not directly or indirectly, own (other than a passive investment), manage, operate, control, or participate in the ownership (other than a passive investment), management, operation, or control of, or be connected with, or have any financial interest in, any competitor; provided, however, that the Company acknowledges and agrees that Executive shall be permitted to continue to own and manage throughout the Term of this Agreement and thereafter: (i) 60 Hempstead Avenue, West Hempstead, New York; (ii) 444 Merrick Road, Lynbrook, New York; (iii) Woodlands, 700, 750 and 800 Veterans Memorial Highway, Hauppauge, New York and (iv) 1581 Franklin Avenue/220 Old Country Road, Garden City, New York (collectively, the “Excluded Properties”).

 

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Executive may, for a reasonable and mutually agreeable fee, manage the Excluded Properties out of the Company’s office space and utilize the Company’s employees, equipment and supplies in connection therewith.  The Parties further agree and acknowledge that (i) Executive may own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected with or have a financial interest in, the acquisition of assets/buildings during the Term and thereafter with the principals of Orlin & Cohen (although the Company shall have the opportunity to invest with Executive and Orlin & Cohen in its discretion); and (ii) Executive (alone or as part of a group) may own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected with or have a financial interest in, the acquisition of a New York sports team or real estate related thereto in which Executive was in negotiation prior to signing this Agreement (the “Team” or “Site”).  In the event Executive does in fact become involved with the Team and/or the Site in any such capacity, Executive and Company shall meet to discuss whether or not any of the terms and/or conditions of this Agreement should be modified and/or amended, as the case may be.  Other than as expressly permitted under this Section 8(a), the Parties further agree that during and after the Term, Executive shall not, directly or indirectly, own, manage, operate, control, or participate in the ownership, management, operation, or control of, or be connected with, or have any financial interest in, any business opportunity in which such opportunity or information pertaining thereto was obtained while he was employed by the Company.  In the event that Executive seeks to own, manage, operate, control or participate in the purchase of a real estate or other business activity during the Term that would otherwise constitute a violation of this Section 8(a), Executive shall first obtain the prior written consent of the Board, which consent shall be in the discretion of the Board.  The Parties acknowledge and agree that nothing in Section 8 of this Agreement shall prevent Executive from using Green Holland Management and/or Green Holland Ventures to engage in any activity that is not otherwise in violation of this Agreement.

 

(b)                                  Executive agrees that during the Term and for a period of twelve (12) months following the termination of his employment for any reason, he will not actively solicit or hire for employment, consulting or any other arrangement any employee of the Company, any of its subsidiaries or any of its other affiliates, present or future (while an affiliate).

 

(c)                                   Executive agrees that during the Term and for a period of twelve (12) months following the termination of his employment for any reason, he will not do business with, influence or attempt to influence customers of the Company or any of its present or future subsidiaries or affiliates, either directly or indirectly, to divert their business to any competitor.

 

(d)                                  The restrictions contained in this Section 8 are necessary for the protection of the business and goodwill of the Company and are considered by Executive to be reasonable for such purpose.  Further, Executive represents that these restrictions will not prevent him from earning a livelihood during the restricted period.

 

Section 9.                                           Equitable Relief .  Executive acknowledges and agrees that the Company will suffer irreparable damage which cannot be adequately compensated by money damages in the event of a breach, or threatened breach, of any of the terms and provisions of Sections 6, 7 and 8 of this Agreement, and that, in the event of any such breach, or threatened breach, the Company will not have an adequate remedy at law.

 

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It is therefore agreed that the Company, in addition to all other such rights, powers, privileges and remedies that it may have, shall be entitled to seek injunctive relief, specific performance or such other equitable relief as the Company may request to enforce any of those terms and provisions and seek to enjoin or otherwise restrain any act prohibited thereby.  Executive agrees that the Company shall be entitled to seek such injunctive relief, without bond, in a court of competent jurisdiction and Executive hereby consents to the jurisdiction of the state and federal courts of New York for purposes of such an action.  The foregoing shall not constitute a waiver of any of the Company’s rights, powers, privileges and remedies against or in respect of a breaching party or any other person or thing under this Agreement, or applicable law.

 

Section 10.                                    Section 409A .                     This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

 

Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date (the “ Specified Employee Payment Date ”). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to the Executive in a lump sum, with interest at the New York statutory rate, on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.  To the extent that any reimbursements pursuant to Section 3(e) are taxable to Executive, any such reimbursement payment due to the Executive shall be paid to the Executive as promptly as practicable consistent with Company practice following the Executive’s appropriate itemization and substantiation of expenses incurred, and in all events on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred.  The reimbursements pursuant to Section 3(e) are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that the Executive receives in one taxable year shall not affect the amount of such benefits or reimbursements that the Executive receives in any other taxable year.

 

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Section 11.                                    Parachute Payments .

 

(a)                                  Notwithstanding any other provision of this Agreement, if all or any portion of the payments and benefits provided under this Agreement (including without limitation any accelerated vesting and any other payment or benefit received in connection with a Change in Control or the termination of Executive’s employment), or any other payments and benefits which Executive receives or is entitled to receive under any plan, program, arrangement or other agreement, whether from the Company or an affiliate of the Company, or any combination of the foregoing, would constitute an excess “parachute payment” within the meaning of Section 280G of the Code (whether or not under an existing plan, arrangement or other agreement) (each such parachute payment, a “ Parachute Payment ”), and would result in the imposition on Executive of an excise tax under Section 4999 of the Code or any successor thereto, then the following provisions shall apply:

 

(1)               If the Parachute Payment, reduced by the sum of (i) the Excise Tax (as defined below) and (ii) the total of the federal, state, and local income and employment taxes payable by Executive on the amount of the Parachute Payment which are in excess of the Threshold Amount (as defined below), are greater than or equal to the Threshold Amount, Executive shall be entitled to the full benefits payable under this Agreement.

 

(2)               If the Threshold Amount (as defined below) is less than (x) the Parachute Payment, but greater than (y) the Parachute Payment reduced by the sum of (1) the Excise Tax and (2) the total of the federal, state, and local income and employment taxes on the amount of the Parachute Payment which are in excess of the Threshold Amount, then the Parachute Payment shall be reduced (but not below zero) to the extent necessary so that the sum of all Parachute Payments shall not exceed the Threshold Amount.  In such event, the Parachute Payment shall be reduced in the following order:  (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits.  To the extent any payment is to be made over time (e.g., in installments, etc.), then the payments shall be reduced in reverse chronological order.

 

(b)                                  For the purposes of this Section 11, “ Threshold Amount ” shall mean three times Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less one dollar ($1.00); and “ Excise Tax ” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by Executive with respect to such excise tax.

 

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(c)                                   The determination as to which of the alternative provisions of Section 11(a) shall apply to Executive shall be made by a certified public accounting firm of national reputation reasonably selected by the Employer.  Executive and the Employer shall provide the accounting firm with all information which any accounting firm reasonably deems necessary in computing the Threshold Amount. For purposes of determining which of the alternative provisions of Section 11(a) shall apply, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive’s residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  Any determination by the accounting firm shall be binding upon the Employer and the Executive.

 

Section 12.                                    Notice .  Any notice, request, demand or other communication hereunder shall be in writing, shall be delivered by nationally recognized overnight delivery service, postage prepaid, to the addressee at the address set forth below (or at such other address as shall be designated hereunder by written notice to the other party hereto).  Notice shall be deemed received one day after dispatch by such overnight service.

 

All notices and other communications hereunder shall be addressed as follows:

 

If to Executive:

 

Paul Cooper

46 Rose Lane

East Rockaway, New York 11518

 

With a copy to:

 

Cozen O’Connor

277 Park Avenue

New York, New York 10172

Attn: Michael C. Schmidt, Esq.

 

If to the Company:

 

GTJ REIT, Inc.

444 Merrick Road, Suite 370

Lynbrook, New York 11563

 

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With a copy to:

 

Ruskin Moscou Faltischek, P.C.

East Tower, 15 th  Floor

1425 RXR Plaza

Uniondale, New York 11556

Attention: Adam P. Silvers, Esq.

 

Section 13.                                    Legal Counsel .  In entering into this Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them.

 

Section 14.                                    Section and Other Headings .  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

Section 15.             Applicable Law; Jurisdiction .  This Agreement shall be construed in accordance with, and governed by, the laws of the State of New York, without resort to principles of conflicts of laws.  Each of the Parties hereby (i) agrees to submit to the exclusive jurisdiction of the Supreme Court of the State of New York, County of Nassau, and the United States District Court for the Eastern District of New York in any action, suit or other proceeding arising out of or related to the subject matter of this Agreement, and (ii) to the extent permitted by applicable law, waives and agrees not to assert by way of motion, as a defense or otherwise in any such action, suit or proceeding, any claim that such party is not personally subject to the jurisdiction of such courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or subject matter hereof may not be litigated in or by such courts.

