INDEMNIFICATIONAGREEMENT

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This Indemnification Agreement (“the Agreement”) dated as of February 8, 2008 made by and between First Real Estate Investment Trust of New Jersey, a New Jersey real estate business trust (hereinafter “FREIT”), and Damascus 100, LLC, a New Jersey limited liability company (hereinafter “Damascus 100”).

WHEREAS, Damascus Second, LLC (the “LLC”) is a Maryland limited liability company consisting of FREIT as the Managing Member and Damascus 100, as the Limited Member;

WHEREAS, FREIT is the owner of 70% of the “Percentage Interests” in the LLC and Damascus 100 is the owner of 30% of the “Percentage Interests” in the LLC; the term Percentage Interest being defined in the Operating Agreement of the LLC; and

WHEREAS, Damascus Centre, L.L.C. ("Centre") is the owner of a mixed use retail complex located in Damascus, Maryland known as the “Damascus Centre” (the "Premises”); and

WHEREAS, the LLC is obligated to Bank of America (the “lender”) pursuant to a Promissory Note (the "Note") in an amount up to Twenty-Seven Million Two Hundred Ninety-Eight Thousand Dollars ($27,298,000.00) (the “loan”), the proceeds of which are being used to reconstruct the Premises; and

WHEREAS, Centre has granted an Indemnity Deed of Trust on the Premises to secure its Indemnity Guaranty of the Loan in favor of the Lender; and

WHEREAS, as a condition precedent of the granting of the Loan, the Lender required FREIT to execute certain guarantees and indemnifications related to the Loan as evidenced by the Note, and a certain Guaranty Agreement of even date (all of the foregoing being, collectively referred to herein as the “Guaranty Documents”); and

WHEREAS, the Guaranty Documents are being executed and delivered to Lender by FREIT with FREIT’s understanding that any loss or other costs incurred pursuant to the terms of the Guaranty Agreement will be borne seventy (70%) by FREIT and thirty (30%) percent by Damascus 100;

NOW THEREFORE, the parties hereto agree as follows:

Section 1.

Inducement.

This Agreement is executed by the undersigned in order to induce FREIT to execute and deliver to the Lender the Guaranty Documents.

Section 2.

Agreement of Indemnity.

(a)           Damascus 100 hereby, irrevocably and unconditionally agrees to jointly and severally defend, indemnify and hold FREIT harmless from and against any and all claims, demands, causes of action, liabilities, losses, costs incurred by FREIT as a result of any and all action and enforcement of the Guaranty Documents to the extent of Damascus 100’s thirty percent (30%) share of the Percentage Interest in the LLC.

 

Section 3.

Term.

This Agreement shall remain in full force and effect so long as any of the parties hereto or their successors and assigns shall be liable to Lender under the Guaranty Documents.

Section 4.

Nature of Obligations.

The obligations of the Undersigned hereunder are primary obligations and such obligations shall be absolute and unconditional irrespective of any illegality, invalidity or unenforceability of or defect in any provision of the loan documents prepared in connection with the Loan or of any obligations of the LLC thereunder, the absence of any action to enforce the same, seek execution thereof (or the lack thereof), or any other circumstance affecting the LLC (whether or not within the control of the LLC or the Undersigned) which might otherwise constitute a defense available to, or discharge of, the warrantor or surety of any type.  This Agreement is a continuing one and all liabilities that apply or may apply under the terms hereof shall be conclusively presumed to have been created in reliance hereon.

Section 5.

Independence of Obligations.

This Agreement and the obligations of the Undersigned hereunder may be enforced in full irrespective of the existence of  the obligations (direct or contingent) of the Undersigned or any other person (including, without limitation, the LLC any other indemnitor or surety) under any other instrument or agreement in favor of Lender, as the case may be with respect to the obligations under the Loan or any other obligation.  No payment by the Undersigned or any other person under any other agreement shall under any circumstance diminish, or constitute a defense to, the Undersigned obligations hereunder until all obligations have been indefeasibly paid in full.

Section 6.

Miscellaneous.

(a)

Modification.

This Agreement may be modified only by an instrument in writing signed by the parties hereto.

(b)

Governing Law.

This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with, and be governed by, the laws of the State of New Jersey.

(c)

Descriptive Headings, etc.

The descriptive headings used in this Agreement are for convenience only and shall not be deemed to affect the meaning of construction of any provision hereof.

(d)

Benefit of Agreement.

This Agreement shall be binding upon and inure to the benefit of the Undersigned and their respective successors, assigns, and distributes.

(e)

Waivers.

The Undersigned hereby waive presentment, demand, protest or notice of any kind in connection with this Agreement.

 

(f)

Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be an original, but which together constitutes one and same instrument.

IN WITNESS WHEREOF, the Undersigned has caused this Agreement to be duly executed and executed as of the date first above written.

	FIRST REAL ESTATE INVESTMENT
	TRUST OF NEW JERSEY
	By:	/s/ Donald Barney
		Donald Barney, President
	Damascus 100, LLC
	By:	/s/ Robert S. Hekemian, Jr.
		Robert S. Hekemian, Jr., Managing Manager

 

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