Retail Opportunity Investments
Annual Report 2009

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONaWashington, DC 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934 For the fiscal year ended December 31, 2009or oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934 For the transition period from to .Commission file number: 001-33749 RETAIL OPPORTUNITY INVESTMENTS CORP.(Exact name of registrant as specified in its charter) Delaware(State or other jurisdiction ofincorporation or organization)3 Manhattanville RoadPurchase, New York(Address of principal executive offices)26-0500600(I.R.S. EmployerIdentification No.)10577(Zip code)Registrant's telephone number, including area code:(914) 272-8080 Securities Registered Pursuant to Section 12(b) of the Act: Title of Each ClassName of Exchange on Which RegisteredCommon Stock, $0.0001 par value per shareThe NASDAQ Stock Market LLCWarrants, exercisable for Common Stock atan exercise price of $12.00 per shareThe NASDAQ Stock Market LLCUnits, each consisting of one share ofCommon Stock and one WarrantThe NASDAQ Stock Market LLCSecurities Registered Pursuant to Section 12(g) of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act. Yes o No x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act. Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-Tduring the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes o No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and"smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated fileroAccelerated filerxNon accelerated filer o(Do not check if a smallerreporting company)Smaller reporting companyoIndicate by check mark whether the registrant is a Shell Company (as defined in rule 12b-2 of the ExchangeAct). Yes o No x The aggregate market value of the common equity held by non affiliates of the registrant as of June 30, 2009,the last business day of the registrant's most recently completed second fiscal quarter, was $401,166,000 (based on theclosing sale price of the registrant's common stock on that date as reported on the NYSE Amex).  Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latestpracticable date: 41,804,675 shares of common stock, par value $0.0001 per share, outstanding as of March 11, 2010. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's definitive proxy statement for the registrant's 2010 Annual Meeting, to be filedwithin 120 days after the registrant's fiscal year, are incorporated by reference into Part III of this Annual Report onForm 10-K.  RETAIL OPPORTUNITY INVESTMENTS CORP.TABLE OF CONTENTS Page PART I2 Item 1.Business2 Item 1A.Risk Factors7 Item 1B.Unresolved Staff Comments20 Item 2.Properties20 Item 3.Legal Proceedings20 Item 4.(Removed and Reserved)20 PART II21 Item 5.Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchasesof Equity Securities21 Item 6.Selected Financial Data24 Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations24 Item 8.Financial Statements and Supplementary Data32 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure32 Item 9A.Controls and Procedures32 Item 9B.Other Information34 PART III38 Item 10.Directors, Executive Officers, and Corporate Governance38 Item 11.Executive Compensation38 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters38 Item 13.Certain Relationships, Related Transactions, and Director Independence38 Item 14.Principal Accountant Fees and Services38 PART IV39 Item 15.Exhibits and Financial Statement Schedules39 SIGNATURES43 - i - Statements Regarding Forward-Looking Information When used in this discussion and elsewhere in this Annual Report on Form 10-K, the words "believes,""anticipates," "projects," "should," "estimates," "expects," and similar expressions are intended to identify forward-looking statements with the meaning of that term in Section 27A of the Securities Act of 1933, as amended (the"Securities Act"), and in Section 21F of the Securities and Exchange Act of 1934, as amended (the "ExchangeAct"). Actual results may differ materially due to uncertainties including: · our ability to identify and acquire retail real estate and real estate-related debt investments thatmeet our investment standards in our target markets and the time period required for us to acquireour initial portfolio of its target assets; · the level of rental revenue and net interest income we achieve from our target assets; · the market value of our assets and the supply of, and demand for, retail real estate and real estate-related debt investments in which we invest; · the length of the current economic downturn; · the conditions in the local markets in which we will operate, as well as changes in nationaleconomic and market conditions; · consumer spending and confidence trends; · our ability to enter into new leases or to renew leases with existing tenants at the properties weacquire at favorable rates; · our ability to anticipate changes in consumer buying practices and the space needs of tenants; · the competitive landscape impacting the properties we acquire and their tenants; · our relationships with our tenants and their financial condition; · our use of debt as part of our financing strategy and our ability to make payments or to complywith any covenants under any borrowings or other debt facilities we obtain; · the level of our operating expenses, including amounts we are required to pay to our managementteam and to engage third party property managers; · changes in interest rates that could impact the market price of our common stock and the cost ofour borrowings; and · legislative and regulatory changes (including changes to laws governing the taxation of real estateinvestment trusts ("REITs")). Forward-looking statements are based on estimates as of the date of this report. We disclaim any obligationto publicly release the results of any revisions to these forward-looking statements reflecting new estimates, events orcircumstances after the date of this report. The risks included here are not exhaustive. Other sections of this report may include additional factors thatcould adversely affect our business and financial performance. Moreover, we operate in a very competitive andrapidly changing environment. New risk factors emerge from time to time and it is not possible for management topredict all such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to whichany factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-lookingstatements as a prediction of actual results. - 1 - In this Annual Report on Form 10-K, unless the context requires otherwise, all references to "our company,""we," "our," and "us" means Retail Opportunity Investments Corp.(f/k/a NRDC Acquisition Corp.) and one or more ofour subsidiaries, including our operating partnership. PART I Item 1.Business The Company Retail Opportunity Investments Corp., formerly known as NRDC Acquisition Corp., was incorporated inDelaware on July 10, 2007 for the purpose of acquiring through a merger, capital stock exchange, stock purchase, assetacquisition or other similar business combination with one or more assets or control of one or more operatingbusinesses. On August 7, 2009, we entered into the Framework Agreement (the "Framework Agreement") with NRDCCapital Management, LLC, which, among other things, sets forth the steps to be taken by us to continue our businessas a corporation that will elect to qualify as a REIT for U.S. federal income tax purposes, commencing with our taxableyear ending December 31, 2010. On October 20, 2009, our stockholders and warrantholders approved each of theproposals presented at the special meetings of stockholders and warrantholders, respectively, in connection with thetransactions contemplated by the Framework Agreement (the "Framework Transactions"), including to provide that theconsummation of substantially all of the Framework Transactions also constitutes a business combination under oursecond amended and restated certificate of incorporation, as amended (our "certificate of incorporation"). Following the consummation of the Framework Transactions on October 20, 2009, our business has beenprimarily focused on investing in, acquiring, owning, leasing, repositioning and managing a diverse portfolio ofnecessity-based retail properties, including, primarily, well located community and neighborhood shopping centers,anchored by national or regional supermarkets and drugstores. Although not our primary focus, we may also acquireother retail properties, including power centers, regional malls, lifestyle centers and single-tenant retail locations, thatare leased to national, regional and local tenants. We target properties strategically situated in densely populated,middle and upper income markets in the eastern and western regions of the United States. In addition, we maysupplement our direct purchases of retail properties with first mortgages or second mortgages, mezzanine loans, bridgeor other loans and debt investments related to retail properties, which are referred to collectively as "real estate-relateddebt investments," in each case provided that the underlying real estate meets our criteria for direct investment. Ourprimary focus with respect to real estate-related debt investments is to capitalize on the opportunity to acquire controlpositions that will enable us to obtain the asset should a default occur. These properties and investments are referredto as our target assets. We are organized in a traditional umbrella partnership real estate investment trust ("UpREIT")format pursuant to which Retail Opportunity Investments GP, LLC, our wholly-owned subsidiary, serves as the generalpartner of, and we conduct substantially all of our business through, our operating partnership subsidiary, RetailOpportunity Investments Partnership, LP, a Delaware limited partnership (our "operating partnership"), and itssubsidiary. Acquisitions; Subsequent Events On December 22, 2009, we acquired a shopping center located in Paramount, Los Angeles County, California(the "Paramount Property") for $18.1 million. The Paramount Property is a 95,000 square foot, recently renovated,shopping center with an overall occupancy rate of approximately 95.0%. The Paramount Property has three majoranchor tenants, Fresh & Easy Neighborhood Market (Tesco), Rite Aid and T.J. Maxx. The Paramount Property, whichcomplements our acquisition strategy, is located in a densely populated area, with approximately 215,000 peopleliving within a five-mile radius of the Paramount Property. On January 26, 2010, we acquired a shopping center located in Santa Ana, California (the "Santa AnaProperty"), for a purchase price of approximately $17.3 million. The Santa Ana Property is a shopping center ofapproximately 100,306 square feet, with an overall occupancy rate of approximately 91.0%. The Santa Ana Propertyhas two major anchor tenants, including Food 4 Less and FAMSA Furniture Store. The Santa Ana Property is locatedin a densely populated area, with over 660,000 people living within a five-mile radius. - 2 - On February 1, 2010, we acquired a shopping center located in Kent, Washington (the "Meridian ValleyProperty"), for an aggregate purchase price of approximately $7.1 million. The Meridian Valley Property is a fullyleased shopping center of approximately 51,566 square feet, anchored by a QFC (Kroger) Grocery store. The MeridianValley Property is located in a densely populated area, with over 180,000 people living within a five-mile radius. On February 2, 2010, we completed the acquisition of the Phillips Ranch Shopping Center, a neighborhoodcenter located in Pomona, California (the "Phillips Ranch Property"), for an aggregate purchase price of approximately$7.4 million, a portion of the proceeds of which was used to extinguish an existing $18.5 million deed of trust on thePhillips Ranch Property. The Phillips Ranch Property was acquired by ROIC Phillips Ranch, LLC, pursuant to apurchase and sale agreement, dated February 2, 2010, by and among CMP Phillips Associates, LLC and MCC Phillips,LLC (the "Phillips Ranch Seller"), as seller, and ROIC Phillips Ranch, LLC, as purchaser. Our operating partnershipholds a 99.97% and MCC Realty III, LLC, an affiliate of the Phillips Ranch Seller, a 0.03% Class A membershipinterest in ROIC Phillips Ranch, LLC. The Phillips Ranch Property is a 125,554 square foot neighborhood center. On December 15, 2009, we entered into a purchase and sale agreement with PBS Associates, LLC (the "AuroraSeller") to acquire a property known as the Aurora Shopping Center, located in Seattle, Washington. The estimatedtotal purchase price was to be $23 million which included the Company assuming $2.5 million of the Aurora Seller'sobligation on an existing loan. In accordance with the terms of this agreement, $0.5 million was deposited into aninterest-bearing escrow account with the Title Company during January 2010. On January 20, 2010, there was anamendment to the agreement dated December 15, 2009 to reduce the total purchase price to $22.9 million. On March 11, 2010, we completed the acquisition of a shopping center located in Lake Stevens, SnohomishCounty, Washington (the "Lake Stevens Property"), for an aggregate purchase price of approximately $16.2million. The Lake Stevens Property is a shopping center of approximately 74,130 square feet, is 100% occupied andanchored by Haggen Food & Pharmacy. The Lake Stevens Property is located in an area with over 96,000 peoplewithin a five mile radius having an average household income of approximately $79,000. Investment Strategy We believe that the current market environment in the retail real estate sector presents a significant andgrowing opportunity to acquire assets from owners and to aggressively reposition and manage the assets to profitablereturns, offering us the potential to achieve attractive risk adjusted returns for our stockholders over time primarilythrough dividends and secondarily through capital appreciation. To identify attractive opportunities within our targetassets, we rely on the expertise and experience of our management team. We utilize our management team's extensivecontacts in the U.S. real estate market to source investment opportunities, in particular through access to bothdistressed and more conventional sellers such as banks, institutions, REITs, property funds, other companies andprivate investors. In implementing our investment strategy, we utilize our management team's expertise in identifyingundervalued real estate and real estate-related debt investments with a focus on the retail sector. We believe that thekey factors to determining current value and future growth potential include the ability to identify the fundamentalqualities of an individual asset, understand the inherent strengths and weaknesses of a market, utilize local marketknowledge to identify sub-market drivers and trends, and understand how to mitigate appropriate risks prior to theacquisition of an asset. We seek to target assets where our management team believes there is an opportunity to lease-up vacant space, renew or release expiring leases and take advantage of economies of scale achieved in themanagement and leasing of properties acquired and developed within our target markets, and redesign and repositionproperties that maximize rental revenues and property potential. We believe that our management team's, acquisitionprocess and operational expertise provides us with the capability to identify and properly underwrite investmentopportunities. We also believe that in the current market, we may have opportunities to acquire properties from sellers notable to refinance maturing debt as well as acquire properties arising out of foreclosure sales or owned by lendersfollowing foreclosures. In addition, we may find opportunities to acquire properties with deferred capitalexpenditures, design flaws or other perceived risks, such as tenancy issues or near-term lease expirations. Further, - 3 - we may find opportunities in incomplete projects held by undercapitalized and/or defaulting developers or partiallyleased complexes with inexperienced management unable to achieve market occupancy. With respect to real estate-related debt investments, our primary focus is opportunities to acquire controlpositions that will enable us to obtain the asset should a default occur, provided that the underlying real estate meetsour criteria for direct investment. Our aim is to seek to provide a diversification of asset classes, tenant exposures, lease terms and locations asour portfolio expands. In order to capitalize on the changing sets of investment opportunities that may be present inthe various points of an economic cycle, we may expand or refocus our investment strategy by emphasizinginvestments in different parts of the capital structure and different areas of the real estate sector. Our investmentstrategy may be amended from time to time, if approved by our board of directors. We are not required to seekstockholder approval when amending our investment strategy. Our Operating Strategy Enhancing rental and capital growth of real estate assets through active asset management We intend to directly manage the condition of our retail properties and their relative attractiveness totenants. We believe that the value of the real estate assets that we invest in should be relatively better able towithstand market downturns, and well placed to benefit from upwards valuations when the cycle recovers. Our intention is to improve income profiles and add value to our real estate portfolio through ourmanagement team's proven asset management techniques, which include: · Understanding tenants' needs, and restructure leases, for example, remove tenant break clauses to extendlease terms; · Seeking opportunities to increase the likelihood of tenants remaining in occupancy when leaseexpirations occur by enhancing the experience of occupying a particular property wherever possible, forinstance by improving parking and facilities; · Making cost effective cosmetic and functional improvements; and · Monitoring expenses and prudently carrying out capital expenditures. Repositioning and Management of Real Estate Assets We follow an approach of renovating, re-merchandising and re-tenanting real estate assets to their highestoperating efficiency: · Renovation. Renovate assets from unappealing strip malls to visually and functionally attractive retailcenters that draw stable tenants and loyal consumers; · Re-merchandising. Position the property to meet the needs of consumers, while creating acomplementary offering of tenant merchandise; · Re-tenanting. Utilize existing relationships with tenants to sign leases that optimize stable incomepatterns, high occupancy, tenant flexibility and opportunities for rent growth; and · Property and Risk Management. Employ internal controls to achieve predictable revenues, monitorexpenses and prudently carry out capital expenditures, ensuring short-term cash flows and long-termvalue. Dispositions There were no real estate dispositions during 2009. - 4 - Our Financing Strategy During 2009, we did not incur any financing in connection with our operations or the acquisition ofproperty. We purchased our property for cash. In the future, we intend, when appropriate, to employ prudent amountsof leverage and use debt as a means of providing additional funds for the acquisition of our target assets and thediversification of our portfolio. We intend to use traditional forms of financing, including mortgage financing andcredit facilities. In addition, in connection with the acquisition of properties, we may assume all or a portion of theexisting debt on such properties. Business Segments We operate in one industry segment which involves, investing in, acquiring, owning, and managingcommercial real estate in the United States. Accordingly, we believe we have a single reportable segment fordisclosure purposes. Regulation The following discussion describes certain material U.S. federal laws and regulations that may affect ouroperations and those of our tenants. However, the discussion does not address state laws and regulations, except asotherwise indicated. These state laws and regulations, like the U.S. federal laws and regulations, could affect ouroperations and those of our tenants. Generally, real estate properties are subject to various laws, ordinances and regulations. Changes in any ofthese laws or regulations, such as the Comprehensive Environmental Response and Compensation Liability Act,increase the potential liability for environmental conditions or circumstances existing or created by tenants or otherson the properties. In addition, laws affecting development, construction, operation, upkeep, safety and taxationrequirements may result in significant unanticipated expenditures, loss of real estate property sites or otherimpairments to operations, which would adversely affect our cash flows from operating activities. Under the Americans with Disabilities Act of 1990 (the "Americans with Disabilities Act") all places of publicaccommodation are required to meet certain U.S. federal requirements related to access and use by disabled persons. Anumber of additional U.S. federal, state and local laws also exist that may require modifications to properties, orrestrict certain further renovations thereof, with respect to access thereto by disabled persons. Noncompliance with theAmericans with Disabilities Act could result in the imposition of fines or an award of damages to private litigants andalso could result in an order to correct any non-complying feature and in substantial capital expenditures. To theextent our properties are not in compliance, we may incur additional costs to comply with the Americans withDisabilities Act. Property management activities are often subject to state real estate brokerage laws and regulations asdetermined by the particular real estate commission for each state. Environmental Matters Pursuant to U.S. federal, state and local environmental laws and regulations, a current or previous owner oroperator of real property may be required to investigate, remove and/or remediate a release of hazardous substances orother regulated materials at or emanating from such property. Further, under certain circumstances, such owners oroperators of real property may be held liable for property damage, personal injury and/or natural resource damageresulting from or arising in connection with such releases. Certain of these laws have been interpreted to be joint andseveral unless the harm is divisible and there is a reasonable basis for allocation of responsibility. The failure toproperly remediate the property may also adversely affect the owner's ability to lease, sell or rent the property or toborrow funds using the property as collateral. In connection with the ownership, operation and management of our current properties and any propertiesthat we may acquire and/or manage in the future, we could be legally responsible for environmental liabilities or costsrelating to a release of hazardous substances or other regulated materials at or emanating from such property. In orderto assess the potential for such liability, we conduct an environmental assessment of each property prior to acquisitionand manage our properties in accordance with environmental laws while we own or operate them. All of - 5 - our leases contain a comprehensive environmental provision that requires tenants to conduct all activities incompliance with environmental laws and to indemnify the owner for any harm caused by the failure to do so. Inaddition, we have engaged qualified, reputable and adequately insured environmental consulting firms to performenvironmental site assessments of our properties and are not aware of any environmental issues that are expected tohave materially impacted the operations of any property. Competition We believe that competition for the acquisition, operation and development of retail properties is highlyfragmented. We compete with numerous owners, operators and developers for acquisitions and development of retailproperties, including institutional investors, other REITs and other owner-operators of community and neighborhoodshopping centers, some of which own or may in the future own properties similar to ours in the same markets in whichour properties are located. We also face significant competition in leasing available space to prospective tenants atour operating and development properties. Recent economic conditions have caused a greater than normal amount ofspace to be available for lease generally and in the markets in which our properties are located. The actualcompetition for tenants varies depending upon the characteristics of each local market (including current economicconditions) in which we own and manage property. We believe that the principal competitive factors in attractingtenants in our market areas are location, demographics, price, the presence of anchor stores and the appearance ofproperties. Many of our competitors are substantially larger and have considerably greater financial, marketing and otherresources than we do. Other companies may raise significant amounts of capital, and may have investment objectivesthat overlap with ours, which may create additional competition for opportunities to acquire assets. In the future,competition from these entities may reduce the number of suitable investment opportunities offered to us or increasethe bargaining power of property owners seeking to sell. Further, as a result of their greater resources, such entitiesmay have more flexibility than we do in their ability to offer rental concessions to attract tenants. If our competitorsoffer space at rental rates below current market rates, or below the rental rates we currently charge our tenants, we maylose potential tenants and we may be pressured to reduce our rental rates below those we currently charge in order toretain tenants when our tenants' leases expire. Employees As of December 31, 2009, we had six employees, including four executive officers, two of whom are alsomembers of our board of directors. Our Executive Chairman is affiliated with other entities, including NRDC RealEstate Advisors, LLC and National Realty & Development Corp. Our Executive Chairman has entered into anemployment agreement with us under which he has agreed that, during the period that he remains the ExecutiveChairman, he will not, nor will he permit any company under his control, to acquire or make any controlling equityinvestment in any retail property that is at least 70% occupied and otherwise fits our investment criteria, unless he firstpresents the opportunity to us for purchase. This commitment is not intended to extend to acquisitions or controllinginvestments in non-U.S. properties or national, regional or local retailers. Available Information We file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and allamendments to those reports with the Securities and Exchange Commission (the "SEC"). You may obtain copies ofthese documents by visiting the SEC's Public Reference Room at 100 F Street N.E., Washington, D.C. 20549, or bycalling the SEC at 1-800-SEC-0330. The SEC also maintains a Website (www.sec.gov) that contains reports, proxyand information statements, and other information regarding issuers that file electronically with the SEC. Our Websiteis www.roireit.net. Our reports on Forms 10-K, 10-Q and 8-K, and all amendments to those reports are available free ofcharge on our Website as soon as reasonably practicable after the reports and amendments are electronically filed withor furnished to the SEC. The contents of our Website are not incorporated by reference herein. - 6 - Item 1A. Risk Factors Risks Related to Our Business and Operations We operate in a highly competitive market and competition may limit our ability to acquire desirable assets. We operate in a highly competitive market. Our profitability depends, in large part, on our ability to acquireour target assets at favorable prices and on trends impacting the retail industry in general, national, regional and localeconomic conditions, financial condition and operating results of current and prospective tenants and customers,availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation andpopulation trends. Many of our competitors are substantially larger and have considerably greater financial,marketing and other resources than we do. Other companies may raise significant amounts of capital, and may haveinvestment objectives that overlap with ours, which may create additional competition for opportunities to acquireassets. We may change any of our strategies, policies or procedures without stockholder consent, which could adverselyaffect our business. We may change any of our strategies, policies or procedures with respect to acquisitions, asset allocation,growth, operations, indebtedness, financing strategy and distributions, including those related to maintaining ourREIT qualification, at any time without the consent of our stockholders, which could result in making acquisitionsthat are different from, and possibly riskier than, the types of acquisitions described in this Annual Report on Form 10-K. A change in our strategy may increase our exposure to real estate market fluctuations, financing risk, default riskand interest rate risk. Furthermore, a change in our asset allocation could result in us making acquisitions in assetcategories different from those described in this Annual Report on Form 10-K. These changes could adversely affectour financial condition, results of operations, the market price of our common stock or warrants and our ability tomake distributions to the stockholders. Our executive officers and directors are subject to potential conflicts of interest. Our executive officers and directors face conflicts of interest. Except for Messrs. Tanz, Roche and Schoebel,none of our executive officers or directors are required to commit his full time to our affairs and, accordingly, they mayhave conflicts of interest in allocating management time among various business activities. In addition, except forMessrs. Tanz, Roche and Schoebel, each of our executive officers and directors is engaged in several other businessendeavors and they are not obligated to contribute any specific number of hours per week to our affairs. In the courseof their other business activities, our executive officers and directors may become aware of investment and businessopportunities that may be appropriate for presentation to us as well as the other entities with which they areaffiliated. They may have conflicts of interest in determining to which entity a particular business opportunity shouldbe presented. As a result of multiple business affiliations, our executive officers and directors may have legal obligationsrelating to presenting opportunities to acquire one or more properties, portfolios or real estate-related debt investmentsto other entities. In addition, conflicts of interest may arise when our board of directors evaluates a particularopportunity. Subject to the limitations described in the employment agreements applicable to Messrs. Tanz, Roche,Schoebel and Richard Baker, our executive officers and directors may present such opportunities to the other entitiesto which they owe a pre-existing fiduciary duty before presenting such opportunities to us. We have limited operating history and may not be able to successfully operate our business or generate sufficientrevenue to make or sustain distributions to our stockholders. We commenced operations upon consummation of the Framework Transactions on October 20, 2009. Wecannot assure you that we will be able to operate our business successfully or implement our policies and strategies asdescribed in this Annual Report on Form 10-K. Our ability to provide attractive risk adjusted returns to ourstockholders over time is dependent on our ability both to generate sufficient cash flow to pay an attractive dividendand to achieve capital appreciation, and we cannot assure you we will do either.` There can be no assurance that wewill be able to generate sufficient revenue from operations to pay our operating expenses and make distributions tostockholders. - 7 - Capital markets and economic conditions can materially affect our financial condition and results of operationsand the value of our assets. There are many factors that can affect the value of our assets, including the state of the capital markets andeconomy. We are currently in an economic recession which has negatively affected consumer spending and retailsales, which has adversely impacted the performance and value of retail properties in most regions in the UnitedStates. In addition, compared to the first half of 2007, the number of banks advancing new loans against U.S.commercial property has fallen substantially and that decline, together with a tightening of lending policies, hasresulted in a significant contraction in the amount of debt available to fund retail properties. These conditions have contributed to volatility of unprecedented levels. Although we will factor in theseconditions in acquiring our target assets, our long term success depends in part on improving economic conditionsand the eventual return of a stable and dependable financing market for retail real estate. If market conditions do noteventually improve, our financial condition and results of operations and the value of our common stock will beadversely affected. Bankruptcy or insolvency of tenants may decrease our revenues and available cash. In the face of the current difficult economic conditions tenant bankruptcies are on the rise compared to recentprior periods and we anticipate that additional tenants may declare bankruptcy or become insolvent in the future. Inthe case of many retail properties, the bankruptcy or insolvency of a major tenant could cause us to suffer lowerrevenues and operational difficulties, and could allow other tenants to exercise so-called "kick-out" clauses in theirleases and terminate their lease or reduce their rents prior to the normal expiration of their lease terms. As a result, thebankruptcy or insolvency of a major tenant could result in a lower level of net income and funds available for thepayment of indebtedness or for distribution to stockholders. Inflation or deflation may adversely affect our financial condition and results of operations. Increased inflation could have a pronounced negative impact on our mortgages and interest rates and generaland administrative expenses, as these costs could increase at a rate higher than our rents. Inflation could also have anadverse effect on consumer spending which could impact our tenants' sales and, in turn, our percentage rents, whereapplicable. Conversely, deflation could lead to downward pressure on rents and other sources of income. Compliance or failure to comply with the Americans with Disabilities Act or other safety regulations andrequirements could result in substantial costs. The Americans with Disabilities Act generally requires that a public building be made accessible to disabledpersons. Noncompliance could result in the imposition of fines by the federal government or the award of damages toprivate litigants. If, under the Americans with Disabilities Act, we are required to make substantial alterations andcapital expenditures in one or more of our properties, including the removal of access barriers, it could adversely affectour financial condition and results of operations, as well as the amount of cash available for distribution tostockholders. Our properties are subject to various federal, state and local regulatory requirements, such as state and localfire and life safety requirements. If we fail to comply with these requirements, we could incur fines or private damageawards. We do not know whether compliance with the requirements will require significant unanticipatedexpenditures that will affect our cash flow and results of operations. We expect to acquire additional properties and this may create risks. We expect to acquire additional properties consistent with our investment strategies. We may not, however,succeed in consummating desired acquisitions on time or within budget. In addition, we may face competition inpursuing acquisition opportunities that could increase our costs. When we do pursue a project or acquisition, we maynot succeed in leasing newly acquired properties at rents sufficient to cover our costs of acquisition or in operating thebusinesses we acquired. Difficulties in integrating acquisitions may prove costly or time-consuming and could resultin poorer than anticipated performance. We may also abandon acquisition opportunities that we - 8 - have begun pursuing and consequently fail to recover expenses already incurred. Furthermore, acquisitions of newproperties will expose us to the liabilities of those properties, some of which we may not be aware of at the time ofacquisition. Factors affecting the general retail environment could adversely affect the financial condition of our retail tenantsand the willingness of retailers to lease space in our shopping centers, and in turn, adversely affect us. We expect our properties and our real estate-related debt investments to be focused on the retail real estatemarket. This means that we will be subject to factors that affect the retail environment generally, including the levelof consumer spending and consumer confidence, the threat of terrorism and increasing competition from online retailwebsites and catalog companies. We believe that retail real estate assets are currently exhibiting distress with weakfundamentals and a smaller and more conservative available capital pool. Consumers are spending less money, manytenants are credit impaired, rents are in decline, capitalization rates are expanding and transaction volume is downsignificantly. These factors could adversely affect the financial condition of our retail tenants and the willingness ofretailers to lease space in our shopping centers, and in turn, adversely affect us. As a result of current economic conditions, we may be limited in our ability to obtain financing on favorable terms. After we invest the funds released to us from the trust account established in connection with our initialpublic offering (the "Trust Account") upon consummation of the Framework Transactions, we expect to dependprimarily on external financing to fund the growth of our business. Our access to debt or equity financing depends onthe willingness of third parties to lend or make equity investments and on conditions in the capital marketsgenerally. As a result of current economic conditions, we may be limited in our ability to obtain financing onfavorable terms and there can be no assurances as to when financing conditions will improve. We do not have a formal policy limiting the amount of debt we may incur and our board of directors may change ourleverage policy without stockholder consent, which could result in a different risk profile. Although we are not required to maintain any particular leverage ratio, we intend, when appropriate, toemploy prudent amounts of leverage and use debt as a means of providing additional funds for the acquisition of ourtarget assets and the diversification of our portfolio. The amount of leverage we will deploy for particular investmentsin our target assets will depend upon our management team's assessment of a variety of factors, which may include theanticipated liquidity and price volatility of the target assets in our investment portfolio, the potential for losses, theavailability and cost of financing the assets, our opinion of the creditworthiness of our financing counterparties, thehealth of the U.S. economy and commercial mortgage markets, our outlook for the level, slope and volatility ofinterest rates, the credit quality of our target assets and the collateral underlying our target assets. Our certificate ofincorporation will not limit the amount of indebtedness we can incur. Our board of directors may change our leveragepolicies at any time without the consent of our stockholders, which could result in an investment portfolio with adifferent risk profile. Your investment return may be reduced if we are required to register as an investment company under the 1940 Act;if we are required to register under the 1940 Act, we will not be able to continue our business. We conduct our operations so that neither we, nor our operating partnership nor any of our future othersubsidiaries, are required to register as investment companies under the 1940 Act. Section 3(a)(1)(A) of the 1940 Actdefines an investment company as any issuer that is or holds itself out as being engaged primarily in the business ofinvesting, reinvesting or trading in securities. Section 3(a)(1)(C) of the 1940 Act defines an investment company asany issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or tradingin securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of theissuer's total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis, which we referto as the "40% test." Excluded from the term "investment securities," among other things, are U.S. governmentsecurities and securities issued by majority-owned subsidiaries that are not themselves investment companies and arenot relying on the exception from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7)of the 1940 Act. Accordingly, under Section 3(a)(1) of the 1940 Act, in relevant part, a company is not deemed to bean "investment company" if: (i) it neither is, nor holds itself out as being, engaged primarily, nor proposes to engageprimarily, in the business of investing, reinvesting or trading in securities; or (ii) it - 9 - neither is engaged nor proposes to engage in the business of investing, reinvesting, owning, holding or trading insecurities and does not own or propose to acquire "investment securities" having a value exceeding 40% of the valueof its total assets on an unconsolidated basis. We believe that we and our operating partnership (which is initiallywholly owned by us) will not meet either of the above definitions of investment company as we invest primarily inreal property. We expect that a majority of our subsidiaries will be wholly or majority owned by us and will have atleast 60% of their assets in real property. As these subsidiaries would be investing either solely or primarily in realproperty, they themselves would be outside of the definition of "investment company" under Section 3(a)(1) of the1940 Act. As we are organized as a holding company that conducts its businesses primarily through our operatingpartnership, which in turn is a holding company conducting its business through its wholly or majority ownedsubsidiaries, both we and our operating partnership conduct our operations so that we and our operating partnershipcomply with the 40% test. We also do not believe that we will be considered to be an investment company underSection 3(a)(1)(A) of the 1940 Act because we will not engage primarily or hold ourself out as being engagedprimarily in the business of investing, reinvesting or trading in securities. Rather, we will be primarily engaged in thenon-investment company businesses of our subsidiaries. We will monitor our holdings to ensure continuing andongoing compliance with this test. In the event that the value of investment securities held by the subsidiaries of our operating partnership wereto exceed 40%, we expect our subsidiaries to be able to rely on the exclusion from the definition of "investmentcompany" provided by Section 3(c)(5)(C) of the 1940 Act. Section 3(c)(5)(C), as interpreted by the staff of the SEC,requires each of our subsidiaries relying on this exception to invest at least 55% of its portfolio in "mortgage and otherliens on and interests in real estate," which we refer to as qualifying assets and at least 80% of its assets in qualifyingassets and other real estate- related assets. The remaining 20% of the portfolio can consist of miscellaneousassets. What we buy and sell is therefore limited to these criteria. How