 

Section 16.                                    Severability .  In the event that any term or provision of this Agreement shall be finally determined to be superseded, invalid, illegal or otherwise unenforceable pursuant to applicable law by a governmental authority having jurisdiction and venue, that determination shall not impair or otherwise affect the validity, legality or enforceability, to the maximum extent permissible by law, (i) by or before that authority of the remaining terms and provisions of this Agreement, which shall be enforced as if the unenforceable term or provision were deleted, or (ii) by or before any other authority of any of the terms and provisions of this Agreement.

 

Section 17.                                    Counterparts .  This Agreement may be executed in two counterpart copies of the entire document or of signature pages to the document, each of which may be executed by one of the parties hereto, but all of which, when taken together, shall constitute a single agreement binding upon both of the parties hereto.

 

Section 18.                                    Benefit .  This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their legal representatives, successors and assigns.  Insofar as Executive is concerned, this Agreement, being personal, cannot be assigned; provided, however, that should Executive become entitled to payment pursuant to Section 5 hereof, he may assign his rights to such payment to his legal representatives, successors, and assigns.

 

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Without limiting the generality of the foregoing, all representations, warranties, covenants and other agreements made by or on behalf of Executive in this Agreement shall inure to the benefit of the successors and assigns of the Company.

 

Section 19.             Modification .  This Agreement may not be amended or modified other than by a written agreement executed by all parties hereto.

 

Section 20.                                    Entire Agreement .  Except as provided in Section 5(e) hereof, this Agreement contains the entire agreement of the parties and supersedes all other representations, warranties, agreements and understandings, oral or otherwise, among the parties with respect to the matters contained herein.

 

Section 21.                                    Waiver of Jury Trial .  Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby. Each party to this Agreement certifies and acknowledges that (a) no representative of any other party has represented, expressly or otherwise, that such other party would not seek to enforce the foregoing waiver in the event of a legal action, (b) such party has considered the implications of this waiver, (c) such party makes this waiver voluntarily, and (d) such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 21.

 

Section 22.                                    Representations and Warranties of Executive .  In order to induce the Company to enter into this Agreement, Executive represents and warrants to the Company, to the best of his knowledge after the review of his personnel files, that:  (a) the execution and delivery of this Agreement by Executive and the performance of his obligations hereunder will not violate or be in conflict with any fiduciary or other duty, instrument, agreement, document, arrangement or other understanding to which Executive is a party or by which he is or may be bound or subject; and (b) Executive is not a party to any instrument, agreement, document, arrangement or other understanding with any person (other than the Company) requiring or restricting the use or disclosure of any confidential information or the provision of any employment, consulting or other services.

 

Section 23.                                    Waiver of Breach .  Except as may specifically provided herein, the failure of a party to insist on strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement.  Any waiver hereto must be in writing.

 

Section 24.                                    Conflict Between Agreement and Company Policy .  In the event of any inconsistency or conflict between any provision of this Agreement, on the one hand, and any Company policy or practice, on the other hand, such inconsistency or conflict shall be resolved in favor of the applicable provision(s) of this Agreement, which should in all cases prevail.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF , the parties hereto have executed and delivered this Agreement as of the date first written above.

 

 

 

EXECUTIVE :

 

 

 

 

 

/s/ Paul Cooper

 

PAUL COOPER

 

 

 

 

 

GTJ REIT, INC. :

 

 

 

 

 

By:

/s/ David J. Oplanich

 

Name:

David J. Oplanich

 

Title:

Chief Financial Officer

 

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Exhibit A

 

Bonus Criteria

 

Intentionally Omitted

 


 

Exhibit B

 

Form of General Release

 

Attached hereto

 

[Signature Page to Employment Agreement]

 


 

EXHIBIT B

 

GENERAL RELEASE

 

This General Release (the “Agreement”) is between GTJ REIT, Inc. (the “Company” or “we”) and Paul Cooper (“Employee” or “you”).  The term “Company” includes parents, subsidiaries, divisions, and/or related companies, their directors, officers, shareholders, employees, agents, attorneys, and successors of the Company.

 

IT IS AGREED THAT:

 

1.                                       Your last date of employment with the Company is                     .

 

2.                                       The Company shall pay you severance payments as set forth in the Employment Agreement between you and the Company dated as of January 13, 2013 (which payments you would not otherwise be entitled to but for your execution of this Agreement) (the “Severance Payments”).

 

3.                                       In consideration of the Severance Payments, and for other good and valuable consideration described herein, receipt of which is hereby acknowledged, you understand that you voluntarily release and forever discharge the Company from any and all actions or causes of action, suits, claims, charges, complaints, contracts, agreements and promises, whatsoever, whether known or unknown, including but not limited to any claim under contract and/or equity and/or any law, relating in any way to your employment with the Company or the termination of that employment.  This waiver of claims includes any claims of discrimination on any grounds, whether or not you have previously filed such a claim.  You understand that you are giving up any rights or claims which you may have under the numerous laws and regulations regulating employment, whether on the federal, state, or local level, including, but not limited to, the Age Discrimination in Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the Fair Labor Standards Act, the Equal Pay Act, the Family and Medical Leave Act, the New York State Human Rights Laws, the New York State Labor Law, and any other federal, state or local civil or human rights or employment law alleging discrimination or retaliation, or any other alleged violation of any local, state or federal law, regulation or ordinance, and/or public policy or tort law, or claim of breach of contract or for personal injury that you ever had through the date of this Agreement.

 

4.                                       You agree that you will return to the Company any and all files, books, records, materials, equipment or documents in your possession that were provided to or obtained by you in connection with your employment.  Such documents and materials include all computer software, data base or customer information, publications, correspondence, notes and notebooks, drawings, prints, photographs, tape recordings, and other written, typed, printed or recorded materials to which the Employee had access or which the Employee developed during the course of Employee’s employment with the Company.

 

5.                                       It is understood and agreed that you will not talk about, discuss or communicate with anyone, orally or in writing, concerning the matter which is the subject of this Agreement except you may (i) discuss this Agreement with your spouse and children, (ii) permit your accountant to review this Agreement in connection with the filing of tax returns, (iii) permit attorney(s) of your choice to review this Agreement, and (iv) testify truthfully under oath pursuant to a subpoena (in which event you will provide the Company with prompt notice of the subpoena in advance of providing such testimony).

 


 

6.                                       You represent and agree that you have neither filed nor authorized the filing on your behalf of any claims against the Company with any state, federal, or local agency or court or in any other forum or tribunal with respect to anything that has happened up through the date of this Agreement.  Should any government agency or other third party pursue any actions or other claims on Employee’s behalf, Employee hereby agrees to waive any right to recovery or monetary award from such actions or proceedings.

 

7.                                       This Agreement is deemed to be made in the State of New York.  This Agreement is to be interpreted under the laws of the State of New York without regard to conflict of law principles.

 

8.                                       No waiver of any breach of any term or provision of this Agreement shall be construed to be, or shall be, a waiver of any other breach of this Agreement.  No waiver shall be binding unless in writing and signed by the party waiving the breach.

 

9.                                       This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, successors and permitted assigns.  The Company may assign this Agreement without notice in its sole discretion.

 

10.                                Employee acknowledges that Employee has received a copy of this Agreement and that the Company has informed Employee that Employee should consult with an attorney in connection with it.  Employee acknowledges that Employee’s decision to consult with an attorney or not to consult with any attorney was made without influence by the Company.  Employee further acknowledges that Employee has had at least 21 days in which to consider, execute, and return this Agreement.  Notwithstanding Employee’s right to consider this Agreement for 21 days, if Employee signs this Agreement before the expiration of the 21-day period, Employee will have done so knowingly and voluntarily, and will have expressly waived employee’s right to consider this Agreement for the balance of the 21 day period.  In addition, should Employee fail to return an executed copy of this Agreement within 21 days, the Company shall have no obligations under this Agreement.

 

11.                                This Agreement shall not become effective until seven (7) days after the date Employee executes the Agreement, and Employee may cancel this Agreement within seven (7) days of the date Employee executes it, except that any cancellation must be in writing, signed by Employee, and delivered to the Company prior to the expiration of the seven-day period.

 

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12.                                This Agreement may be executed by facsimile, and in counterparts, and shall be fully binding and enforceable upon the parties when so executed.

 

GTJ REIT, INC.

 

 

 

 

 

By:

 

 

Dated:

 

 

 

 

 

 

 

 

 

 

 

Dated:

 

PAUL COOPER

 

 

 

 

 

STATE OF

)

 

:ss.:

COUNTY OF

)

 

On the          day of                          before me personally appeared Paul Cooper personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that s/he executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person on behalf of which the individual acted, executed the instrument and that such individual made such appearance before the undersigned.

 

 

 

 

 

NOTARY PUBLIC

 

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Exhibit 10.7

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (this “ Agreement ”) is entered into as of the 1st day of January, 2013 by and between Louis Sheinker (“ Executive ”), an individual residing at 19 The Glenada, Roslyn Estates, New York 11576, and GTJ REIT, Inc., a Maryland corporation (the “ Company ”) with principal offices at 444 Merrick Road, Suite 370, Lynbrook, New York 11563.  Executive and Company may be referred to collectively as the “Parties.”

 

WHEREAS , the Company desires to employ the Executive on the terms and conditions set forth herein and acknowledges and agrees that Executive has the professional and personal skills to perform under the terms and conditions of this Agreement; and

 

WHEREAS , the Executive desires to be employed by the Company on such terms and conditions.

 

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

 

Section 1.                                           Term .   The Company hereby employs Executive and Executive hereby accepts such employment, upon the terms and conditions hereinafter set forth, from January 1, 2013 (the “ Employment Commencement Date ”) through and including December 31, 2015 (the “ Initial Term ”).  This Agreement shall renew automatically for two (2) successive one (1) year periods (each, a “ Renewal Term ”) unless either party gives notice to the other party, in writing, at least sixty (60) days prior to the expiration of the Initial Term (or any Renewal Term) of its desire to terminate the Agreement at the end of such Initial Term or Renewal Term, as the case may be.  The term of this Agreement, including the Initial Term and any Renewal Term, shall be referred to hereinafter as the “ Term .”

 

Section 2.                                           Executive’s Duties .

 

(a)                                        Executive shall be the Chief Operating Officer and President of the Company and shall report directly to the Board of Directors of the Company (the “ Board ”) or its designee.  Executive shall faithfully and diligently perform his duties at the direction of the Board, or its designee, to the best of Executive’s ability.  Subject to Section 8(a) of this Agreement, Executive shall (i) devote his full-time business efforts, skill, ability and attention to the performance of the services customarily incident to such office, subject to vacations and sick leave as provided herein and in accordance with the Company policy, (ii) carry out his duties in a competent and professional manner; and (iii) generally promote the interests of the Company.

 

(b)                                        Executive agrees to abide by all policies of the Company promulgated from time to time by the Company, which policies are generally enforced uniformly and applicable to all similar executives of the Company.

 

(c)                                         Subject to Section 4(e)(4), and except for such business travel as may be incident to his duties hereunder, Executive shall perform his duties at the Company’s offices at the address set forth in the preamble to this Agreement or at such other location as may be approved by the Company.

 

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Section 3.                                     Compensation for Executive’s Services .   In consideration of the duties and services to be performed by Executive pursuant to Sections 1 and 2 hereof, Executive shall receive:

 

(a)                                        Salary .  Executive shall earn salary (the “ Salary ”) at the annual rate of Five Hundred Thousand ($500,000) Dollars, less all applicable federal, state, and local tax withholdings.  Such Salary shall be earned and shall be payable in periodic installments in accordance with the Company’s normal payroll practices.  During the Term, the Company shall review the Salary annually and may in its discretion increase the Salary, but may not reduce it during the Term.

 

(b)                                        Cash Bonus .  For each fiscal year of the Company ended December 31 (each, a “ Fiscal Year ”), Executive shall receive a cash bonus (“ Cash Bonus ”) from the Company in the amount of Two Hundred Thousand ($200,000) Dollars, provided that the Company achieves the Adjusted Funds From Operations (as defined below) benchmarks for such Fiscal Year as set forth in an annual budget approved by the Board and agreed to by Executive for each such Fiscal Year (the “ Bonus Criteria ”).  Solely in the event that the Company either (i) exceeds the Bonus Criteria for a particular Fiscal Year, or (ii) does not achieve the Bonus Criteria for a particular Fiscal Year, the Board or the Compensation Committee of the Board (the “ Compensation Committee ”) may, in its discretion, increase (in the case of (b)(i) of this paragraph) or decrease to as low as zero (in the case of (b)(ii) of this paragraph) the Cash Bonus for that Fiscal Year.  Any Cash Bonus earned and payable for each Fiscal year shall be paid within thirty (30) days following the completion of the Company’s annual audit.  “ Adjusted Funds From Operations ” means, the Company’s funds from operations calculated in accordance with the guidelines published by the National Association of Real Estate Investment Trusts, as adjusted for straight-lining of rent and purchase accounting under ASC 805.

 

(c)                                         Equity Bonus .  For each Fiscal Year, Executive shall receive an annual equity incentive award in the form of shares of the Company’s restricted common stock (“ Equity Bonus ,” and together with the Cash Bonus, the “ Bonus ”) from the Company in the amount of Fifty Thousand ($50,000) Dollars, based on the grant date value of any such award, provided that Executive achieves the Adjusted Funds From Operations benchmark or such Fiscal Year as set forth in the Bonus Criteria.  Solely in the event that Executive either (i) exceeds the Bonus Criteria for a particular Fiscal Year, or (ii) does not achieve the Bonus Criteria for a particular Fiscal Year, the Compensation Committee may review the discretionary Equity Bonus on an annual basis and, in its discretion, increase (in the case of (c)(i) of this paragraph) or decrease to as low as zero (in the case of (c)(ii) of this paragraph) the Equity Bonus for any Fiscal Year.  All other terms and conditions applicable to such equity awards shall be determined by the Board and, if any such equity awards are granted, such terms and conditions shall be no less favorable than those that apply to similarly situated executive officers of the Company under the 2007 Incentive Award Plan.  The Equity Bonus earned and payable for each Fiscal year shall be paid within thirty (30) days following the completion of the Company’s annual audit.

 

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(d)                                        Benefits .  The Company shall provide Executive with the right to participate in and receive benefits from all life, accident, disability, medical and pension plans, and all similar benefits as are from time to time in effect and are generally made available to similar senior executive officers of the Company pursuant to the policies of the Company  (collectively, the “ Benefits ”).  Throughout the Term, and notwithstanding the Company’s rights to determine which specific benefit plan will be offered by the Company, Executive shall be entitled to, at a minimum: (i) medical insurance, including healthcare coverage for his immediate family, with the Company to pay such portion of Executive’s contribution as it pays for similarly situated senior executive officers of the Company; (ii) disability insurance of a type provided to other executives of the Company; (iii) premiums paid on a five million ($5,000,000) dollar term life insurance policy, assuming satisfactory insurability, for a ten (10) year term; and (iv) participation in a 401(k) plan and/or other retirement plan to the extent available to the Company’s employees.

 

(e)                                         Expenses .  The Company shall promptly reimburse Executive for reasonable expenses for cellular telephone usage, entertainment, travel, meals, lodging and similar items incurred in the conduct of the Company’s business.  Such expenses shall be reimbursed in accordance with the Company’s normal expense reimbursement policies and guidelines.  The Company shall provide a corporate credit card to Executive to enable Executive to charge such reasonable Company expenses.

 

(f)                                          Vacation; Sick Leave .  During the Term, Executive shall be entitled to reasonable paid vacation commensurate with his position and within the industry; paid holidays; paid sick leave; and similar benefits, to be earned and used in accordance with the Company’s policy and procedure for other similarly situated senior executive officers of the Company.

 

(g)                                   Vehicle .  During the Term, the Executive shall receive a reasonable automobile allowance commensurate with his position within the industry, which shall be paid monthly.

 

(h)                                        Modification .  Subject to the minimum coverages and/or benefit amounts set forth in Section 3(d) and elsewhere in this Agreement, the Company reserves the right to modify, suspend or discontinue any and all of the above plans, practices, policies and programs referenced in Sections 3(d) and (e) at any time in its discretion without recourse by Executive so long as such action is taken generally with respect to other similarly situated senior executive officers, and the minimum coverages and/or benefit amounts set forth in Section 3(d) and elsewhere in this Agreement are maintained.  Any such modification, suspension or discontinuance of the plans, practices and policies referenced in Section 3(e) will not apply to otherwise reimbursable expenses incurred by Executive prior to any such modification, suspension or discontinuance.

 

Section 4.                                      Termination of Employment .  This Agreement may only be terminated by a method permitted under Section 4(a), (b), (c), (d), or (e) as follows:

 

(a)                                   Resignation by Executive .  Executive may voluntarily terminate his employment with the Company, at any time, with or without Good Reason (as defined below), upon written notice to the Company; provided, however, that any termination of Executive’s employment without Good Reason shall be upon not less than thirty (30)  days prior written notice to the Company.