we determine to classify our assets for purposesof the 1940 Act will be based in large measure upon no-action letters issued by the SEC staff and other SECinterpretive guidance. No assurance can be given that the SEC staff will concur with our classification of ourassets. Future revisions to the 1940 Act or further guidance from the SEC or its staff may cause us to lose ourexclusion from registration or force us to re-evaluate our portfolio and our investment strategy. Such changes mayprevent us from operating our business successfully. To ensure that neither we, nor our operating partnership nor subsidiaries are required to register as aninvestment company, each entity may be unable to sell assets they would otherwise want to sell and may need to sellassets they would otherwise wish to retain. In addition, we, our operating partnership or our other future subsidiariesmay be required to acquire additional assets that we might not otherwise acquire or forego opportunities to acquireinterests in companies that we would otherwise want to acquire. Although we, our operating partnership and our otherfuture subsidiaries intend to monitor our portfolio periodically and prior to each acquisition and disposition, any ofthese entities may not be able to maintain an exclusion from registration as an investment company. If we, ouroperating partnership or our other subsidiaries are required to register as an investment company but fail to do so, theunregistered entity would be prohibited from engaging in our business, and criminal and civil actions could bebrought against such entity. In addition, the contracts of such entity would be unenforceable unless a court requiredenforcement, and a court could appoint a receiver to take control of the entity and liquidate its business. Increasing vacancy rates for retail property assets resulting from recent disruptions in the financial markets anddeteriorating economic conditions could adversely affect the value of the retail property assets we acquire. We depend upon tenants for a majority of our revenue from real property investments. Recent disruptions inthe financial markets and deteriorating economic conditions have resulted in a trend toward increasing vacancy ratesfor certain classes of commercial property, including retail properties, due to increased tenant delinquencies and/ordefaults under leases, generally lower demand for rentable space, as well as potential oversupply of rentablespace. Business failures and downsizings have led to reduced consumer demand for retail products and services,which in turn has led to retail business failures or downsizings and reducing demand for retail space. Reduced demandfor retail space could require us to increase concessions, tenant improvement expenditures or reduce rental rates tomaintain occupancies beyond those anticipated at the time we acquire the property. The continuation of disruptionsin the financial markets and deteriorating economic conditions could impact certain of the retail properties we mayacquire and such properties could experience higher levels of vacancy than anticipated at the time of our acquisitionof such properties. The value of our retail property investments could decrease below the amounts - 10 - we paid for such properties. Revenues from properties could decrease due to lower occupancy rates, reduced rentalrates and potential increases in uncollectible rent. We incur expenses, such as for maintenance costs, insurances costsand property taxes, even though a property is vacant. The longer the period of significant vacancies for a property, thegreater the potential negative impact on our revenues and results of operations. Real estate investments' value and income fluctuate due to conditions in the general economy and the real estatebusiness, which may affect our ability to service our debt and expenses. The value of real estate fluctuates depending on conditions in the general and local economy and the realestate business. These conditions may also limit our revenues and available cash. The rents we receive and theoccupancy levels at our properties may decline as a result of adverse changes in conditions in the general economyand the real estate business. If rental revenues and/or occupancy levels decline, we generally would expect to haveless cash available to pay indebtedness and for distribution to our stockholders. In addition, some of our majorexpenses, including mortgage payments, real estate taxes and maintenance costs, generally do not decline when therelated rents decline. It may be difficult to buy and sell our real estate quickly, which may limit our ability to vary our portfolio promptlyin response to changes in economic or other conditions. Real estate investments are relatively difficult to buy and sell quickly. Consequently, we may have limitedability to vary our portfolio promptly in response to changes in economic or other conditions. We depend on leasing space to tenants on economically favorable terms and collecting rent from tenants, some ofwhom may not be able to pay. Our financial results depend significantly on leasing space in our properties to tenants on economicallyfavorable terms. In addition, if a substantial majority of our income comes from renting of real property, our income,funds available to pay indebtedness and funds available for distribution to our stockholders will decrease if asignificant number of our tenants cannot pay their rent or if we are not able to maintain occupancy levels on favorableterms. If a tenant does not pay its rent, we may not be able to enforce our rights as landlord without delays and mayincur substantial legal costs. Some of our properties depend on anchor stores or major tenants to attract shoppers and could be adversely affectedby the loss of or a store closure by one or more of these tenants. Regional malls are typically anchored by department stores and other large, nationally recognizedtenants. The value of some of the retail properties we acquire could be adversely affected if these tenants fail tocomply with their contractual obligations, seek concessions in order to continue operations or cease theiroperations. Department store and larger store, also referred to as "big box," consolidations typically result in theclosure of existing stores or duplicate or geographically overlapping store locations. We will not control thedisposition of those department stores or larger stores nor will we control the vacant space that is not re-leased in thosestores. Other tenants may be entitled to modify the terms of their existing leases in the event of such closures. Themodification could be unfavorable to us as the lessor and could decrease rents or expense recoverycharges. Additionally, major tenant closures may result in decreased customer traffic which could lead to decreasedsales at other stores. If the sales of stores operating in our properties were to decline significantly due to closing ofanchors, economic conditions or other reasons, tenants may be unable to pay their minimum rents or expense recoverycharges. In the event of default by a tenant or anchor store, we may experience delays and costs in enforcing our rightsas landlord to recover amounts due to us under the terms of our agreements with those parties. Our Common Area Maintenance (CAM) contributions may not allow us to recover the majority of our operatingexpenses from tenants, which may reduce operating cash flow from our properties. CAM costs typically include allocable energy costs, repairs, maintenance and capital improvements tocommon areas, janitorial services, administrative, property and liability insurance costs and security costs. We mayacquire properties with leases with variable CAM provisions that adjust to reflect inflationary increases or leases witha fixed CAM payment methodology which fixes our tenants' CAM contributions. With respect to both variable - 11 - and fixed payment methodologies, the amount of CAM charges we bill to our tenants may not allow us to recover orpass on all these operating expenses to tenants, which may reduce operating cash flow from our properties. We may incur costs to comply with environmental laws. Our operations and properties are subject to various federal, state and local laws and regulations concerningthe protection of the environment, including air and water quality, hazardous or toxic substances and health andsafety. Under some environmental laws, a current or previous owner or operator of real estate may be required toinvestigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be heldliable to a governmental entity or to third parties for property damage or personal injuries and for investigation andclean-up costs incurred by those parties because of the contamination. These laws often impose liability withoutregard to whether the owner or operator knew of the release of the substances or caused the release. The presence ofcontamination or the failure to remediate contamination may impair our ability to sell or lease real estate or to borrowusing the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including thosethat can require the abatement or removal of asbestos-containing materials in the event of damage, demolition,renovation or remodeling and also govern emissions of and exposure to asbestos fibers in the air. The maintenanceand removal of lead paint and certain electrical equipment containing polychlorinated biphenyls ("PCBs") andunderground storage tanks are also regulated by federal and state laws. We are also subject to risks associated withhuman exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, abovecertain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptibleindividuals. We could incur fines for environmental compliance and be held liable for the costs of remedial actionwith respect to the foregoing regulated substances or tanks or related claims arising out of environmentalcontamination or human exposure to contamination at or from our properties. Identification of compliance concernsor undiscovered areas of contamination, changes in the extent or known scope of contamination, discovery ofadditional sites, human exposure to the contamination or changes in cleanup or compliance requirements could resultin significant costs to us. Our investments in mezzanine loans are generally subject to losses, which may result in losses to us. We may acquire mezzanine loans, which are loans made to property owners that are secured by pledges of theborrower's ownership interests, in whole or in part, in entities that directly or indirectly own the real property. The keydistinction from mortgage loans is that the most senior portion of the loan with the least credit risk is owned by thesenior lender. In the event a borrower defaults on a loan and lacks sufficient assets to satisfy our loan, we may suffer aloss of principal or interest. In the event a borrower declares bankruptcy, we may not have full recourse to the assets ofthe borrower, or the assets of the borrower may not be sufficient to satisfy the loan. In addition, mezzanine loans areby their nature structurally subordinated to more senior property level financings. If a borrower defaults on ourmezzanine loan or on debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will besatisfied only after the property level debt and other senior debt is paid in full. Significant losses related to ourmezzanine loans would result in operating losses for us and may limit our ability to make distributions to ourstockholders. We may invest in loans to owners of net leased properties and these investments may generate losses. We may invest in commercial mortgage loans to owners of net leased real estate assets. A net lease requiresthe tenant to pay, in addition to the fixed rent, some or all of the property expenses that normally would be paid by theproperty owner. The value of our investments and the income from our investments in loans to owners of net leasedproperties, if any, will depend upon the ability of the applicable tenant to meet its obligations to maintain the propertyunder the terms of the net lease. If a tenant fails or becomes unable to so maintain a property, the borrower would havedifficulty making its required loan payments to us. In addition, under many net leases the owner of the propertyretains certain obligations with respect to the property, including among other things, the responsibility formaintenance and repair of the property, to provide adequate parking, maintenance of common areas and compliancewith other affirmative covenants in the lease. If the borrower were to fail to meet these obligations, the applicabletenant could abate rent or terminate the applicable lease, which may result in a loss of capital invested in, andanticipated profits from, the property to the borrower and the borrower would have difficulty making its required loanpayments to us. In addition, the borrower may find it difficult to lease property to new tenants that may have beensuited to the particular needs of a former tenant. - 12 - We may be subject to "lender liability" claims, which may subject us to significant liability, should a claim of thistype arise. In recent years, a number of judicial decisions have upheld the right of borrowers to sue lending institutionson the basis of various evolving legal theories, collectively termed "lender liability." Generally, lender liability isfounded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fairdealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of afiduciary duty owed to the borrower or its other creditors or stockholders. We cannot assure prospective investors thatsuch claims will not arise or that we will not be subject to significant liability if a claim of this type did arise. A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could impair ourassets and harm our operations. Because we have only recently acquired assets, we are not burdened by the losses experienced by certain ofour competitors as a result of the current recession and declines in real estate values. Although we will take currenteconomic conditions into account in acquiring our target assets, our long term success depends in part on improvingeconomic conditions and the eventual return of a stable and dependable financing market for retail real estate. If thecurrent economic slowdown persists or worsens, our financial condition and results of operations and the value of ourcommon stock will be adversely affected. Loss of our key personnel could harm our operations and adversely affect the value of our common stock. We are dependent on the efforts of our key personnel of our senior management team. While we believe thatwe could find replacements for these key personnel, the loss of their services could harm our operations and adverselyaffect the value of our common stock. Risks Related to Financing Our access to financing may be limited and thus our ability to potentially enhance our returns may be adverselyaffected. We intend, when appropriate, to employ prudent amounts of leverage and use debt as a means of providingadditional funds for the acquisition of our target assets and the diversification of our portfolio. To the extent marketconditions improve and markets stabilize over time, we expect to increase our borrowing levels. We currently do nothave any commitments for financing. Our access to private sources of financing will depend upon a number of factors over which we have little orno control, including: · general market conditions; · the market's view of the quality of our assets; · the market's perception of our growth potential; · our eligibility to participate in and access capital from programs established by the U.S.government; · our current and potential future earnings and cash distributions; and · the market price of the shares of our common stock. The current dislocation and weakness in the capital and credit markets could adversely affect one or moreprivate lenders and could cause one or more private lenders to be unwilling or unable to provide us with financing orto increase the costs of that financing. In addition, if regulatory capital requirements imposed on our private lenderschange, they may be required to limit, or increase the cost of, financing they provide to us. In general, this couldpotentially increase our financing costs and reduce our liquidity or require us to sell assets at an inopportune time orprice. - 13 - During times when interest rates on mortgage loans are high or financing is otherwise unavailable on a timelybasis, we have and may continue to purchase certain properties for cash. Consequently, depending on marketconditions at the relevant time, we may have to rely more heavily on additional equity issuances, which may bedilutive to our stockholders, or on less efficient forms of debt financing that require a larger portion of our cash flowfrom operations, thereby reducing funds available for our operations, future business opportunities, cash distributionsto our stockholders and other purposes. We cannot assure you that we will have access to such equity or debt capitalon favorable terms (including, without limitation, cost and term) at the desired times, or at all, which may cause us tocurtail our asset acquisition activities and/or dispose of assets, which could negatively affect our results of operations. Interest rate fluctuations could reduce the income on our investments and increase our financing costs. Changes in interest rates will affect our operating results as such changes will affect the interest we receive onour floating rate interest bearing investments and the financing cost of our debt, as well as our interest rate swaps thatwe may utilize for hedging purposes. Changes in interest rates may also, in the case of our real estate-related debtinvestments, affect borrower default rates, which may result in losses for us. Any credit facilities that we may use to finance our assets may require us to provide additional collateral or paydown debt. We intend, when appropriate, to use traditional forms of financing, including credit facilities. In the event weutilize such financing arrangements, they would involve the risk that the market value of our assets pledged to theprovider of the credit facility may decline in value, in which case the lender may require us to provide additionalcollateral or to repay all or a portion of the funds advanced. We may not have the funds available to repay our debt atthat time, which would likely result in defaults unless we are able to raise the funds from alternative sources, which wemay not be able to achieve on favorable terms or at all. Posting additional collateral would reduce our liquidity andlimit our ability to leverage our assets. If we cannot meet these requirements, the lender could accelerate ourindebtedness, increase the interest rate on advanced funds and terminate our ability to borrow funds from them, whichcould materially and adversely affect our financial condition and ability to implement our business plan. In addition,in the event that the lender files for bankruptcy or becomes insolvent, our loans may become subject to bankruptcy orinsolvency proceedings, thus depriving us, at least temporarily, of the benefit of these assets. Such an event couldrestrict our access to credit facilities and increase our cost of capital. The providers of credit facilities may also requireus to maintain a certain amount of cash or set aside assets sufficient to maintain a specified liquidity position thatwould allow us to satisfy our collateral obligations. As a result, we may not be able to leverage our assets as fully aswe would choose, which could reduce our return on assets. In the event that we are unable to meet these collateralobligations, our financial condition and prospects could deteriorate rapidly. Currently, we have no credit facilities inplace, and there can be no assurance that we will be able to utilize such arrangements on favorable terms, or at all. We expect that certain of our debt instruments may contain covenants that could adversely affect our financialcondition and our acquisitions and development activities. To the extent we use mortgage financing on our properties, we expect that such mortgages will containcustomary covenants and provisions that limit our ability to pre-pay such mortgages before their scheduled maturitydate or to transfer the underlying property without lender consent. In addition, because a mortgage is secured by a lienon the underlying real property, mortgage defaults subject us to the risk of losing the property throughforeclosure. Any unsecured credit facilities, unsecured debt securities and other loans that we may obtain in the futuremay contain customary restrictions, requirements and other limitations on our ability to incur indebtedness, includingcovenants that limit our ability to incur debt based upon the level of our ratio of total debt to total assets, our ratio ofsecured debt to total assets, our ratio of net operating income to our interest expense, and fixed charges, and thatrequire us to maintain a certain level of unencumbered assets to unsecured debt. In addition, failure to comply withthese covenants could cause a default under the applicable debt instrument, and we may then be required to repaysuch debt with capital from other sources. Under those circumstances, other sources of capital may not be available tous, or be available only on unattractive terms. Additionally, our ability to satisfy prospective lenders' insurancerequirements may be adversely affected if lenders generally insist upon greater insurance coverage against certain risksthan is available to us in the marketplace or on commercially reasonable terms. - 14 - Risks Related to Our Organization and Structure We depend on dividends and distributions from our direct and indirect subsidiaries. The creditors and preferredsecurity holders of these subsidiaries, if any, are entitled to amounts payable to them by the subsidiaries before thesubsidiaries may pay any dividends or distributions to us. Substantially all of our assets are held through our operating partnership that holds substantially all of itsproperties and assets through subsidiaries. Our operating partnership's cash flow are dependent on cash distributionsto it by its subsidiaries, and in turn, substantially all of our cash flow is dependent on cash distributions to us by ouroperating partnership. The future creditors of each of our direct and indirect subsidiaries are entitled to payment ofthat subsidiary's obligations to them, when due and payable, before distributions may be made by that subsidiary to itsequity holders. Thus, our operating partnership's ability to make distributions to us and therefore our ability to makedistributions to our stockholders will depend on its subsidiaries' ability first to satisfy their obligations to creditors andthen to make distributions to our operating partnership. In addition, our participation in any distribution of the assets of any of our direct or indirect subsidiaries uponthe liquidation, reorganization or insolvency, is only after the claims of the creditors, including trade creditors, aresatisfied. The authorized but unissued shares of preferred stock and the ownership limitations contained in our certificate ofincorporation may prevent a change in control. Our certificate of incorporation authorizes us to issue authorized but unissued shares of preferred stock. Inaddition, our board of directors, without stockholder approval, has the authority to issue and classify or reclassify anypreferred stock and set the terms of the classified or reclassified shares. As a result, our board of directors may establisha series of shares of preferred stock that could delay or prevent a transaction or a change in control that might involvea premium price for shares of our common stock or otherwise be in the best interests of our stockholders. In addition, our certificate of incorporation contains restrictions limiting the ownership and transfer of sharesof our common stock and other outstanding shares of capital stock. The relevant sections of our certificate ofincorporation provide that, subject to certain exceptions described below, ownership of shares of our common stockby any person is limited to 9.8% by value or by number of shares, whichever is more restrictive, of our outstandingshares of common stock (the common share ownership limit), and no more than 9.8% by value or number of shares,whichever is more restrictive, of our outstanding capital stock (the aggregate share ownership limit). The commonshare ownership limit and the aggregate share ownership limit are collectively referred to herein as the "ownershiplimits." These provisions will restrict the ability of persons to purchase shares in excess of the relevant ownershiplimits. Our failure to qualify as a REIT would subject us to U.S. federal income tax and potentially increased state andlocal taxes, which would reduce the amount of cash available for distribution to our stockholders. We intend to operate in a manner that will enable us to qualify as a REIT for U.S. federal income tax purposes,commencing with our taxable year ending December 31, 2010. We have not requested and do not intend to request aruling from the IRS that we will qualify as a REIT. The U.S. federal income tax laws governing REITs arecomplex. The complexity of these provisions and of the applicable U.S. Treasury Department regulations that havebeen promulgated under the Code ("Treasury Regulations") is greater in the case of a REIT that holds assets through apartnership, as we may at some point in the future, and judicial and administrative interpretations of the U.S. federalincome tax laws governing REIT qualification are limited. To qualify as a REIT, we must meet, on an ongoing basis,various tests regarding the nature of our assets and our income, the ownership of or outstanding shares, and the amountof our distributions. Moreover, new legislation, court decisions or administrative guidance, in each case possibly withretroactive effect, may make it more difficult or impossible for us to qualify as a REIT. In addition, in order for us toqualify as a REIT for our taxable year ending December 31, 2010, we will be required to have 75% of our total assetsinvested in qualifying REIT real estate assets, cash, cash items and government securities by March 31, 2010. Noassurance can be given that we will be able to invest the funds released to us from the Trust Account upon theapproval of the Framework Transactions in such qualifying assets prior to such date. Thus, while we intend to operateso that we will qualify as a REIT, given the highly complex nature of the rules - 15 - governing REITs, the ongoing importance of factual determinations, and the possibility of future changes in ourcircumstances, no assurance can be given that we will so qualify for any particular year. If we fail to qualify as a REIT in any taxable year, and do not qualify for certain statutory relief provisions, wewould be required to pay U.S. federal income tax on our taxable income, and distributions to our stockholders wouldnot be deductible by us in determining our taxable income. In such a case, we might need to borrow money or sellassets in order to pay our taxes. Our payment of income tax would decrease the amount of our income available fordistribution to our stockholders. Furthermore, if we fail to maintain our qualification as a REIT, we no longer wouldbe required to distribute substantially all of our net taxable income to our stockholders. In addition, unless we wereeligible for certain statutory relief provisions, we could not re-elect to qualify as a REIT until the fifth calendar yearfollowing the year in which we failed to qualify. The stock transfer restrictions in our certificate of incorporation may not be effective as to all stockholders, whichcould adversely affect our ability to qualify as a REIT. Under Delaware law, a transfer restriction on a security of a corporation is not binding on the holder thereofunless the holder voted in favor of the restriction. Unless each of our stockholders voted in favor of the stock transferrestrictions contained in our certificate of incorporation, the transfer restrictions will not be effective against anystockholder that did not affirmatively approve the transfer restrictions or any transferee of suchstockholder. Accordingly, despite certain transfer restrictions in our certificate of incorporation, a transfer of shares ofour stock could result in our stock being beneficially owned by less than 100 persons and loss of our REITqualification. We intend to monitor the beneficial owners of our stock to ensure that our stock is at all timesbeneficially owned by more than 100 persons, but no assurance can be given that we will be successful in this regard. Failure to make required distributions would subject us to tax, which would reduce the cash available fordistribution to our stockholders. In order to qualify as a REIT, we must distribute to our stockholders, each calendar year, at least 90% of ourREIT taxable income, determined without regard to the deduction for dividends paid and excluding net capitalgain. To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our taxableincome, we are subject to U.S. federal corporate income tax on our undistributed income. In addition, we will incur a4% nondeductible excise tax on the amount, if any, by which our distributions in any calendar year are less than aminimum amount specified under U.S. federal income tax laws. We intend to distribute our net income to ourstockholders in a manner intended to satisfy the REIT 90% distribution requirement and to avoid the 4%nondeductible excise tax. Our taxable income may exceed our net income as determined by the U.S. generally accepted accountingprinciples ("GAAP") because, for example, realized capital losses will be deducted in determining our GAAP netincome, but may not be deductible in computing our taxable income. In addition, we may invest in assets thatgenerate taxable income in excess of economic income or in advance of the corresponding cash flow from theassets. For example, we may be required to accrue interest income on mortgage loans or other types of debt securitiesor interests in debt securities before we receive any payments of interest or principal on such assets. Similarly, some ofthe debt securities that we acquire may have been issued with original issue discount. We will be required to reportsuch original issue discount based on a constant yield method. As a result of the foregoing, we may generate less cashflow than taxable income in a particular year. To the extent that we generate such non-cash taxable income in ataxable year, we may incur corporate income tax and the 4% nondeductible excise tax on that income if we do notdistribute such income to stockholders in that year. In that event, we may be required to use cash reserves, incur debtor liquidate assets at rates or times that we regard as unfavorable or make a taxable distribution of our shares in order tosatisfy the REIT 90% distribution requirement and to avoid U.S. federal corporate income tax and the 4%nondeductible excise tax in that year. To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions. To qualify as a REIT, we generally must distribute to our stockholders at least 90% of the our net taxableincome each year, excluding net capital gains, and we will be subject to regular corporate income taxes to the extentthat we distribute less than 100% of our net taxable income each year. In addition, we will be subject to a 4%nondeductible excise tax on the amount, if any, by which distributions paid by us in any calendar year are less than - 16 - the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed incomefrom prior years. In order to qualify as a REIT and avoid the payment of income and excise taxes, we may need toborrow funds on a short-term basis, or possibly on a long-term basis, to meet the REIT distribution requirements evenif the then prevailing market conditions are not favorable for these borrowings. These borrowing needs could resultfrom, among other things, a difference in timing between the actual receipt of cash and inclusion of income for U.S.federal income tax purposes, the effect of non-deductible capital expenditures, the creation of reserves or required debtamortization payments. Even if we qualify as a REIT, we may be required to pay certain taxes. Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes onour income and assets, including taxes on any undistributed income, tax on income from some activities conducted asa result of a foreclosure and state or local income, franchise, property and transfer taxes, including mortgage recordingtaxes. In addition, we may hold some of our assets through taxable subsidiary corporations, including anytaxable REIT subsidiaries (“TRSs”). Any TRSs or other taxable corporations in which we own an interest will besubject to U.S. federal, state and local corporate taxes. Payment of these taxes generally would reduce our cash flowand the amount available to distribute to our stockholders. We may choose to pay dividends in our own stock, in which case you may be required to pay income taxes in excessof the cash dividends you receive. We may distribute taxable dividends that are payable in cash and shares of our common stock at the electionof each stockholder. Under IRS Revenue Procedure 2010-12, up to 90% of any such taxable dividend with respect tothe taxable years 2010 and 2011 could be payable in our stock. Taxable stockholders receiving such dividends willbe required to include the full amount of the dividend as ordinary income to the extent of our current or accumulatedearnings and profits for U.S. federal income tax purposes. As a result, U.S. stockholders may be required to pay incometaxes with respect to such dividends in excess of the cash dividends received. Accordingly, U.S. stockholdersreceiving a distribution of our shares may be required to sell shares received in such distribution or may be required tosell other stock or assets owned by them, at a time that may be disadvantageous, in order to satisfy any tax imposed onsuch distribution. If a U.S. stockholder sells the stock that it receives as a dividend in order to pay this tax, the salesproceeds may be less than the amount included in income with respect to the dividend, depending on the market priceof our stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required towithhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that ispayable in stock, by withholding or disposing of part of the shares in such distribution and using the proceeds of suchdisposition to satisfy the withholding tax imposed. In addition, if a significant number of our stockholders determineto sell shares of our common stock in order to pay taxes owed on dividends, such sale may put downward pressure onthe trading price of our common stock. Further, while Revenue Procedure 2010-12 applies only to taxable dividends payable by us in a combinationof cash and stock with respect to the taxable years 2010 and 2011, it is unclear whether and to what extent we will beable to pay taxable dividends in cash and stock in later years. Moreover, various tax aspects of such a taxablecash/stock dividend are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRSwill not impose additional requirements in the future with respect to taxable cash/stock dividends, including on aretroactive basis, or assert that the requirements for such taxable cash/stock dividends have not been met. Dividends payable by REITs generally do not qualify for the reduced tax rates on dividend income from regularcorporations, which could adversely affect the value of our shares or warrants. The maximum U.S. federal income tax rate for certain qualified dividends payable to domestic stockholdersthat are individuals, trusts and estates is 15% (through 2010). Dividends payable by REITs, however, are generallynot eligible for the reduced rates and therefore may be subject to a 35% maximum U.S. federal income tax rate onordinary income. Although the reduced U.S. federal income tax rate applicable to dividend income from regularcorporate dividends does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorablerates applicable to regular corporate dividends could cause investors who are individuals, trusts and estates to perceiveinvestments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that paydividends, which could adversely affect the value of the shares of REITs, including our shares. - 17 - We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our sharesof common stock or warrants. At any time, the U.S. federal income tax laws or regulations governing REITs or the administrativeinterpretations of those laws or regulations may be changed, possibly with retroactive effect. We cannot predict if orwhen any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to anyexisting U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated orbecome effective or whether any such law, regulation or interpretation may take effect retroactively. We and ourstockholders or warrantholders could be adversely affected by any such change in, or any new, U.S. federal income taxlaw, regulation or administrative interpretation. The failure of a mezzanine loan to qualify as a real estate asset would adversely affect our ability to qualify as aREIT. We may acquire mezzanine loans, which are loans secured by equity interests in a partnership or limitedliability company that directly or indirectly owns real property. In Revenue Procedure 2003-65, the IRS provided asafe harbor pursuant to which a mezzanine loan, if it meets each of the requirements contained in the RevenueProcedure, will be treated by the IRS as a real estate asset for purposes of the REIT asset tests, and interest derived fromthe mezzanine loan will be treated as qualifying mortgage interest for purposes of the REIT 75% gross incometest. Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rulesof substantive tax law. We may acquire mezzanine loans that do not meet all of the requirements for reliance on thissafe harbor. In the event we own a mezzanine loan that does not meet the safe harbor, the IRS could challenge suchloan's treatment as a real estate asset for purposes of the REIT asset and the interest generated by such a loan asqualifying income for purposes of the REIT income tests, and if such a challenge were sustained, we could fail toqualify as a REIT. There may be uncertainties relating to the estimate of our accumulated non-REIT tax earnings and profits,which could result in our failing to qualify as a REIT. In order to qualify as a REIT for our taxable year ending December 31, 2010, we will be required to distributeto our stockholders prior to the end of such calendar year all of our accumulated non-REIT tax earnings and profits, orE&P, incurred by us prior to such calendar year. Although we have not yet established any minimum distributionlevel in respect of 2010, we intend that the regular quarterly dividends we anticipate paying in respect of 2010 will bein sufficient amounts to enable us to satisfy this requirement, as well as our minimum REIT distribution requirementsin respect of out 2010 taxable income. However, our ability to pay distributions is subject to the discretion of ourboard of directors and the requirements of Delaware law and may be adversely affected by a number of factors,including the risk factors described in this Annual Report on Form 10-K. Further, the determination of the amount tobe distributed is a complex factual and legal determination. We may have less than complete information at the timewe undertake our analysis or may interpret the applicable law differently than the IRS. The IRS could alsosuccessfully assert that our pre-2010 taxable income should be increased, which would increase our E&P. Thus, wemight fail to satisfy the requirement that we distribute all of our E&P by the close of our first taxable year as aREIT. Although there are procedures available to cure a failure to distribute all of our E&P, we cannot now determinewhether we will be able to take advantage of these procedures (which could result in us failing to qualify as a REIT)nor can we estimate the economic impact that any such steps would cause us to incur. We could have potential deferred tax liabilities, which could delay or impede future sales of certain of ourproperties. Under the Treasury Regulations, if, during the ten-year period beginning on the first day of the first taxableyear for which we qualify as a REIT, which is expected to be January 1, 2010, we recognize gain on the disposition ofany property that we held as of that date, then, to the extent of the excess of (i) the fair market value of such property asof that date over (ii) our adjusted income tax basis in such property as of that date, we will be required to pay acorporate level U.S. federal income tax on this gain at the highest regular corporate tax rate. Depending on the timingof our investments and the amount of any appreciation of such investments prior to January 1, 2010, there can be noassurance that a disposition triggering such gain will not occur and, if applicable, these Treasury Regulations couldlimit, delay or impede sale of our property acquired prior to January 1, 2010. - 18 - We have not established a minimum distribution payment level and we cannot assure you of our ability to paydistributions in the future. We intend to pay quarterly distributions and to make distributions to our stockholders in an amount such thatwe distribute all or substantially all of our REIT taxable income in each year, subject to certain adjustments. We havenot established a minimum distribution payment level and our ability to pay distributions may be adversely affectedby a number of factors, including the risk factors described in this Annual Report on Form 10-K. All distributions willbe made, subject to Delaware law, at the discretion of our board of directors and will depend on our earnings, ourfinancial condition, any debt covenants, maintenance of our REIT qualification and other factors as our board ofdirectors may deem relevant from time to time. We believe that a change in any one of the following factors couldadversely affect our results of operations and impair our ability to pay distributions to our stockholders: · the profitability of the assets acquired; · our ability to make profitable acquisitions; · margin calls or other expenses that reduce our cash flow; · defaults in our asset portfolio or decreases in the value of our portfolio; and · the fact that anticipated operating expense levels may not prove accurate, as actual results mayvary from estimates. We cannot assure you that we will achieve results that will allow us to make a specified level of cashdistributions or year-to-year increases in cash distributions in the future. In addition, some of our distributions mayinclude a return in capital. Your ability to exercise your warrants may be limited by the ownership limits contained in the terms of the WarrantAgreement and our certificate of incorporation. Your ability to exercise your warrants may be limited by the ownership limits contained in the terms of theWarrant Agreement, dated as of October 17, 2009, as amended, between us and Continental Stock Transfer and TrustCompany (the "Warrant Agreement"), and our certificate of incorporation. In particular, to assist us in qualifying as aREIT, ownership of shares of our common stock by any person is limited under the certificate of incorporation, withcertain exceptions, to 9.8% by value or by number of shares, whichever is more restrictive, of our outstanding shares ofcommon stock and no more than 9.8% by value or by number of shares, whichever is more restrictive, of ouroutstanding capital stock. Moreover, the terms of the warrants limit a holder's ability to exercise warrants to ensurethat such holder's Beneficial Ownership or Constructive Ownership, each as defined in our certificate of incorporation,does not exceed the restrictions contained in our certificate of incorporation limiting the ownership of shares of ourcommon stock. In addition, our certificate of incorporation contains various other restrictions limiting the ownershipand transfer of our common stock. As a result, you may not be able to exercise your warrants if such exercise wouldcause you to own shares of our common stock in excess of these ownership limits. You will not be able to exercise your warrants if an effective registration statement is not in place when you desire todo so. No warrant will be exercisable and we will not be obligated to issue shares of common stock unless, at thetime a holder seeks to exercise such warrant, a prospectus relating to the common stock issuable upon exercise of thewarrant is current. Under the terms of the Warrant Agreement, we are required to use our best efforts to meet theseconditions and to maintain a current prospectus relating to the shares of common stock issuable upon exercise of thewarrants until the expiration of the warrants. However, there can be no assurance that we will be able to do so, and ifwe do not maintain a current prospectus related to the shares of common stock issuable upon exercise of the warrants,holders will be unable to exercise their warrants. Additionally, we will have no obligation to settle the warrants forcash or "net cash settle" any warrant exercise. Accordingly, if the prospectus relating to the common stock issuableupon the exercise of the warrants is not current, the warrants may have no value, the market for the warrants may belimited and the warrants may expire worthless. - 19 - Our warrants may be exercised in the future, which would increase the number of shares eligible for future resale inthe public market and dilute the ownership of our existing stockholders. Outstanding warrants to purchase an aggregate of 49,400,000 shares of our common stock are currentlyexercisable at an exercise price of $12.00 per share. The warrant exercise price may be lowered under certaincircumstances, including, among others, in our sole discretion at any time prior to the expiration date of the warrantsfor a period of not less than 20 business days; provided, however, that any such reduction shall be identical inpercentage terms among all of the warrants. These warrants likely will be exercised if the market price of the shares ofour common stock equals or exceeds the warrant exercise price. Therefore, as long as warrants remain outstanding,there will be a drag on any increase in the price of our common stock in excess of the warrant exercise price. To theextent such warrants are exercised, additional shares of our common stock will be issued, which would dilute theownership of our existing stockholders. Further, if these warrants are exercised at any time in the future at a pricelower than the book value per share of our common stock, existing stockholders could suffer substantial dilution oftheir investment, which dilution could increase in the event the warrant exercise price is lowered. Additionally, if wewere to lower the exercise price in the near future, the likelihood of this dilution could be accelerated. Item 1B.Unresolved Staff Comments None. Item 2.Properties We maintain our executive office at 3 Manhattanville Road, Purchase, New York 10577. The cost for thisspace is included in the $7,500 per month fee we have agreed to pay NRDC Real Estate Advisors, LLC under theTransitional Shared Facilities and Services Agreement, pursuant to which NRDC Real Estate Advisors, LLC providesus with access to, among other things, their information technology, office space, personnel and other resourcesnecessary to enable us to perform our business. As of December 31, 2009, we owned one property located inParamount, Los Angeles County, California. The following table provides information regarding our property.PropertyYearRenovatedYearCompletedYearAcquiredGrossLeasableSq. FeetAcres(1)NumberofTenants%LeasedPrincipal TenantLos Angeles,CA20091966200995,0006.311195%Fresh & Easy, Rite Aid andT.J. Maxx(1) Includes Land The following table sets forth a summary schedule of the annual lease expirations for leases in place atDecember 31, 2009. Year ofExpiration Number ofLeasesExpiring SquareFootage MinimumBase Rentals Base Rent% 2010 1 3,290 $64,473 3.7%2011 2012 4 7,905 171,702 9.7%2013 2014 1 11,750 141,000 8.0%Thereafter 5 66,907 1,386,192 78.6%Total 11 89,852 $1,763,367 100.0% Item 3.Legal Proceedings Upon consummation of the Framework Transactions, the shareholders no longer have rescission rights. Thereis no litigation currently pending or, to our knowledge, threatened against us or any of our officers or directors in theircapacity as such. Item 4.