 

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(b)                                        Non-Renewal by Company or Executive . The Company or Executive may terminate Executive’s employment effective at the end of the Initial Term, or any Renewal Term, in accordance with Section 1.

 

(c)                                         Executive’s Death or Disability .  Executive’s employment shall terminate immediately upon Executive’s death.  In the event the Company, in good faith, determines that Executive is unable to perform the functions of his position due to a Disability (as defined below), it may notify Executive in writing of its intention to terminate Executive’s employment and Executive’s employment with the Company shall terminate effective on the thirtieth (30th) day after receipt of such notice by Executive.  For the purposes of this Agreement, “ Disability ” shall mean a physical or mental impairment that renders Executive unable to perform the essential functions of his position (i) for a continuous period of ninety (90) days, not including any vacation days, holidays or sick days, (ii) for a cumulative period of ninety (90) in any twelve-month period, not including any vacation days, holidays or sick days, or (iii) at such earlier time as Executive submits medical evidence satisfactory to the Company that the Executive has a physical or mental disability or infirmity that will likely prevent Executive from substantially performing his duties and responsibilities for ninety (90) days or longer.  In the event of any disagreement between the Executive and the Company as to whether the Executive is physically or mentally incapacitated so as to constitute a Disability under this Agreement, the question of such incapacity shall be submitted to an impartial and reputable physician selected by mutual agreement of the Company and the Executive, or, failing such agreement, a physician selected by two physicians, one of whom shall have been selected by the Company, and the other by the Executive, and the determination of the question of such incapacity by such physician shall be final and binding upon the Company and the Executive.  The Company shall pay the fees and expenses of such physicians, and the Executive shall submit to any medical examinations reasonably necessary to enable such physicians to make a determination as to whether the Executive’s incapacity constitutes a Disability under this Agreement.

 

(d)                                        Cause by the Company .  The Company may immediately terminate Executive’s employment for “Cause” by giving written notice to Executive.  For purposes of this Agreement, “ Cause ” shall mean:

 

(1)            Executive’s commission of an act of fraud, misappropriation or embezzlement, whether or not related to the Executive’s employment with the Company;

 

(2)            Executive’s commission of any act of gross negligence or willful misconduct act which injures the reputation, business, or any material business relationship of the Company;

 

(3)            Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent), or a crime that constitutes a misdemeanor involving dishonesty or moral turpitude;

 

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(4)            Executive’s refusal or failure of Executive to perform Executive’s duties with the Company in a competent and professional manner that is not cured by Executive within fifteen (15) business days after a written demand therefor is delivered to Executive by the Board which identifies with reasonable specificity the manner in which the Board believes that Executive has not substantially performed Executive’s duties; provided, further, however, that if the refusal or failure by Executive is not susceptible of cure, then no cure period shall be required hereunder; or

 

(5)            Executive’s refusal or failure of Executive to comply with any of his material obligations under this Agreement (including any Exhibit hereto) that is not cured by Executive within fifteen (15) business days after a written demand therefor is delivered to Executive by the Board which identifies with reasonable specificity the manner in which the Board believes Executive has materially breached this Agreement; provided, further, however, that if the refusal or failure by Executive is not susceptible of cure, then no cure period shall be required hereunder.

 

(e)                                         Good Reason by the Executive .  Executive may immediately terminate his employment for “ Good Reason ,” by giving written notice to the Company.  For purposes of this Agreement, “ Good Reason ” shall mean:

 

(1)            the Company’s material breach, or any successor entity in the event of a Change in Control (as defined in Section 5(c)(2)), of any provision of this Agreement that is not cured by the Company within fifteen (15) business days after a written demand therefor is delivered to the Board by Executive which identifies with reasonable specificity the manner in which Executive believes that the Company, or successor entity, has breached this Agreement, provided, further, however, that if the material breach by the Company, or successor entity, is not susceptible of cure, then no cure period shall be required hereunder;

 

(2)            a material reduction of Executive’s title, status, authority, responsibility or duties as Chief Executive Officer of the Company or the assignment to Executive of any duties materially inconsistent with the position of Chief Executive Officer;

 

(3)            any reduction in Executive’s Salary or material reduction in Executive’s benefits; or

 

(4)            the relocation of Executive to a facility or location outside the radius of more than fifty (50) miles from the Company’s principal offices at the address set forth in the preamble to this Agreement.  However, in the event that Executive does not terminate this Agreement for Good Reason under this Section 4(e)(4) within fifteen (15) business days of such relocation, and instead agrees to such relocation, then in that case the Company shall promptly pay all of Executive’s reasonable relocation expenses.

 

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(f)                                          Continuing Obligations .  Executive acknowledges and agrees that any termination under this Section 4 is not intended, and shall not be deemed or construed, to affect in any way any of Executive’s covenants and obligations contained in Sections 6, 7, and 8 hereof, which shall continue in full force and effect beyond such termination for any reason.

 

Section 5.                                           Termination Obligations .

 

(a)                                        Resignation By Executive Without Good Reason .  If Executive’s employment is terminated voluntarily by Executive during the Term without Good Reason, Executive’s employment shall terminate without further obligations to Executive other than for payment of the sum of any unpaid Salary and reimbursable expenses accrued and owing to Executive prior to the termination.  The sum of such amounts shall hereinafter be referred to as the “ Accrued Obligations ,” which shall be paid to Executive or Executive’s estate or beneficiary within thirty (30) days of the date of termination.

 

(b)                                        Cause by Company .  If Executive’s employment is terminated by the Company during the Term for Cause, this Agreement shall terminate without further obligations to Executive other than for the payment of Accrued Obligations within thirty (30) days of Executive’s termination.

 

(c)                                         Non-Renewal by Company; By Executive for Good Reason; Change in Control .

 

(1)                        If (x) the Company elects (pursuant to Section 1) not to renew this Agreement after expiration of the Initial Term, or any Renewal Term, as the case may be; (y) Executive terminates his employment for Good Reason; or (z) following a Change in Control (as defined below): (I) the Company, or any successor entity, terminates the Executive without Cause, or (II) Executive terminates his employment for Good Reason, then the Company shall have no further obligations to Executive other than for:

 

(i)             the payment of Accrued Obligations;

 

(ii)            severance pay in an amount equal to the following:

 

(A)        if Executive is terminated pursuant to clauses (y) or (z) above during the Initial Term, then:

 

(I)                                    the greater of the Salary that the Executive would have earned during the remainder of the Initial Term of this Agreement, or one year of Executive’s Salary, plus

 

(II)                               the greater of Executive’s Bonus that the Executive could have earned during the remainder of the Initial Term of this Agreement (assuming that Executive achieved the performance benchmarks for each remaining Fiscal Year), or one year of the Bonus (assuming that Executive achieved the performance benchmarks for such Fiscal Year);

 

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(B)        if the Company elects not to extend this Agreement at the end of the Initial Term, and provided that the Company achieved the Bonus Criteria, on an aggregate basis for each specified criteria during the Initial Term, as of the end of “Year 3” on Exhibit A ; then:

 

(I)                                    one times Executive’s Salary, plus

 

(II)                               one times Executive’s Bonus;

 

and provided further that, if the Company fails to achieve the Bonus Criteria, on an aggregate basis for each specified criteria during the Initial Term, as of the end of “Year 3” on Exhibit A, then no payments described in clauses (B)(I) or (B)(II) above shall be payable to Executive.

 

(C)        if during a Renewal Term, then:

 

(I)                                    the Salary that the Executive would have earned during the remainder of the Renewal Term of this Agreement, plus

 

(II)                               the Bonus that the Executive could have earned during the remainder of the Renewal Term of this Agreement (assuming that Executive achieved the performance benchmarks for such Fiscal Year).

 

(iii)           the accelerated vesting of any issued and unvested Equity Bonus granted to the Executive during the Term; and

 

(iv)           the payment of COBRA premiums, if Executive elects COBRA, for the period equal to the greater of the remainder of the Initial Term, or one year.  Notwithstanding the foregoing, if no severance shall be payable pursuant to Section 5(c)(1)(ii)(B), then the Company shall not be obligated to pay such COBRA premiums.

 

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The payments described in Sections 5(c)(1)(i) and 5(c)(1)(ii)(A)(I)-(II), if any, shall be made in a lump sum within thirty (30) days of the date of termination.  The payments described in Sections 5(c)(1)(ii)(A)(II) and 5(c)(1)(ii)(B)(II), if any, shall be made payable within thirty (30) days following the completion of the Company’s annual audit.

 

(2)                        For purposes of this Agreement, “ Change in Control ” shall mean the occurrence of any of the following:

 

(i)             one person (or more than one person acting as a group) acquires (or has acquired during the twelve-month period ending on the date of the most recent acquisition) ownership of the Company’s stock possessing fifty percent (50%) or more of the total voting power of the stock of such corporation;

 

(ii)            a majority of the members of the Board are replaced during any twelve-month period with directors whose appointment or election is not endorsed by a majority of the Board before the date of appointment or election;

 

(iii)           any consolidation or merger of the Company or any subsidiary that would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation representing (either by remaining outstanding or by being converted into voting securities of the surviving entity) less than fifty (50%) percent of the total voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation or ceasing to have the power to elect at least a majority of the board of directors or other governing body of such surviving entity; or

 

(iv)           the sale, lease, exchange or transfer of all or substantially all of the Company’s assets to an unaffiliated entity.

 

(d)                                        Release .  Notwithstanding anything to the contrary contained herein, no severance payments required hereunder shall be made by the Company until such time as Executive shall execute a general release for the benefit of the Company in the form annexed to this Agreement as Exhibit B .

 

(e)                                         Exclusive Remedy .  Executive agrees that the payments set forth in Section 5 of this Agreement shall constitute the exclusive and sole remedy for any termination of Executive’s employment permitted under Section 4 of this Agreement, and Executive covenants not to assert or pursue any other remedies, at law or in equity, with respect to such termination provisions under this Agreement.

 

(f)                                          Termination of Executive’s Office .  Following the termination of Executive’s employment for any reason, Executive shall hold no further office or position with the Company.

 

8


 

Section 6.                                           Restrictions Respecting Confidential Information .  Executive hereby covenants and agrees that, during his employment and thereafter, Executive will not, under any circumstance, disclose in any way any Confidential Information (as defined below) to any other person other than at the direction of or for the benefit of the Company.  For the purposes of the foregoing, “ Confidential Information ” means information pertaining to the assets, business, rental information, tenant names, creditors, vendors, customers, data, employees, financial condition or affairs, formulae, licenses, methods, operations, procedures, reports, suppliers, systems and technologies of the Company, including (without limitation) the contracts, patents, trade secrets and customer lists developed or otherwise acquired by the Company; provided , however , that the term Confidential Information shall exclude any information that was, is, or becomes publicly available other than through disclosure by Executive or any other person known to Executive to be subject to confidentiality obligations to the Company.  All Confidential Information is and will remain the sole and exclusive property of the Company.  Following the termination of his employment, Executive shall return all documents and other tangible items containing Confidential Information to the Company, without retaining any copies, notes or excerpts thereof.

 

Section 7.                                           Proprietary Matters .  Executive expressly understands and agrees that any and all improvements, inventions, discoveries, processes, or know-how that are generated or conceived by Executive during the Term (collectively, the “ Inventions ”) will be the sole and exclusive property of the Company, and Executive will, whenever requested to do so by the Company (either during the Term or thereafter), execute and assign any and all applications, assignments and/or other instruments and do all things which the Company may deem necessary or appropriate in order to apply for, obtain, maintain, enforce and defend patents, copyrights, trade names or trademarks of the United States or of foreign countries for said Inventions, or in order to assign and convey or otherwise make available to the Company the sole and exclusive right, title, and interest in and to said Inventions, applications, patents, copyrights, trade names or trademarks; provided , however , that the provisions of this Section 7 shall not apply to an Invention that Executive developed entirely on his own time without using the Company’s Confidential Information except for those Inventions that either (i) directly and materially relate, at the time of conception or reduction to practice of the invention, to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or (ii) directly and materially result from any work performed by Executive for the Company.  Executive shall promptly communicate and disclose to the Company all Inventions conceived, developed or made by him during his employment by the Company, whether solely or jointly with others, and whether or not patentable or copyrightable, (a) which relate to any matters or business of the type carried on or being developed by the Company, or (b) which result from or are suggested by any work done by him in the course of his employment by the Company.  Executive shall also promptly communicate and disclose to the Company all material other data obtained by him concerning the business or affairs of the Company in the course of his employment by the Company.

 

Section 8.                                           Nonsolicitation/Non-Compete .

 

(a)                                        Executive agrees that during the Term, he will not directly or indirectly, own (other than a passive investment), manage, operate, control, or participate in the ownership (other than a passive investment), management, operation, or control of, or be connected with, or have any financial interest in, any competitor; provided, however, that the Company acknowledges and agrees that Executive shall be permitted to continue to own and manage throughout the Term of this Agreement and thereafter: (i) 60 Hempstead Avenue, West Hempstead, New York; (ii) 444 Merrick Road, Lynbrook, New York; (iii) Woodlands, 700, 750 and 800 Veterans Memorial Highway, Hauppauge, New York; and (iv) 1581 Franklin Avenue/220 Old Country Road, Garden City, New York (collectively, the “Excluded Properties”).

 

9


 

Executive may, for a reasonable and mutually agreeable fee, manage the Excluded Properties out of the Company’s office space and utilize the Company’s employees, equipment and supplies in connection therewith.  The Parties further agree and acknowledge that (i) Executive may own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected with or have a financial interest in, the acquisition of assets/buildings during the Term and thereafter with the principals of Orlin & Cohen (although the Company shall have the opportunity to invest with Executive and Orlin & Cohen in its discretion); and (ii) Executive (alone or as part of a group) may own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected with or have a financial interest in, the acquisition of a New York sports team or real estate related thereto in which Executive was in negotiation prior to signing this Agreement (the “Team” or “Site”).  In the event Executive does in fact become involved with the Team and/or the Site in any such capacity, Executive and Company shall meet to discuss whether or not any of the terms and/or conditions of this Agreement should be modified and/or amended, as the case may be.  Other than as expressly permitted under this Section 8(a), the Parties further agree that during and after the Term, Executive shall not, directly or indirectly, own, manage, operate, control, or participate in the ownership, management, operation, or control of, or be connected with, or have any financial interest in, any business opportunity in which such opportunity or information pertaining thereto was obtained while he was employed by the Company.  In the event that Executive seeks to own, manage, operate, control or participate in the purchase of a real estate or other business activity during the Term that would otherwise constitute a violation of this Section 8(a), Executive shall first obtain the prior written consent of the Board, which consent shall be in the discretion of the Board.  The Parties acknowledge and agree that nothing in Section 8 of this Agreement shall prevent Executive from using Green Holland Management and/or Green Holland Ventures to engage in any activity that is not otherwise in violation of this Agreement.

 

(b)                                        Executive agrees that during the Term and for a period of twelve (12) months following the termination of his employment for any reason, he will not actively solicit or hire for employment, consulting or any other arrangement any employee of the Company, any of its subsidiaries or any of its other affiliates, present or future (while an affiliate).

 

(c)                                         Executive agrees that during the Term and for a period of twelve (12) months following the termination of his employment for any reason, he will not do business with, influence or attempt to influence customers of the Company or any of its present or future subsidiaries or affiliates, either directly or indirectly, to divert their business to any competitor.

 

(d)                                        The restrictions contained in this Section 8 are necessary for the protection of the business and goodwill of the Company and are considered by Executive to be reasonable for such purpose.  Further, Executive represents that these restrictions will not prevent him from earning a livelihood during the restricted period.

 

10


 

Section 9.                                           Equitable Relief .  Executive acknowledges and agrees that the Company will suffer irreparable damage which cannot be adequately compensated by money damages in the event of a breach, or threatened breach, of any of the terms and provisions of Sections 6, 7 and 8 of this Agreement, and that, in the event of any such breach, or threatened breach, the Company will not have an adequate remedy at law.  It is therefore agreed that the Company, in addition to all other such rights, powers, privileges and remedies that it may have, shall be entitled to seek injunctive relief, specific performance or such other equitable relief as the Company may request to enforce any of those terms and provisions and seek to enjoin or otherwise restrain any act prohibited thereby.  Executive agrees that the Company shall be entitled to seek such injunctive relief, without bond, in a court of competent jurisdiction and Executive hereby consents to the jurisdiction of the state and federal courts of New York for purposes of such an action.  The foregoing shall not constitute a waiver of any of the Company’s rights, powers, privileges and remedies against or in respect of a breaching party or any other person or thing under this Agreement, or applicable law.

 

Section 10.                                    Section 409A .                     This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”), or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

 

Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Executive is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date (the “ Specified Employee Payment Date ”). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date shall be paid to the Executive in a lump sum, with interest at the New York statutory rate, on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.  To the extent that any reimbursements pursuant to Section 3(e) are taxable to Executive, any such reimbursement payment due to the Executive shall be paid to the Executive as promptly as practicable consistent with Company practice following the Executive’s appropriate itemization and substantiation of expenses incurred, and in all events on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred.  The reimbursements pursuant to Section 3(e) are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that the Executive receives in one taxable year shall not affect the amount of such benefits or reimbursements that the Executive receives in any other taxable year.