(Removed and Reserved) - 20 - PART II Item 5.Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases ofEquity Securities Market Information Our common stock trades on the NASDAQ Global Market ("NASDAQ") under the symbol "ROIC." Prior toNovember 3, 2009, our common stock traded on the NYSE Amex under the symbol "NAQ." The following table setsforth, for the period indicated, the high and low sales price for our common stock as reported by the NASDAQ and theNYSE Amex, as applicable, and the per share dividends declared: Period High Low DividendsDeclared 2008 First Quarter $9.40 $9.01 $— Second Quarter $9.47 $9.10 $— Third Quarter $9.46 $8.95 $— Fourth Quarter $9.34 $8.55 $— 2009 First Quarter $9.64 $9.15 $— Second Quarter $9.72 $9.52 $— Third Quarter $11.04 $9.68 $— Fourth Quarter $10.76 $10.01 $— On March 10, 2010, the closing price of our common stock as reported by the NASDAQ was $10.30. We have not paid any dividends on our common stock to date. We intend to make regular quarterlydistributions to holders of our common stock. U.S. federal income tax law generally requires that a REIT distributeannually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excludingnet capital gains, and that it pay U.S. federal income tax at regular corporate rates to the extent that it annuallydistributes less than 100% of its net taxable income. We intend to pay regular quarterly dividends to stockholders inan amount not less than our net taxable income, if and to the extent authorized by our board of directors. Before wepay any dividend, whether for U.S. federal income tax purposes or otherwise, we must first meet both our operatingrequirements and debt service on debt. If our cash available for distribution is less than its net taxable income, wecould be required to sell assets or borrow funds to make cash distributions or we may make a portion of the requireddistribution in the form of a taxable stock distribution or distribution of debt securities. As of December 31, 2009, 100% of the outstanding interests in our operating partnership were owned by us. Holders As of March 11, 2010, we had 10 registered holders. Such information was obtained through our registrar andtransfer agent. - 21 - Stockholder Return Performance The following graph compares the cumulative total return on our common stock with that of the Standard andPoor's 500 Stock Index ("S&P 500 Index") and the National Association of Real Estate Investment Trusts Equity Index("NAREIT Equity Index") from October 23, 2007 (the date that our common stock began to trade publicly) throughDecember 31, 2009. We believe that such comparison with the NAREIT Equity Index, as opposed to a comparisonwith Alternative Asset Management Acquisition Corp., as in the previous year, is more appropriate to reflect theactions we have taken to continue our business as a corporation that will elect to qualify as a REIT for U.S. federalincome tax purposes, commencing with our taxable year ending December 31, 2010. In addition, on August 5, 2009Alternative Asset Management Acquisition Corp. was delisted from the NYSE Amex. The stock price performancegraph assumes that an investor invested $100 in each of us and the indices, and the reinvestment of anydividends. The comparisons in the graph are provided in accordance with the SEC disclosure requirements and are notintended to forecast or be indicative of the future performance of our shares of common stock. Period Ending Index 10/30/07 12/31/07 12/31/08 12/31/09 Retail Opportunity InvestmentsCorp.. 100.00 100.44 100.22 110.51 S&P 500 100.00 96.67 60.90 77.02 FTSE NAREIT Equity REITs 100.00 87.33 54.38 69.60 Alternative Asset Management Acquisition Corp. 100.00 100.22 101.20 - - 22 - Except to the extent that we specifically incorporate this information by reference, the foregoing StockholderReturn Performance information shall not be deemed incorporated by reference by any general statementincorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act or under theExchange Act. This information shall not otherwise be deemed filed under such acts. Securities Authorized For Issuance Under Equity Compensation Plans During 2009, we adopted the 2009 Plan. (For a description of the 2009 Plan, see Note 7 to the consolidatedfinancial in this Annual Report on Form 10-K.) The following table presents certain information about our equity compensation plans as of December 31,2009: Plan Category Number of securitiesto be issued uponexercise ofoutstanding options,warrants and rights Weighted-averageexercise price ofoutstanding options,warrants and rights Number of securitiesremaining availablefor future issuanceunder equitycompensation plans(excluding securitiesreflected in the firstcolumn of this table) Equity compensation plans approved bystockholders 235,000 $10.25 3,480,000 Equity compensation plans not approved bystockholders - - - Total 235,000 $10.25 3,480,000 Unregistered Sales of Equity Securities and Use of Proceeds None of our securities sold by us within the past three years were not registered under the Securities Act. On October 23, 2007, we consummated a private placement of 8,000,000 warrants with NRDC CapitalManagement, LLC, an entity owned and controlled by certain of our executive officers and directors, and our initialpublic offering of 41,400,000 units, including 5,400,000 units pursuant to the underwriters' over-allotmentoption. We received net proceeds of approximately $384 million and also received $8 million of proceeds from theprivate placement sale of 8,000,000 insider warrants to NRDC Capital Management, LLC. Banc of America Securities,LLC served as the sole bookrunning manager for our initial public offering. The securities sold in the initial publicoffering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-144871). The SECdeclared the registration statement effective on October 17, 2007. Upon the closing of the initial public offering and private placement, $406.5 million including $14.5 millionof the underwriters' discounts and commissions was held in the Trust Account and invested in U.S. "governmentsecurities" within the meaning of Section 2(a)(16) of the 1940 Act having a maturity of 180 days or less or in moneymarket funds meeting certain conditions under Rule 2a-7 promulgated under the 1940 Act until the earlier of (i) theconsummation of our initial "business combination" and (ii) our liquidation. On October 20, 2009, we consummatedthe Framework Transactions, which constituted our initial business combination. Stockholders representing anaggregate of 5,325 shares of common stock that we issued in our initial public offering elected to exercise conversionrights, while holders representing an aggregate of 41,394,675 shares we issued in our initial public offering did notexercise conversion rights, resulting in such shares remaining outstanding upon completion of the FrameworkTransactions. As a result, we had approximately $405 million released to us (after payment of deferred underwritingfees) from the Trust Account established in connection with our initial public offering to invest in our target assets andto pay expenses arising out of the Framework Transactions. As of December 31, 2009, we have applied approximately $5.6 million of the net proceeds of the initialpublic offering and the private placement toward consummating a "business combination," including the FrameworkTransactions and paid approximately $18.1 million to acquire the Paramount Property. For more information see Item2, "Properties" in this Annual Report on Form 10-K. - 23 - No portion of the proceeds of the initial public offering was paid to directors, officers or holders of 10% ormore of any class of our equity securities or their affiliates. Item 6.Selected Financial Data The following selected financial and operating information should be read in conjunction with "Item 7,Management Discussion and Analysis of Financial Conditions and Results of Operations" and our financialstatements, including the notes, included elsewhere herein. Year EndedDecember 31,2009 Year EndedDecember 31,2008 Period fromJuly 10, 2007(inception) toDecember 31,2007 Statement of Income Data: Base rents $45,736 $— $— Operating expenses 11,385,270 1,566,294 672,187 Operating loss (11,339,534) (1,566,294) (672,187)Interest income 1,705,421 5,563,075 3,359,023 (Loss) Income before provision for income taxes (9,634,113) 3,996,781 2,686,836 (Benefit) Provision for Income taxes (268,343) 1,358,906 952,634 Net (loss) income for period $(9,365,770) $2,637,875 $1,734,202 Weighted average shares outstanding Basic and diluted: 49,734,703 51,750,000 27,198,837 (Loss) earnings per share Basic and diluted $(0.19) $0.05 $0.06 Balance Sheet Data: Net Real Estate investments, net $16,544,905 $— $— Investments held in trust $— $396,804,576 $395,323,737 Investments held in trust from underwriter $— $14,490,000 $14,490,000 Cash $383,217,881 $4,222 $198,570 Total assets $403,873,513 $412,387,958 $410,273,506 Total liabilities $5,678,738 $15,723,332 $16,266,860 Common stock subject to redemption $— $117,590,055 $117,590,055 Total stockholders' equity . $398,194,775 $279,074,571 $276,416,591 Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the Retail Opportunity InvestmentsCorp. Consolidated Financial Statements and Notes thereto appearing elsewhere in this Annual Report on Form 10-K. The company makes statements in this section that are forward-looking statements within the meaning of thefederal securities laws. For a complete discussion of forward-looking statements, see the section in this AnnualReport on Form 10-K entitled "Statements Regarding Forward-Looking Information." Certain risk factors may causeactual results, performance or achievements to differ materially from those expressed or implied by the followingdiscussion. For a discussion of such risk factors, see the section in this Annual Report on Form 10-K entitled "RiskFactors." Overview The company was formed on July 10, 2007 as a special purpose acquisition corporation for the purpose ofacquiring, through a merger, capital stock exchange, stock purchase, asset acquisition, or other similar businesscombination, one or more assets or control of one or more operating businesses. Through October 19, 2009, our efforts have been limited to organizational activities and activities relating toour initial public offering; we had neither engaged in any operations nor generated any revenues. On October 20, 2009, we completed the transactions contemplated by the Framework Agreement. We - 24 - intend to continue our business as a REIT that invests in, acquires, owns, leases, repositions and manages a diverseportfolio of necessity-based retail properties, including, primarily, well located community and neighborhoodshopping centers, anchored by national or regional supermarkets and drugstores. Although not our primary focus, wemay also acquire other retail properties, including power centers, regional malls, lifestyle centers and single-tenantretail locations, that are leased to national, regional and local tenants. We will target properties strategically situatedin densely populated, middle and upper income markets in the eastern and western regions of the United States. Inaddition, we may supplement our direct purchases of retail properties with first mortgages or second mortgages,mezzanine loans, bridge or other loans and debt investments related to retail properties, which are referred tocollectively as "real estate-related debt investments," in each case provided that the underlying real estate meets ourcriteria for direct investment. Our primary focus with respect to real estate-related debt investments is to capitalize onthe opportunity to acquire control positions that will enable it to obtain the asset should a default occur. Theproperties and investments we will target are referred herein as our target assets. On December 22, 2009, we acquired a property located in Paramount, California. The property is a 95,000square foot, recently renovated, shopping center with an overall occupancy rate of approximately 95.0%. Theproperty has three major anchor tenants, including Fresh & Easy Neighborhood Market (Tesco), Rite Aid and T.J.Maxx. The property, which complements our acquisition strategy, is located in a densely populated area, withapproximately 215,000 people living within a five-mile radius of the property. FORWARD-LOOKING STATEMENTS This Item 7 includes certain statements that may be deemed to be "forward-looking statements" within themeaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other thanstatements of historical facts, included in this Item 7 that address activities, events or developments that the Companyexpects, believes or anticipates will or may occur in the future, including such matters as future capital expenditures,dividends and acquisitions (including the amount and nature thereof), business strategies, expansion and growth ofthe Company's operations and other such matters are forward-looking statements. These statements are based oncertain assumptions and analyses made by the Company in light of its experience and its perception of historicaltrends, current conditions, expected future developments and other factors it believes are appropriate. Such statementsare subject to a number of assumptions, risks and uncertainties, including, among other things, general economic andbusiness conditions, the business opportunities that may be presented to and pursued by the Company, changes inlaws or regulations and other factors, many of which are beyond the control of the Company. Many of these risks arediscussed in Item 1A. Risk Factors. Any forward-looking statements are not guarantees of future performance andactual results or developments may differ materially from those anticipated in the forward-looking statements. Factors Impacting Our Operating Results Following consummation of the Framework Transactions, the results of our operations will be affected by anumber of factors and will primarily depend on, among other things, the following: · Our ability to identify and acquire retail real estate and real estate-related debt investments that meetour investment standards and the time period required for us to acquire our initial portfolio of ourtarget assets; · The level of rental revenue and net interest income we achieve from our target assets; · The market value of our assets and the supply of, and demand for, retail real estate and real estate-related debt investments in which we invest; · The length of the current economic downturn; · The conditions in the local markets in which we will operate, as well as changes in nationaleconomic and market conditions; · Consumer spending and confidence trends; - 25 - · Our ability to enter into new leases or to renew leases with existing tenants at the properties weacquire at favorable rates; · Our ability to anticipate changes in consumer buying practices and the space needs of tenants; · The competitive landscape impacting the properties we acquire and their tenants; · Our relationships with our tenants and their financial condition; · Our use of debt as part of our financing strategy and our ability to make payments or to comply withany covenants under any borrowings or other debt facilities we obtain; · The level of our operating expenses, including amounts we are required to pay to our managementteam and to engage third party property managers and loan servicers; and · Changes in interest rates that could impact the market price of our common stock and the cost of ourborrowings. Reporting on Operating Results We held the newly acquired property for ten days during 2009 with minimal operational income andexpenditures. As a result, we determined the reporting of Funds from Operations ("FFO") to not be useful to ourinvestors and other interested parties to evaluate our performance. We intend to provide a complete report for 2010consistent with the manner in which most public equity REITs report their operating results. We believe that FFO,which is a non-GAAP financial measure, will provide additional and useful means to assess our financialperformance. FFO is frequently used by securities analysts, investors and other interested parties to evaluate theperformance of REITs, most of which present FFO along with net income as calculated in accordance with GAAP. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and real estateinvestments, which assumes that the value of real estate assets diminishes ratably over time. Historically, however,real estate values have risen or fallen with market conditions, and many companies utilize different depreciable livesand methods. Because FFO excludes depreciation and amortization unique to real estate, gains and certain losses fromdepreciable property dispositions and extraordinary items, it provides a performance measure that, when comparedyear over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs,acquisition and development activities and interest costs. This will provide a perspective on our future financialperformance not immediately apparent from net income determined in accordance with GAAP. FFO is generally defined and calculated as net income, adjusted to exclude: (i) preferred share dividends, (ii)gains from disposition of depreciable real estate property, except for those sold through a company's merchantbuilding program, which are presented net of taxes, (iii) extraordinary items and (iv) certain non-cash items. Thesenon-cash items principally include real property depreciation, equity income from joint ventures and equity incomefrom minority equity investments and adding our proportionate share of FFO from any unconsolidated joint ventureswe establish in the future and any minority equity investments, determined on a consistent basis. Results of Operations The company's entire activity prior to the consummation of the Framework Transactions was limited toorganizational activities, activities relating to its initial public offering and, after the initial public offering, activitiesrelating to identifying and evaluating prospective acquisition targets. During that period, we neither engaged in anyoperations nor generated any revenues, other than interest income earned on the proceeds of the initial publicoffering. We had one property in our portfolio at December 31, 2009. The majority of our operating income is derived from interest earned from the Trust Account previouslyheld. General and administrative expenses consisted mainly of costs related to the framework, abandoned dealsincurred during the pursuit of a viable business plan, legal fees and payroll. We believe, because of the location of theproperty in a densely populated area, the nature of our investment provides for relatively stable revenue flows evenduring difficult economic times. We have a strong capital structure with no debt as of the year just ended. We - 26 - expect to continue to explore acquisition opportunities that might present themselves during this economic downturnconsistent with our business strategy.Results of Operations for the year ended December 31, 2009 compared to year ended December 31, 2008Net loss of $9.4 million and net income of $2.6 million reported for the years ended December 31, 2009and December 31, 2008 respectively, consisted primarily of interest income of $1.7 million and $5.6 millionrespectively. Interest income decreased for the year ended December 31, 2009 due to declining interest ratesbeginning in late 2008. We incurred general and administrative expenses of $11.3 million and $1.6 millionrespectively. General and administrative expenses increased for the year ended December 31, 2009 due to the activepursuit of an initial business combination and transaction costs associated with the Framework Transactions. Includedin general and administrative expenses are $5.6 million of costs related to the Framework Transactions, $1.3 million inpayroll and related expenses, $1.2 million in costs related to abandoned deals incurred during the pursuit of an initialbusiness combination, $1.2 million for general legal, advisory and accounting fees and $0.5 million in state incometaxes. Approximately $0.2 million of costs related to the acquisition of properties was incurred. Other expensesincluded the issuance of restricted stock to newly appointed board members and board fees totaling $0.6 million.Results of Operations for the year ended December 31, 2008 compared to the period from July 10, 2007(inception) to December 31, 2007For the year ended December 31, 2008 and the period from July 10, 2007 (inception) to December 31, 2007,the Company earned interest income of $5.6 million and $3.4 million respectively, and had general and administrativeexpenses of $1.6 million and $0.7 million respectively. The Company also had a provision for income taxes of $1.4million and $1 million, respectively, resulting in net income for the period of $2.6 million and $1.7 millionrespectively. The increase from the period from July 10, 2007 (inception) to December 31, 2007 was due to a full yearof operations in 2008.Critical Accounting Policies Critical accounting policies are those that are both important to the presentation of our financial conditionand results of operations and require management's most difficult, complex or subjective judgments. Set forth belowis a summary of the accounting policies that management believes are critical to the preparation of the consolidatedfinancial statements. This summary should be read in conjunction with the more complete discussion of ouraccounting policies included in Note 1 to our consolidated financial statements. Revenue Recognition We record base rents on a straight-line basis over the term of each lease. The excess of rents recognized overamounts contractually due pursuant to the underlying leases is included in tenant receivables on the accompanyingbalance sheets. Most leases contain provisions that require tenants to reimburse a pro-rata share of real estate taxesand certain common area expenses. Adjustments are also made throughout the year to tenant receivables and therelated cost recovery income based upon our best estimate of the final amounts to be billed and collected. Allocation for Doubtful Accounts The allowance for doubtful accounts is established based on a quarterly analysis of the risk of loss on specificaccounts. The analysis places particular emphasis on past-due accounts and considers information such as the natureand age of the receivables, the payment history of the tenants or other debtors, the financial condition of the tenantsand any guarantors and management's assessment of their ability to meet their lease obligations, the basis for anydisputes and the status of related negotiations, among other things. Management's estimates of the required allowanceis subject to revision as these factors change and is sensitive to the effects of economic and market conditions ontenants, particularly those at retail properties. Estimates are used to establish reimbursements from tenants forcommon area maintenance, real estate tax and insurance costs. We analyze the balance of our estimated accountsreceivable for real estate taxes, common area maintenance and insurance for each of its properties by - 27 - comparing actual recoveries versus actual expenses and any actual write-offs. Based on our analysis, we may recordan additional amount in our allowance for doubtful accounts related to these items. Real Estate Land, buildings, property improvements, furniture/fixtures and tenant improvements are recorded atcost. Expenditures for maintenance and repairs are charged to operations as incurred. Renovations and/orreplacements, which improve or extend the life of the asset, are capitalized and depreciated over their estimated usefullives. The amounts to be capitalized as a result of an acquisition and the periods over which the assets aredepreciated or amortized are determined based on estimates as to fair value and the allocation of various costs to theindividual assets. We allocate the cost of an acquisition based upon the estimated fair value of the net assetsacquired. We also estimate the fair value of intangibles related to its acquisitions. The valuation of the fair value ofintangibles involves estimates related to market conditions, probability of lease renewals and the current market valueof in-place leases. This market value is determined by considering factors such as the tenant's industry, locationwithin the property and competition in the specific region in which the property operates. Differences in the amountattributed to the intangible assets can be significant based upon the assumptions made in calculating these estimates. We are required to make subjective assessments as to the useful life of our properties for purposes ofdetermining the amount of depreciation. These assessments have a direct impact on our net income. Properties are depreciated using the straight-line method over the estimated useful lives of the assets. Theestimated useful lives are as follows: Buildings40 yearsProperty Improvements10-20 yearsFurniture/Fixtures3-10 yearsTenant ImprovementsShorter of lease term or their useful life Asset Impairment On a periodic basis, management assesses whether there are any indicators that the value of the real estateproperties may be impaired. A property value is considered impaired when management's estimate of current andprojected operating cash flows (undiscounted and without interest) of the property over its remaining useful life is lessthan the net carrying value of the property. Such cash flow projections consider factors such as expected futureoperating income, trends and prospects, as well as the effects of demand, competition and other factors. To the extentimpairment has occurred, the loss is measured as the excess of the net carrying amount of the property over the fairvalue of the asset. Changes in estimated future cash flows due to changes in our plans or market and economicconditions could result in recognition of impairment losses which could be substantial. Management does not believethat the value of its rental property is impaired at December 31, 2009. Income Taxes Deferred income taxes are provided for the differences between bases of assets and liabilities for financialreporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assetsto the amount expected to be realized Our 2009 financial results reflect provisions for current and deferred income taxes. We believe that we willoperate in a manner that will allow it to qualify for taxation as a REIT commencing with its taxable year endingDecember 31, 2010. As a result of our expected REIT qualification, we will not generally expect to pay U.S. federalcorporate level taxes. Many of the REIT requirements, however, are highly technical and complex. If we were to failto meet the REIT requirements, we would be subject to U.S. federal, state and local income taxes. REIT Qualification Requirements We are subject to a number of operational and organizational requirements to qualify and then maintainqualification as a REIT. If we do not qualify as a REIT, our income would become subject to U.S. federal, state and - 28 - local income taxes at regular corporate rates that would be substantial and we cannot re-elect to qualify as a REIT forfour taxable years following the year we failed to quality as a REIT. The resulting adverse effects on our results ofoperations, liquidity and amounts distributable to stockholders would be material. Liquidity and Capital Resources Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments torepay borrowings, fund and maintain our assets and operations, make distributions to our stockholders and othergeneral business needs. We will use significant cash to purchase our target assets, repay principal and interest on anyborrowings, make distributions to our stockholders and fund our operations. Our primary sources of cash generallyconsist of the funds released to us from the Trust Account upon consummation of the Framework Transactions, cashgenerated from our operating results and interest we receive on our portfolio of real estate-related debt investments. Asa result of the release to us upon consummation of the Framework Transactions of the funds from the Trust Account, asof December 31, 2009, we had $383.2 million available in unrestricted cash. While we generally intend to hold our target assets as long term investments, certain of our investments maybe sold in order to manage our interest rate risk and liquidity needs, meet other operating objectives and adapt tomarket conditions. The timing and impact of future sales of our investments, if any, cannot be predicted with anycertainty. Potential future sources of capital include proceeds from the sale of real estate or real estate-related debtinvestments, proceeds from secured or unsecured financings from banks or other lenders and undistributed funds fromoperations. In addition, we anticipate raising additional capital from future equity financings and if the value of ourcommon stock exceeds the exercise price of our warrants through the sale of common stock to the holders of ourwarrants from time to time. Cash FlowsThe Company expects to meet its short-term liquidity requirements primarily from the cash on hand ofapproximately $383.2 million. The Company believes the cash on hand will be sufficient to fund its short-termliquidity requirements for 2010 and to meet its dividend requirements necessary to qualify as a REIT. For the yearsended 2009, 2008 and 2007, net cash flow used in operations amounted to $6.2 million, $5.2 million and $0.2million, respectively. For the period, the Company derived substantially all of its revenues from interest earned fromthe Trust Account previously held. However, for 2010, the Company expects rents under existing leases to account forsubstantially all of its revenues.Net Cash Flows from:Operating ActivitiesNet cash flows used in operating activities amounted to $6.2 million in 2009, compared to $5.2 million in 2008 and$0.2 million in 2007. The changes in operating cash flows were primarily the result of:Increase in cash flows used in operating activities from 2008 to 2009:Increase in costs during 2009 associated with the pursuit of an initial business combination and transaction costassociated with our framework transactions.Increase in cash flows used in operating activities from 2007 to 2008:Increase in cash used from 2007 to 2008 was primarily due to the increase in net operating loss of $0.7 million in 2007to $1.6 million in 2008 resulting from the payment of $1.3 million of income taxes accrued at December 31, 2007 andthe increase in accrued interest on investments held in trust.Investing Activities - 29 - Net cash flows provided by investing activities were $393.6 million in fiscal 2009, $5.0 million in fiscal 2008. Netcash flows used in investing activities were $406.5 million in fiscal 2007. The changes in investing cash flows wereprimarily the result of:Increase in cash flows provided by investing activities from 2008 to 2009:During 2009, investments of approximately $411.6 million previously held as restricted in the Trust Account wasreleased and placed into U.S bank accounts and was available for investment activities. This increase was partiallyoffset by the acquisition of the property for cash of approximately $18.1 million in December 2009.Increase in cash flows provided by investing activities from 2007 to 2008:During 2007, our initial year, approximately $406.5 million of the cash raised in our initial public offering was placedin the Trust Account. Usage of the cash was restricted and limited to the capital calls to fund operations. Investmentactivities were restricted and limited only to approval of a business plan by the stockholders.Financing ActivitiesNet cash flows used in financing activities amounted to $4.3 million in 2009, $0.05 million in 2008. Net cash flowsprovided by financing activities in 2007 was $406.8 million in fiscal 2007. The changes in financing activities wereprimarily attributable to:Increase in cash flows used in financing activities from 2008 to 2009:During 2009, fees of $4.2 million were paid to underwriters relating to our initial public offering in 2007. These feeswere to be paid upon consummation of the Framework Transactions which occurred in 2009.Decrease in cash flows provided by financing activities from 2007 to 2008:During 2007, the initial year, approximately $406.8 million of net proceeds was raised during the initial publicoffering and $406.5 million was placed in the Trust Account. Included in the net proceeds were $414.0 million fromthe sale of units to the public net of the payment of $15.2 million of related expenses (excluding deferred underwriterfees of $14.5 million) and $8.0 million from warrants purchased by NRDC Capital Management, LLC in a privateplacement simultaneously with the consummation of our initial public offering.Contractual Obligations As of December 31, 2009, we did not have any long term debt, capital lease obligations, operating leaseobligations, purchase obligations or other long term liabilities. We entered into a Transitional Shared Facilities andServices Agreement with NRDC Real Estate Advisors, LLC, pursuant to which NRDC Real Estate Advisors, LLCprovides us with access to, among other things, their information technology, office space, personnel and otherresources necessary to enable us to perform our business, including access to NRDC Real Estate Advisors, LLC's realestate teams, who will work with us to source, structure, execute and manage properties for a transitional period. As ofDecember 31, 2009, we paid NRDC Real Estate Advisors, LLC a monthly fee of $7,500 pursuant to the TransitionalShared Facilities and Services Agreement. The Transitional Shared Facilities and Services Agreement has an initialone-year term, which will be renewable by us for an additional one-year term. Off-Balance Sheet Arrangements We have issued warrants in conjunction with our initial public offering and private placement, and have alsogranted incentive stock options. These options and warrants may be deemed to be equity linked derivatives and,accordingly, represent off balance sheet arrangements. See Note 3and 7 to the accompanying consolidated financialstatements. We account for these warrants as stockholders' equity and not as derivatives. Real Estate Taxes Our leases will generally require the tenants to be responsible for a pro rata portion of the real estate taxes. - 30 - Inflation Our leases at wholly-owned and consolidated partnership properties generally provide for either indexedescalators, based on the CPI or other measures or, to a lesser extent, fixed increases in base rents. The leases alsocontain provisions under which the tenants reimburse us for a portion of property operating expenses and real estatetaxes. The revenues collected from leases are generally structured as described above, with year over yearincreases. We believe that inflationary increases in expenses will be offset, in part, by the contractual rent increasesand tenant expense reimbursements described above. Leverage Policies During 2009, we did not incur any financing in connection with our operations or the acquisition of ourproperty. We purchased our properties for cash. In the future, we intend, when appropriate, to employ prudentamounts of leverage and use debt as a means of providing additional funds for the acquisition of our target assets andthe diversification of our portfolio. We intend to use traditional forms of financing, including mortgage financing andcredit facilities. In addition, in connection with the acquisition of properties, we may assume all or a portion of theexisting debt on such properties. In addition, we may acquire retail property indirectly through joint ventures withinstitutional investors as a means of increasing the funds available for the acquisition of properties. We may borrow on a non-recourse basis or at the corporate level or operating partnership level. Non-recourseindebtedness means the indebtedness of the borrower or its subsidiaries is secured only by specific assets withoutrecourse to other assets of the borrower or any of its subsidiaries. Even with non-recourse indebtedness, however, aborrower or its subsidiaries will likely be required to guarantee against certain breaches of representations andwarranties such as those relating to the absence of fraud, misappropriation, misapplication of funds, environmentalconditions and material misrepresentations. Because non-recourse financing generally restricts the lender's claim onthe assets of the borrower, the lender generally may only proceed against the asset securing the debt. This protects ourother assets. We plan to evaluate each investment opportunity and determine the appropriate leverage on a case-by-casebasis. We may seek to refinance indebtedness, such as when a decline in interest rates makes it beneficial to prepay anexisting mortgage, when an existing mortgage matures or if an attractive investment becomes available and theproceeds from the refinancing can be used to purchase the investment. In the future, we may also seek to raise furtherequity capital or issue debt securities in order to fund our future investments. Dividends We intend to make regular quarterly distributions to holders of our common stock. U.S. federal income taxlaw generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to thededuction for dividends paid and excluding net capital gains, and that it pay U.S. federal income tax at regularcorporate rates to the extent that it annually distributes less than 100% of its net taxable income. We intend to payregular quarterly dividends to our stockholders in an amount not less than our net taxable income, if and to the extentauthorized by our board of directors. Before we pay any dividend, whether for U.S. federal income tax purposes orotherwise, we must first meet both our operating requirements and debt service on debt. If our cash available fordistribution is less than our net taxable income, we could be required to sell assets or borrow funds to make cashdistributions or we may make a portion of the required distribution in the form of a taxable stock distribution ordistribution of debt securities. Recently Issued Accounting Standards See Note 1 to the accompanying consolidated financial statements. Item 7A. Quantitative and Qualitative Disclosure About Market Risk As of December 31, 2009, we had no debt outstanding and the Company has not engaged in any hedgingactivities since its inception on July 10, 2007. Prior to the consummation of the Framework Transactions, our effortshad been limited to organizational activities and activities relating to its initial public offering and the identificationof a target business; we had neither engaged in any operations nor generated any revenues. As the - 31 - proceeds from our initial public offering held in trust had been invested in short term investments, our only market riskexposure related to fluctuations in interest rates. As a corporation that will elect to qualify as a REIT for U.S. federal income tax purposes, commencing withits taxable year ending December 31, 2010, our future income, cash flows and fair values relevant to financialinstruments are dependent upon prevailing market interest rates. Market risk refers to the risk of loss from adversechanges in market prices and interest rates. We will be exposed to interest rate changes primarily as a result of long-term debt used to acquire properties and make real estate-related debt investments. Our interest rate risk managementobjectives will be to limit the impact of interest rate changes on earnings and cash flows and to lower overallborrowing costs. To achieve these objectives, we expect to borrow primarily at fixed rates or variable rates with thelowest margins available and, in some cases, with the ability to convert variable rates to fixed rates. With regard tovariable rate financing, we will assess interest rate cash flow risk by continually identifying and monitoring changes ininterest rate exposures that may adversely impact expected future cash flows and by evaluating hedgingopportunities. While we do not seek to avoid risk completely, the Company believes that risk can be quantified fromhistorical experience and seeks to actively manage that risk, to earn sufficient compensation to justify taking thoserisks and to maintain capital levels consistent with the risks it undertakes, while, at the same time, seeking to providean opportunity to stockholders to realize attractive risk-adjusted returns through ownership of our capital stock. Wemay use some derivative financial instruments to manage, or hedge, interest rate risks related to our borrowings. Wewill not use derivatives for trading or speculative purposes and will only enter into contracts with major financialinstitutions based on their credit rating and other factors. Item 8.Financial Statements and Supplementary Data The information required by Item 8 of Part II is incorporated by reference from the registrant's annual report to securityholders for the fiscal year ended December 31, 2009 commencing on page F-1 to this Annual Report on Form 10-K Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A.Controls and Procedures Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures that are designed to ensure that informationrequired to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the timeperiods specified in the SEC's rules and forms, and that such information is accumulated and communicated to itsmanagement, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule13a-15(e). In designing and evaluating the disclosure controls and procedures, management recognized that anycontrols and procedures, no matter how well designed and operated, can provide only reasonable assurance ofachieving the desired control objectives, and management necessarily was required to apply its judgment inevaluating the cost-benefit relationship of possible controls and procedures. Also, the Company has investments incertain unconsolidated entities. As the Company does not control these entities, the Company's disclosure controlsand procedures with respect to such entities are necessarily substantially more limited than those the Companymaintains with respect to its consolidated subsidiaries. As of the end of the period covered by this report, the Company carried out an evaluation, under thesupervision and with the participation of its management, including its Chief Executive Officer and its Chief FinancialOfficer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Basedupon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company'sdisclosure controls and procedures were effective as of the end of the period covered by this report. - 32 - Management's Report on Internal Control over Financial Reporting The Company is responsible for establishing and maintaining adequate internal control over financialreporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with theparticipation of our management, including the Chief Executive Officer and Chief Financial Officer, the Companyconducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2009based on the framework in Internal Control-Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission. Based on that evaluation, the Company concluded that its internalcontrol over financial reporting was effective as of December 31, 2009. Because of its inherent limitations, internal control over financial reporting may not prevent or detectmisstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls maybecome inadequate because of changes in conditions, or that the degree of compliance with the policies or proceduresmay deteriorate. The effectiveness of internal control over financial reporting as of December 31, 2009, has been audited byMcGladrey & Pullen, LLP, an independent registered public accounting firm, as stated in its report which is includedbelow. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting (as such term is defined in Exchange ActRule 13a-15(f)) that occurred during our most recent quarter that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting. Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders Retail Opportunity Investments Corp. We have audited Retail Opportunity Investments Corp.'s internal control over financial reporting as ofDecember 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission. Retail Opportunity Investments Corp.’smanagement is responsible for maintaining effective internal control over financial reporting and for its assessment ofthe effectiveness of internal control over financial reporting included in the accompanying Management’s Report onInternal Control Over Financial Reporting. Our responsibility is to express an opinion on the company's internalcontrol over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting OversightBoard (United States). Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether effective internal control over financial reporting was maintained in all material respects. Our auditincluded obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on theassessed risk. Our audit also included performing such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for our opinion. A company's internal control over financial reporting is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company's internal control over financial reportingincludes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (c) provide reasonable - 33 - assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company'sassets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk thatcontrols may become inadequate because of changes in conditions, or that the degree of compliance with the policiesor procedures may deteriorate. In our opinion, Retail Opportunity Investments Corp. maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2009, based on criteria established in Internal Control —Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), the balance sheets of Retail Opportunity Investments Corp. at December 31, 2009 and 2008, and therelated statements of income, stockholders' equity, and cash flows for the years ended December 31, 2009 and 2008and the period from July 10, 2007 (inception) to December 31, 2007, and our report dated March 11, 2010 expressedan unqualified opinion. /s/ McGladrey & Pullen, LLP McGLADREY & PULLEN, LLP New York, New York March 11, 2010 Item 9B.Other Information On October 20, 2009, we held special meetings of stockholders and warrantholders. At the special meeting ofstockholders, our stockholders approved (i) amendments to our certificate of incorporation to provide that theconsummation of substantially all of the Framework Transactions would also constitute a "business combination"under the certificate of incorporation, (ii) the Framework Transactions, (iii) amendments to our certificate ofincorporation to provide for our perpetual existence, (iv) amendments to our certificate of incorporation whicheliminate certain provisions applicable only to special purpose acquisition corporations, add various provisionsrelating to our intention to elect to qualify to be taxed as a REIT and revise certain other provisions in anticipation ofour existence as an operating company and (v) our 2009 Equity Incentive Plan (the "2009 Plan"). At the specialmeeting of warrantholders, our warrantholders approved amendments to our warrants to, among other things, increasethe exercise and call price and extend the term of the warrants. The following is a listing of the votes cast for, against or withheld, as well as the number of abstentions as toeach of the proposals presented at the special meeting of stockholders: (1) To approve an amendment to our certificate of incorporation to provide that the consummation ofsubstantially all of the transactions contemplated by the Framework Agreement would also constitute a"business combination" under Article Sixth of the certificate of incorporation even though theFramework Agreement does not contemplate an acquisition by us of one or more assets or control of oneor more operating businesses. For 44,217,976 Against 1,739,375 Abstain 273,000 (2) To approve the Framework Transactions and provide for our perpetual existence, consisting of thefollowing sub-proposals: · 2A — to approve the transactions contemplated by the Framework Agreement which, amongother things, sets forth the steps to be taken by us to continue our business as a corporation thatwill elect to qualify as a REIT for U.S. federal income tax purposes, commencing with ourtaxable year ending December 31, 2010. - 34 - All outstanding shares: For 44,182,126 Against 1,775,225 Abstain 273,000 Shares we issued in our initial public offering: For 33,877,126 Against 1,775,225 Abstain 273,000 · Marked the box to convert shares. For 5,325 · 2B — to approve an amendment to the certificate of incorporation to provide that our corporateexistence will be perpetual instead of terminating on October 23, 2009. All outstanding shares: For 44,227,551 Against 1,729,800 Abstain 273,000 Shares we issued in our initial public offering: For 33,922,551 Against 1,729,800 Abstain 273,000 (3) To approve amendments to the certificate of incorporation which (i) eliminate certain provisionsapplicable only to special purpose acquisition corporations, (ii) add various provisions relating toour intention to elect to qualify to be taxed as a REIT and (iii) revise certain other provisions inanticipation of our existence as an operating company, consisting of the following sub-proposals: · 3A — to eliminate the provisions only applicable to us as a special purpose acquisitioncorporation prior to the completion of a "business combination," as defined in the certificate ofincorporation after giving effect to Proposal 1. For 43,217,051 Against 1,740,300 Abstain 273,000 · 3B — to change our name from "NRDC Acquisition Corp." to "Retail Opportunity InvestmentsCorp." For 44,497,976 Against 1,739,375 Abstain 273,000 · 3C — to add provisions setting forth REIT related ownership limitations and transfer restrictionson our stock, which, among other things, (i) provide that no person may generally own, or bedeemed to own more than 9.8% by value or number of shares, whichever is more restrictive, ofshares of our common stock or 9.8% by value or number of shares, whichever is more restrictive,of shares of our capital stock, (ii) prohibit any person from beneficially or constructively owningshares of our stock that would result in it being "closely held" under Section 856(h) of the Code,or otherwise cause us to fail to qualify as a REIT and (iii) prohibit any person from transferringshares of our stock if such transfer would result in shares of our stock being beneficially ownedby fewer than 100 persons. For 44,188,626 Against 1,767,725 Abstain 274,000 · 3D — to allow our board of directors to exempt a person from the REIT related limits onownership of our stock unless the exemption would result in us being "closely held" within themeaning of Section 856(h) of the Code or otherwise would result in us failing to qualify as aREIT and to set forth requirements for the exemptions. - 35 - For 44,216,028 Against 1,740,323 Abstain 274,000 · 3E — to provide that if any purported transfer of shares of our stock or any other event wouldotherwise result in any person violating the REIT related ownership limits or in us being"closely held" under Section 856(h) of the Code or otherwise failing to qualify as a REIT, thenthat number of shares that would cause such person to violate such restrictions will beautomatically transferred to a trust and the intended transferee will not acquire rights in suchshares or we, at our option, may redeem such shares. For 44,215,051 Against 1,741,300 Abstain 274,000 · 3F — to increase the number of authorized shares of our capital stock from 106,005,000 to550,000,000. For 43,090,942 Against 2,866,409 Abstain 273,000 · 3G — to eliminate the classified status of our board of directors so that all directors will besubject to re-election at each annual meeting. For 44,791,277 Against 1,085,212 Abstain 353,862 (4) To adopt the 2009 Plan, effective upon completion of the Framework Transactions. For 40,890,784 Against 4,985,705 Abstain 353,862 (5) To adjourn the special meeting of stockholders to a later date or dates, if necessary, to permit furthersolicitation and vote of proxies if, at the time of the special meeting, it appeared we could notconsummate the Framework Transactions by October 23, 2009. For 44,055,180 Against 1,822,309 Abstain 353,862 (6) To amend our certificate of incorporation to extend the date our existence terminates from October 23,2009 to December 4, 2009 if it appeared that, at the time of the special meeting of stockholders, we couldnot complete the Framework Transactions. For 44,217,051 Against 1,740,300 Abstain 273,000 The following is a listing of the votes cast for, against or withheld, as well as the number of abstentions as toeach of the proposals presented at the special meeting of warrantholders: (1) To approve amendments to the Warrant Agreement, which governs the terms of our outstanding warrants,in connection with the consummation of the Framework Transactions, which, among other things, setsforth the steps to be taken by us to continue our business as a corporation that will elect to qualify as areal estate investment trust for U.S. federal income tax purposes, commencing with our taxable yearending December 31, 2010, consisting of the following sub-proposals: · 1A — to provide that the exercise price of our warrants would be increased to $12.00 per share. For 38,183,486 Against 31,900 Abstain 150,000 · 1B — to provide that the expiration date of the warrants would be extended from October 17,2011 to October 23, 2014. For 38,337,186 Against 28,200 Abstain 0 - 36 - · 1C — to provide that a warrantholder's ability to exercise warrants would be limited to ensurethat such holder's "Beneficial Ownership" or "Constructive Ownership," each as defined in thecertificate of incorporation, does not exceed the restrictions contained in the certificate ofincorporation limiting the ownership of shares of our common stock. For 38,194,186 Against 20,500 Abstain 150,700 · 1D — to provide that the price at which our common stock must trade before we are able toredeem the warrants we issued in our initial public offering would be increased from $14.25 to$18.75. For 38,341,186 Against 24,200 Abstain 0 · 1E — to provide that the price at which our common stock must trade before we are able toredeem the warrants we issued to NRDC Capital Management, LLC prior to our initial publicoffering would be increased from $14.25 to (x) $22.00, as long as they are held by NRDCCapital Management, LLC or its members, members of its members' immediate families or theircontrolled affiliates, or (y) $18.75. For 38,341,986 Against 23,400 Abstain 0 (2) To adjourn the special meeting of warrantholders to a later date or dates, if necessary, to permit furthersolicitation and vote of proxies if, at the time of the special meeting, we were not authorized toconsummate any of the foregoing proposals or it otherwise appeared that we could not consummate theFramework Transactions by October 23, 2009 For 38,325,186 Against 39,500 Abstain 0 Stockholders representing an aggregate of 5,325 shares of common stock that we issued in our initial publicoffering elected to exercise conversion rights, while holders representing an aggregate of 41,394,675 shares that weissued in our initial public offering did not exercise conversion rights, resulting in such shares remaining outstandingupon consummation of the Framework Transactions. As a result, we had approximately $405 million released to us(after payment of deferred underwriting fees) from the Trust Account to invest in our target assets and to pay expensesarising out of the Framework Transactions. The Framework Transactions were consummated on October 20, 2009. - 37 - PART III Item 10.Directors, Executive Officers, and Corporate Governance Information required by this Item is hereby incorporated by reference to the material appearing in the ProxyStatement for our 2010 Annual Meeting of Stockholders to be filed within 120 days after December 31, 2009. Item 11.Executive Compensation Information required by this Item is hereby incorporated by reference to the material appearing in the ProxyStatement for our 2010 Annual Meeting of Stockholders to be filed within 120 days after December 31, 2009. Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required by this Item is hereby incorporated by reference to the material appearing in the ProxyStatement for our 2010 Annual Meeting of Stockholders to be filed within 120 days after December 31, 2009. Item 13.Certain Relationships, Related Transactions, and Director Independence Information required by this Item is hereby incorporated by reference to the material appearing in the ProxyStatement for our 2010 Annual Meeting of Stockholders to be filed within 120 days after December 31, 2009. Item 14.Principal Accountant Fees and Services Information required by this Item is hereby incorporated by reference to the material appearing in the ProxyStatement for our 2010 Annual Meeting of Stockholders to be filed within 120 days after December 31, 2009. - 38 - PART IV Item 15.Exhibits and Financial Statement Schedules (a)(1) and (2) Financial Statements and Schedules Reference is made to the "Index to Consolidated Financial Statements and Financial Statement Schedules" onpage F-1 of this Annual Report on Form 10-K and the consolidated financial statements included herein, beginning onpage F-2. (a)(3) Exhibits 3.1Second Amended & Restated Certificate of Incorporation(1)3.2Second Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation(2)3.3Third Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation(2)3.4Fourth Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation(2)3.5Amended and Restated Bylaws(2)4.1Specimen Unit Certificate(2)4.2Specimen Common Stock Certificate(2)4.3Specimen Warrant Certificate(2)4.4Form of Warrant Agreement, between Continental Stock Transfer & Trust Company and NRDC AcquisitionCorp.(3)4.5Supplement and Amendment to Warrant Agreement, by and between NRDC Acquisition Corp. andContinental Stock Transfer & Trust Company, dated October 20, 2009(2)10.1Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and NRDC CapitalManagement, LLC(3)10.2Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and William L. Mack(4)10.3Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and Robert C. Baker(4)10.4Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and Richard A. Baker(4)10.5Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and Lee S. Neibart(3)10.6Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and Michael J. Indiveri(3)10.7Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and Edward H. Meyer(3)10.8Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and Laura Pomerantz(3)10.9Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and Vincent Tese(3) - 39 - 10.10Letter Agreement among NRDC Acquisition Corp., Banc of America Securities LLC and Ronald W. Tysoe(3)10.11Promissory Note issued by NRDC Acquisition Corp. to NRDC Capital Management, LLC(5)10.12Form of Registration Rights Agreement, between NRDC Acquisition Corp. and NRDC Capital Management,LLC(3)10.13Private Placement Warrant Purchase Agreement, between NRDC Acquisition Corp. and NRDC CapitalManagement, LLC(4)10.14Letter Agreement between NRDC Acquisition Corp. and Apollo Real Estate Advisors(4)10.15Framework Agreement, by and between NRDC Acquisition Corp. and NRDC Capital Management, LLC(6)10.16Letter Agreement between NRDC Acquisition Corp. and Banc of America Securities LLC(7)10.17Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand NRDC Capital Management, LLC(8)10.18Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand William L. Mack(8)10.19Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand Robert C. Baker(8)10.20Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand Richard A. Baker(8)10.21Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand Lee S. Neibart(8)10.22Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand Michael J. Indiveri(8)10.23Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand Edward H. Meyer(8)10.24Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand Laura Pomerantz(8)10.25Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand Vincent Tese(8)10.26Letter Agreement, dated August 10, 2009, among NRDC Acquisition Corp., Banc of America Securities LLCand Ronald W. Tysoe(8)10.27Letter Agreement between NRDC Acquisition Corp. and Ladenburg Thalmann & Co. Inc. (9)10.28Letter Agreement between NRDC Acquisition Corp. and Maxim Group LLC(10)10.29Letter Agreement between NRDC Acquisition Corp. and Gunnallen Financial, Inc. (11)10.30Amendment to Framework Agreement, by and between NRDC Acquisition Corp. and NRDC CapitalManagement, LLC(11)10.31Amendment to Placement Warrant Purchase Agreement, by and between NRDC Acquisition Corp. and NRDCCapital Management, LLC, dated as of October 20, 2009(2) - 40 - 10.32Transitional Shared Facilities and Services Agreement, by and between NRDC Acquisition Corp. and NRDCReal Estate Advisors, LLC, dated as of October 20, 2009(2)10.33Employment Agreement, by and between NRDC Acquisition Corp. and Stuart Tanz, dated as of October 20,2009(2)10.34Employment Agreement, by and between NRDC Acquisition Corp. and John Roche, dated as of October 20,2009(2)10.35Employment Agreement, by and between NRDC Acquisition Corp. and Richard A. Baker, dated as of October20, 2009(2)10.36Restricted Stock Award Agreement, by and between Retail Opportunity Investments Corp. and Stuart Tanz,dated as of October 20, 2009(2)10.37Restricted Stock Award Agreement, by and between Retail Opportunity Investments Corp. and John Roche,dated as of October 20, 2009(2)10.38Restricted Stock Award Agreement, by and between Retail Opportunity Investments Corp. and Richard A.Baker, dated as of October 20, 2009(2)10.39Option Award Agreement, by and between Retail Opportunity Investments Corp. and Stuart Tanz, dated as ofOctober 20, 2009(2)10.40Option Award Agreement, by and between Retail Opportunity Investments Corp. and John Roche, dated as ofOctober 20, 2009(2)10.41Option Award Agreement, by and between Retail Opportunity Investments Corp. and Richard A. Baker, datedas of October 20, 2009(2)10.42Corporate Opportunity Agreement, by and between NRDC Acquisition Corp. and Robert C. Baker, dated asof October 20, 2009(2)10.43Corporate Opportunity Agreement, by and between NRDC Acquisition Corp. and William L. Mack, dated asof October 20, 2009(2)10.44Termination of Co-Investment Agreement, by and between NRDC Acquisition Corp. and NRDC CapitalManagement, LLC, dated as of October 20, 2009(2)10.452009 Equity Incentive Plan(2)10.46Form of Restricted Stock Award Agreement under 2009 Equity Incentive Plan(2)10.47Form of Option Award Agreement under 2009 Equity Incentive Plan(2)10.48Agreement of Purchase and Sale and Joint Escrow Instructions, by and between Retail OpportunityInvestments Corp. and PPSC, LLC and 15717 Downey Ave LLC, dated as of November 25, 200910.49Purchase and Sale Agreement and Receipt for Earnest Money, between PBS Associates, LLC and RetailOpportunity Investments Corp., dated December 15, 200910.50Purchase and Sale Agreement and Receipt for Earnest Money, between Meridian valley Properties, LLC andRetail Opportunity Investments Corp., dated December 24, 200910.51Agreement of Purchase and Sale and Escrow Instructions, by and between Regency Centers, L.P. and RetailOpportunity Investments Corp., dated as of December 30, 2009 - 41 - 10.52Employment Agreement, by and between Retail Opportunity Investment Corp. and Richard K. Schoebel,dated as of December 9, 200910.53Restricted Stock Award Agreement, by and between Retail Opportunity Investments Corp. and Richard K.Schoebel, dated as of December 9, 200910.54Option Award Agreement, by and between Retail Opportunity Investments Corp. and Richard K. Schoebel,dated as of December 9, 200910.55Common Stock Award, by Retail Opportunity Investments Corp. to Melvin S. Adess, dated as of December11, 2009 and effective as of October 20, 200910.56Common Stock Award, by Retail Opportunity Investments Corp. to Charles J. Persico, dated as of December11, 2009 and effective as of October 20, 200914.1Code of Business Conduct and Ethics21.1List of Subsidiaries of Retail Opportunity Investments Corp.23.1Consent of McGladrey & Pullen, LLP31.1Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act31.2Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act32.1Certifications pursuant to Section 1350(1) Incorporated by reference to Retail Opportunity Investments Corp's registration statement on Form S-1/A filed onSeptember 7, 2007 (File No. 333-144871).(2) Incorporated by reference to Retail Opportunity Investments Corp.'s current report on Form 8-K filed on October26, 2009.(3) Incorporated by reference to Retail Opportunity Investments Corp.'s registration statement on Form S-1/A filed onSeptember 27, 2007 (File No. 333-144871).(4) Incorporated by reference to Retail Opportunity Investments Corp.'s registration statement on Form S-1/A filed onOctober 10, 2007 (File No. 333-144871).(5) Incorporated by reference to Retail Opportunity Investments Corp.'s registration statement on Form S-1 filed onJuly 26, 2007 (File No. 333-144871).(6) Incorporated by reference to Retail Opportunity Investments Corp.'s current report on Form 8-K filed on August10, 2009.(7) Incorporated by reference to Retail Opportunity Investments Corp.'s current report on Form 8-K filed on August12, 2009.(8) Incorporated by reference to Retail Opportunity Investments Corp.'s current report on Form 8-K filed on August14, 2009.(9) Incorporated by reference to Retail Opportunity Investments Corp.'s current report on Form 8-K filed on August21, 2009.(10) Incorporated by reference to Retail Opportunity Investments Corp.'s current report on Form 8-K filed on August31, 2009.(11) Incorporated by reference to Retail Opportunity Investments Corp.'s current report on Form 8-K filed onSeptember 16, 2009. - 42 - SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, theRegistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RETAIL OPPORTUNITY INVESTMENTS CORP.Registrant Date: March 11, 2010By: /s/ Stuart A. Tanz Stuart A. TanzPresident and Chief Executive Officer(Principal Executive Officer) Date: March 11, 2010By: /s/ John B. Roche John B. RocheSenior Vice President and Chief Financial Officer(Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signedbelow by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Date: March 11, 2010/s/ Richard A. Baker Richard A. BakerExecutive Chairman of the Board Date: March 11, 2010/s/ Stuart A. Tanz Stuart A. TanzPresident, Chief Executive Officer and Director Date: March 11, 2010/s/ Melvin S. Adess Melvin S. AdessDirector Date: March 11, 2010/s/ Robert C. Baker Robert C. BakerDirector Date: March 11, 2010/s/ Michael J. Indiveri Michael J. IndiveriDirector Date: March 11, 2010/s/ William L. Mack William L. MackDirector - 43 - Date: March 11, 2010/s/ Edward H. Meyer Edward H. MeyerDirector Date: March 11, 2010/s/ Lee S. Neibart Lee S. NeibartDirector Date: March 11, 2010/s/ Charles J. Persico Charles J. PersicoDirector Date: March 11, 2010/s/ Laura H. Pomerantz Laura H. PomerantzDirector Date: March 11, 2010/s/ Vincent S. Tese Vincent S. TeseDirector - 44 - Retail Opportunity Investments Corp.Index To Consolidated Financial Statements and Financial Statement Schedules Page Report of Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets at December 31, 2009 and 2008F-3 Consolidated Statements of Operations for year ended December 31, 2009 and December 31, 2008and the period from July 10, 2007 (inception) through December 31, 2007F-4 Consolidated Statements of Stockholders' Equity for the period from July 10, 2007 (inception)through December 31, 2009F-5 Consolidated Statements of Cash Flows for the year ended December 31, 2009 and December 31,2008 and the period from July 10, 2007 (inception) through December 31, 2007F-6 Notes to Consolidated Financial StatementsF-7 Financial Statement Schedules: Schedule III – Real Estate and Accumulated Depreciation – December 31, 2009F-20 All other schedules for which provision is made in the applicable accounting regulation of the Securities andExchange Commission are not required under the related instructions or are inapplicable and therefore have beenomitted. F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders Retail Opportunity Investments Corp. We have audited the accompanying consolidated balance sheets of Retail Opportunity Investments Corp. andSubsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of income, stockholders'equity, and cash flows for the years ended December 31, 2009 and 2008 and the period from July 10, 2007 (inception)to December 31, 2007. Our audits also included the financial statement schedules of Retail Opportunity InvestmentsCorp. listed in Item 15(a). These financial statements and financial statement schedules are the responsibility of theCompany's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, theconsolidated financial position of Retail Opportunity Investments Corp. and Subsidiaries as of December 31, 2009and 2008 and the results of their operations and their cash flows for the year ended December 31, 2009 and 2008 andthe period from July 10, 2007 (inception) to December 31, 2007, in conformity with U.S. generally acceptedaccounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation tothe basic consolidated financial statements taken as a whole, presents fairly in all material respects the information setforth therein. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates), Retail Opportunity Investments Corp. and Subsidiaries’ internal control over financial reporting as ofDecember 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission, and our report dated March 11, 2010 expressedan unqualified opinion on the effectiveness of Retail Opportunity Investments Corp.’s internal control over financialreporting./s/ McGladrey & Pullen, LLP McGLADREY & PULLEN, LLP New York, New York March 11, 2010 F-2 RETAIL OPPORTUNITY INVESTMENTS CORP. CONSOLIDATED BALANCE SHEETS December 31,2009 December 31,2008 ASSETS Real Estate Investments: Land $6,346,871 $— Building and improvements 10,218,422 — 16,565,293 — Less: accumulated depreciation 20,388 — Net Real Estate Investments, net 16,544,905 — Cash 383,217,881 4,222 Restricted cash 22,946 — Investments held in trust — 396,804,576 Investments held in trust from underwriter — 14,490,000 Acquired lease intangible asset, net of accumulated amortization of $7,510 1,820,151 — Income taxes receivable 1,236,375 366,153 Prepaid expenses 147,634 47,254 Deferred tax asset — 675,753 Deferred charges, net of accumulated amortization $2,147 870,769 — Other 12,852 — Total assets $403,873,513 $412,387,958 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Acquired lease intangibles liability, net of accumulated amortization of $4,683 $1,121,187 $— Accrued expenses 4,434,586 272,684 Due to related party 5,556 — Deferred interest payable — 960,648 Deferred underwriting fee — 14,490,000 Tenants' security deposits 22,946 — Other liabilities 94,463 — Total liabilities 5,678,738 15,723,332 Common Stock, subject to possible conversion of 12,419,999 shares — 117,590,055 Commitments and Contingencies Stockholders' equity: Preferred stock, $.0001 par value 50,000,000 Authorized shares; none issued andoutstanding — — Common stock, $.0001 par value 500,000,000 shares Authorized; 41,569,675 and51,750,000 shares respectively, issued and outstanding 4,156 5,175 Additional paid-in-capital 403,184,312 274,697,319 (Accumulated deficit) retained earnings (4,993,693) 4,372,077 Total stockholders' equity 398,194,775 279,074,571 Total liabilities and stockholders' equity $403,873,513 $412,387,958 The accompanying notes to consolidated financial statementsare an integral part of these statements F-3 RETAIL OPPORTUNITY INVESTMENTS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS For the yearendedDecember 31,2009 For the year endedDecember 31,2008 For theperiod fromJuly 10, 2007(inception) toDecember 31,2007 Revenues Base rents $45,736 $— $— Operating Expenses Property operating 9,149 — — General & Administrative Expenses 11,347,257 1,566,294 672,187 Depreciation and amortization 28,864 — — Total operating expenses 11,385,270 1,566,294 672,187 Operating loss (11,339,534) (1,566,294) (672,187)Interest income 1,705,421 5,563,075 3,359,023 (Loss) Income before Provision for Income Taxes (9,634,113) 3,996,781 2,686,836 (Benefit) Provision for Income Taxes (268,343) 1,358,906 952,634 Net (Loss) Income for period $(9,365,770) $2,637,875 $1,734,202 Weighted average shares outstanding Basic and diluted: 49,734,703 51,750,000 27,198,837 (Loss) earnings per share Basic and diluted: $(0.19) $0.05 $0.06 The accompanying notes to consolidated financial statementsare an integral part of these statements F-4 RETAIL OPPORTUNITY INVESTMENTS CORP. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock Shares Amount Additionalpaid-incapital Retainedearnings(accumulateddeficit) Stockholders'Equity Issuance of shares to Founders on July 13,2007 at approximately $.002 per share 10,350,000 $1,035 $23,965 $— $25,000 Sale of Private Placement Warrants — — 8,000,000 — 8,000,000 Sale of 41,400,000 units through publicoffering (net of underwriter's discountand offering expenses) including12,419,999 shares subject to possibleconversion 41,400,000 4,140 384,243,304 — 384,247,444 Proceeds subject to possible conversion — — (117,590,055) — (117,590,055)Net Income — — — 1,734,202 1,734,202 Balance at December 31, 2007 51,750,000 5,175 274,677,214 1,734,202 276,416,591 Adjustment to expenses incurred in initialpublic offering — — 20,105 — 20,105 Net Income — — — 2,637,875 2,637,875 Balance at December 31, 2008 51,750,000 5,175 274,697,319 4,372,077 279,074,571 Reduction of deferred underwriting fee — 10,267,778 — 10,267,778 Shares of 5,325 exercised duringconversion (5,325) (1) (52,172) (52,173)Shares of 12,414,674 unexercisedpreviously subject to possibleconversion — — 117,590,055 — 117,590,055 Cancellation of shares issued to Founderson July 13, 2007 (10,225,000) (1,023) 1,023 — Issuance of common shares to directors 50,000 5 512,495 — 512,500 Compensation expense related to restrictedstock grants — — 138,400 — 138,400 Compensation expense related to optionsgranted — — 29,414 — 29,414 Net Loss — — — (9,365,770) (9,365,770)Balance at December 31, 2009 41,569,675 $4,156 $403,184,312 $(4,993,693) $398,194,775 The accompanying notes to consolidated financial statementsare an integral part of these statements F-5 RETAIL OPPORTUNITY INVESTMENTS CORP. CONSOLIDATED STATEMENTS OF CASH FLOW For the yearendedDecember 31,2009 For the yearendedDecember 31,2008 For the periodfrom July 10,2007(inception)throughDecember 31,2007 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income $(9,365,770) $2,637,875 $1,734,202 Adjustments to reconcile net (loss) income to cash provided by operating activities: Depreciation and amortization 28,864 — — Amortization of above and below market rent (2,827) — — Amortization relating to stock based compensation 680,314 — — Net income earned in acquisition (29,641) — — Change in operating assets and liabilities Restricted cash (22,946) — — Prepaid expenses (100,380) 80,876 (128,130) Interest on investments held in trust (352,407) (6,522,954) (3,356,856) Income taxes receivable (870,222) (366,153) — Deferred tax asset 675,753 (542,684) (133,069) Accounts payable — (26,310) 26,310 Income taxes payable — (1,311,589) 1,311,589 Due to related party 5,556 — — Deferred interest payable (960,648) 960,648 — Accrued expenses 4,161,902 (97,277) 369,961 Other assets (13,528) — — Other liabilities 9,751 — — Net cash used in operating activities (6,156,229) (5,187,568) (175,993) CASH FLOWS FROM INVESTING ACTIVITIES Withdrawal of funds from investments placed in trust 411,646,984 5,042,115 — Investments placed in trust — — (406,456,881) Acquisition of real estate investments (18,002,923) — — Net cash provided by (used in) investment activities 393,644,061 5,042,115 (406,456,881) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the sale of units to public — — 414,000,000 Proceeds from private placement warrants — — 8,000,000 Proceeds from sale of units to Founders — — 25,000 Proceeds from notes payable to affiliates of Founders — — 200,000 Repayment of notes payable to affiliates of Founders — — (200,000) Payments for shares redeemed during conversion (52,173) — — Payments of offering costs (4,222,000) (48,895) (15,193,556) Net cash (used in) provided by financing activities (4,274,173) (48,895) 406,831,444 Net increase (decrease) in cash 383,213,659 (194,348) 198,570 Cash at Beginning of Period 4,222 198,570 — Cash at End of Period $383,217,881 $4,222 $198,570 Cash paid for Federal and New York state income taxes $— $4,345,144 $— Supplemental disclosure of non-cash financing activities: Accrual of offering costs $— $— $69,000 (Reduction) accrual of deferred underwriting fee $(10,267,778) $— $14,490,000 F-6 The accompanying notes to consolidated financial statements are an integral part of these statements. RETAIL OPPORTUNITY INVESTMENTS CORP.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2009 1.ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES Business Retail Opportunity Investments Corp. (the "Company"), formerly known as NRDC Acquisition Corp., wasincorporated in Delaware on July 10, 2007 for the purpose of acquiring through a merger, capital stock exchange,stock purchase, asset acquisition or other similar business combination with one or more assets or control of one ormore operating businesses ("Business Combination"). On August 7, 2009, the Company entered into the FrameworkAgreement (the "Framework Agreement") with NRDC Capital Management, LLC (the "Sponsor") which, among otherthings, sets forth the steps to be taken by the Company to continue the business as a corporation that will elect toqualify as a REIT for U.S. federal income tax purposes, commencing with its taxable year ending December 31,2010. On October 20, 2009, the Company's stockholders and warrantholders approved each of the proposals presentedat the special meetings of stockholders and warrantholders, respectively, in connection with the transactionscontemplated by the Framework Agreement (the "Framework Transactions"), including to provide that theconsummation of substantially all of the Framework Transactions also constitutes a Business Combination under theCompany's second amended and restated certificate of incorporation, as amended (the "certificate of incorporation"). All activity from the Company's inception through October 20, 2009 relates solely to the Company's formation, aprivate placement of its securities, the initial public offering ("Public Offering") of its securities and the Company'sefforts to identify a target business and transactions related to the Framework agreement. Following theconsummation of the Framework Transactions on October 20, 2009, the Company has been primarily focused oninvesting in, acquiring, owning, leasing, repositioning and managing a diverse portfolio of necessity-based retailproperties, including, primarily, well located community and neighborhood shopping centers, anchored by national orregional supermarkets and drugstores. Although not its primary focus, the Company may also acquire other retailproperties, including power centers, regional malls, lifestyle centers and single-tenant retail locations that are leased tonational, regional and local tenants. The Company is targeting properties strategically situated in densely populated,middle and upper income markets in the eastern and western regions of the United States. On December 22, 2009, the Company acquired a shopping center located in Paramount, Los Angeles County,California (the "Paramount Property"). The acquisition is consistent with the Company's business plan to acquireproperties in well located communities and densely populated areas. As a result of the acquisition, the Company hasdeemed its business to no longer be in the development stage at year ended December 31, 2009. As of December 31, 2009, the Company owned one property containing a total of 95,000 square feet of gross leasablearea ("GLA"). The Company is organized in a traditional umbrella partnership real estate investment trust ("UpREIT") formatpursuant to which Retail Opportunity Investments GP, LLC, its wholly-owned subsidiary, serves as the general partnerof, and the Company conducts substantially all of its business through, its operating partnership subsidiary, RetailOpportunity Investments Partnership, LP, a Delaware limited partnership (the "operating partnership"), and itssubsidiary. Principles of Consolidation and Use of Estimates The accompanying financial statements are prepared on the accrual basis in accordance with accounting principlesgenerally accepted in the United States ("GAAP"). The consolidated financial statements include the consolidated F-7 accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balanceshave been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates andassumptions that affect the disclosure of contingent assets and liabilities, the reported amounts of assets and liabilitiesat the date of the financial statements, and the reported amounts of revenue and expenses during the periods coveredby the financial statements. The most significant assumptions and estimates relate to the valuation of real estate,depreciable lives, valuation allowance on its deferred tax asset and the valuation of options and warrants. Actualresults could differ from these estimates. Income Taxes Deferred income taxes are provided for the differences between bases of assets and liabilities for financial reportingand income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to theamount expected to be realized Commencing with the Company's taxable year ending December 31, 2010, the Company intends to be treated as aREIT under Sections 856-860 of the Internal Revenue Code ("Code"). Under those sections, a REIT that, among otherthings, distributes at least 90% of real estate trust taxable income and meets certain other qualifications prescribed bythe Code will not be taxed on that portion of its taxable income that is distributed. The Company follows the Financial Accounting Standards Board's ("FASB") guidance that defines a recognitionthreshold and measurement attribute for the financial statement recognition and measurement of a tax position takenor expected to be taken in a tax return. The FASB also provides guidance on de-recognition, classification, interestand penalties, accounting in interim periods, disclosure, and transition. The Company records interest and penaltiesrelating to unrecognized tax benefits, if any, as interest expense. For the years ended December 31, 2009, 2008 and2007, the Company did not incur any interest and penalties related to income taxes. As of December 31, 2009, the taxyears 2007 through and including 2009 remain open to examination by the Internal Revenue Service and state taxingauthorities. There are currently no examinations in progress. Real Estate Investments All capitalizable costs related to the improvement or replacement of real estate properties are capitalized. Additions,renovations and improvements that enhance and/or extend the useful life of a property are alsocapitalized. Expenditures for ordinary maintenance, repairs and improvements that do not materially prolong thenormal useful life of an asset are charged to operations as incurred. Upon the acquisition of real estate properties, the fair value of the real estate purchased is allocated to the acquiredtangible assets (consisting of land, buildings and building improvements), and acquired intangible assets andliabilities (consisting of above-market and below-market leases and acquired in-place leases). Acquired leaseintangible assets include above market leases and acquired in-place leases in the accompanying consolidated balancesheet. The fair value of the tangible assets of an acquired property is determined by valuing the property as if it werevacant, which value is then allocated to land, buildings and improvements based on management's determination ofthe relative fair values of these assets. In valuing an acquired property's intangibles, factors considered bymanagement include an estimate of carrying costs during the expected lease-up periods, and estimates of lost rentalrevenue during the expected lease-up periods based on its evaluation of current market demand. Management alsoestimates costs to execute similar leases, including leasing commissions, tenant improvements, legal and other relatedcosts. The fair value of acquired assets is considered a level 3 input in accordance with the fair value measurementtopic in the FASB clarification. Leasing commissions, legal and other related costs ("lease origination") costs areclassified as deferred charges in the accompanying balance sheet. The value of in-place leases is measured by the excess of (i) the purchase price paid for a property after adjustingexisting in-place leases to market rental rates, over (ii) the estimated fair value of the property as if vacant. Above-market and below-market leases are recorded based on the present value (using a discount rate which reflects the risksassociated with the leases acquired) of the difference between the contractual amounts to be received andmanagement's estimate of market lease rates, measured over the non-cancelable terms of the respective leases. Thevalue of in-place leases are amortized to expense, and the above-market and below-market lease values are amortizedto rental income, over the remaining non-cancelable terms of the respective leases. If a lease were to be F-8 terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recognized inoperations at that time. Depreciation and Amortization The Company uses the straight-line method for depreciation and amortization. Buildings are depreciated over theestimated useful lives which the Company estimates to be 40 years. Property improvements are depreciated over theestimated useful lives that range from 10 to 20 years. Furniture and fixtures are depreciated over the estimated usefullives that range from 3 to 10 years. Tenant improvements are amortized over the shorter of the life of the related leasesor their useful life. Deferred Charges Deferred charges consist principally of leasing commissions and acquired lease origination costs (which are amortizedratably over the life of the tenant leases). Deferred charges in the accompanying consolidated balance sheets areshown at cost, net of accumulated amortization of $2,147 and $0 as of December 31, 2009 and 2008, respectively. Asset Impairment The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that thecarrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by acomparison of the carrying amount of the asset to aggregate future net cash flows (undiscounted and without interest)expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized ismeasured by the amount by which the carrying amounts of the assets exceed the fair value. Revenue Recognition Management has determined that all of the Company's leases with its various tenants are operating leases. Rentalincome is generally recognized based on the terms of leases entered into with tenants. In those instances in which theCompany funds tenant improvements and the improvements are deemed to be owned by the Company, revenuerecognition will commence when the improvements are substantially completed and possession or control of the spaceis turned over to the tenant. When the Company determines that the tenant allowances are lease incentives, theCompany commences revenue recognition when possession or control of the space is turned over to the tenant fortenant work to begin. Minimum rental income from leases with scheduled rent increases is recognized on a straight-line basis over the lease term. Percentage rent is recognized when a specific tenant's sales breakpoint isachieved. Property operating expense recoveries from tenants of common area maintenance, real estate taxes and otherrecoverable costs are recognized in the period the related expenses are incurred. Lease incentives are amortized as areduction of rental revenue over the respective tenant lease terms. Lease termination amounts received by theCompany from its tenants are recognized as income in the period received. Interest income is recognized as it isearned. Gains or losses on disposition of properties are recorded when the criteria for recognizing such gains or lossesunder generally accepted accounting principles have been met. The Company must make estimates as to the collectibility of its accounts receivable related to base rent, straight-linerent, expense reimbursements and other revenues. Management analyzes accounts receivable and the allowance forbad debts by considering historical bad debts, tenant creditworthiness, current economic trends, and changes intenants' payment patterns when evaluating the adequacy of the allowance for doubtful accounts receivable. Restricted Cash Restricted cash consists of tenant security deposits. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily ofcash. The Company places its cash in excess of insured amounts with high quality financial institutions. TheCompany has not experienced any losses in connection with these accounts through December 31, 2009. F-9 Earnings (Loss) Per Share Basic earnings (loss) per share ("EPS") excludes the impact of dilutive shares and is computed by dividing net income(loss) by the weighted average number of shares of common stock outstanding for the period. Diluted EPS reflects thepotential dilution that could occur if securities or other contracts to issue shares of common stock were exercised orconverted into shares of common stock and then shared in the earnings of the Company. Earnings per share are computed by dividing net income by the weighted-average number of shares of common stockoutstanding during the period. In 2008 and 2007, the effect of the 41,400,000 warrants to purchase the Company's common stock issued inconnection with the Public Offering and the 8,000,000 outstanding warrants purchased by the Sponsor simultaneouslywith the consummation of the Public Offering ("Private Placement Warrants") were not considered in diluted EPS sincesuch warrants were contingently exercisable. In 2009, the effect of the 41,400,000 warrants issued in connection with the Public Offering, the 8,000,000 PrivatePlacement Warrants, and the restricted stock and option grants were not included in the calculation of diluted EPSsince the effect would be anti-dilutive. Stock-Based Compensation The Company has a stock-based employee compensation plan, which is more fully described in Note 7. The Company accounts for its stock-based compensation plans based on the FASB guidance which requires thatcompensation expense be recognized based on the fair value of the stock awards less estimated forfeitures. It is theCompany's policy to grant options with an exercise price equal to the quoted closing market price of stock on thegrant date. Awards of stock options and restricted stock are expensed as compensation on a current basis over thebenefit period. Segment Reporting The Company operates in one industry segment which involves, investing in, acquiring, owning, and managingcommercial real estate in the United States. Accordingly, the Company believes it has a single reportable segment fordisclosure purposes. Accounting Standards Updates In July 2009, the FASB issued the Codification as the source of authoritative GAAP to be applied bynongovernmental entities including public companies, in the preparation of their financial statements in accordancewith GAAP. This guidance was effective for financial statements issued for interim and annual periods ending afterSeptember 15, 2009. Prior to the issuance of the Codification, all GAAP pronouncements were issued in separatetopical pronouncements and referred to as such. As a public company, the Company will still follow rules andinterpretive releases of the Securities and Exchange Commission ("SEC") under federal securities laws. The SEC rulesand regulations generally rank one level higher than GAAP for public companies in the preparation of their financialstatements. During the year ended December 31, 2009 the Company adopted the Codification. In May 2009, the FASB issued a new standard on subsequent events, which establishes general standards ofaccounting for and disclosure of events that occur after the balance sheet date but before the financial statements areissued or are available to be issued. It requires the Company to consider subsequent events through the date thefinancial statements were issued. The required disclosure is included in Note 14 to these consolidated financialstatements. The Company adopted the updated accounting guidance related to business combinations, which (i) establishes theacquisition-date fair value as the measurement objective for all assets acquired, liabilities assumed, and anycontingent consideration, (ii) requires expensing of most transaction costs that were previously capitalized, and(iii) requires the acquiror to disclose the information needed to evaluate and understand the nature and financial effectof the business combination to investors and other users. The principal impact of the adoption of this guidance F-10 on the Company's financial statements, is that the Company has expensed transaction costs relating to its acquisitionactivities ($0.2 million for the year ended December 31, 2009). The Company adopted the updated accounting guidance related to determining whether instruments granted in share-based payment transactions are participating securities, which states that unvested share-based payment awards thatcontain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securitiesand shall be included in the computation of earnings per share. The adoption of this guidance had no impact on theCompany's consolidated financial statements. The Company adopted the updated accounting guidance related to interim disclosures about fair value of financialinstruments (the prior guidance had required annual disclosures of the fair value of all instruments, recognized orunrecognized, except for those specifically excluded, when practical to do so). The updated guidance requires apublicly-traded company to include disclosures about the fair value of its financial instruments whenever it issuessummarized financial information for interim reporting periods. The updated guidance must be applied prospectivelyand does not require disclosures for earlier periods presented for comparative periods at initial adoption. The adoptionof this guidance did not have a material effect on the Company's consolidated financial statements. The Company adopted additional updated accounting guidance relating to fair value measurements and disclosures,which clarifies the guidance for fair value measurements when the volume and level of activity for the asset or liabilityhave significantly decreased, and includes guidance on identifying circumstances that indicate a transaction is notorderly. The adoption of this guidance did not have a material effect on the Company's consolidated financialstatements. In June 2009, the FASB issued new accounting guidance which requires additional information regarding transfers offinancial assets, including securitization transactions, and where companies have continuing exposure to the risksrelated to transferred financial assets. The guidance eliminates the concept of a “qualifying special-purpose entity,”changes the requirements for derecognizing financial assets, and requires additional disclosures. The guidance will beeffective for the Company on January 1, 2010. The Company is currently evaluating the impact that the guidance willhave on its financial condition and results of operations. In June 2009, the FASB issued new accounting guidance which modifies how a company determines when an entitythat is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. Theguidance clarifies that the determination of whether a company is required to consolidate an entity is based on, amongother things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that mostsignificantly impact the entity’s economic performance. The guidance requires an ongoing reassessment of whether acompany is the primary beneficiary of a variable interest entity. The guidance also requires additional disclosuresabout a company’s involvement in variable interest entities and any significant changes in risk exposure due to thatinvolvement. The guidance will be effective for the Company on January 1, 2010. The Company is currentlyevaluating the impact that the guidance will have on its financial condition and results of operations. The FASB issued an update that all entities that are required to make disclosures about recurring and nonrecurring fairvalue measurements under Fair Value Measurements. The guidance requires certain new disclosures and clarifies twoexisting disclosure requirements. The new disclosures and clarifications of existing disclosures are effective forinterim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases,sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosuresare effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company does not believe that any other recently issued, but not yet effective, accounting standards will have asignificant effect on its consolidated financial condition or results of operations. 2.REAL ESTATE INVESTMENTS In December 2009, the Company purchased the Paramount Property for $18.1 million in cash. The ParamountProperty is a 95,000 square foot, recently renovated, shopping center with an overall occupancy rate of approximately95%. The Paramount Property has three major anchor tenants, Fresh & Easy Neighborhood Market F-11 (Tesco), Rite Aid and T.J. Maxx. The acquisition of the property was funded from available cash. The results ofoperations of the Paramount Property are included in the accompanying consolidated statement of operations from thedate of acquisition through December 31, 2009. Pro forma information has not been included since this acquisition was not considered significant. Upon acquisitions of real estate, the Company assesses the fair value of acquired assets (including land, buildings andimprovements, and identified intangibles such as above and below market leases, acquired in-place leases). Theintangibles are amortized over the remaining non-cancelable terms of the respective leases. During 2009, theCompany completed its evaluation of the acquired assets at the Paramount Property. As a result of its evaluations, theCompany has allocated the purchase price as follows: Land $6,346,871 Building 9,884,334 Tenant improvements 334,088 Acquired lease intangible assets 1,827,661 Acquired lease intangible liabilities (1,125,870)Lease origination costs 872,916 Total $18,140,000 Future minimum rentals to be received under non-cancelable tenant leases at December 31, 2009 are approximately asfollow: Year ending December 31: 2010 $1,585,354 2011 1,535,542 2012 1,446,402 2013 1,370,424 2014 1,279,882 Thereafter 12,572,108 $19,789,712 The scheduled amortization of acquired lease intangible assets as of December 31, 2009 is as follows: Year ending December 31: 2010 $260,977 2011 210,850 2012 177,876 2013 159,123 2014 128,350 Thereafter 882,975 $1,820,151 The intangible assets are being amortized over a weighted average life of 12.2 years. The scheduled amortization of acquired lease intangible liabilities as of December 31, 2009 is as follows: Year ending December 31: 2010 $(174,236)2011 (174,236)2012 (151,187)2013 (146,252)2014 (62,293)Thereafter (412,983) $(1,121,187) F-12 The intangible liabilities are being amortized over a weighted average life of 10.1 years. 3.INITIAL PUBLIC OFFERING AND FRAMEWORK TRANSACTIONS On October 23, 2007, the Company sold 41,400,000 units ("Units") in the Public Offering at a price of $10 per Unit,including 5,400,000 Units sold by the underwriters in their exercise of the full amount of their over-allotmentoption. Each Unit consists of one share of the Company's common stock and one warrant. Simultaneously with the consummation of the Public Offering, the Sponsor purchased 8,000,000 Private PlacementWarrants at a purchase price of $1.00 per warrant. The proceeds of $8 million were placed in a trust account (the "TrustAccount"). The Private Placement Warrants were identical to the warrants sold in the Public Offering except that thePrivate Placement Warrants are exercisable on a cashless basis as long as they are still held by the Sponsor or itspermitted transferees. The purchase price of the Private Placement Warrants approximated the fair value of suchwarrants at the purchase date. The Company has the right to redeem all of the warrants it issued in the Public Offering or the Private PlacementWarrants, at a price of $0.01 per warrant upon 30 days' notice while the warrants are exercisable, only in the event thatthe last sale price of the common stock is at least a specified price, as described below. In accordance with the warrant agreement relating to the warrants sold and issued in the Public Offering and thePrivate Placement Warrants, the Company is only required to use its best efforts to maintain an effective registrationstatement covering the warrants. The Company will not be obligated to deliver shares securities, and there are nocontractual penalties for failure to deliver securities, if a registration statement is not effective at the time ofexercise. Consequently, the warrants may expire unexercised and unredeemed. Additionally, in no event (whether inthe case of a registration statement not being effective or otherwise) will the Company be required to net cash settlethe exercise of a warrant issued in the Public Offering. As a result of the Framework Transactions that were consummated on October 20, 2009, certain terms of the warrantswere amended as follows: · The exercise price of the warrants was increased to $12.00 from $7.50 per share. · The expiration date of the warrants was extended from October 17, 2011 to October 23, 2014. · The price at which the Company's common stock must trade before the Company is able to redeemthe warrants it issued in the Public Offering increased from $14.25 to $18.75. · The price at which the Company's common stock must trade before the Company is able to redeemthe Private Placement Warrants increased from $14.25 to (x) $22.00, as long as they are held bythe Sponsor or its members, members of its members' immediate families or their controlledaffiliates, or (y) $18.75. · To provide that a warrantholder's ability to exercise warrants is limited to ensure that such holder's"Beneficial Ownership" or "Constructive Ownership," each as defined in the Company's certificateof incorporation, does not exceed the restrictions contained in the certificate of incorporationlimiting the ownership of shares of the Company's common stock. Upon the closing of the Public Offering and the concurrent private placement, $406.5 million including $14.5 millionof the underwriters' deferred discounts and commissions described below were held in the Trust Account and investedin U.S. "government securities" within the meaning of Section 2(a)(16) of the Investment Company F-13 Act of 1940 having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 until the earlier of (i) the consummation of its BusinessCombination and (ii) liquidation of the Company. The placing of funds in the Trust Account may not protect thosefunds from third party claims against the Company. Upon consummation of the Framework Transactions, the fundswere released to the company from the Trust Account. In connection with the Public Offering, the Company paid Banc of America Securities LLC, Maxim Securities Inc.,Gunnallen Financial Inc. and Ladenburg Thalmann & Co. Inc., the underwriters of the Public Offering, an underwritingdiscount of 7.0% of the gross proceeds of the Public Offering, of which 3.5% of the gross proceeds ($14.5million) washeld in the Trust Account and payable only upon the consummation of a Business Combination. The underwriterswaived their right to receive such payment upon the Company's liquidation if the Company was unable to complete aBusiness Combination. In August 2009, the Company renegotiated with the underwriters of the Public Offering,reducing the fee to $4.2 million, which was paid prior to December 31, 2009. With respect to a Business Combination which was approved and consummated, any stockholder who purchasedsecurities offered in the Public Offering or in the secondary market (each a "public stockholder") who voted againstsuch Business Combination could demand that the Company convert his or her shares. The per share conversion priceequaled the amount on deposit in the Trust Account, calculated as of two business days prior to the consummation ofthe proposed Business Combination, divided by the number of shares of common stock held by public stockholders atthe consummation of the Public Offering. Accordingly, public stockholders holding 12,419,999 shares sold in thePublic Offering could seek conversion of their shares in the event of a Business Combination. Such publicstockholders were entitled to receive their per share interest in the Trust Account computed without regard to theshares of common stock held prior to the consummation of the Public Offering. Accordingly, a portion of the netproceeds from the Public Offering (29.99% of the amount placed in the Trust Account, including the deferred portionof the underwriters' discount and commission) was classified as common stock subject to possible conversion and aportion (29.99%) of the interest earned on the Trust Account, after deducting the amounts permitted to be utilized fortax obligations and working capital purposes, was recorded as deferred interest on the December 31, 2008 balancesheet. Pursuant to letter agreements, the Company's stockholders prior to the Public Offering waived their right toreceive distributions with respect to their founding shares upon the Company's liquidation. An aggregate of 10,230,325 shares of the Company's common stock were cancelled in connection with the completionof the Framework Transactions, consisting of the cancellation of 10,125,000 shares that were held by the Sponsor,100,000 shares that were held by five of the Company's independent directors, and 5,325 shares of public stockholderswho elected to exercise conversion rights with respect to the proposal to approve the Framework Transactions. Theconversion by the public stockholders resulted in a net payment of $52,173 and the remaining balance previouslyincluded in common stock subject to redemption was reclassed to additional paid-in capital and the balance in thedeferred interest payable was recognized as interest income. Under the terms of a registration rights agreement, the Sponsor has the right to make up to three demands that theCompany register 125,000 shares of common stock held by the Company's independent directors and the 8,000,000Private Placement Warrants and the shares for which they are exercisable. Under this agreement the Sponsor can electto exercise its registration rights at any time beginning on the date three months prior to the expiration of theapplicable transfer restrictions. Under this agreement, the restricted transfer period for the shares expires on the datethat is one year after the consummation of the Framework Transactions, which constituted the Company's initialBusiness Combination, and the restricted transfer period for the Private Placement Warrants and the shares for whichthey are exercisable expired on the consummation of the Company's initial Business Combination. The Company willbear the expenses incurred in connection with the filing of any registration statement. Pursuant to the registrationrights agreement, the Sponsor and the Company's executive officers and directors will waive any claims to monetarydamages for any failure by the Company to comply with the requirements of the registration rights agreement. 4.INVESTMENTS HELD IN TRUST At December 31, 2008, the Company had investments in treasury bills which it considered a trading security. Theinvestments were carried at market value, which approximated cost plus accrued interest. Upon the consummation F-14 of the Framework Transactions the funds held in trust were released to the Company and placed in U.S. bank accountswhich are reflected in Cash in the accompanying consolidated balance sheet. The following table reconciles the amount of net proceeds from the Public Offering and the concurrent privateplacement in the Trust Account to the balance at December 31, 2009: December 31, 2009 December 31, 2008 Contribution to trust $406,456,881 $406,456,881 Underwriters discounts and commissions (4,222,000) (14,490,000)Interest income received 10,232,218 9,879,810 Withdrawals to fund tax payments (4,670,144) (4,345,144)Withdrawal for working capital purposes (2,779,280) (696,971)Total investments held in trust 405,017,675 396,804,576 Less: Payment to dissenting stockholders (52,637) — Less: Transfer to cash accounts (404,965,038) — Total investments held in trust $— $396,804,576 5.PREFERRED STOCK The Company is authorized to issue 50,000,000 shares of preferred stock with such designations, voting and otherrights and preferences as may be determined from time to time by the Board of Directors. In connection with theconsummation of the Framework Transaction, on October 20, 2009, the Company's certificate of incorporation wasamended to increase the number of authorized shares of the Company's preferred stock from 5,000 to 50,000,000. 6.COMMON STOCK On September 4, 2007, the Company's Board of Directors authorized a 6 for 5 stock split with respect to alloutstanding shares of the Company's common stock. On October 17, 2007, the Company's Board of Directorsauthorized an additional 6 for 5 stock split with respect to all outstanding shares of the Company's common stock. Allreferences in the accompanying financial statements to the number of shares of stock have been retroactively restatedto reflect these transactions. On September 4, 2007, the Company's certificate of incorporation was amended to increase the authorized shares ofcommon stock from 70,000,000 to 106,000,000 shares of common stock. In connection with the consummation of theFramework Transactions, on October 20, 2009, the Company's certificate of incorporation was amended to increase thenumber of authorized shares of the Company's common stock from 106,000,000 to 500,000,000. The Company has reserved 53,400,000 shares for the exercise of warrants issued during the Public Offering and thePrivate Placement Warrants, and the issuance of shares under the Company's 2009 Equity Incentive Plan (the "2009Plan"). 7.STOCK COMPENSATION AND OTHER BENEFIT PLANS The Company follows the FASB guidance related to stock compensation which establishes financial accounting andreporting standards for stock-based employee compensation plans, including all arrangements by which employeesreceive shares of stock or other equity instruments of the employer, or the employer incurs liabilities to employees inamounts based on the price of the employer's stock. The guidance also defines a fair value-based method ofaccounting for an employee stock option or similar equity instrument During 2009, the Company adopted the 2009 Plan. The 2009 Plan provides for grants of restricted common stock andstock option awards up to an aggregate of 7.5% of the issued and outstanding shares of the Company's common stockat the time of the award, subject to a ceiling of 4,000,000 shares. Restricted Stock During the year ended December 31, 2009, the Company awarded a total of 235,000 shares of restricted stock from the2009 Plan. As of December 31, 2009 there remained a total of $2.3 million of unrecognized restricted stockcompensation related to outstanding nonvested restricted stock grants awarded under the plan. Restricted stock F-15 compensation is expected to be expensed over a remaining weighted average period of 3 years. For the year endedDecember 31, 2009, amounts charged to compensation expense totaled $138,400. Nothing was incurred in prioryears. A summary of the status of the Company's nonvested restricted stock awards as of December 31, 2009, and changesduring the year ended December 31, 2009 are presented below: Shares WeightedAverageGrant DateFair Value Nonvested at December 31, 2008 — — Granted 235,000 $10.27 Vested — — Forfeited — — Nonvested at December 31, 2009 235,000 $10.27 Stock Options During the year ended December 31, 2009, the Company awarded a total of 235,000 options to purchase shares underthe 2009 Plan. The shares vest over an average period of 3.5 years. The Company has used the Monte Carlo methodfor purposes of estimating the fair value in determining compensation expense for options granted for the year endedDecember 31, 2009. The assumption for expected volatility has a significant effect on the grant fair value. Volatilityis determined based on the historical volatilities of REITs similar to the Company. The Company used the simplifiedmethod to determine the expected life which is calculated as an average of the vesting period and the contractualterm. The fair value for the options issued by the Company was estimated at the date of the grant using the followingweighted-average assumptions: Year endedDecember 31, 2009 Weighted-average volatility at a range of 34% to 39% 35.0%Expected dividends at a range of 7.3% to 7.5% 7.3%Expected life (in years) at a range of 6.0 to 6.5 6.1 Risk-free interest rate 2.6% A summary of option activity as of December 31, 2009, and changes during the year then ended is presented below: Shares WeightedAverageExercise Price WeightedRemainingContractual Term WeightedAverageFair Value Outstanding at December 31, 2008 — — — Granted 235,000 $10.25 10 $2.18 Exercised — — — Expired — — — Outstanding at December 31, 2009 235,000 $10.25 10 $2.18 Exercisable at December 31, 2009 — — — — The fair value of the stock options at the date of grant was $0.5 million. For the year ended December 31, 2009,amounts charged to compensation expense totaled $29,414. Nothing was incurred in prior years. The total unearnedcompensation at December 31, 2009 was $0.5 million. There were no options granted during the year endedDecember 31, 2008 and 2007. F-16 8.INCOME TAXES The components of the provision for income taxes are as follows: For the year endedDecember 31,2009 For the year endedDecember 31,2008 For the period fromJuly 10, 2007(inception) toDecember 31,2007 Current: Federal $(944,096) $1,901,590 $1,026,445 State — — 59,258 Deferred: Federal 675,753 (542,684) (133,069)State — — — Total provision for income taxes $(268,343) $1,358,906 $952,634 The components of the deferred tax asset are as follows: December 31,2009 December 31,2008 Assets deferred for income tax purposes $1,120,109 $407,664 Deferred interest income — 381,377 Valuation allowance (1,120,109) (113,288)Deferred tax asset — $675,753 For the year ended December 31, 2008, the Company recorded a valuation allowance against the state deferred taxasset since it cannot determine realizability for tax purposes and therefore cannot conclude that the deferred tax assetis more likely than not recoverable at this time. However, at December 31, 2009, the Company recorded a fullvaluation allowance against the deferred tax asset as a result of the impending REIT status in 2010. The Company's effective tax rate differs from the effective tax rate of 34.0% for the year ended December 31, 2008principally due to the following: For the year endedDecember 31,2009 For the year endedDecember 31,2008 For the period fromJuly 10, 2007(inception) toDecember 31,2007 Federal statutory rate 34.0% 34.0% 34.0%Permanent differences -19.8% — — State taxes -1.0% -2.3% 0.6%Valuation allowance -10.5% 2.3% 0.8%Effective tax rate 2.7% 34.0% 35.4% 9.FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying values of cash, restricted cash, income tax receivable, prepaid expenses, other assets, accrued expenses,other liabilities are reasonable estimates of their fair values because of the short-term nature of these instruments. 10.ACCRUED EXPENSES Accrued expenses consist of the following: December 31, 2009 December 31, 2008 Framework Transactions costs $2,440,060 $— Payroll and related costs 521,598 — Professional fees 896,928 60,012 Other 576,000 212,672 $4,434,586 $272,684 11.COMMITMENTS AND CONTINGENCIES In the normal course of business, from time to time, the Company is involved in legal actions relating to the ownershipand operations of its properties. In management's opinion, the liabilities, if any, that ultimately may F-17 result from such legal actions are not expected to have a material adverse effect on the consolidated financial position,results of operations or liquidity of the Company. In September 2009, the Company entered into an agreement with CSCA Capital Advisors LLC. The agreement statesthat after consummation of the Framework Transactions the Company is liable to pay an Asset Transaction Fee ("AssetTransaction Fee"). The Asset Transaction Fee is equal to 0.65% of total purchase price paid by the Company for realestate assets or related debt or equity investments including all cash, notes, contingent payments, securities and otherproperty paid together with the assumption of indebtedness. The Company's obligation to pay the Asset TransactionFee will end at such at time as the cumulative transaction value of properties acquired and/or investments madeexceeds the amount of the Trust Account proceeds. For the year ended December 31, 2009, the Company has incurred$2.4 million of expenses relating to this agreement which is included in general and administrative expenses in theaccompanying consolidated statements of operations. 12.RELATED PARTY TRANSACTIONS Prior to the consummation of the Framework Transactions, the Company has paid up to $7,500 a month in total foroffice space and general and administrative services to the Sponsor. In connection with the consummation of theFramework Transactions, on October 20, 2009, the Company entered into a Transitional Shared Facilities and ServicesAgreement with NRDC Real Estate Advisors, LLC, an entity wholly owned by four of the Company's directors, whichreplaced the original agreement with the Sponsor. Pursuant to the Shared Facilities and Services Agreement, NRDCReal Estate Advisors, LLC provides the Company with access to, among other things, their information technology,office space, personnel and other resources necessary to enable the Company to perform its business, including accessto NRDC Real Estate Advisors, LLC's real estate teams, who will work with the Company to source, structure, executeand manage properties for a transitional period. As of December 31, 2009, the Company paid NRDC Real EstateAdvisors, LLC a monthly fee of $7,500 pursuant to the Transitional Shared Facilities and Services Agreement. For theyears ended December 31, 2009, 2008, and 2007 the Company has incurred $62,661, $90,000, and 16,451,respectively, of expenses relating to this agreement which is included in general and administrative expenses in theaccompanying consolidated statements of operations. The related party payable at December 31, 2009 was related to expenses paid by Hudson Bay Trading Company, anaffiliate of the Sponsor, on the Company's behalf. 13.QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The unaudited quarterly results of operations for the years ended December 31, 2009 and 2008 are as follows (Inthousands, except per share data): Year Ended December 31, 2009 Year Ended December 31, 2008 Quarter Ended Quarter Ended 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 Base rents $— $— $— $46 $— $— $— $— Interest Income $74 $83 $64 $1,484 $2,277 $888 $1,507 $891 Net Income (Loss) (220) (739) (2,337) (6,070) 1,089 465 833 250 Basic and diluted (loss) incomeper share $(0.00) $(0.01) $(0.05) $(0.14) $0.02 $0.01 $0.02 $— The fourth quarter 2009 results reflects the consummation of the Framework Transactions on October 20, 2009 and thepurchase of the Paramount Property. 14.SUBSEQUENT EVENTS In determining subsequent events, the Company reviewed all activity from January 1, 2010 to the date the financialstatements are issued and discloses the following items: On January 26, 2010, the Company acquired a shopping center located in Santa Ana, California (the "Santa AnaProperty"), for a purchase price of approximately $17.3 million. The Santa Ana Property is a shopping center of F-18 approximately 100,306 square feet. The Santa Ana Property has two major anchor tenants, including Food 4 Less andFAMSA Furniture Store. The acquisition of the property was funded from available cash. On February 1, 2010, the Company acquired a shopping center located in Kent, Washington (the "Meridian ValleyProperty"), for an aggregate purchase price of approximately $7.1 million. The Meridian Valley Property is a fullyleased shopping center of approximately 51,566 square feet, anchored by a QFC (Kroger) Grocery store. Theacquisition of the property was funded from available cash. On February 2, 2010, The Company purchased a 99.7% interest in Phillips Ranch Shopping Center, (the "PhillipsRanch Property") a neighborhood center located in Pomona, California for an aggregate purchase price ofapproximately $7.4 million. A portion of the proceeds were used to extinguish an existing $18.5 million deed of truston the Phillips Ranch Property The Phillips Ranch Property is a 125,554 square foot neighborhood center. Theacquisition of the property was funded from available cash. On December 15, 2009, the Company entered into a purchase and sale agreement with PBS Associates, LLC (the"Seller") to acquire a property known as the Aurora Shopping Center, located in Seattle, Washington. The estimatedtotal purchase price was to be $23 million which included the Company assuming $2.5 million of the Sellersobligation on an existing loan. In accordance with the terms of this agreement, $0.5 million was deposited into aninterest-bearing escrow account with the Title Company on January 4, 2010. On January 20, 2010, there was anamendment to the agreement dated December 15, 2009 to reduce the total purchase price to $22.9 million. On March 11, 2010, the Company completed the acquisition of a shopping center located in Lake Stevens, SnohomishCounty, Washington (the "Lake Stevens Property"), for an aggregate purchase price of approximately $16.2million. The Lake Stevens Property is a shopping center of approximately 74,130 square feet, is 100% occupied andanchored by Haggen Food & Pharmacy. The acquisition of the property was funded from available cash. The Company has not yet determined the purchase price allocations for the above property acquisitions. F-19 RETAIL OPPORTUNITY INVESTMENTS CORP. SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2009 (in thousands) Initial Coststo Company Cost CapitalizedSubsequentto Acquisition Amount atWhich Carriedat Close of Period Description andLocation Encumbrances Land Buildings &Improvements Land Buildings &Improvements Land Building &Improvements Total AccumulatedDepreciation(1) Date ofAcquisitionParamount PlazaParamount, CA $— $6,347 $10,218 $— $— $6,347 $10,218 $16,565 $20 12/22/2009 (1)Depreciation and investments in buildings and improvements reflected in the consolidated statements ofoperations is calculated over the estimated useful life of the assets as follows: Buildings: 40 yearsProperty Improvements: 10-20 yearsTenant Improvements: Shorter of lease term or their useful lifeThe changes in real estate and accumulated depreciation for the three years ended December 31, 2009, 2008and 2007 are as follows: 2009 2008 2007 Cost Balance, beginning of year $— $— $— Properties acquired 16,565 — — Improvements andbetterments — — — Write off of fully-depreciatedassets — — — Balance, end of year $16,565 $— $— Accumulated Depreciation Balance, beginning of year $— $— $— Depreciation expenses 20 — — Write off of fully-depreciatedassets — — — Balance, end of year $20 $— $— Net book value $16,545 $— $— F-20RMRG AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS ("Agreement") ismade and entered into as of the date last written below the signatures of the parties hereto ("Effective Date"), by andbetween Retail Opportunity Investments Corp and/or assignee ("Buyer") and PPSC, LLC and 15717 Downey AveLLC ("Seller"), collectively, the "Parties" and individually, a "Party". Buyer shall deposit the sum of Two HundredFifty Thousand Dollars ($250,000) ("Earnest Money Deposit") with Escrow Holder within three (3) calendar daysfollowing the signing of the Purchase and Sale Agreement ("Agreement"). This sum is a deposit (including anyincreases pursuant to Paragraphs 3 (Prorations) collectively referred to as the "Deposit") to be applied to the purchaseprice of the approximately 95,072_square foot shopping center, whose legal description will be made a part as"Exhibit A" hereafter referred to as (the "Property"), located in the City of Paramount, County of Los Angeles, Stateof California, and more particularly described as follows: ADDRESS: NWC Downey Avenue & Alondra Boulevard, Paramount, California APN: 6270-020-040, 6270-020-041, 6270-020-042, 6270-020-043, 6270-020-044, 6270-020-045, 6270-020- 046. 6270-020-046, 6270-020-047, 6270-020-048, 6270-020-049 TERMS AND CONDITIONS Seller agrees to sell the Property, and Buyer agrees to purchase the Property, on the following terms and conditions: 1) PURCHASE PRICE: The purchase price for the Property is Eighteen Million One Hundred Forty ThousandDollars ($18,140,000) (the "Purchase Price"). The balance of the Purchase Price shall be payable inimmediately available funds at close of escrow pursuant to the terms stated below. 2) ESCROW: Upon signing of the Agreement, Seller and Buyer shall open escrow ("Opening of Escrow")withLawyers Title, 4100 Newport Place Drive, Suite #120, Newport Beach, CA 92660, attention: Joy Eatontelephone (949) 724-3145 facsimile (949) 271-5762 ("Escrow Holder") by the deposit of a copy of thisPurchase Agreement ("Agreement") with the Escrow Holder. Seller and Buyer agree to prepare and executesuch escrow instructions as may be necessary and appropriate to close the transaction based on all terms andconditions of this Agreement. Should said instructions fail to be executed as required, Escrow Holder shall andis hereby directed to cancel escrow pursuant to the terms and conditions of this Agreement. Close of escrow (orthe "Closing Date"), which shall mean the date on which the deed transferring title is recorded in the office ofthe County Recorder of Los Angeles shall occur on or before seven (7) days from the expiration of the "DueDiligence Period" or December 22, 2009 whichever comes first. Escrow fees shall be shared equally by Buyerand Seller. Unless otherwise set forth herein, all other closing costs shall be paid in accordance with the customin the county in which the Property is located. Contemporaneous with Buyer's execution and delivery of thisAgreement, Buyer has delivered to Seller and Seller hereby acknowledges the receipt of One Hundred Dollars($100.00) ("Independent Contract Consideration"), which amount the parties bargained for and agreed asconsideration for Buyer's exclusive right to inspect and purchase the Property pursuant to this Agreement andfor Seller's execution, delivery and performance of this Agreement. The Independent Contract Consideration isin addition to and independent of any other consideration or payment provided in this Agreement, isnonrefundable, and is fully earned and shall be retained by Seller notwithstanding any other provision of thisAgreement. 