 

11


 

Section 11.                                    Parachute Payments .

 

(a)                                  Notwithstanding any other provision of this Agreement, if all or any portion of the payments and benefits provided under this Agreement (including without limitation any accelerated vesting and any other payment or benefit received in connection with a Change in Control or the termination of Executive’s employment), or any other payments and benefits which Executive receives or is entitled to receive under any plan, program, arrangement or other agreement, whether from the Company or an affiliate of the Company, or any combination of the foregoing, would constitute an excess “parachute payment” within the meaning of Section 280G of the Code (whether or not under an existing plan, arrangement or other agreement) (each such parachute payment, a “ Parachute Payment ”), and would result in the imposition on Executive of an excise tax under Section 4999 of the Code or any successor thereto, then the following provisions shall apply:

 

(1)                If the Parachute Payment, reduced by the sum of (i) the Excise Tax (as defined below) and (ii) the total of the federal, state, and local income and employment taxes payable by Executive on the amount of the Parachute Payment which are in excess of the Threshold Amount (as defined below), are greater than or equal to the Threshold Amount, Executive shall be entitled to the full benefits payable under this Agreement.

 

(2)                If the Threshold Amount (as defined below) is less than (x) the Parachute Payment, but greater than (y) the Parachute Payment reduced by the sum of (1) the Excise Tax and (2) the total of the federal, state, and local income and employment taxes on the amount of the Parachute Payment which are in excess of the Threshold Amount, then the Parachute Payment shall be reduced (but not below zero) to the extent necessary so that the sum of all Parachute Payments shall not exceed the Threshold Amount.  In such event, the Parachute Payment shall be reduced in the following order:  (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits.  To the extent any payment is to be made over time (e.g., in installments, etc.), then the payments shall be reduced in reverse chronological order.

 

(b)            For the purposes of this Section 11, “ Threshold Amount ” shall mean three times Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less one dollar ($1.00); and “ Excise Tax ” shall mean the excise tax imposed by Section 4999 of the Code, and any interest or penalties incurred by Executive with respect to such excise tax.

 

12


 

(c)                                   The determination as to which of the alternative provisions of Section 11(a) shall apply to Executive shall be made by a certified public accounting firm of national reputation reasonably selected by the Employer.  Executive and the Employer shall provide the accounting firm with all information which any accounting firm reasonably deems necessary in computing the Threshold Amount. For purposes of determining which of the alternative provisions of Section 11(a) shall apply, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive’s residence on the Termination Date, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.  Any determination by the accounting firm shall be binding upon the Employer and the Executive.

 

Section 12.                                    Notice .  Any notice, request, demand or other communication hereunder shall be in writing, shall be delivered by nationally recognized overnight delivery service, postage prepaid, to the addressee at the address set forth below (or at such other address as shall be designated hereunder by written notice to the other party hereto).  Notice shall be deemed received one day after dispatch by such overnight service.

 

All notices and other communications hereunder shall be addressed as follows:

 

If to Executive:

 

Louis Sheinker

19 The Glenada

Roslyn Estates, New York 11576

 

With a copy to:

 

Cozen O’Connor

277 Park Avenue

New York, NY 10172

Attention: Michael C. Schmidt, Esq.

 

If to the Company:

 

GTJ REIT, Inc.

444 Merrick Road, Suite 370

Lynbrook, New York 11563

 

13


 

With a copy to:

 

Ruskin Moscou Faltischek, P.C.

East Tower, 15 th  Floor

1425 RXR Plaza

Uniondale, New York 11556

Attention: Adam P. Silvers, Esq.

 

Section 13.                                    Legal Counsel .  In entering into this Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them.

 

Section 14.                                    Section and Other Headings .  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

Section 15.             Applicable Law; Jurisdiction .   This Agreement shall be construed in accordance with, and governed by, the laws of the State of New York, without resort to principles of conflicts of laws.  Each of the Parties hereby (i) agrees to submit to the exclusive jurisdiction of the Supreme Court of the State of New York, County of Nassau, and the United States District Court for the Eastern District of New York in any action, suit or other proceeding arising out of or related to the subject matter of this Agreement, and (ii) to the extent permitted by applicable law, waives and agrees not to assert by way of motion, as a defense or otherwise in any such action, suit or proceeding, any claim that such party is not personally subject to the jurisdiction of such courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Agreement or subject matter hereof may not be litigated in or by such courts.

 

Section 16.                                    Severability .  In the event that any term or provision of this Agreement shall be finally determined to be superseded, invalid, illegal or otherwise unenforceable pursuant to applicable law by a governmental authority having jurisdiction and venue, that determination shall not impair or otherwise affect the validity, legality or enforceability, to the maximum extent permissible by law, (i) by or before that authority of the remaining terms and provisions of this Agreement, which shall be enforced as if the unenforceable term or provision were deleted, or (ii) by or before any other authority of any of the terms and provisions of this Agreement.

 

Section 17.                                    Counterparts .  This Agreement may be executed in two counterpart copies of the entire document or of signature pages to the document, each of which may be executed by one of the parties hereto, but all of which, when taken together, shall constitute a single agreement binding upon both of the parties hereto.

 

Section 18.                                    Benefit .  This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their legal representatives, successors and assigns.  Insofar as Executive is concerned, this Agreement, being personal, cannot be assigned; provided, however, that should Executive become entitled to payment pursuant to Section 5 hereof, he may assign his rights to such payment to his legal representatives, successors, and assigns.

 

14


 

Without limiting the generality of the foregoing, all representations, warranties, covenants and other agreements made by or on behalf of Executive in this Agreement shall inure to the benefit of the successors and assigns of the Company.

 

Section 19.             Modification .   This Agreement may not be amended or modified other than by a written agreement executed by all parties hereto.

 

Section 20.                                    Entire Agreement .  Except as provided in Section 5(e) hereof, this Agreement contains the entire agreement of the parties and supersedes all other representations, warranties, agreements and understandings, oral or otherwise, among the parties with respect to the matters contained herein.

 

Section 21.                                    Waiver of Jury Trial .  Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby. Each party to this Agreement certifies and acknowledges that (a) no representative of any other party has represented, expressly or otherwise, that such other party would not seek to enforce the foregoing waiver in the event of a legal action, (b) such party has considered the implications of this waiver, (c) such party makes this waiver voluntarily, and (d) such party has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 21.

 

Section 22.                                    Representations and Warranties of Executive .   In order to induce the Company to enter into this Agreement, Executive represents and warrants to the Company, to the best of his knowledge after the review of his personnel files, that:  (a) the execution and delivery of this Agreement by Executive and the performance of his obligations hereunder will not violate or be in conflict with any fiduciary or other duty, instrument, agreement, document, arrangement or other understanding to which Executive is a party or by which he is or may be bound or subject; and (b) Executive is not a party to any instrument, agreement, document, arrangement or other understanding with any person (other than the Company) requiring or restricting the use or disclosure of any confidential information or the provision of any employment, consulting or other services.

 

Section 23.                                    Waiver of Breach .  Except as may specifically provided herein, the failure of a party to insist on strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any term of this Agreement.  Any waiver hereto must be in writing.

 

Section 24.                                    Conflict Between Agreement and Company Policy .  In the event of any inconsistency or conflict between any provision of this Agreement, on the one hand, and any Company policy or practice, on the other hand, such inconsistency or conflict shall be resolved in favor of the applicable provision(s) of this Agreement, which should in all cases prevail.

 

[Signature Page Follows]

 

15


 

IN WITNESS WHEREOF , the parties hereto have executed and delivered this Agreement as of the date first written above.

 

 

 

EXECUTIVE :

 

 

 

 

 

/s/ Louis Sheinker

 

LOUIS SHEINKER

 

 

 

 

 

GTJ REIT, INC. :

 

 

 

 

 

By:

/s/ David J. Oplanich

 

Name:

David J. Oplanich

 

Title:

Chief Financial Officer

 

16


 

Exhibit A

 

Bonus Criteria

 

Intentionally Omitted

 


 

Exhibit B

 

Form of General Release

 

Attached hereto

 


 

EXHIBIT B

 

GENERAL RELEASE

 

This General Release (the “Agreement”) is between GTJ REIT, Inc. (the “Company” or “we”) and Louis Sheinker (“Employee” or “you”).  The term “Company” includes parents, subsidiaries, divisions, and/or related companies, their directors, officers, shareholders, employees, agents, attorneys, and successors of the Company.

 

IT IS AGREED THAT:

 

1.                                       Your last date of employment with the Company is                     .

 

2.                                       The Company shall pay you severance payments as set forth in the Employment Agreement between you and the Company dated as of January 13, 2013 (which payments you would not otherwise be entitled to but for your execution of this Agreement) (the “Severance Payments”).

 

3.                                       In consideration of the Severance Payments, and for other good and valuable consideration described herein, receipt of which is hereby acknowledged, you understand that you voluntarily release and forever discharge the Company from any and all actions or causes of action, suits, claims, charges, complaints, contracts, agreements and promises, whatsoever, whether known or unknown, including but not limited to any claim under contract and/or equity and/or any law, relating in any way to your employment with the Company or the termination of that employment.  This waiver of claims includes any claims of discrimination on any grounds, whether or not you have previously filed such a claim.  You understand that you are giving up any rights or claims which you may have under the numerous laws and regulations regulating employment, whether on the federal, state, or local level, including, but not limited to, the Age Discrimination in Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the Fair Labor Standards Act, the Equal Pay Act, the Family and Medical Leave Act, the New York State Human Rights Laws, the New York State Labor Law, and any other federal, state or local civil or human rights or employment law alleging discrimination or retaliation, or any other alleged violation of any local, state or federal law, regulation or ordinance, and/or public policy or tort law, or claim of breach of contract or for personal injury that you ever had through the date of this Agreement.

 

4.                                       You agree that you will return to the Company any and all files, books, records, materials, equipment or documents in your possession that were provided to or obtained by you in connection with your employment.  Such documents and materials include all computer software, data base or customer information, publications, correspondence, notes and notebooks, drawings, prints, photographs, tape recordings, and other written, typed, printed or recorded materials to which the Employee had access or which the Employee developed during the course of Employee’s employment with the Company.

 

5.                                       It is understood and agreed that you will not talk about, discuss or communicate with anyone, orally or in writing, concerning the matter which is the subject of this Agreement except you may (i) discuss this Agreement with your spouse and children, (ii) permit your accountant to review this Agreement in connection with the filing of tax returns, (iii) permit attorney(s) of your choice to review this Agreement, and (iv) testify truthfully under oath pursuant to a subpoena (in which event you will provide the Company with prompt notice of the subpoena in advance of providing such testimony).

 


 

6.                                       You represent and agree that you have neither filed nor authorized the filing on your behalf of any claims against the Company with any state, federal, or local agency or court or in any other forum or tribunal with respect to anything that has happened up through the date of this Agreement.  Should any government agency or other third party pursue any actions or other claims on Employee’s behalf, Employee hereby agrees to waive any right to recovery or monetary award from such actions or proceedings.

 

7.                                       This Agreement is deemed to be made in the State of New York.  This Agreement is to be interpreted under the laws of the State of New York without regard to conflict of law principles.

 

8.                                       No waiver of any breach of any term or provision of this Agreement shall be construed to be, or shall be, a waiver of any other breach of this Agreement.  No waiver shall be binding unless in writing and signed by the party waiving the breach.

 

9.                                       This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, successors and permitted assigns.  The Company may assign this Agreement without notice in its sole discretion.

 

10.                                Employee acknowledges that Employee has received a copy of this Agreement and that the Company has informed Employee that Employee should consult with an attorney in connection with it.  Employee acknowledges that Employee’s decision to consult with an attorney or not to consult with any attorney was made without influence by the Company.  Employee further acknowledges that Employee has had at least 21 days in which to consider, execute, and return this Agreement.  Notwithstanding Employee’s right to consider this Agreement for 21 days, if Employee signs this Agreement before the expiration of the 21-day period, Employee will have done so knowingly and voluntarily, and will have expressly waived employee’s right to consider this Agreement for the balance of the 21 day period.  In addition, should Employee fail to return an executed copy of this Agreement within 21 days, the Company shall have no obligations under this Agreement.

 

11.                                This Agreement shall not become effective until seven (7) days after the date Employee executes the Agreement, and Employee may cancel this Agreement within seven (7) days of the date Employee executes it, except that any cancellation must be in writing, signed by Employee, and delivered to the Company prior to the expiration of the seven-day period.

 

2


 

12.                                This Agreement may be executed by facsimile, and in counterparts, and shall be fully binding and enforceable upon the parties when so executed.

 

GTJ REIT, INC.

 

 

 

 

 

By:

 

 

Dated:

 

 

 

 

 

 

 

 

 

 

 

Dated:

 

LOUIS SHEINKER

 

 

 

 

 

STATE OF

)

 

:ss.:

COUNTY OF

)

 

On the          day of                          before me personally appeared Louis Sheinker personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that s/he executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person on behalf of which the individual acted, executed the instrument and that such individual made such appearance before the undersigned.

 

 

 

 

NOTARY PUBLIC

 

3

Exhibit 99.1

 

 

To the Special Committee of the

 

January 10, 2013

Board of Directors

 

 

GTJ REIT, Inc.

 

 

444 Merrick Road Suite 370

 

 

Lynbrook, NY 11563

 

 

 

 

 

 

 

 

Ladies and Gentlemen:

 

 

 

GTJ REIT, Inc. (the “ Company ”) has engaged Duff & Phelps, LLC (“ Duff & Phelps ”) to serve as an independent financial advisor to the Special Committee (the “Special Committee”) of the Board of Directors (the “ Board of Directors ”) of the Company and to provide an opinion (the “ Opinion ”) as of the date hereof as to the fairness, from a financial point of view, to the stockholders of the Company (without giving effect to any impact of the Proposed Transaction on any particular stockholder other than in its capacity as a stockholder) of the Consideration (as defined herein) to be paid by GTJ Realty, LP (“ UPREIT ”), a wholly-owned subsidiary of the Company, to WU/Lighthouse Portfolio, LLC or its beneficial owners (“ Lighthouse ”) in the Proposed Transaction (as defined herein).

 

Description of the Proposed Transaction

 

It is Duff & Phelps’ understanding that, prior to the Proposed Transaction, the Company has contributed to UPREIT 100% of its membership interests in seven limited liability companies (the “ GTJ LLCs ”) which own seven properties (the “ GTJ Properties ”). Prior to the Proposed Transaction, GTJ will own beneficially 100% of the outstanding limited partnership interests in UPREIT. GTJ is also the owner of 100% of the outstanding membership interests of GTJ GP, LLC (“ General Partner ”), the general partner in UPREIT. General Partner is the owner of a 1% general partnership interest in UPREIT and is the sole general partner in the UPREIT.

 

In the Proposed Transaction, Lighthouse will contribute 100% of the membership interests in 25 limited liability companies (the “ Lighthouse LLCs ”) which own 25 properties (the “ Lighthouse Properties ”) in exchange for a 33.29% limited partnership interest (comprised of Common Units and Class B Units) in UPREIT (the “ Consideration ”). Immediately following the Proposed Transaction, GTJ will own a 65.71% limited partnership interest (comprised of Class A Units) and, through its ownership of General Partner, a 1.00% general partnership interest (comprised of Common Units) in UPREIT.

 

Duff & Phelps, LLC

T + 1 212 871 2000

www.duffandphelps.com

55 East 52nd Street

F + 1 212 277 0176

 

Floor 31

 

 

New York, NY 10055

 

 

 


 

Scope of Analysis

 

In connection with this Opinion, Duff & Phelps has made such reviews, analyses and inquiries as it has deemed necessary and appropriate under the circumstances. Duff & Phelps also took into account its assessment of general economic, market and financial conditions, as well as its experience in securities and business valuation, in general, and with respect to similar transactions, in particular. Duff & Phelps’ procedures, investigations, and financial analysis with respect to the preparation of its Opinion included, but were not limited to, the items summarized below:

 

1.

Reviewed the following documents:

 

 

 

a.

The Company’s annual reports and audited financial statements on Form 10-K filed with the Securities and Exchange Commission (“ SEC ”) for the years ended December 31, 2009 through 2011 and the Company’s unaudited interim financial statements for the year to date period ended September 30, 2012 included in the Company’s Form 10-Q filed with the SEC;

 

 

 

 

b.

Unaudited financial information for Lighthouse for the year ended December 31, 2011 and the seven months ended July 31, 2012;

 

 

 

 

c.

The execution versions of the Contribution Agreement (the “ Contribution Agreement ”) and the Limited Partnership Agreement of UPREIT (the “ Partnership Agreement ”) to be entered into in connection with the Proposed Transaction.

 

 

 

 

d.

Argus files prepared by FTI Consulting (“ FTI ”), which include projected cash flows for each of the GTJ Properties and Lighthouse Properties;

 

 

 

 

e.

A report dated February 9, 2012 provided by FTI to the Special Committee regarding the Proposed Transaction (the “ FTI Report ”) and certain updates to the information contained therein as provided by FTI from time to time;

 

 

 

 

f.

Electronic files containing comparable rental listings and sales by property type and geography; and

 

2


 

 

g.

A schedule, prepared by FTI, of principal and interest payments for the debt secured by the GTJ Properties and Lighthouse Properties and updates to such schedule as requested by Duff & Phelps from time to time.

 

 

 

2.

Discussed the information referred to in Item 1 above and the background and other elements of the Proposed Transaction with representatives of management of the Company;

 

 

3.

Discussed with FTI the assumptions used by FTI to estimate the value of the GTJ Properties and Lighthouse Properties as set forth in the FTI report and reviewed with FTI the reasonableness of those assumptions;

 

 

4.

Performed certain valuation analyses on the debt secured by the GTJ Properties and Lighthouse Properties; and

 

 

5.

Conducted such other analyses and considered such other factors and updated information as Duff & Phelps deemed appropriate.

 

 

Assumptions, Qualifications and Limiting Conditions

 

In performing its analyses and rendering this Opinion with respect to the Proposed Transaction, Duff & Phelps, with the Company’s consent:

 

 

6.

Relied upon the accuracy, completeness, and fair presentation of all information, data, advice, opinions and representations obtained from public sources or provided to it from private sources, including Company management and FTI, and did not independently verify such information;

 

 

7.

Relied upon the fact that the Board of Directors and the Company have been advised by counsel as to all legal matters with respect to the Proposed Transaction, including whether all procedures required by law to be taken in connection with the Proposed Transaction have been duly, validly and timely taken;

 

 

8.

Assumed that any estimates, evaluations, forecasts and projections furnished to Duff & Phelps were reasonably prepared and based upon the best currently available information and good faith judgment of the person furnishing the same;

 

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9.

Assumed that information supplied by Company management and FTI and representations made by Company management regarding the Company, Lighthouse and the Proposed Transaction are accurate;

 

 

10.

Assumed that the representations and warranties made by the various parties in the Contribution Agreement and the Partnership Agreement are accurate;

 

 

11.

Assumed that the rights of the Limited Partnership Units, whether represented by Class A Units, Class B Units or Common Units, are substantially identical, and disregarded, for purposes hereof, any rights of holders of any of these Units vis a vis holders of the other of these Units set forth in the Partnership Agreement;

 

 

12.

Assumed that the final versions of all documents reviewed by Duff & Phelps in draft form conform in all material respects to the drafts reviewed;

 

 

13.

Assumed that there has been no material change in the assets, financial condition, business, or prospects of the Company or Lighthouse since the date of the most recent financial statements and other information made available to Duff & Phelps;

 

 

14.

Assumed that all of the conditions required to implement the Proposed Transaction will be satisfied and that the Proposed Transaction will be completed in accordance with the Agreement without any amendments thereto or any waivers of any terms or conditions thereof; and

 

 

15.

Assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Proposed Transaction will be obtained without any adverse effect on the Company.

 

To the extent that any of the foregoing assumptions or any of the facts on which this Opinion is based prove to be untrue, this Opinion cannot and should not be relied upon. Furthermore, in Duff & Phelps’ analysis and in connection with the preparation of this Opinion, Duff & Phelps has made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of any party involved in the Proposed Transaction.

 

Duff & Phelps has prepared this Opinion effective as of the date hereof. This Opinion is necessarily based upon market, economic, financial and other conditions as they exist and can be evaluated as of the date hereof, and Duff & Phelps disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting this Opinion which may come or be brought to the attention of Duff & Phelps after the date hereof.

 

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Duff & Phelps did not evaluate the Company’s solvency or conduct an independent appraisal or physical inspection of any specific assets or liabilities (contingent or otherwise). Duff & Phelps has not been requested to, and did not, (i) initiate any discussions with, or solicit any indications of interest from, third parties with respect to the Proposed Transaction, the assets, businesses or operations of the Company, or any alternatives to the Proposed Transaction, (ii) negotiate the terms of the Proposed Transaction, or (iii) advise the Board of Directors or any other party with respect to alternatives to the Proposed Transaction, and, therefore, Duff & Phelps has assumed that such terms are the most beneficial terms, from the Company’s perspective, that could, under the circumstances, be negotiated among the parties to the Proposed Transaction.

 

Duff & Phelps is not expressing any opinion as to the market price or value of the Company’s common stock (or anything else) after the announcement or the consummation of the Proposed Transaction. This Opinion should not be construed as a valuation opinion, credit rating, solvency opinion, an analysis of the Company’s or Lighthouse’s credit worthiness, as tax advice, or as accounting advice. Duff & Phelps has not made, and assumes no responsibility to make, any representation, or render any opinion, as to any legal matter.

 

In rendering this Opinion, Duff & Phelps is not expressing any opinion with respect to the amount or nature of any compensation under employment agreements, management agreements or other arrangements, to any of the Company’s officers, directors, affiliates or employees, or any class of such persons, relative to the consideration to be received by the public shareholders of the Company in the Proposed Transaction, or with respect to the fairness of any such compensation.

 

This Opinion is furnished solely for the use and benefit of the Special Committee and the Board of Directors in connection with their consideration of the Proposed Transaction and is not intended to, and does not, confer any rights or remedies upon any other person, and is not intended to be used, and may not be used, by any other person or for any other purpose, including, without limitation, stockholders, without Duff & Phelps’ express consent. This Opinion (i) does not address the merits of the underlying business decision to enter into the Proposed Transaction versus any alternative strategy or transaction; (ii) does not address any transaction related to the Proposed Transaction; (iii) is not a recommendation as to how the Board of Directors or any stockholder should vote or act with respect to any matters relating to the Proposed Transaction, or whether to proceed with the Proposed Transaction or any related transaction, and (iv) does not indicate that the consideration received is the best possibly attainable under any circumstances; instead, it merely states whether the consideration in the Proposed Transaction is within a range suggested by certain financial analyses.

 

5


 

The decision as to whether to proceed with the Proposed Transaction or any related transaction may depend on an assessment of factors unrelated to the financial analysis on which this Opinion is based. This letter should not be construed as creating any fiduciary duty on the part of Duff & Phelps to any party.

 

This Opinion is solely that of Duff & Phelps, and Duff & Phelps’ liability in connection with this letter shall be limited in accordance with the terms set forth in the engagement letter between Duff & Phelps and the Company dated February 29, 2012 (the “ Engagement Letter ”). This letter is confidential, and its use and disclosure is strictly limited in accordance with the terms set forth in the Engagement Letter.

 

Disclosure of Prior Relationships

 

Duff & Phelps has acted as financial advisor to the Special Committee and will receive a fee for its services. No portion of Duff & Phelps’ fee is contingent upon either the conclusion expressed in this Opinion or whether or not the Proposed Transaction is successfully consummated. Pursuant to the terms of the Engagement Letter, a portion of Duff & Phelps’ fee is payable upon Duff & Phelps’ stating to the Special Committee that it is prepared to deliver its Opinion. Other than this engagement, during the two years preceding the date of this Opinion, Duff & Phelps has not had any material relationship with any party to the Proposed Transaction for which compensation has been received or is intended to be received, nor is any such material relationship or related compensation mutually understood to be contemplated.

 

6


 

Conclusion

 

Based upon and subject to the foregoing, Duff & Phelps is of the opinion that as of the date hereof the consideration to be paid by UPREIT in the Proposed Transaction is fair from a financial point of view to the Company and the stockholders of the Company (without giving effect to any impact of the Proposed Transaction on any particular stockholder other than in its capacity as a stockholder).

 

This Opinion has been approved by the Opinion Review Committee of Duff & Phelps.

 

 

Respectfully submitted,

 

 

Duff & Phelps, LLC

 

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Exhibit 99.2

33.29% LP 1% GP 65.71% LP GTJ REIT, Inc. GTJ GP, LLC GTJ Realty, LP Wu/Lighthouse Portfolio, LLC Partners Farm Springs 49-19 Rockaway 165-25 147th Ave 85-01 24th Ave 114-15 Guy Brewer 23-85 87th St. 612 Wortman 460 Bridgeport 470 Bridgeport 950 Bridgeport 12 Cascade 15 Executive 25 Executive 35 Executive 22 Marsh Hill 8 Slater 269 Lambert 412 Fairview 401 Fieldcrest 404 Fieldcrest 36 Midland 103 Fairview 100-110 Midland 112 Midland 199 Ridgewood 203 Ridgewood 100 American 200 American 300 American 400 American 500 American 466 Bridgeport