3) PRORATIONS: Real Property ad valorem taxes, rents, NNN & CAM reconciliation shall be prorated on acalendar year basis as of the Closing Date. All utility accounts shall be closed as of the Closing Date and Sellershall be responsible for all charges for service through the Closing Date. Buyer shall be responsible forreopening and reinstituting utility service following the Closing Date. Within one hundred eighty (180) daysfollowing the Closing Date (or such earlier date after the Closing Date when such figures are available), Sellerand Buyer shall reprorate real and personal property taxes and other items of income and expenses based uponactual bills or invoices received after the Closing Date (if original prorations were based upon estimates) andany other items necessary to effectuate the intent of the parties that all income and expense items be prorated asprovided above in this Section 3. Any reprorated items shall be promptly paid to the party entitled thereto 4) TITLE: Within five (5) days from the signing of the Agreement, Seller shall procure and cause to be deliveredto Buyer, at Seller's cost, a current commitment for title insurance report ("Preliminary Title Report") issuedby Lawyers Title, 4100 Newport Place Drive, Suite #120, Newport Beach, CA 92660, attention: Barbie Herndontelephone (949) 724-3161 facsimile (949) 930-9392, (the "Title Company") on the Property together withcomplete and legible copies of all underlying documents which will remain as exceptions to Buyer's policy oftitle insurance, including but not limited to, conditions, covenants and restrictions, agreements, deedrestrictions, and easements along with a plat map drawn by the title company reflecting the location of alleasements and other exceptions affecting the Property which are located of record drawn and identified on theplat map. Buyer shall have ten (10) days from receipt to either approve in writing the exceptions contained insaid title report or specify in writing any exceptions to which Buyer reasonably objects. If Buyer objects to anyexceptions, Seller shall, within five (5) calendar days after receipt of Buyer's objections, deliver to Buyer writtennotice that either (i) Seller will, at Seller's expense, remove the exception(s) to which Buyer has objected beforethe Closing Date or (ii) Seller is unwilling or unable to eliminate said exception(s). If Seller fails to so notifyBuyer or states in such notice that it is unwilling or unable to remove any such exception by the Closing Date,Buyer may elect to terminate this Agreement and receive back the entire Deposit, in which event Buyer andSeller shall have no further obligations under this Agreement; or, alternatively, Buyer may elect to purchase theProperty subject to such exception(s). Notwithstanding any provision herein to the contrary, Seller shall causeall judgments, deeds of trust, mechanics liens or other financial encumbrances to be removed prior to (or upon)the Closing Date, without the requirement of any notice of objection by Buyer. Page 1of 18 Seller shall convey by Grant Deed to Buyer or to such other person or entity as Buyer may specify prior to theClosing Date marketable fee title subject only to the exceptions approved by Buyer in accordance with thisAgreement. Title shall be insured by an owner's standard Title Policy issued by the Title Company in theamount of the Purchase Price with premium paid by Seller. Buyer reserves the right to upgrade the titleinsurance to acquire endorsements to the title policy at Buyer's expense. Buyer further reserves the right tohave the legal description resulting from Buyer's ALTA survey substituted for Exhibit A (attached hereto andmade an integral part hereof) and utilize the ALTA legal description for any other forms or documents Buyerrequires to complete and record this transaction. Prior to the Closing Date, Seller shall deliver fully executedoriginals of the Grant Deed and Bill of Sale and General Assignment in form and substance as set forth onSchedule 1. Buyer reserves the right to assign this Agreement to a newly formed LLC or other legal entity providedBuyer retains a majority ownership interest, in which case Buyer shall be released from its obligationshereunder. 5) FINANCING CONTINGENCIES: NOT APPLICABLE — ALL CASH. 6) INSPECTION CONTINGENCIES: 6.1) BOOKS AND RECORDS: To the extent they are in Sellers possession, within three (3) days from thesigning of this Agreement, Seller agrees to provide Buyer with legible copies of the rent roll, all leases("Leases"), service and other contracts ("Contracts"), latest tax bills, CC&R's, Seller Certified OperatingStatements for, 2008, and ytd 2009, construction and equipment warranties, Natural Hazard Disclosure (Sellershall procure and cause to be delivered to Buyer from a professional provider the "Natural Hazards Disclosures"which shall mean whether the Property is located within: (1) Special Flood Hazard Area; (2) Dam FailureInundation Area; (3) Earthquake Fault-Zone; (4) Seismic Hazard Zone; (5) High Fire Severity Area; and/or (6)Wildland Fire Area. Seller represents and warrants that, unless otherwise noted by Seller to Buyer in writing,Seller is unaware of any inaccuracies in the Natural Hazard Disclosures); available environmental reports,available surveys, available building plans and available real estate related documents in Sellers' possession orcontrol (collectively, the "Books and Records"). Buyer shall acknowledge receipt, in writing, of legible copies of the items provided by Seller. 6.2) INSPECTION: Buyer shall have twenty-one (21) calendar days from the signing of this Agreement andthe receipt of all the Books and Records defined in 6.1 above to inspect the Property ("Due DiligencePeriod"), including, but not limited to the title, soil conditions and the presence or absence of hazardousmaterials on or about the Property and the feasibility of Buyer's intended use of the Property. If Buyer notifiesSeller, in writing, on or before the end of the Due Diligence Period that the Property in unsuitable to Buyer forany reason, in its sole discretion, then this Agreement shall be null and void, Buyer's Earnest Money Deposit,net of cancellation fees, if any, shall be returned, and Buyer and Seller shall have no further obligationshereunder. Buyer's failure to remove inspection contingencies will be deemed unapproved and this Agreementwill be null and void, Buyer and Seller will have no further obligations to one another and Buyer's EarnestMoney Deposit will be returned to Buyer. During the Due Diligence Period, Buyer shall be permitted the opportunity to conduct any reasonableinspection which Buyer deems necessary upon the Property, at Buyer's sole risk and cost at a reasonable timeupon at least one (1) business day prior notice to Seller. Seller shall have the right to have a representativepresent at all such inspections on the Property. Buyer shall not disturb or interfere with any tenants and all suchrights to study, evaluate, inspect, test or investigate any leased premises shall be subject to any applicabletenants' rights pursuant to any Leases. Buyer shall treat all information obtained by Buyer pursuant to the termsof this Agreement as strictly confidential and such obligations shall survive Closing or termination hereof.Buyer acknowledges that Buyer shall inspect, test and investigate or have the opportunity to study, evaluate,inspect, test and investigate the Property during the Due Diligence Period. Buyer shall indemnify and holdSeller harmless from any losses or damages to the Property or to Buyer and its agents arising out of or inconnection with any such inspection conducted (the "Inspection Risks") including, without limitation, actionsor claims for any damage to any property and any injuries or death to any persons resulting therefrom andreasonable attorney's fees and expenses. At the conclusion of the Due Diligence Period provided Buyer has approved the inspection and reviewed andapproved the Books and Records, Buyer shall deposit an additional $250,000 into escrow (additional EarnestMoney Deposit). 6.3) STATE AND LOCAL LAWS: During the Due Diligence Period, Buyer may investigate State and locallaws to determine whether the Property must be brought into compliance with minimum energy conservationor safety standards or similar retrofit requirements as a condition of sale or transfer and the cost thereof. To the best of Seller's actual knowledge, Seller represents and warrants to Buyer that Seller has no actualknowledge, without independent inquiry, of any such conditions, requirements and/or obligations as of theEffective Date of this Agreement. 6.4) CLOSING CONTINGENCIES: If one or more of the following Closing Conditions are not satisfied orwaived by Buyer prior to the Closing Date, Buyer may elect to cancel this Agreement and terminate the Escrowupon written notice by Buyer to Seller of such election, whereupon Escrow Holder shall promptly refund toBuyer the Deposit, including any interest:(a) There shall have occurred no material adverse change in the physical condition of the Property (defined asa loss exceed $500,000 to repair);(b) Seller shall not enter into any new Leases, Contracts or agreements for the Property without Buyer's writtenconsent. Buyer shall approve or disapprove any new Leases, Contracts or agreements submitted by Sellerwithin five (5) calendar days. Buyer shall not unreasonably withhold their consent;(c) The Title Company shall be committed to issue to Buyer at the Closing a CLTA Title Policy insuring titleto the Property vested in Buyer in the aggregate amount of the Purchase Price subject only to therequirements and title exceptions shown on the title commitment delivered pursuant to Paragraph 4 towhich Buyer has not objected. All endorsements thereto are at the sole cost of Buyer, unless purchased bySeller to cure a title exception to which Buyer has objected; and(d) Seller shall have performed all of the obligations required to be performed by Seller under this Agreement. If any of the foregoing conditions have not been satisfied or performed or waived in writing by Buyer duringthe Due Diligence Period (or, with respect to 6.4(a) through 6.4(d), prior to Closing), Buyer shall have the right,at Buyer's option, either: (i) to terminate this Agreement by giving written notice to Seller on or before the endof the Due Diligence Period, in which event all rights and obligations of Seller and Buyer under thisAgreement shall expire, and this Agreement shall become null and void; or (ii) if such failure of conditionconstitutes a breach of representation or warranty by Seller, constitutes a failure by Seller to perform any of theterms, covenants, Page 2of 18 conditions, agreements, requirements, restrictions or provisions of this Agreement, or otherwise constitutes adefault by Seller under this Agreement, to exercise such rights and remedies as may be provided for by law orin equity. 7) ESTOPPEL CERTIFICATE CONTINGENCY: Buyer hereby instructs Seller to use Sellers standard EstoppelCertificate (attached as "Exhibit B"). Within five (5) days following the Effective Date , Seller shall complete and deliver Estoppel Certificates toBuyer for approval. Buyer's failure to disapprove any Estoppel Certificate within two (2) days after receipt shallbe deemed Buyer's approval thereof. Upon the timely disapproval of this condition, the Agreement shallterminate and Buyer's Earnest Money Deposit shall be returned to Buyer. Within two(2) days following Seller'sreceipt of the completed Estoppel Certificates (the "Final Estoppel Certificates") from Buyer, Seller shalldeliver Final Estoppel Certificates to each tenant at the Property. Within two (2) days of the Closing Date,Seller shall collect and return to Buyer executed Final Estoppel Certificates (i) from all anchor tenants (anytenant leasing 10,000 or more rented square footage of the Property) and (ii) representing no less than seventy-five percent (75%) of the remaining rented square footage of the Property. As a Closing condition for Buyer'sBenefit: (A) Buyer shall have received the executed Final Estoppel Certificates in at least the percentagereferenced above in the form delivered or in such other form as specified by the applicable lease ; and (B) noneof the executed Final Estoppel Certificates shall have disclosed any materially adverse information. If either (a) Seller fails to timely deliver Final Estoppel Certificates from the all anchor tenants and seventy fivepercent (75%) of the remaining tenants at the Property, or (b) Buyer reasonably disapproves any Final EstoppelCertificate, and Seller cannot cause such tenant(s) to execute substitute Final Estoppel Certificates which arereasonably satisfactory to Buyer prior to the Closing Date, Buyer may either (i) terminate this Agreement bydelivering written notice to the Seller and the Escrow Holder of its election of the same, or (ii) delay the ClosingDate for up to thirty (30) days to allow Seller additional time to obtain Final Estoppel Certificates from allProperty tenants. If either (x) Seller has not delivered Final Estoppel Certificates to Buyer by the end ofadditional thirty (30) day period, or (y) Buyer reasonably disapproves any Final Estoppel Certificate, and Sellercannot cause such tenant to execute a substitute Final Estoppel Certificate which is reasonably satisfactory toBuyer prior to the Closing Date (as the same may have been extended), Buyer shall have the right to either (AA)terminate this Agreement by delivering written notice to the Seller and the Escrow Holder of its election of thesame, or (BB) proceed to the Closing notwithstanding Seller's failure to deliver the missing Final EstoppelCertificates (provided that Seller shall execute and deliver a substitute Final Estoppel Certificates for any suchnon delivering tenant). If Buyer terminates this Agreement in accordance with the foregoing, the entire Depositshall be immediately returned to Buyer (without the need for any additional instructions by either party hereto),and thereafter neither party shall have any further rights or obligations hereunder, except as specificallyprovided in this Agreement. 8) DEPOSIT TRANSFER: Buyer's deposit shall remain with Escrow Holder until removal of the InspectionContingencies set forth in Paragraph(s) 4 and 6 hereof. Upon removal of said contingencies, Buyer's deposit ofFive Hundred Thousand Dollars ($500,000) ("Earnest Money Deposit") shall become immediately non-refundable and applicable to the Purchase Price. Buyer acknowledges and agrees that, in the event Buyerdefaults on this Agreement after removal of contingencies, Buyer's Deposit is non-refundable and is forfeited toSeller. Seller shall hold Buyer's Deposit subject to the remaining terms and conditions of this Agreement. If theProperty is made unmarketable by Seller, or acts of God, or Seller should default on this Agreement, the Depositshall be returned to Buyer. 9) CONDITION OF PROPERTY: Seller shall maintain the Property in the same manner as it has maintained theProperty prior to the date hereof pursuant to its normal course of business, subject to reasonable wear and tearand further subject to destruction by casualty or other events beyond the control of Seller. It is understood and agreed that the Property is being sold "as is"; that Buyer has, or will have prior to theClosing Date, inspected the Property; and that Seller makes no representation or warranty as to the physicalcondition or value of the Property or its suitability for Buyer's intended use. Buyer's initials _/s/ ST_____ Seller's Initials _/s/ MB___ 10) RISK OF LOSS: Risk of loss to the Property, including without limitation, physical damage or actual orthreatened taking, shall be borne by Seller until title has been conveyed to Buyer. In the event that theimprovements on the Property are materially destroyed or materially damaged between the Effective Date ofthis Agreement (defined as a loss exceed $500,000 to repair) and the date title is conveyed to Buyer, or if anyportion of the property is taken (or threatened to be taken) by eminent domain, act of terrorism or deed in lieuthereof, Buyer shall have the option of demanding and receiving back the entire Deposit and being releasedfrom all obligations hereunder, or alternatively, taking such portion of the Property and improvements as Sellercan deliver. Upon Buyer's physical inspection and approval of the Property, Seller shall maintain the Propertythrough close of escrow in the same condition and repair as approved, reasonable wear and tear excepted. 11) POSSESSION: Exclusive possession of the Property shall be delivered to Buyer on Closing Date 12) REMEDIES: Liquidated Damages; Seller's Remedies. IN THE EVENT THE CLOSING AND THE CONSUMMATION OFTHE TRANSACTION HEREIN CONTEMPLATED DO NOT OCCUR AS HEREIN PROVIDED BY REASONOF ANY BREACH OF BUYER, BUYER AND SELLER AGREE THAT IT WOULD BE IMPRACTICAL ANDEXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER AS A RESULTTHEREOF. THEREFORE, BUYER AND SELLER DO HEREBY AGREE THAT A REASONABLE ESTIMATEOF THE TOTAL NET DETRIMENT THAT SELLER WOULD SUFFER IN THE EVENT THAT BUYERBREACHES THIS AGREEMENT AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY IS ANDSHALL BE, AS SELLER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), ANDAS THE FULL, AGREED AND LIQUIDATED DAMAGES FOR SUCH BREACH, AN AMOUNT EQUAL TOTHAT PORTION OF THE DEPOSIT WHICH HAS BEEN DEPOSITED BY BUYER INTO ESCROW AT THETIME OF THE BUYER'S BREACH. Page 3of 18 /s/ MB /s/ ST SELLER'S INITIALS BUYER'S INITIALS Buyer's Remedies. In the event Seller fails to perform its obligations pursuant to this Agreement for anyreason, then Buyer shall elect, as its sole remedy, either to: (i) terminate this Agreement by giving Seller writtennotice of such election on or prior to the Closing Date, in which case (a) the entire Deposit shall be promptlydelivered to Buyer and thereafter neither party shall have any further rights or obligations hereunder, except asspecifically provided in this Agreement, and (b) Seller shall pay to Buyer an amount equal to its actual out-of-pocket third party costs and expenses incurred in connection with its contemplated acquisition of the Property inan amount not to exceed Fifty Thousand Dollars($50,000); or (ii) enforce specific performance of this Agreement.The remedies set forth in subclauses (i) and (ii) hereinabove are Buyer's sole and exclusive remedies with respectto Seller's default, and Buyer waives any and all other remedies as may be available at law or in equity inconnection with such Seller's default (subject, however, to Buyer's right to recover its reasonable attorneys' feesand court costs pursuant to Section 17 below). /s/ MB /s/ ST SELLER'S INITIALS BUYER'S INITIALS 13) SELLER EXCHANGE: Buyer agrees to cooperate should Seller elect to sell the Property as part of a like-kindexchange under IRC Section 1031. Seller's contemplated exchange shall utilize a qualified intermediary andshall not impose upon Buyer any additional liability or financial obligation, nor shall Buyer be obligated toenter into any other contracts or agreements (other than acknowledging Seller's assignment of this contract tothe qualified intermediary for the purpose of completing the exchange) and Seller agrees to hold Buyerharmless from any liability that might arise from such exchange. Seller shall not be relieved from any of itsobligations hereunder as a result of its entering into the exchange or assigning its rights to the qualifiedintermediary, nor shall any time periods hereunder be extended as a result of Seller's exchange. This Agreementis not subject to or contingent upon Seller's ability to acquire a suitable exchange property or effectuate anexchange. In the event any exchange contemplated by Seller should fail to occur, for whatever reason, the saleof the Property shall nonetheless be consummated as provided herein. 14) BUYER EXCHANGE: Seller agrees to cooperate should Buyer elect to purchase the Property as part of a like-kind exchange under IRC Section 1031. Buyer's contemplated exchange shall not impose upon Seller anyadditional liability or financial obligation, and Buyer agrees to hold Seller harmless from any liability thatmight arise from such exchange. This Agreement is not subject to or contingent upon Buyer's ability to disposeof its exchange property or effectuate an exchange. In the event any exchange contemplated by Buyer shouldfail to occur, for whatever reason, the sale of the Property shall nonetheless be consummated as provided herein. 15) AGENCY DISCLOSURE: Seller shall pay Capital Real Estate Advisors a real estate commission per theirseparate agreement at the close of escrow. Each party indemnifies the other with respect to any claim made byany broker, and the party so incurring or causing such claims shall indemnify, defend and hold harmless theother party from any loss or damage, including attorney's fees which said other party suffers because of saidclaims. 16) SUCCESSORS & ASSIGNS: This Agreement and any addenda hereto shall be binding upon and inure to thebenefit of the heirs, successors, agents, representatives and assigns of the parties hereto. 17) ATTORNEYS' FEES: In any litigation, arbitration or other legal proceeding which may arise between any ofthe parties hereto, the prevailing party shall be entitled to recover its costs, including court costs, andreasonable attorneys' fees in addition to any other relief to which such party may be entitled up to $50,000.Each party shall be responsible for its own fees and costs above $50,000. 18) TIME: Time is of the essence of this Agreement. 19) NOTICES: All notices required or permitted hereunder shall be given to the parties in writing at theirrespective addresses as set forth below. Should the date upon which any act required to be performed by thisAgreement fall on a Saturday, Sunday or holiday, the time for performance shall be extended to the nextbusiness day. Page 4of 18 20) FOREIGN INVESTOR DISCLOSURE: Seller and Buyer agree to execute and deliver any instrument, affidavitor statement, and to perform any act reasonably necessary to carry out the provisions of this Foreign Investmentin Real Property Tax Act and regulations promulgated there under as well as any comparable statutes pertainingto sales of real property by non-residents. 21) ADDENDA: Any addendum attached hereto and either signed or initialed by the parties shall be deemed a parthereof. This Agreement, including addenda, if any, expresses the entire agreement of the parties and supersedesany and all previous agreements between the parties with regard to the Property. There are no otherunderstandings, oral or written, which in any way alter or enlarge its terms, and there are no warranties orrepresentations of any nature whatsoever, either express or implied, except as set forth herein. Any futuremodification of this Agreement will be effective only if it is in writing and signed by the party to be charged. 22) ACCEPTANCE AND EFFECTIVE DATE: Buyer's signature hereon constitutes an offer to Seller to purchasethe Property on the terms and conditions set forth herein. Unless acceptance hereof is made by Seller's executionof this Agreement and delivery of a fully executed copy to Buyer, either in person or by nationally-recognizedovernight delivery service at the address shown below or by facsimile, this offer shall be null and void, theDeposit shall be returned to Buyer, and neither Seller nor Buyer shall have any further rights or obligationshereunder. The "Effective Date" of this Agreement shall be the date last written below the signatures of the partieshereto. 23) GOVERNING LAW: This Agreement shall be governed by and construed in accordance with the laws of theState of California. 24) OTHER TERMS AND CONDITIONS: 24.1) All parties to this Agreement agree that a facsimile signature and signing in counterpart are legallybinding. 24.2) Buyer and Seller hereby appoint Escrow Agent as, and Escrow Agent agrees to act as, "the personresponsible for closing" the transaction which is the subject of this Agreement pursuant to Internal RevenueCode Section 6045(e). Escrow Agent shall prepare and file all informational returns, including withoutlimitation, IRS form 1099-S and shall otherwise comply with the provisions of Internal Revenue CodeSection 6045(e). Escrow Agent shall indemnify, protect, hold harmless and defend Seller, Buyer and theirrespective attorneys for, from and against any and all claims, actions, costs, losses, liabilities or expensesarising out of or in connection with the failure of Escrow Agent to comply with the provisions of thisparagraph section 24.2. 24.3) If any term or provision of this Agreement is determined to be invalid, such invalid term or provisionshall bedeleted, and the remainder of this Agreement shall continue in full force and effect to the same extent asthough the invalid term or provision were not contained herein. 24.4) The parties hereto agree to execute acknowledge and deliver such other documents and instruments asmay be reasonably necessary or appropriate to carry out the full intent and purpose of this Agreement. 24.5) Buyer represents and warrants to Seller, with the understanding that Seller is relying on saidrepresentations and warranties in entering into this Agreement, that Buyer has not: (i) made a generalassignment for the benefit of creditors; (ii) filed any voluntary petition in bankruptcy or suffered the filingof any involuntary petition by Buyer's creditors; (iii) suffered the appointment of a receiver to takepossession of all or substantially all of Buyer's assets; (iv) suffered the attachment or other judicial seizure ofall, or substantially all, of Buyer's assets; (v) admitted in writing Buyer's inability to pay its debts as theycome due; or (vi) made an offer of settlement, extension, or composition to its creditors generally.Buyer's initials _/s/ ST_____ Seller's Initials _/s/ MB___ 24.6) Seller Representations and Warranties: In consideration of Buyer entering into this Agreement and as an inducement to Buyer to acquire theProperty, Seller hereby represents and warrants to Buyer as follows Page 5of 18 A. Seller is not in monetary default or material non-monetary default under any of such Leases that remainsuncured. B. To the best of Seller's knowledge there is no pending action, litigation, condemnation or other proceedingagainst the Property or against Seller (or any of its partners or principals) with respect to the Property. Thereare no written threats or demands of any litigation, condemnation or other proceeding against the Property oragainst Seller (or any of its partners or principals) with respect to the Property. To the best of Seller'sknowledge, there are no threatened or contemplated actions, suits, arbitrations, claims or proceedings, at lawor in equity, affecting the Property or in which Seller is, or will be, a party by reason of Seller's ownership ofthe Property. C. To the best of Seller's knowledge Seller has received no written notice from any governmental authorityhaving jurisdiction over the Property to the effect that the Property is not currently in compliance withapplicable laws and ordinances, and Seller has no knowledge that the Property is not currently in compliancewith all applicable laws and ordinances. D. Other than those which are either (a) cancelable on thirty (30) days' notice without payment of any fees, or (b)expressly assumed by Buyer in writing at the Closing, there are no Contracts or other agreements relating tothe Property which will be in force on the Closing Date, and Seller is not in monetary default or material non-monetary default thereunder that remains uncured. E. This Agreement and all agreements, instruments and documents herein provided to be executed or to becaused to be executed by Seller are and on the Closing Date will be duly authorized, executed and deliveredby and are binding upon Seller. Seller has the legal capacity and authority to enter into this Agreement andconsummate the transactions herein provided without the consent or joinder of any other party. F. The rent roll and operating statements that will be provided to Buyer by Seller are complete, true and correctin all material respects. At Closing, Seller will deliver to Buyer an updated, certified rent roll (current towithin five (5) days of the Closing Date) that will be complete, true and correct in all material respects. G. Neither the execution and delivery of this Agreement and documents referenced herein, nor the incurrence ofthe obligations set forth herein, nor the consummation of the transactions herein contemplated, norcompliance with the terms of this Agreement and the documents referenced herein conflict with or result inthe material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note, orother evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnershipagreement, lease or other agreements or instruments to which Seller is a party or affecting the Property. H. To the best of Seller's knowledge, there is not any plan, study or effort of any governmental agency which inany way would materially affect the use of the Property for its intended uses or any intended publicimprovements which will result in any charge being levied against, or any lien assessed upon, the Property. I. To the best of Seller's knowledge, (i) Seller has disclosed any and all notices of violations received by theSeller with respect to the Property, (ii) all licenses, approvals, permits and certificates from all applicablegovernmental authorities or private parties necessary for all Property alterations completed by the Seller wereobtained prior to the commencement of such alterations, and (iii) the Property is in compliance with allrecorded covenants, conditions, restrictions, easements and agreements affecting the Property. J. Seller is not currently obligated to sell the Property to any party or entity other than Buyer, nor do there existany rights of first refusal or options to purchase the Property. Page 6of 18 For the purposes of this Agreement the terms "to the best of Seller's knowledge" shall mean the actualknowledge of Michael H. Mugel, in his sole capacity as Manager of Seller, without any duty of independentinvestigation and or confirmation. Seller's representations and warranties set forth herein shall be continuingand shall be true and correct as of the Closing Date with the same force and effect as if remade by Seller in aseparate, certificate at that time. The truth and accuracy of Seller's representations and warranties made hereinshall constitute a condition for the benefit of Buyer to the Closing Date and shall survive, and shall not mergeinto, the Closing Date and the recording of the Deed for a period of six (6) months. Seller shall indemnify,defend and hold Buyer harmless from and against any and all claims, demands, liabilities, losses, damages,costs and expenses, including attorney's fees, that may be suffered by or incurred by Buyer if anyrepresentation or warranty set forth in this Agreement is untrue or incorrect in any material respect. 24.7) Patriot Act Compliance. To the extent applicable to Seller, to the best of Seller's knowledge, Seller hascomplied in all material respects with the International Money Laundering Abatement and Anti-TerroristFinancing Act of 2001, which comprises Title Ill of the Uniting and Strengthening America by ProvidingAppropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "Patriot Act") and theregulations promulgated thereunder, and the rules and regulations administered by the U.S. TreasuryDepartment's Office of Foreign Assets Control ("OFAC"), to the extent such Laws are applicable to Seller.Seller is not included on the List of Specially Designated Nationals and Blocked Persons maintained by theOFAC, or is a resident in, or organized or chartered under the laws of, (A) a jurisdiction that has beendesignated by the U.S. Secretary of the Treasury under Section 311 or 312 of the Patriot Act as warrantingspecial measures due to money laundering concerns or (B) any foreign country that has been designated asnon-cooperative with international anti-money laundering principles or procedures by anintergovernmental group or organization, such as the Financial Action Task Force on Money Laundering,of which the United States is a member and with which designation the United States representative to thegroup or organization continues to concur. The undersigned Buyer hereby offers and agrees to purchase the above described Property for the price and uponthe terms and conditions herein stated. This offer is made by Buyer to Seller on this 25 day of Nov., 2009. The undersigned Buyer hereby acknowledgesreceipt of an executed copy of this Agreement. SELLER'S ACCEPTANCE The undersigned Seller accepts the foregoing offer and agrees to sell the Property to Buyer for the price and on theterms and conditions stated herein. Seller acknowledges receipt of an executed copy of this Agreement andauthorizes Agent to deliver an executed copy to Buyer. Page 7of 18 SELLER:ADDRESS:Michelle BellC/O Robert CliffordCapital Real Estate AdvisorsBy: /s/ Michelle Bell 11755 Wilshire Blvd., Suite 1800 Los Angeles, CA 90025310.231.1270 x 233racwh@earthlink.netDate BUYER:ADDRESS:Retail Opportunity Investments Corp.3 Manhattanville RoadBy: /s/ Stuart Tanz 2nd FloorStuart TanzCEO Purchase, New York 10577 Date 11/25/09 ASSOCIATION OF REALTORS® PORTLAND/VANCOUVER PURCHASE AND SALE AGREEMENT AND RECEIPT FOR EARNEST MONEY(Washington-Commercial Form) Dated: December 15, 2009 BETWEEN:PBS ASSOCIATES, LLC ("Seller") AND:RETAIL OPPORTUNITY INVESTMENTS CORP., a Delaware corporation("Buyer") Buyer agrees to buy and Seller agrees to sell, on the following terms and conditions, the realproperty and all improvements thereon (including an approximately 124,231 square foot shopping center (the"Property") commonly known as the Aurora Shopping Center, located at SR-99 (Aurora Avenue North) and North130th Street in Seattle, Washington consisting of approximately ten (10) acres. The legal description of the Propertyfor this transaction shall be the legal description contained in the Preliminary Commitment (defined below), subject toBuyer’s and Seller’s reasonable approval. The Property also includes all personal property related to the use oroperation of the Property (the “Personal Property”). 1. Purchase Price. The total purchase price is TWENTY-THREE MILLION AND NO/100 DOLLARS ($23,000,000.00)payable as follows: At closing, Buyer will assume Seller’s obligations on an existing loan with an interest rate of sixpercent (6.00%) per annum secured by the Property with a total current balance of approximately TWO MILLIONFOUR HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($2,450,000.00). The total balance of such loanassumed by Buyer at closing shall be applied to the Purchase Price, and Buyer will pay the remainder of the PurchasePrice in cash at closing. 2. Earnest Money Receipt. Within three (3) days after mutual execution of this Agreement (the “Execution Date”),Buyer shall deposit with the Title Company (defined below) the sum of TWO HUNDRED FIFTY THOUSAND ANDNO/100 DOLLARS ($250,000.00) as earnest money (the "Earnest Money") in the form of xcash or o check or opromissory note not to exceed 5% of the purchase price. Upon removal of the conditions referred to in Section 3 andBuyer’s receipt of Seller’s Closing Notice referred to in Section 8, the Earnest Money Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 1 shall be increased to FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) and shall be non-refundable except as otherwise provided in this Agreement. If the Earnest Money is in the form of a promissory note, itis due and payable: o no later than 5 PM Pacific Time one day after execution of this Agreement by Buyer and Selleror o upon satisfaction or waiver by Buyer of the conditions to Buyer's obligation to purchase the Property set forth inthis Agreement or o other: ____________________________________________________________. If theEarnest Money promissory note is not redeemed and paid in full when due, then (i) the Earnest Money promissorynote shall be delivered and endorsed to Seller (if not already in Seller’s possession), (ii) Seller may collect the EarnestMoney from Buyer, either pursuant to an action on the promissory note or an action on this Agreement, and (iii) thisAgreement shall be of no further force or effect. The Earnest Money shall be deposited with First American TitleInsurance Company of Oregon, (the "Title Company") at the following branch: 200 SW Market Street, Suite 250,Portland, Oregon 97201, Attn: Rachael Bushnell. The Earnest Money shall be applied to the payment of the purchaseprice for the Property at closing. The Earnest Money shall be deposited in an interest bearing account. Any interestearned on the Earnest Money shall be considered to be part of the Earnest Money. The Earnest Money shall bereturned to Buyer in the event any condition to Buyer's obligation to purchase the Property shall fail to be timelysatisfied or waived by Buyer or in the event this transaction fails to close as a result of a casualty, condemnation ordefault by Seller hereunder. 3. Conditions to Purchase. Buyer's obligation to purchase the Property is conditioned on the following: (a) Buyer’ssatisfaction with the Property and Buyer’s financing, including without limitation the terms and conditions of Seller’sloan to be assumed by Buyer, (b) the approval of Seller’s lender to Buyer’s assumption of the Seller’s loan inaccordance with the terms of such loan, and (c) Buyer's review and approval of Seller’s Documents (as defined inSection 5 below) and approval of the results of its property inspection described in Section 4 below. If Buyer has notgiven written waiver of these conditions, or stated in writing that these conditions have been satisfied, by writtennotice given to Seller (“Notice of Intent to Close”) within twenty-one (21) days after the Execution Date (the “DueDiligence Period”), the Agreement shall automatically terminate, and the Earnest Money shall be promptly returned toBuyer. If Buyer shall require additional time to satisfy the above conditions or to Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 2 complete its due diligence related to the environmental condition of the Property or to complete Buyer’s ALTAsurvey of the Property, then, upon written notice to Seller, given upon or prior to the then end of the DueDiligence Period, Buyer shall have the right to extend the Due Diligence Period until the close of business onJanuary 31, 2010. If a Notice of Intent to Close is given by Buyer prior to expiration of the Due DiligencePeriod, then the conditions set forth in clauses (a)-(c) above shall be deemed satisfied. Seller shallreasonably cooperate and assist with obtaining the consent of its lender to such loan assumption by Buyer. Itshall be a condition to Buyer’s obligation to close this transaction that Seller’s lender is ready, willing and ableto allow Buyer to assume Seller’s loan referenced in Section 1 above on the Closing Date. It shall be acondition to Buyer’s obligation to close this transaction that Seller shall have delivered to Buyer prior to theclosing an estoppel certificate from all tenants of the Property occupying 5,000 or more s.f. of the Propertycertifying that such tenants’ leases is in full force and effect and there is no breach or default thereunder, andother information as Buyer shall reasonably require. Seller will use reasonable efforts to provide estoppelcertificates from eighty percent (80%) of tenants of the Property occupying less then 5,000 s.f. and, if Seller isunable to provide such estoppel certificates, Seller will provide a landlord’s form of estoppel certificate forsuch tenants certifying that such tenants’ leases are in full force and effect and there is no breach or defaultthereunder, and other information as Buyer shall reasonably require. At all times before the Closing Date,Seller shall cooperate with Buyer in connection with obtaining governmental approvals, entitlements, consents,and permits in connection with Buyer's purchase and operation of the Property, without cost or expense toSeller. This includes, without limitation, joining in proceedings for and/or the execution of petitions,applications, zone changes, easements, permits, approvals, conditional uses, licenses, dedications, and otherland use-related matters as reasonably approved by Seller and provided that the same are not effective unlessthe purchase and sale closes as contemplated herein, and further provided that the obtaining of the same shallnot be a condition precedent to Buyer’s obligation to close. 4. Property Inspection. From the Execution Date through closing, Seller shall permit Buyer and its agents, at Buyer'ssole expense and risk, to enter the Property, at reasonable times after reasonable prior notice to Seller and after priornotice to the tenants of the Property as required by the tenants' leases, to conduct inspections, tests, surveys and otherinvestigations including (i) environmental review including independent third party review of any Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 3 environmental and geotechnical reports provided by Seller; (ii) preparation of design, planning or densitystudies; (iii) third party engineering reviews, including review of building structure and mechanical systems; (iv)preparation of an independent market survey and geotechnical report; (v) review of historic preservationissues; (vi) review of City of Seattle files and documents, as well as applications and correspondence (if any)of Seller with the City; and (vii) other matters pertaining to title, physical condition or any other aspect of theProperty. Buyer shall also have the right to discuss the Property and this Agreement with third parties,including lenders, contractors and governmental officials and representatives. Buyer shall indemnify, holdharmless, and defend Seller from all liens, costs, and expenses, including reasonable attorneys' fees andexperts' fees, arising from or relating to Buyer's entry on and inspection of the Property. This agreement toindemnify, hold harmless, and defend Seller shall survive closing or any termination of this Agreement. TheBuyer and Seller understand that the information provided is confidential in nature, and the Buyer and theSeller covenant not to disclose any information the use of which in any manner may be detrimental to anyparty, except as reasonably necessary in connection with the transactions contemplated by this Agreement,or as required by applicable law. Seller hereby agrees from and after the Execution Date until the ClosingDate (as hereinafter defined), or the termination of this Agreement, that (i) Seller will take no action that willadversely affect title to the Property; and (ii) Seller will not enter into any written or oral contracts, leases, oragreements or amendments or modification thereto, with respect to the operation, use or occupancy of theProperty that would be binding upon Buyer following the closing without the prior written consent of Buyer,which consent shall not be unreasonably withheld. Buyer may obtain an ALTA survey of the Property during the Due Diligence Period and Seller shall promptlycooperate with Buyer with regard to obtaining such survey. Buyer, at its expense, shall be entitled to engage an environmental consultant of its choice and obtain a Phase Ienvironmental site assessment of the Property during the Due Diligence Period, and, if recommended by suchconsultant, Buyer shall be entitled to obtain a Phase II environmental site assessment and perform any testingrecommended in the assessment. Seller agrees to provide Buyer and its consultant with copies of any environmentalreports, assessments or other information in Seller’s possession or of which Seller has knowledge, concerning theProperty, or any portion thereof, and to cooperate in the completion of Buyer’s environmental site assessment. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 4 Buyer, at its expense, shall be entitled to engage a consultant of its choice to review and inspect the Property and all ofthe buildings on the Property, including, but not limited to, the structural and roof components of the buildings andcompliance with building codes and the Americans With Disabilities Act. If in the possession of Seller, Seller agreesto provide Buyer with as-built plans and specifications for the Property and to facilitate access to the Property byBuyer’s consultants and representatives. 5. Seller’s Documents. Within five (5) days after the Execution Date, Seller shall deliver to Buyer, at Buyer's addressshown below, legible and complete copies of the following documents and other items relating to the ownership,operation, and maintenance of the Property, to the extent now in existence and to the extent such items are withinSeller's possession or control (“Seller’s Documents”): (a) Real and personal property tax bills for the most recent tax year. (b) All environmental reports, studies and assessments concerning theProperty. (c) All soils, geotechnical, drainage, seismological, and engineeringreports, studies and assessments concerning the Property. (d) Any CC&R’s or other agreements relating to all of any portion of theProperty. (e) All tenant leases and any amendments thereto (the “Leases”) alongwith copies of any tenant financial statements, and a current rent roll for the Property. (f) Operating statements, copies of sales reports and CAM details for theProperty for the years 2006, 2007, 2008 and 2009 to date. (g) All certificates of occupancy for the Property. (h) All construction and equipment warranties. (i) All documents related to Seller’s loan on the Property. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 5 In the event Seller does not deliver the foregoing documents within the five (5) day period, the DueDiligence Period shall be extended one day for each day that Buyer has not received all of the foregoing documents. 6. Title Insurance. Within five (5) days after the Execution Date, Seller shall deliver to Buyer a preliminary title reportfrom the Title Company (the "Preliminary Commitment"), together with complete and legible copies of all documentsshown therein as exceptions to title, showing the status of Seller's title to the Property. Buyer shall have ten (10) daysafter receipt of a copy of the Preliminary Commitment within which to give notice in writing to Seller of any objectionto such title or to any liens or encumbrances affecting the Property. Within five (5) days after the date of such noticefrom Buyer, Seller shall give Buyer written notice of whether it is willing and able to remove the objected-toexceptions. Within five (5) days after the date of such notice from Seller, Buyer shall elect whether to purchase theProperty subject to the objected-to exceptions which Seller is not willing or able to remove or terminate thisAgreement. On or before the Closing Date (defined below), Seller shall remove all exceptions to which Buyer objectsand which Seller agrees Seller is willing and able to remove. Excepting the loan to be assumed by Buyer described inSection 1 above, Seller agrees to remove all exceptions to title that consist of monetary liens against the Property,including, but not limited to, mortgages, trust deeds, delinquent taxes and assessments, federal and state tax liens,judgments, equitable liens and other exceptions of a similar nature unless Buyer has agreed to assume suchexceptions. All remaining exceptions set forth in the Preliminary Commitment and agreed to by Buyer shall be"Permitted Exceptions." The title insurance policy to be delivered by Seller to Buyer at closing shall contain noexceptions other than the Permitted Exceptions and the usual preprinted exceptions in an ALTA owner's standard formtitle insurance policy, unless Buyer purchases extended coverage, in which event, such preprinted exceptions shall bedeleted from the title insurance policy. 7. Default, Remedies. If the conditions, if any, to Buyer's obligation to close this transaction are timely satisfied orwaived by Buyer and Buyer nevertheless fails, through no fault of Seller, to close the purchase of the Property, Seller'ssole remedy shall be to retain the Earnest Money paid by Buyer. In the event Seller defaults in its obligation to closeunder this Agreement, Buyer, as its sole remedies, shall be entitled either to (i) the return of the Earnest Money, or (ii)the remedy of specific performance. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 6 8. Closing of Sale. Within sixty (60) days after the receipt by Seller of Buyer’s Notice of Intent to Close, Seller shallgive written notice to Buyer of Seller’s intent to close this transaction (the “Seller’s Closing Notice”) and designatinga date not more than fourteen (14) days after the date of Seller’s Closing Notice (or as soon as possible thereafter toallow Buyer’s assumption of Seller’s loan) that the sale shall be closed in escrow at the Title Company (the “ClosingDate”), provided Seller shall have performed all of Seller’s obligations set forth in this Agreement up through ClosingDate. If Seller does not give Seller’s Closing Notice within the above sixty-day period, this transaction shallautomatically terminate, all Earnest Money shall be immediately refunded to Buyer, and Seller shall reimburse Buyeron demand for all of Buyer’s out-of-pocket due diligence costs paid to third parties in an amount not to exceedTWENTY THOUSAND AND NO/100 DOLLARS ($20,000.00). Copies of the paid invoices evidencing such out-of-pocket costs shall also be delivered to Seller. The sale shall be "closed" when the document conveying title and thedocuments evidencing the loan assumption are recorded and funds are disbursed to Seller. At closing, Buyer andSeller shall deposit with the Title Company all documents and funds required to close the transaction in accordancewith the terms of this Agreement. At closing, Seller shall deliver a certification in a form reasonably approved byBuyer that Seller is not a "foreign person" as such term is defined in the Internal Revenue Code and the TreasuryRegulations promulgated under the Internal Revenue Code. If Seller is a foreign person and this transaction is nototherwise exempt from FIRPTA regulations, the Title Company shall be instructed by the parties to withhold and paythe amount required by law to the Internal Revenue Service. At closing, Seller shall convey fee simple title to theProperty to Buyer by statutory special warranty deed subject only to the Permitted Exceptions (the "Deed"). Atclosing, Buyer and Seller shall each also execute and deliver an Assignment and Assumption of Leases, and anAssignment and Assumption of Contracts related to the Property for those contracts that Buyer chooses to assume,provided the same are assumable. Seller shall also deliver to Buyer a Bill of Sale conveying to Seller all PersonalProperty and warranties, if any, related to the use and operation of the Property free and clear of all liens, claims, andencumbrances. The form of each of these Assignment and Assumption agreements and the Bill of Sale reasonablydrafted and consistent with this Agreement shall be agreed upon in good faith by Buyer and Seller during the DueDiligence Period. At closing, Seller shall pay for and deliver to Buyer a standard form owner's policy of title insurancein the amount of the purchase price insuring fee simple title to the Property in Buyer subject only to the PermittedExceptions and the standard preprinted exceptions in a standard Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 7 form policy. Buyer may obtain an extended ALTA owner’s policy, with such endorsements as Buyer mayrequire at Buyer’s cost, and Seller shall execute an owners title affidavit in commercially reasonable form tofacilitate the issuance thereof. In such event, the preprinted standard exceptions shall be removed from suchtitle policy. 9. Closing Costs, Prorates. Seller shall pay the premium and any sales tax on the premium for the title insurancepolicy that Seller is required to deliver pursuant to the above paragraph. Seller and Buyer shall each pay one-half ofthe escrow fees and applicable sales tax charged by the Title Company. Seller shall pay any loan assumption fees ofSeller’s lender, and Seller shall pay any other fees and charges assessed by its lender in connection with the loanassumption. Seller shall deliver to escrow prior to closing a Real Estate Excise Tax Affidavit and shall pay anyapplicable real estate excise tax and transfer taxes. Real property taxes for the tax year in which the transaction isclosed, assessments (if a Permitted Exception), personal property taxes, rents on existing tenancies paid for the monthof closing, interest on assumed obligations, and utilities shall be prorated as of the Closing Date. Prepaid rents,security deposits, and other unearned refundable deposits regarding the tenancies shall be assigned and delivered toBuyer at closing, or, at Seller’s option, a credit for the same shall be given to Buyer against the purchase price atclosing. The Property o does x does not qualify for a special tax assessment or deferral program asfollows: __________________________________________________________________________________________________________________________________________________________________________________________________________________________. oSeller o Buyer x N/A shall be responsible for payment of all taxes, interest, and penalties, if any, upon removal of theProperty from such special assessment or program. o Prior to closing, Buyer shall sign the Notice of Continuation onthe Real Estate Excise Tax Affidavit or otherwise file for continuation of the specified assessment or program to avoidremoval of the Property upon closing of the sale. 10. Possession. Buyer shall be entitled to exclusive possession (subject to the Leases and Permitted Exceptions of theProperty x on the Closing Date or o ______________________________________________________________________. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 8 11. Representations and Warranties. Seller represents and warrants that, to the best of Seller's knowledge, (a) Seller has the authority to enter into this Agreement and, subject to theprovisions of this Agreement, to consummate or cause to be consummated the transactionscontemplated herein to be made by Seller. The person signing this Agreement on behalf of Seller isauthorized to do so. (b) Seller is, or on the Closing Date shall be, the sole owner of the entireright, title and interest in and to the Property, subject to the Leases and the Permitted Exceptions. (c) To Seller’s actual knowledge, (without independent investigation orduty to investigate), there are no hazardous materials on the Property or current violations ofEnvironmental Laws with respect to the Property. (d) Except for the Leases, there are no agreements or contracts, whetherwritten or oral, express or implied, for lease or purchase of all or a portion of the Property to whichSeller is a party. (e) Except as disclosed in Seller’s Documents, Seller has received nowritten notice of any violation (nor, to Seller’s actual knowledge, without independent investigationor duty to investigate, is the Property in violation) of any applicable law, ordinance, order orregulation of any governmental or quasi-governmental agency having jurisdiction over the Propertyor any portion thereof. (f) No attachments, execution proceedings, assignments for the benefit ofcreditors, insolvency, bankruptcy, reorganization or other proceedings are pending against Seller. (g) Seller is not a "foreign person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended, or applicable Washington law. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 9 (h) Except for the Leases, there are no options to purchase or options tolease, or contracts for sale or management, maintenance, service or similar agreement (whether oral orwritten) affecting or relating to the Property, or any portion thereof, to which Seller is a party, thatwill survive closing. (i) There is no litigation, claim or proceeding pending against Seller orthe Property. (j) There are no current or pending condemnation proceedings against allor any portion of the Property. Seller has no actual knowledge (without independent investigationor duty to investigate) of any plan or study by any governmental authority which in any way wouldmaterially adversely affect the use of the Property, or any portion thereof for its intended uses or anyintended public improvements which will result in any charge being levied against, or any lienassessed upon, the Property. Seller has no actual knowledge (without independent investigation orduty to investigate) of any existing, proposed or contemplated plan to widen, modify or realign anystreet or highway contiguous to the Property. Risk of loss or damage to the Property shall be Seller's until closing and Buyer's at and after closing. Except forSeller's representations set forth in this Section 11 or elsewhere in this Agreement, Buyer shall acquire the Property"AS IS" with all faults and Buyer shall rely on the results of its own inspection and investigation in Buyer's acquisitionof the Property. It shall be a condition of Buyer’s obligation to close, and of Seller’s right to retain the Earnest Moneyas of closing, that all of the Seller’s representations and warranties stated in this Agreement are materially true andcorrect on the Closing Date. All representations, warranties, and indemnity and hold harmless obligations stated inthis Agreement shall survive closing for a period of one year only following closing. 12. Personal Property. This sale includes the following personal property: o None or x the personal propertylocated on and used in connection with the Property and owned by Seller which Seller shall itemize in aschedule. Seller shall deliver to Buyer such schedule within five (5) days after the Execution Date. The parties agreethat the personal property conveyed herein shall not be allocated to any of the purchase price. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 10 13. Agency Disclosure. At the signing of this Agreement, the Seller’s brokers are Paul Sleeth and Billy Sleeth ofColliers International. Buyer is not represented by a broker in this transaction. Each party signing this documentconfirms that prior oral and/or written disclosure of agency was provided to him/her in this transaction. Seller shall besolely responsible for paying its brokers in connection with this transaction pursuant to the terms of a separateagreement. Each party will indemnify, defend, and hold the other party harmless of and from any claim for a fee orcompensation by any other broker claiming by or through the indemnifying party. 14. Notices. Unless otherwise specified, any notice required or permitted in, or related to, this Agreement must be inwriting and signed by the party to be bound. Any notice or payment will be deemed given when personally deliveredor delivered by facsimile transmission (with electronic confirmation of delivery), or will be deemed given on the dayfollowing delivery of the notice by reputable overnight courier or through mailing in the U.S. mails, postage prepaid,by the applicable party to the address of the other party shown in this Agreement, unless that day is a Saturday,Sunday, or legal holiday, in which event it will be deemed delivered on the next following business day. If thedeadline under this Agreement for delivery of a notice or payment is a Saturday, Sunday, or legal holiday, such lastday will be deemed extended to the next following business day. 15. Assignment. Buyer o may assign o may not assign x may assign, if the assignee is an entity owned or controlledby Buyer (may not assign, if no box is checked) this Agreement or Buyer's rights under this Agreement withoutSeller's prior written consent. 16. Attorneys’ Fees. In the event a suit, action, arbitration, or other proceeding of any nature whatsoever, includingwithout limitation any proceeding under the U.S. Bankruptcy Code, is instituted, or the services of an attorney areretained, to interpret or enforce any provision of this Agreement or with respect to any dispute relating to thisAgreement, the prevailing party shall be entitled to recover from the losing party its reasonable attorneys', paralegals',accountants', and other experts' fees and all other fees, costs, and expenses actually incurred and reasonably necessaryin connection therewith. In the event of suit, action, arbitration, or other proceeding, the amount thereof shall bedetermined by the judge or arbitrator, shall include fees and expenses incurred on any appeal or review, and shall be inaddition to all other amounts provided by law. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 11 17. Miscellaneous. Time is of the essence of this Agreement. The facsimile transmission of any signed documentincluding this Agreement shall be the same as delivery of an original. At the request of either party, the partydelivering a document by facsimile will confirm facsimile transmission by signing and delivering a duplicate originaldocument. This Agreement may be executed in two or more counterparts, each of which shall constitute an originaland all of which together shall constitute one and the same Agreement. This Agreement contains the entire agreementand understanding of the parties with respect to the subject matter of this Agreement and supersedes all prior andcontemporaneous agreements between them with respect thereto. Without limiting the provisions of Section 15 of thisAgreement, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respectivesuccessors and permitted assigns. The person signing this Agreement on behalf of Buyer and the person signing thisAgreement on behalf of Seller each represents, covenants and warrants that such person has full right and authority toenter into this Agreement and to bind the party for whom such person signs this Agreement to the terms and provisionsof this Agreement. This Agreement shall not be recorded unless the parties otherwise agree. 18. Addendums, Exhibits. The following named addendums and exhibits are attached to this Agreement andincorporated within this Agreement: NONE. 19. Time for Acceptance. Seller has until 5:00 p.m. Pacific Time on December 31, 2009, to accept thisoffer. Acceptance is not effective until a copy of this Agreement which has been signed and dated by Seller is actuallyreceived by Buyer. If this offer is not so accepted, it shall expire and the Earnest Money shall be promptly refunded toBuyer. 20. Calculation of Time Periods. Whenever a time period is set forth in days in this Agreement, the first day fromwhich the designated period of time begins to run shall not be included. The last day of the period so computed shallbe included, unless it is a Saturday or legal holiday, including Sunday, in which event, the period runs until the end ofthe next day which is not a Saturday or legal holiday. 21. Execution Date. The Execution Date is the later of the two dates shown beneath the parties' signatures below. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 12 22. Governing Law. This Agreement is made and executed under, and in all respects shall be governed and construedby the laws of the State of Washington. 23. Leases. Seller shall provide Buyer with copies of all Leases, tenant correspondence and such other records anddocuments as Buyer reasonably deems necessary for its due diligence review of the Property. Seller will also provideBuyer with copies of all management agreements and such other agreements and contracts pertinent to the operationof the Property. Subsequent to the Execution Date, all leases, agreements and/or contracts entered into with respect tothe Property, which would be binding upon Buyer following closing, will require Buyer’s prior written consent andapproval, which consent and approval shall not be unreasonably withheld. CONSULT YOUR ATTORNEY. THIS DOCUMENT HAS BEEN PREPARED FOR SUBMISSION TO YOURATTORNEY FOR REVIEW AND APPROVAL PRIOR TO SIGNING. NO REPRESENTATION ORRECOMMENDATION IS MADE BY THE COMMERCIAL ASSOCIATION OF REALTORS®PORTLAND/VANCOUVER OR BY THE REAL ESTATE LICENSEES INVOLVED WITH THIS DOCUMENT AS TOTHE LEGAL SUFFICIENCY OR TAX CONSEQUENCES OF THIS DOCUMENT. Buyer:Seller:RETAIL OPPORTUNITY INVESTMENTS CORP.PBS ASSOCIATES, LLC By: /s/ Stuart A. TanzBy: /s/ Ezra Genauer Name: Stuart A. TanzName: Ezra Genauer Title: CEOTitle: Manager Execution Date: 12-30-09Execution Date: 12/30/09Office Telephone: 1-914-272-8080Office Telephone: 206-658-3104Address: 3 Manhattanville Road, 2nd FloorAddress: 650 S. Orcas Street Purchase, New York 10577 Suite 210 Seattle, WA 98108Fax No.: 1-914-272-8088Fax No.: 206-254-2566 [Notary Blocks on Following Page] 13 State of New York ) ) ssCounty of Westchester )Before me, a Notary Public in and for said County and State, personally appeared the above-namedStuart Tanz in his or her capacity as CEO of Retail Opportunity Investments Corp., who acknowledged that he did signthe foregoing instrument and that the same is the free act and deed of said entity.In testimony whereof, I have hereunto set my hand and official seal at Purchase, New York, this 30day of December, 2009./s/ Wayne E. Heller Notary Public of NY State of Washington ) ) ssCounty of King )Before me, a Notary Public in and for said County and State, personally appeared the above-named Ezra Genauer , in his or her capacity as Manager of PBS Associates, LLC, who acknowledged that hedid sign the foregoing instrument and that the same is the free act and deed of said entity. In testimony whereof, I have hereunto set my hand and official seal at Seattle ,WA, this _________day of _________, 2009./s/ An E HoffmanNotary Public of Seattle, WA Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 14  COMMERCIAL ASSOCIATION OF REALTORS® PORTLAND/VANCOUVER PURCHASE AND SALE AGREEMENT AND RECEIPT FOR EARNEST MONEY(Washington-Commercial Form) Dated: December 24, 2009 BETWEEN:MERIDIAN VALLEY PROPERTIES, LLC ("Seller") AND:RETAIL OPPORTUNITY INVESTMENTS CORP., a Delaware corporation("Buyer") Buyer agrees to buy and Seller agrees to sell, on the following terms and conditions, the realproperty and all improvements thereon (including an approximately 51,566 square foot shopping center (the"Property") commonly known as the Meridian Valley Plaza, located at 13304 SE 240th Street in Kent,Washington. The legal description of the Property for this transaction shall be the legal description contained in thePreliminary Commitment (defined below), subject to Buyer’s and Seller’s reasonable approval. The Property alsoincludes all personal property related to the use or operation of the Property (the “Personal Property”). 1. Purchase Price. The total purchase price is a sum equal to (a) SEVEN MILLION ONE HUNDRED TEN THOUSANDAND NO/100 DOLLARS ($7,110,000.00), payable as follows: At closing, Buyer will assume Seller’s obligations onan existing loan with an interest rate of five and one-half percent (5.50%) per annum secured by the Property with atotal current balance of approximately ONE MILLION SEVEN HUNDRED FIFTY-EIGHT THOUSAND AND NO/100DOLLARS ($1,758,000.00) (the “Assumed Loan”). The total balance of the Assumed Loan shall be applied to thepurchase price, and Buyer will pay the remainder of the cash purchase price, that is, approximately FIVE MILLIONTHREE HUNDRED EIGHTY-FIVE THOUSAND AND NO/100 DOLLARS ($5,385,000.00), at closing. 2. Earnest Money Receipt. Within three (3) days after mutual execution of this Agreement (the “Execution Date”),Buyer shall deposit with the Title Company (defined below) the sum of ONE HUNDRED FIFTY THOUSAND ANDNO/100 DOLLARS ($150,000.00) as earnest money (the "Earnest Money") in the form of Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 1 x cash or ocheck or opromissory note not to exceed 5% of the purchase price. Upon removal of the conditionsreferred to in Section 3, the Earnest Money shall be increased to THREE HUNDRED THOUSAND AND NO/100DOLLARS ($300,000.00) and shall be non-refundable except as otherwise provided in this Agreement. If the EarnestMoney is in the form of a promissory note, it is due and payable: ono later than 5 PM Pacific Time one day afterexecution of this Agreement by Buyer and Seller or oupon satisfaction or waiver by Buyer of the conditions to Buyer'sobligation to purchase the Property set forth in this Agreement or oother:____________________________________________________________. If the Earnest Money promissory noteis not redeemed and paid in full when due, then (i) the Earnest Money promissory note shall be delivered and endorsedto Seller (if not already in Seller’s possession), (ii) Seller may collect the Earnest Money from Buyer, either pursuant toan action on the promissory note or an action on this Agreement, and (iii) this Agreement shall be of no further force oreffect. The Earnest Money shall be deposited with First American Title Insurance Company of Oregon, (the "TitleCompany") at the following branch: 200 SW Market Street, Suite 250, Portland, Oregon 97201, Attn: RachaelBushnell. The Earnest Money shall be applied to the payment of the purchase price for the Property at closing. TheEarnest Money shall be deposited in an interest bearing account. Any interest earned on the Earnest Money shall beconsidered to be part of the Earnest Money. The Earnest Money shall be returned to Buyer in the event any conditionto Buyer's obligation to purchase the Property shall fail to be timely satisfied or waived by Buyer or in the event thistransaction fails to close as a result of a casualty, condemnation or default by Seller hereunder. 3. Conditions to Purchase. (a) Buyer's obligation to purchase the Property is conditioned on the following: (a) Buyer’s satisfaction withthe Property and Buyer’s financing, including without limitation the terms and conditions of Seller’s loan to beassumed by Buyer, (b) the approval of Seller’s lender to Buyer’s assumption of the Seller’s loan on terms acceptable toBuyer in Buyer’s sole discretion, and (c) Buyer's review and approval of Seller’s Documents (as defined in Section 5below) and approval of the results of its property inspection described in Section 4 below. If Buyer has not givenwritten waiver of these conditions, or stated in writing that these conditions have been satisfied, by written noticegiven to Seller within twenty-one (21) days after the Execution Date (the “Due Diligence Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 2 Period”), the Agreement shall automatically terminate, and the Earnest Money shall be promptly returned toBuyer. Seller shall reasonably cooperate and assist with obtaining the consent of its lender to such loanassumption by Buyer. It shall be a condition to Buyer’s obligation to close this transaction that Seller shallhave delivered to Buyer prior to the closing an estoppel certificate from all tenants of the Property certifyingthat such tenants’ leases are in full force and effect and there is no breach or default thereunder, and otherinformation as Buyer shall reasonably require. At all times before the Closing Date, Seller shall cooperate withBuyer in connection with obtaining governmental approvals, entitlements, consents, and permits in connectionwith Buyer's purchase and operation of the Property, without cost or expense to Seller. This includes, withoutlimitation, joining in proceedings for and/or the execution of petitions, applications, zone changes, easements,permits, approvals, conditional uses, licenses, dedications, and other land use-related matters as reasonablyapproved by Seller and provided that the same are not effective unless the purchase and sale closes as contemplatedherein. (b) Seller’s obligation to sell the Property is conditioned upon being released from all liability arising under orin connection with the Assumed Loan after the Closing Date. Buyer’s obligation to purchase the Property isconditioned on completing the assumption of the Assumed Loan at Closing. In the event that either of theseconditions is not satisfied, this Agreement shall immediately terminate and the Earnest Money shall be promptlyreturned to Buyer. 4. Property Inspection. From the Execution Date through closing, Seller shall permit Buyer and its agents, at Buyer'ssole expense and risk, to enter the Property, at reasonable times after reasonable prior notice to Seller and after priornotice to the tenants of the Property as required by the tenants' leases, to conduct inspections, tests, surveys and otherinvestigations including (i) environmental review including independent third party review of any environmental andgeotechnical reports provided by Seller, that is, a Phase I environmental site assessment as that term is generally used,but no drilling or other invasive action at the Property without Seller’s prior written consent, which shall not beunreasonably conditioned, delayed or denied; (ii) preparation of design, planning or density studies; (iii) third partyengineering reviews, including review of building structure and mechanical systems; (iv) preparation of anindependent market survey and geotechnical report; (v) review of historic preservation issues; (vi) review of City ofKent files and documents, as well as applications and correspondence (if any) of Seller with the Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 3 City; and (vii) other matters pertaining to title, physical condition or any other aspect of the Property. Buyershall also have the right to discuss the Property and this Agreement with third parties, including lenders,contractors and governmental officials and representatives. Buyer shall indemnify, hold harmless, and defendSeller from all liens, costs, and expenses, including reasonable attorneys' fees and experts' fees, arising fromor relating to Buyer's entry on and inspection of the Property. This agreement to indemnify, hold harmless,and defend Seller shall survive closing or any termination of this Agreement. The Buyer and Seller understandthat the information provided is confidential in nature, and the Buyer and the Seller covenant not to discloseany information the use of which in any manner may be detrimental to any party, except as reasonablynecessary in connection with the transactions contemplated by this Agreement, or as required by applicablelaw. Seller hereby agrees from and after the Execution Date until the Closing Date (as hereinafter defined), orthe termination of this Agreement, that (i) Seller will take no action that will adversely affect title to the Property;and (ii) Seller will not enter into any written or oral contracts, leases, or agreements or amendments or modificationthereto, with respect to the operation, use or occupancy of the Property without the prior written consent of Buyer. Buyer may obtain an ALTA survey of the Property during the Due Diligence Period and Seller, without incurring anycost or expense to it, shall promptly cooperate with Buyer with regard to obtaining such survey. Buyer, at its expense, shall be entitled to engage an environmental consultant of its choice and obtain a Phase Ienvironmental site assessment of the Property during the Due Diligence Period, and, if recommended by suchconsultant, Buyer shall be entitled to obtain a Phase II environmental site assessment and perform any testingrecommended in the assessment. Seller agrees to provide Buyer and its consultant with copies of any environmentalreports, assessments or other information in Seller’s possession or of which Seller has knowledge, concerning theProperty, or any portion thereof, and to cooperate in the completion of Buyer’s environmental site assessment. Buyer, at its expense, shall be entitled to engage a consultant of its choice to review and inspect the Property and all ofthe buildings on the Property, including, but not limited to, the structural and roof components of the buildings andcompliance with building codes and the Americans With Disabilities Act. If in the possession of Seller, Seller Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 4 agrees to provide Buyer with as-built plans and specifications for the Property and to facilitate access to theProperty by Buyer’s consultants and representatives. 5. Seller’s Documents. Within five (5) days after the Execution Date, Seller shall deliver to Buyer, at Buyer's addressshown below, legible and complete copies of the following documents and other items relating to the ownership,operation, and maintenance of the Property, to the extent now in existence and to the extent such items are withinSeller's possession or control (“Seller’s Documents”): (a) Real and personal property tax bills for the most recent tax year. (b) All environmental reports, studies and assessments concerning theProperty. (c) All soils, geotechnical, drainage, seismological, and engineeringreports, studies and assessments concerning the Property. (d) Any CC&R’s or other agreements relating to all of any portion of theProperty. (e) All tenant leases and any amendments thereto (the “Leases”) alongwith copies of any tenant financial statements, and a current rent roll for the Property. (f) Operating statements, copies of sales reports and CAM details for theProperty for the years 2006, 2007, 2008 and 2009 to date. (g) All certificates of occupancy for the Property. (h) All construction and equipment warranties. (i) All documents related to Seller’s loan on the Property. In the event Seller does not deliver the foregoing documents within the five (5) day period, the DueDiligence Period shall be extended one day for each day that Buyer has not received all of the foregoing documents. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 5 6. Title Insurance. Within five (5) days after the Execution Date, Seller shall deliver to Buyer a preliminary title reportfrom the Title Company (the "Preliminary Commitment"), together with complete and legible copies of all documentsshown therein as exceptions to title, showing the status of Seller's title to the Property. Buyer shall have ten (10) daysafter receipt of a copy of the Preliminary Commitment within which to give notice in writing to Seller of any objectionto such title or to any liens or encumbrances affecting the Property. Within five (5) days after the date of such noticefrom Buyer, Seller shall give Buyer written notice of whether it is willing and able to remove the objected-toexceptions. Within five (5) days after the date of such notice from Seller, Buyer shall elect whether to purchase theProperty subject to the objected-to exceptions which Seller is not willing or able to remove or terminate thisAgreement. On or before the Closing Date (defined below), Seller shall remove all exceptions to which Buyer objectsand which Seller agrees Seller is willing and able to remove. Excepting the loan to be assumed by Buyer described inSection 1 above, Seller agrees to remove all exceptions to title that consist of monetary liens against the Property,including, but not limited to, mortgages, trust deeds, delinquent taxes and assessments, federal and state tax liens,judgments, equitable liens and other exceptions of a similar nature unless Buyer has agreed to assume suchexceptions. All remaining exceptions set forth in the Preliminary Commitment and agreed to by Buyer shall be"Permitted Exceptions." The title insurance policy to be delivered by Seller to Buyer at closing shall contain noexceptions other than the Permitted Exceptions and the usual preprinted exceptions in an ALTA owner's standard formtitle insurance policy, unless Buyer purchases extended coverage, in which event, such preprinted exceptions shall bedeleted from the title insurance policy. 7. Default, Remedies. If the conditions, if any, to Buyer's obligation to close this transaction are timely satisfied orwaived by Buyer and Buyer nevertheless fails, through no fault of Seller, to close the purchase of the Property, Seller'ssole remedy shall be to retain the Earnest Money paid by Buyer. In the event Seller defaults in its obligation to closeunder this Agreement, Buyer shall be entitled to (i) the return of the Earnest Money and (ii) pursue any remediesprovided for in this Agreement as well as any remedies available at law or in equity, including without limitation, theremedy of specific performance. 8. Closing of Sale. Within seven (7) days after the expiration of or Buyer’s waiver of the Due Diligence Period or assoon as possible thereafter to allow Buyer’s assumption of the Assumed Loan, the sale shall be closed Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 6 in escrow at the Title Company (the “Closing Date”), provided Seller shall have performed all of Seller’sobligations set forth in the Agreement up through Closing Date. If Seller’s lender is not ready, willing and ableto allow Buyer to assume Seller’s loan referenced in Section 1 above within thirty (30) days after the expirationof or Buyer’s waiver of the Due Diligence Period, Buyer shall have the right to terminate this transaction at anytime thereafter by written notice to Seller in which event all Earnest Money shall be immediately refunded toBuyer. The sale shall be "closed" when the document conveying title and the documents evidencing the loanassumption are recorded and funds are disbursed to Seller. At closing, Buyer and Seller shall deposit with theTitle Company all documents and funds required to close the transaction in accordance with the terms of thisAgreement. At closing, Seller shall deliver a certification in a form reasonably approved by Buyer that Selleris not a "foreign person" as such term is defined in the Internal Revenue Code and the Treasury Regulationspromulgated under the Internal Revenue Code. If Seller is a foreign person and this transaction is nototherwise exempt from FIRPTA regulations, the Title Company shall be instructed by the parties to withholdand pay the amount required by law to the Internal Revenue Service. At closing, Seller shall convey feesimple title to the Property to Buyer by statutory warranty deed subject only to the Permitted Exceptions (the"Deed"). At closing, Buyer and Seller shall each also execute and deliver an Assignment and Assumption ofLeases, and an Assignment and Assumption of Contracts related to the Property for those contracts thatBuyer chooses to assume. Seller shall also deliver to Buyer a Bill of Sale conveying to Seller all PersonalProperty and warranties related to the use and operation of the Property free and clear of all liens, claims, andencumbrances. The form of each of these Assignment and Assumption agreements and the Bill of Sale reasonablydrafted and consistent with this Agreement shall be agreed upon by Buyer and Seller during the Due DiligencePeriod. At closing, Seller shall pay for and deliver to Buyer a standard form owner's policy of title insurance in theamount of the purchase price insuring fee simple title to the Property in Buyer subject only to the PermittedExceptions and the standard preprinted exceptions in a standard form policy. Buyer may obtain an extended ALTAowner’s policy, with such endorsements as Buyer may require at Buyer’s cost, plus payment by Buyer of any survey orother associated cost, and Seller shall execute an owners title affidavit reasonably satisfactory to Seller to facilitate theissuance thereof. In such event, the preprinted standard exceptions for a standard owner’s policy shall be removedfrom such title policy. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 7 9. Closing Costs, Prorates. Seller shall pay the premium and any sales tax on the premium for the title insurancepolicy that Seller is required to deliver pursuant to the above paragraph. Seller and Buyer shall each pay one-half ofthe escrow fees and applicable sales tax charged by the Title Company. Seller shall pay any loan assumption fees ofSeller’s lender, and Seller shall pay any other fees and charges assessed by its lender in connection with theassumption of the Assumed Loan. Seller shall pay an existing loan on the Property from Columbia Bank, whichcurrently has a balance of approximately ONE HUNDRED TEN THOUSAND AND NO/100 DOLLARS($110,000.00). Seller shall deliver to escrow prior to closing a Real Estate Excise Tax Affidavit and shall pay anyapplicable real estate excise tax and transfer taxes. Real property taxes for the tax year in which the transaction isclosed, assessments (if a Permitted Exception), personal property taxes, rents on existing tenancies paid for the monthof closing, interest on assumed obligations, and utilities shall be prorated as of the Closing Date. Prepaid rents,security deposits, and other unearned refundable deposits regarding the tenancies shall be assigned and delivered toBuyer at closing. The Property odoes xdoes not qualify for a special tax assessment or deferral program as follows: ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________. oSeller oBuyer xN/A shall be responsible for payment of all taxes, interest, and penalties, if any, upon removal ofthe Property from such special assessment or program. oPrior to closing, Buyer shall sign the Notice of Continuationon the Real Estate Excise Tax Affidavit or otherwise file for continuation of the specified assessment or program toavoid removal of the Property upon closing of the sale. 10. Possession. Buyer shall be entitled to exclusive possession (subject to the Leases and Permitted Exceptions of theProperty x on the Closing Date or o______________________________________________________________________. 11. Representations and Warranties. Except as disclosed to or known by Buyer prior to the satisfaction or waiver ofthe conditions or contingencies stated in Sections 3(a) and 4 above, including in the books, records, and Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 8 documents made available to Buyer, or in the title report or any supplemental report or documents referencedtherein, Seller represents and warrants that, to the best of Seller's actual knowledge, (a) Seller has the authority to enter into this Agreement and, subject to theprovisions of this Agreement, to consummate or cause to be consummated the transactionscontemplated herein to be made by Seller. The person signing this Agreement on behalf of Seller isauthorized to do so. (b) Seller is, or on the Closing Date shall be, the sole owner of the entireright, title and interest in and to the Property, subject to the Leases and the Permitted Exceptions. (c) There are no hazardous materials on the Property or current violationsof Environmental Laws with respect to the Property. (d) There are no agreements or contracts, whether written or oral, expressor implied, for lease or purchase of all or a portion of the Property to which Seller is a party; exceptfor the tenants occupying buildings B and C on the Property which have certain purchase rights withrespect to their buildings. (e) Seller has received no written notice of any violation (nor, to Seller’sactual knowledge, without independent investigation or duty to investigate, is the Property inviolation) of any applicable law, ordinance, order or regulation of any governmental or quasi-governmental agency having jurisdiction over the Property or any portion thereof. (f) No attachments, execution proceedings, assignments for the benefit ofcreditors, insolvency, bankruptcy, reorganization or other proceedings are pending against Seller. (g) Seller is not a "foreign person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended, or applicable Washington law. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 9 (h) There are no options to purchase (except as noted in item (d) above) oroptions to lease, or contracts for sale or management, maintenance, service or similar agreement(whether oral or written) affecting or relating to the Property, or any portion thereof, to which Selleris a party, that will survive closing. (i) There is no litigation, claim or proceeding pending against Seller orthe Property. (j) There are no current or pending condemnation proceedings against allor any portion of the Property. Seller has no knowledge of any plan or study by any governmentalauthority which in any way would materially affect the use of the Property, or any portion thereof forits intended uses or any intended public improvements which will result in any charge being leviedagainst, or any lien assessed upon, the Property. Seller has no knowledge of any existing, proposedor contemplated plan to widen, modify or realign any street or highway contiguous to the Property. If prior to closing, Seller or Buyer discovers any information that would cause any of the representations or warrantiesabove to be false or otherwise breached if the same were deemed made as of the date of such discovery, then the partydiscovering the same shall promptly notify the other party in writing. If the newly-discovered information wouldresult in costs or liability to Buyer in excess of the lesser of ONE HUNDRED THOUSAND AND NO/100 DOLLARS($100,000.00) or five percent (5%) of the Purchase Price, or will materially adversely affect Buyer’s intended use of theProperty, then Buyer shall have the right to terminate this Agreement and receive a refund of the Earnest Money,provided that Buyer elects to do so within five (5) days of discovering or receiving written notice of the newinformation. Nothing in this paragraph shall prevent Buyer from pursuing its remedies against Seller if Seller hadactual knowledge of the newly discovered information such that a representation or warranty provided for above wasfalse or otherwise breached when made. The parties agree that in all events Seller’s liability on any claim by Buyer forbreach of warranty shall be limited to those circumstances where Seller had actual knowledge of the breach at the timethe warranty was made.Risk of loss or damage to the Property shall be Seller's until closing and Buyer's at and after closing. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 10 Except for those representations and warranties of Seller specifically included in this Agreement: (i) Seller makes norepresentations or warranties regarding the Property; (ii) Seller hereby disclaims, and Buyer hereby waives, any and allrepresentations or warranties of any kind, express or implied, concerning the Property or any portion thereof, as to itscondition, value, compliance with laws, status of permits or approvals, existence or absence of hazardous material onsite, dimensions, size or boundaries of the Property, zoning or the ability to develop the Property, occupancy rate orany other matter of similar or dissimilar nature relating in any way to the Property, including the warranties of fitnessof a particular purpose, tenantability, habitability and use; (iii) Buyer otherwise takes the Property "AS IS," and (iv)Buyer represents and warrants to Seller that Buyer has sufficient experience and expertise such that it is reasonable forBuyer to rely on its own pre-closing inspections and investigations. It shall be a condition of Buyer’s obligation to close, and of Seller’s right to retain the Earnest Money as of closing,that all of the Seller’s representations and warranties stated in this Agreement are materially true and correct on theClosing Date. All representations, warranties, and indemnity and hold harmless obligations stated in this Agreementshall survive closing for a period of two (2) years. 12. Personal Property. This sale includes the following personal property: o None or x the personal propertylocated on and used in connection with the Property and owned by Seller which Seller shall itemize in aschedule. Seller shall deliver to Buyer such schedule within five (5) days after the Execution Date. The parties agreethat the personal property conveyed herein shall not be allocated to any of the purchase price. 13. Agency Disclosure. At the signing of this Agreement, the Seller’s brokers are Paul Sleeth and Billy Sleeth ofColliers International. Buyer is not represented by a broker in this transaction. Each party signing this documentconfirms that prior oral and/or written disclosure of agency was provided to him/her in this transaction. Seller shall besolely responsible for paying its brokers in connection with this transaction pursuant to the terms of a separateagreement. Each party will indemnify, defend, and hold the other party harmless of and from any claim for a fee orcompensation by any other broker claiming by or through the indemnifying party. 14. Notices. Unless otherwise specified, any notice required or permitted in, or related to, this Agreement mustbe in writing and signed by the party to be bound. Any notice or payment will be deemed given whenpersonally Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 11 delivered or delivered by facsimile transmission (with electronic confirmation of delivery), or will be deemed given onthe day following delivery of the notice by reputable overnight courier or through mailing in the U.S. mails, postageprepaid, by the applicable party to the address of the other party shown in this Agreement, unless that day is aSaturday, Sunday, or legal holiday, in which event it will be deemed delivered on the next following business day. Ifthe deadline under this Agreement for delivery of a notice or payment is a Saturday, Sunday, or legal holiday, such lastday will be deemed extended to the next following business day. 15. Assignment. Buyer omay assign o may not assign xmay assign, if the assignee is an entity owned or controlledby Buyer (may not assign, if no box is checked) this Agreement or Buyer's rights under this Agreement withoutSeller's prior written consent. No assignment shall relieve Buyer of its obligations under this Agreement. 16. Attorneys’ Fees. In the event a suit, action, arbitration, or other proceeding of any nature whatsoever, includingwithout limitation any proceeding under the U.S. Bankruptcy Code, is instituted, or the services of an attorney areretained, to interpret or enforce any provision of this Agreement or with respect to any dispute relating to thisAgreement, the prevailing party shall be entitled to recover from the losing party its attorneys', paralegals',accountants', and other experts' fees and all other fees, costs, and expenses actually incurred and reasonably necessaryin connection therewith. In the event of suit, action, arbitration, or other proceeding, the amount thereof shall bedetermined by the judge or arbitrator, shall include fees and expenses incurred on any appeal or review, and shall be inaddition to all other amounts provided by law. 17. Miscellaneous. Time is of the essence of this Agreement. The facsimile transmission of any signed documentincluding this Agreement shall be the same as delivery of an original. At the request of either party, the partydelivering a document by facsimile will confirm facsimile transmission by signing and delivering a duplicate originaldocument. This Agreement may be executed in two or more counterparts, each of which shall constitute an originaland all of which together shall constitute one and the same Agreement. This Agreement contains the entire agreementand understanding of the parties with respect to the subject matter of this Agreement and supersedes all prior andcontemporaneous agreements between them with respect thereto. Without limiting the provisions of Section 15 of thisAgreement, this Agreement shall be binding upon and shall inure to the benefit of the parties and their respectivesuccessors and assigns. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 12 The person signing this Agreement on behalf of Buyer and the person signing this Agreement on behalf ofSeller each represents, covenants and warrants that such person has full right and authority to enter into thisAgreement and to bind the party for whom such person signs this Agreement to the terms and provisions of thisAgreement. This Agreement shall not be recorded unless the parties otherwise agree. 18. Addendums, Exhibits. The following named addendums and exhibits are attached to this Agreement andincorporated within this Agreement: NONE. 19. Time for Acceptance. [intentionally deleted] 20. Calculation of Time Periods. Whenever a time period is set forth in days in this Agreement, the first day fromwhich the designated period of time begins to run shall not be included. The last day of the period so computed shallbe included, unless it is a Saturday or legal holiday, including Sunday, in which event, the period runs until the end ofthe next day which is not a Saturday or legal holiday. 21. Execution Date. The Execution Date is the later of the two dates shown beneath the parties' signatures below. 22. Governing Law. This Agreement is made and executed under, and in all respects shall be governed and construedby the laws of the State of Washington. 23. Leases. Seller shall provide Buyer with copies of all Leases, tenant correspondence and such other records anddocuments as Buyer deems necessary for its due diligence review of the Property. Seller will also provide Buyer withcopies of all management agreements and such other agreements and contracts pertinent to the operation of theProperty. Subsequent to the Execution Date, all leases, agreements and/or contracts entered into with respect to theProperty will require Buyer’s prior, written consent and approval. 24. Property Manager. At closing, on terms and conditions of an assignment and assumption agreement agreed uponduring the Due Diligence Period, Buyer shall assume Seller’s obligations under the management agreement with theProperty’s current property manager and Buyer will not terminate such agreement without cause for a Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 13 period of twelve months after closing on the condition that such manager performs each of its obligations under suchmanagement agreement in a timely, professional and competent manner reasonably satisfactory to Buyer. 25. Purchase Rights. Immediately after the Execution Date, Seller shall give the tenants occupying buildings Band C on the Property all written notices to which they are entitled notifying them of and requiring such tenants toexercise or waive their purchase rights with respect to their buildings in accordance with their respective leases, andcopies of such notices shall be provided to Buyer. Seller shall exercise its best efforts to obtain and provide to Buyerduring the Due Diligence Period written confirmation reasonably acceptable to Buyer executed by the tenantsoccupying buildings B and C that they have waived any option or other right to purchase any portion of the Propertyarising from or relating to this transaction (the “Waiver Confirmation”). Unless Buyer receives the WaiverConfirmation during the Due Diligence Period, it shall be a condition to Buyer’s obligation to close this transactionthat Buyer shall be satisfied, in Buyer’s sole discretion, with the status of the purchase rights held by the tenantsoccupying buildings B and C. 26. Broker Disclosure. Buyer acknowledges that Richard S. Pasko is a member of Seller and is a Washingtonlicensed real estate broker acting in his own behalf and is or may be receiving compensation in connection with thistransaction, which shall be the sole responsibility of Seller. EACH PARTY NEEDS TO CONSULT ITS OWN ATTORNEY. THIS DOCUMENT HAS BEEN PREPARED FORSUBMISSION TO THE PARTY’S ATTORNEY FOR REVIEW AND APPROVAL PRIOR TO SIGNING. NOREPRESENTATION OR RECOMMENDATION IS MADE BY THE COMMERCIAL ASSOCIATION OFREALTORS® PORTLAND/VANCOUVER OR BY THE REAL ESTATE LICENSEES INVOLVED WITH THISDOCUMENT AS TO THE LEGAL SUFFICIENCY OR TAX CONSEQUENCES OF THIS DOCUMENT. Buyer: RETAIL OPPORTUNITY INVESTMENTS CORP. By: /s/ Stuart TanzName: Stuart TanzTitle: CEOExecution Date: December 30, 2009Office Telephone: 914-272-8080Address: 3 Manhattanville Road Purchase, NY 10577Fax No.: 914-272-8088Seller: MERIDIAN VALLEY PROPERTIES, LLC By:/s/ Richard S. PaskoName: Richard S. PaskoTitle: Managing PartnerExecution Date: January 2, 2010Office Telephone: ____________Address: ___________________ ___________________Fax No.: ____________________ Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 14 State of New York__________) ) ssCounty of Westchester______)Before me, a Notary Public in and for said County and State, personally appeared the above-named__Stuart Tanz__ in his or her capacity as __CEO__ of Retail Opportunity Investments Corp., who acknowledged thathe did sign the foregoing instrument and that the same is the free act and deed of said entity. In testimony whereof, I have hereunto set my hand and official seal at __Purchase__, __NY__,this __4th__ day of __January__, 2010. __/s/ Steven V. Krauss__Notary Public of __State of New York__ State of Washington ) ) ssCounty of King )I certify that I know or have satisfactory evidence that __Richard S. Pasko______________ is the person whoappeared before me, and said person acknowledged that he signed this instrument, on oath stated that he/she wasauthorized to execute the instrument and acknowledged it as a _managing partner__ of Meridian Valley Properties,L.L.C., to be the free and voluntary act of such company for the uses and purposes mentioned in the instrument.DATED this __2__ day of __January__________ 2010./s/ Mark T. ThorneNOTARY PUBLIC in and for the State ofWashington.My appointment expires 02-09-2012. Ó 1997 Commercial Association of REALTORSÒ Portland/Vancouver (Rev. 9/97)PURCHASE AND SALE AGREEMENT AND RECEIPT OF EARNEST MONEY (WASHINGTON) 15AGREEMENT OF PURCHASE AND SALEAND ESCROW INSTRUCTIONS By and Between REGENCY CENTERS, L.P.,a Delaware limited partnership as Seller and RETAIL OPPORTUNITY INVESTMENTS CORP., a Delaware corporation as Buyer Dated as of December 30, 2009 Santa Ana Downtown Plaza Santa Ana, California Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final)  AGREEMENT OF PURCHASE AND SALEAND ESCROW INSTRUCTIONS(Regency - Santa Ana Downtown Plaza) THIS AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS ("Agreement") is made asof December 30, 2009 ("Agreement Date"), by and between REGENCY CENTERS, L.P., a Delaware limitedpartnership ("Seller"), and RETAIL OPPORTUNITY INVESTMENTS CORP., a Delaware corporation ("Buyer"). RECITALS A. Seller is the current owner of the Property (as defined in Section 2). B. Buyer desires to purchase and Seller is willing to sell the Property on the terms and conditions of thisAgreement. NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are herebyacknowledged, Buyer and Seller agree as follows: AGREEMENT 1. Certain Basic Definitions. For purposes of this Agreement, the following terms shall have the followingdefinitions: 1.1"Additional Deposit" means the amount of Two Hundred Fifty Thousand and No/100 Dollars($250,000.00), to be deposited with Escrow Holder pursuant to Section 2.2.2. The Additional Deposit shall be non-refundable to Buyer subject to the terms of this Agreement. 1.2"Agreement Date" means the date first set forth above in this Agreement. 1.3"Buyer's Address" means: Retail Opportunity Investments Corp.3 Manhattanville Road, Second FloorPurchase, New York 10577Attn: Mr. Richard SchoebelTelephone No.: (914) 272-8080Facsimile No.: (914)272-8088Email: rschoebel@roireit.net With copies to: Bouza, Klein & Kaminsky950 S. Flower Street, Suite 100 Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 1 Los Angeles, California 90015Attention: Michael J. Kaminsky, Esq.Telephone No.: (213) 488-0675, ext. 6Facsimile No.: (213) 488-1361E-Mail: mkaminsky@b2klaw.com 1.4"Closing" means the date the Grant Deed to Buyer is recorded in the Official Records of theCounty in which the Real Property is located. 1.5"Closing Date" means the date on which Closing actually occurs. 1.6"Due Diligence Period" means that period commencing on the Opening of Escrow and expiringat 5:00 p.m. (Pacific time) on the twenty-first (21st) day following the earlier to occur of (a) the Agreement Date, or (b)the date on which the Due Diligence Items were delivered to Buyer, which date is hereby acknowledged and agreed tobe December 29, 2009. If the Due Diligence Period expires on a weekend or legal holiday, it shall automatically beextended to the next business day). 1.7"Escrow Holder" means First American Title Insurance Company. 1.8"Escrow Holder's Address" means: First American Title Insurance CompanyNational Commercial Services777 South Figueroa Street, 4th FloorLos Angeles, CA 90017Attention: Ms. Carolyn J. MarcialTelephone No.: (213) 271-1728Facsimile No.: (818) 450-0132E-mail: cmarcial@firstam.com 1.9"Estoppel Certificates" is defined in Section 3.3.7. 1.10 "Excluded Items" means all proprietary, privileged or confidential information of Sellerrelating to the Property, including but not limited to, Seller's internal financial analysis, Seller's credit analysis andcollection plans, materials relating to Seller's cost to acquire the Property and any documents or communicationssubject to the attorney/client privilege. 1.11 "Initial Deposit" means the amount of Two Hundred Fifty Thousand andNo/100 Dollars ($250,000.00), to be deposited with Escrow Holder pursuant to Section 2.2.1. 1.12 "Leases" means those certain lease agreements set forth in Schedule 1.14. Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 2 1.13 "Outside Closing Date" means January 28, 2010. 1.14 "Purchase Price" means the sum of Nineteen Million and No/100 Dollars($19,000,000.00). 1.15 "Scheduled Closing Date" means that date which is five (5) days after the expiration ofthe Due Diligence Period. 1.16"Seller's Address" means: Regency Centers, L.P.c/o Regency Centers, Inc.915 Wilshire Boulevard, Suite 2200Los Angeles, California 90017Attention: Mr. T.R. GregoryTelephone No.: (213) 553-2200Facsimile No.: (213) 624-2280E-mail Address: TRGregory@regencycenters.com With copies to:Kennerly, Lamishaw & Rossi LLP707 Wilshire Boulevard, Suite 1400Los Angeles, California 90017Attention: Robert L. Madok, Esq.Telephone No.: (213) 426-2090Facsimile No.: (213) 312-1266E-Mail: robertmadok@klrfirm.com 1.17 "Shopping Center" means the shopping center located at 301 – 431 East First Street,Santa Ana, California, commonly known as the Santa Ana Downtown Plaza, which is located within the Real Propertyis located. 1.18"Tenants" mean those certain tenants under the Leases. 1.1"Title Company" means First American Title Insurance Company. 1.2"Title Company Address" means: First American Title Insurance CompanyNational Commercial Services777 South Figueroa Street, 4th FloorLos Angeles, California 90017Attn: Mr. Jimmy B. MoradaTelephone No.: (213) 271-1700 ext. 1770 Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 3 Facsimile No.: (818) 337-7155Email: jbmorada@firstam.corn 2. Sale of Property: Purchase Price. 2.1Sale of Property. Subject to the terms, covenants and conditions of this Agreement, Seller shallsell to Buyer, and Buyer shall purchase from Seller: (a) that certain real property located in the City of Santa Ana, County of Orange,State of California which is more particularly described in Exhibit "A" (the "Real Property"); (b) all buildings and other improvements located on the Real Property (the"Improvements"); and (c) all right, title and interest of Seller in and to the Real Property including,without limitation, the Leases and all other agreements demising space in or providing for the use or the occupancy ofthe land or Improvements and any permits, approvals, operating permits, plans, specifications, licenses, entitlements,surveys, warranties, guaranties and all other contracts and agreements and all intangible property and rights relating tothe Real Property, Improvements or personal property, if any (collectively, the "Contracts"), to the extent theContracts are assignable (the Real Property, the Improvements and the Contracts are collectively referred to herein asthe "Property"). 2.2 Purchase Price. The Purchase Price shall be payable as follows: 2.2.1 Initial Deposit. The Initial Deposit shall be delivered by Buyer to Escrow Holderwithin three (3) business days of Buyer's and Seller's mutual execution of this Agreement and delivery of a fullyexecuted copy thereof to Escrow Holder. Such Initial Deposit shall be made in the form of a wire transfer madepayable to the order of Escrow Holder, and shall be deposited by Escrow Holder pursuant to the provisions of Section3.1 below ("Opening of Escrow"). In the event that the Initial Deposit is not timely delivered to Escrow Holder asprovided above, this Agreement shall, at the option of Seller, be deemed to be null and void and of no further force oreffect. 2.2.2 Additional Deposit. Unless Buyer terminates this Agreement prior to the expirationof the Due Diligence Period pursuant to Section 3.5 below, the Additional Deposit shall be delivered by Buyer toEscrow Holder by 5:00 p.m. Pacific time on the day on which the Due Diligence Period expires. The AdditionalDeposit shall be deposited by Escrow Holder pursuant to the provisions of Section 3.1 below. By making theAdditional Deposit, Buyer shall be deemed to have waived its right to terminate this Agreement during the DueDiligence Period pursuant to Section 3.5 below. The Initial and Additional Deposits shall collectively be referred toas the "Deposit." The Deposit shall be applicable to the Purchase Price at Closing. Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 4 2.2.3 Refundability of Deposit. In the event that Buyer terminates this Agreement prior tothe expiration of the Due Diligence Period pursuant to Section 3.5 below, the Initial Deposit shall be refunded toBuyer in accordance with said Section 3.5. If Buyer does not terminate this Agreement prior to the expiration of theDue Diligence Period prior to the expiration of the Due Diligence Period, the Initial Deposit and the AdditionalDeposit shall become non-refundable to Buyer and shall be retained by Seller if this Agreement is terminated onaccount of a default by Buyer or a failure of Buyer's condition to Close hereunder or if the Close of Escrow does notoccur by the Scheduled Closing Date for any reason, subject to the terms of Section 9.2 hereof or any other provisionsof this Agreement which specifically provide for the return of the Deposit to Buyer. 2.2.4 Closing Payment at Closing. On or before the Closing Date as required by theEscrow Holder to Close Escrow on the Closing Date, Buyer shall pay to Escrow Holder a sum equal to (a) the PurchasePrice, less (b) the Deposit, plus (c) the amount of any items chargeable to Buyer under this Agreement (includingBuyer's share of closing costs, fees and expenses) (the "Closing Payment"). 2.2.5 Interest on Deposits. All funds received from or for the account of Buyer shall bedeposited by Escrow Holder in an interest-bearing account with a federally insured state or national bank("Account") located in California. All interest accrued on the Initial and Additional Deposits shall be credited toBuyer. 2.2.6 Independent Consideration. Contemporaneous with Buyer's execution and deliveryof this Agreement, Buyer has delivered to Seller and Seller hereby acknowledges the receipt of One Hundred Dollars($100.00) ("Independent Contract Consideration"), which amount the parties bargained for and agreed asconsideration for Buyer's exclusive right to inspect and purchase the Property pursuant to this Agreement and forSeller's execution, delivery and performance of this Agreement. The Independent Contract Consideration is inaddition to and independent of any other consideration or payment provided in this Agreement, is nonrefundable,and is fully earned and shall be retained by Seller notwithstanding any other provision of this Agreement. 3. Escrow; Closing Conditions. 3.1 Escrow. Upon the execution of this Agreement by Buyer and Seller, and the acceptance of thisAgreement by Escrow Holder in writing, this Agreement shall constitute the joint escrow instructions of Buyer andSeller to Escrow Holder to open an escrow ("Escrow") for the consummation of the sale of the Property to Buyerpursuant to the terms of this Agreement. Upon Escrow Holder's receipt of the Deposit and Escrow Holder's writtenacceptance of this Agreement, Escrow Holder is authorized to act in accordance with the terms of this Agreement.Upon the Close of Escrow, Escrow Holder shall pay any sum owed to Seller with immediately available federal funds.Escrow Holder shall pay any sum owed to Buyer or Seller with Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 5 immediately available federal funds. Escrow Holder is designated the "real estate reporting person" for purposesof Section 6045 of the Internal Revenue Code of 1986, as amended and Treasury Regulation 1.6045-4, and anyinstructions or settlement statement prepared by Escrow Holder shall so provide. Escrow Holder shall be responsiblefor filing Form 1099-S with the Internal Revenue Service. 3.2Closing Date. The Escrow shall occur ("Close of Escrow") on the Scheduled Closing Date,provided that all conditions to the Close of Escrow set forth in this Agreement have been satisfied or waived in writingby the party intended to be benefited thereby. In the event that the Closing does not occur by the Outside ClosingDate, this Agreement shall automatically terminate and be of no further force or effect, except with respect to anyprovisions of this Agreement that expressly survive the Close of Escrow and/or termination of this Agreement. 3.3Buyer's Conditions to Closing. The Close of Escrow is subject to and contingent on thesatisfaction of the following conditions or the waiver of the same by Buyer in writing: 3.3.1 Inspection. Buyer's approval, in its sole discretion, of the physical condition of theProperty at Buyer's sole cost and expense prior to the expiration of the Due Diligence Period. Notwithstanding theforegoing, Buyer's right to inspect the Property pursuant to the terms of this Agreement shall, at all times, be subject toSeller's inspection rights under the Leases. (a) Buyer shall have the right to commence Buyer's physical inspection of theProperty immediately: (i) after Buyer's and Seller's execution of this Agreement; (ii) after Seller has confirmed to Buyerthat the Tenants have been notified of Buyer's commencement of the physical inspection of the Property; and (iii) afterSeller's receipt of written evidence that Buyer has procured the insurance required by Section 3.3.1(c) of thisAgreement. Buyer's physical inspection of the Property shall be conducted during normal business hours at timesmutually acceptable to Buyer and Seller, but in all events upon no less than one (1) business days' written request fromBuyer to Seller. No invasive testing or boring with respect to the Property shall be conducted by Buyer or Buyer'srepresentatives. Seller shall provide to Buyer copies of all environmental reports relating to the Property in Seller'spossession. (b) Buyer acknowledges that prior to the expiration of the Due Diligence Period:(i) Buyer has or will have conducted such surveys and inspections, and made such percolation, geologic,environmental and soils tests and other studies of the Property; and (ii) Seller shall provide Buyer with adequateopportunity to make such inspection of the Property (including an inspection for zoning, land use, environmental andother laws, regulations and restrictions) as Buyer shall, in Buyer's discretion, deem necessary or advisable as acondition precedent to Buyer's purchase of the Property and to determine the physical, environmental and land usecharacteristics of the Property (including, without limitation, its subsurface) and its suitability for Buyer's Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 6 intended use. (c) Buyer shall obtain or cause its consultants to obtain, at Buyer's sole cost andexpense prior to commencement of any investigative activities on the Property, a policy of commercial generalliability insurance covering any and all liability of Buyer and Seller with respect to or arising out of any investigativeactivities. Such policy of insurance shall be an occurrence policy and shall have liability limits of not less than OneMillion Dollars and No/100 ($1,000,000.00) combined single limit per occurrence for bodily injury, personal injuryand property damage liability. Such insurance policy shall name Seller, its successors and assigns and such otherentities as Seller shall designate as additional insureds including, without limitation, the Tenants, and shall be in formand substance and issued by an insurance company reasonably satisfactory to Seller. Buyer shall protect, indemnify, defend and hold the Property, Seller and Seller's officers, directors, partners,members, fiduciaries, participants, affiliates, employees, representatives, invitees, agents and contractors free andharmless from and against any and all claims, damages, liens, stop notices, liabilities, losses, costs and expenses,including reasonable attorneys' fees and court costs (collectively, "Liabilities"), resulting from Buyer's inspection andtesting of the Property, including, without limitation, repairing any and all damages to any portion of the Property,arising out of or related (directly or indirectly) to Buyer's conducting such inspections, surveys, tests, and studies, evenif such Liabilities are caused by the concurrent negligence of Seller. Notwithstanding anything to the contrarycontained in this Agreement, Buyer's indemnification obligations as set forth herein shall not apply to any claims,costs, losses, liabilities, damages or expenses, to the extent incurred by Seller as a result of a condition existing at theProperty prior to any entry by Buyer onto the Property, except to the extent such pre-existing condition was worsenedby any act or omission of Buyer, its agents or contractors. (d) Buyer shall keep the Property free and clear of any mechanics' liens ormaterialmen's liens related to Buyer's right of inspection and the activities contemplated by Section 3.3.1 of thisAgreement. Buyer's indemnification obligations set forth herein shall survive the Close of Escrow and shall not bemerged with the Deed, and shall survive the termination of this Agreement and the Close of Escrow. (e) Buyer hereby covenants that it shall comply with all the terms andconditions set forth in the Leases and shall use its commercial reasonable efforts not to interfere or disturb the Tenantsor the Tenants' rights, duties and obligations under the Leases. (f) It is understood by the parties that, except to the extent otherwise specificallyprovided herein, Seller does not make any representation or warranty, express or implied, as to the accuracy orcompleteness of any information contained in Seller's files or in the documents produced by Seller, including, without Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 7 limitation, any environmental audit. Buyer acknowledges, except to the extent otherwise specifically providedherein, that Seller and Seller's affiliates shall have no responsibility for the contents and accuracy of such disclosures,and Buyer agrees that the obligations of Seller in connection with the purchase of the Property shall be governed bythis Agreement irrespective of the contents of any such disclosures or the timing or delivery thereof. 3.3.2 Title Policy. The Title Company's issuance of the Buyer's Title Policy (or mark-upthereof with promise of delivery within thirty (30) days) complying with the requirements of Section 3.7.2 below;provided, however, the issuance of endorsements requested by Buyer shall not be a condition precedent to Buyer'sobligation to proceed with the Close of Escrow unless such endorsements are for the purpose of removingdisapproved title exceptions that Seller has agreed to attempt to remove at or prior to the Close of Escrow. 3.3.3 Covenants. Seller having performed and satisfied all agreements and covenantsrequired hereby to be performed by Seller prior to or at the Close of Escrow. 3.3.4 Title Commitment. Buyer's approval, in its sole discretion, by the expiration of theDue Diligence Period of the following (collectively, "Commitment"): (i) a current title commitment for the RealProperty issued by the Title Company; (ii) copies of all underlying title documents described in such titlecommitment; and (iii) the Existing Survey (defined below), if any, or any update thereto obtained by Buyer if Buyerso elects, prior to the expiration of the Due Diligence Period. (a) Seller shall deliver (or cause to be delivered) to Buyer the Commitment and, ifpossessed by Seller, an ALTA Property survey ("Existing Survey"). Buyer, at its sole discretion, cost and expense,shall have the right to commission an updated survey (the "Updated Survey"). In the event Buyer timely objects inwriting to matters on the Commitment, the Existing Survey and the Updated Survey in accordance with the approvalprocedures set forth in Section 3.4 herein, Seller shall have the right, but not the obligation, to notify Buyer in writingwithin five (5) calendar days after the date of Seller's receipt of the Buyer's notice that Seller desires to have untilClosing in which to remove or to cure, or to agree to remove or to cure some or all of the disapproved items to Buyer'sreasonable satisfaction. Seller's notice may limit such attempts to cure or remove to exclude payment of money ortaking any judicial action. Seller's failure to deliver such notice to Buyer within such five (5) day period with respectto any disapproved item shall be deemed to be an election by Seller not to attempt to remove or to cure such items.Notwithstanding the foregoing, Seller agrees to remove prior to or concurrently with the Close of Escrow anymortgages or deeds of trust encumbering the Real Property, any liens for delinquent taxes, judgment liens, ormechanic's liens arising out of work performed or materials supplied to the Real Property by Seller, but in all eventsexcluding the lien for taxes, not yet due and payable. In connection therewith, Seller shall have the option, in Seller'ssole discretion and without Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 8 Buyer's consent, of curing Buyer's objection to any mechanic's lien encumbering the Property or a portion thereof inthe face amount of Fifty Thousand and No/100 Dollars ($50,000.00) or less by the posting of a bond by a reputablebonding company reasonably acceptable to Buyer, provided that Buyer shall have reasonable approval rights withrespect to the form, terms, and amount of the bond so posted. Buyer shall be deemed to have approved all exceptionsnot objected to by Buyer or to which objections have been waived by Buyer pursuant to Section 3.3.4(b) below. (b) If Seller elects not to attempt to remove or to cure some or all of thedisapproved items pursuant to Section 3.3.4 (a) to Buyer's reasonable satisfaction, or if Seller has agreed to attempt toremove or cure some or all of such disapproved items and is unable to or has failed to remove or cure the same, thenBuyer shall have, as Buyer's sole and exclusive remedy, the right exercisable on or before three (3) business days afterSeller's election or deemed election (or prior to Close of Escrow if Seller elects but is unable or fails to remove or curesuch disapproved item) either (i) to waive such exceptions to title, and proceed to take title to the Property withoutany deduction or offset in the Purchase Price, or (ii) to terminate this Agreement and the Escrow by giving writtennotice of such termination to Seller and to Escrow Holder in which event Buyer and Seller shall have no furtherliability to the other hereunder except for those provisions that specifically survive the termination of this Agreementand the Deposit shall be returned to Buyer. Buyer's failure to provide Seller or Escrow Holder with written notice oftermination within said three (3) business day period shall constitute Buyer's election under clause (i) above. 3.3.5 Due Diligence Items. Seller shall deliver to Buyer the due diligence items set forth inSchedule 3.3.5 (the "Due Diligence Items"). Seller acknowledges Buyer may desire to discuss or otherwise inquireabout the Due Diligence Items with various governmental entities and utilities, any contracts with Tenants and thirdparties. In this regard, Buyer is permitted to contact all necessary third parties and discuss with such third partiesgovernmental records, contracts with Tenants and other Due Diligence Items; provided, however, that (a) Buyer firstobtains Seller's reasonable consent and Seller is first given a reasonable opportunity to be present at such contact ordiscussions at a time and location specified by Buyer in writing, and (b) Buyer shall take no action or enter into anyagreement, document, dealing, cooperation or any other matter without Seller's prior written consent (to be withheld inSeller's sole discretion) that: (i) would create liability on Seller; (ii) would be binding on Seller prior to the Close ofEscrow; or (iii) would be binding on Seller if the Close of Escrow does not occur. 3.3.6 Representations and Warranties. All representations and warranties of Sellercontained in this Agreement shall be true and correct as of the date made and as of the Close of Escrow with the sameeffect as though such representations and warranties were made at and as of the Close of Escrow. 3.3.7 Tenant Estoppel Certificates. During the Due Diligence Period, Seller shall deliverto each Tenant under the Leases, other than the "Default Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 9 Tenants" (defined below) a tenant estoppel certificate substantially in the form either: (i) attached Exhibit "G"; or (ii)as required to be delivered by a tenant under the subject Lease (the "Tenant Estoppel Certificates"). The "DefaultTenants" are those known as "Grace's Flowers," "Panderia Ensenada," and "Chiqui's Beauty." Seller shall use itscommercially reasonable efforts (at no expense to Seller unless the subject Lease specifically requires Seller to pay foran estoppel processing fee) to procure from each Tenant an executed Tenant Estoppel Certificate, provided that Sellershall have no liability whatsoever to Buyer if for any reason it is unable to procure an executed Tenant EstoppelCertificate from one or more Tenants. Without limiting the foregoing, in the event Seller is unable to obtain a TenantEstoppel Certificate from those Tenants identified as "Food For Less," "FAMSA," McDonald's, Taco Bell, and not lessthan fifty percent (50%) of the Tenants identified on Schedule 3.3.7, expressly excluding the Default Tenants (said50% of the Tenants listed on Schedule 3.3.7, along with Food For Less, FAMSA, McDonald's, and Taco Bell,collectively the "Estoppel Tenants"), Buyer shall have the right to terminate this Agreement by written notice toSeller delivered prior to the expiration of the Due Diligence Period. In no event shall Seller be in default hereunder forits failure to obtain Tenant Estoppel Certificates from any Tenants, but the delivery of Tenant Estoppel Certificatesfrom all of the Estoppel Tenants shall be a condition precedent to Buyer's obligation to purchase the Property pursuantto this Agreement (which may be waived by Buyer in writing prior to the expiration of the Due Diligence Period;failure of Buyer to terminate this Agreement or permit this Agreement to terminate prior to the expiration of the DueDiligence Period shall be deemed Buyer's waiver of the aforesaid condition precedent). If, by the end of the DueDiligence Period (a) Seller fails to timely deliver Tenant Estoppel Certificates from all of the Estoppel Tenants, or (b)Buyer reasonably disapproves any Tenant Estoppel Certificate from any of the Estoppel Tenants, and Seller cannotcause such tenant(s) to execute substitute Tenant Estoppel Certificate which is reasonably satisfactory to Buyer priorto the expiration of the Due Diligence Period, Buyer may either (i) terminate this Agreement by delivering writtennotice to the Seller and the Escrow Holder of its election of the same, or (ii) waive the requirement that Seller obtainTenant Estoppel Certificates from those Estoppel Tenants from whom Seller has not yet obtained the same andproceed to the Closing notwithstanding Seller's failure to deliver the subject Tenant Estoppel Certificates. If Buyerterminates this Agreement in accordance with the foregoing, the entire Deposit shall be immediately returned to Buyer(without the need for any additional instructions by either party hereto), and thereafter neither party shall have anyfurther rights or obligations hereunder, except as specifically provided in this Agreement. Notwithstanding theforegoing, to the extent Seller is unable, despite the exercise of reasonable diligence, to obtain a Tenant EstoppelCertificate from one or more of the Estoppel Tenants, and any other Tenant that is not a Default Tenant, on or beforethe expiration of the Due Diligence Period, Seller shall execute and deliver to Buyer Seller estoppel certificatessubstantially in the form of Exhibit "H" ("Seller Estoppel Certificates") at Closing for all such Tenants which are notDefault Tenants and from which Seller was not able timely to obtain a Tenant Estoppel Certificate. To the extent Sellerreceives Tenant Estoppel Certificates from any such Tenants after the Close of Escrow and delivers such certificates toBuyer, or Buyer receives an estoppel certificate Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 10 from any such Tenant, the Seller Estoppel Certificate previously delivered by Seller for such Tenant shall bedeemed null and void as to each such Tenant Estoppel Certificate received by Buyer after the Close of Escrow. Theprovisions of this Section 3.3.7 shall survive the Close of Escrow. 3.3.8 Damage or Destruction. Buyer shall not have elected, pursuant to the terms ofSection 6, to terminate this Agreement. 3.4 Approval Procedure. Buyer shall notify Seller of Buyer's approval, if at all, of the mattersdescribed in Sections 3.3.1, 3.3.4, 3.3.5, and 3.3.7 by written notice delivered to Seller and Escrow Holder by theexpiration of the Due Diligence Period. Buyer's failure to approve any of the matters described in Sections 3.3.1, 3.3.4,3.3.5, and 3.3.7 by the expiration of the Due Diligence Period in the manner described shall be deemed Buyer'sdisapproval of such matters, this Agreement shall automatically terminate and Escrow Holder shall immediatelyrelease the Deposit to Buyer without the need for any further instructions. Provided Buyer provides the foregoingapproval notice prior to the expiration of the Due Diligence Period, in no event shall Buyer have the right todisapprove any such item(s) after the expiration of the Due Diligence Period. 3.5 Termination Upon Disapproval. If Buyer disapproves, in its sole discretion, of any aspect of itsreview of the Property pursuant to Section 3.3.1, 3.3.4, 3.3.5, or 3.3.7 above, Buyer shall have the right to terminatethis Agreement by written notice delivered to Seller no later than the expiration of the Due Diligence Period. Upontermination of this Agreement pursuant to this Section 3.5 or pursuant to Section 6: (a) each party shall promptlyexecute and deliver to Escrow Holder such documents as Escrow Holder may reasonably require to evidence suchtermination; (b) Escrow Holder shall return all documents to the respective parties who delivered such documents toEscrow; (c) Escrow Holder shall remit the Deposit to Buyer; (d) Buyer and Seller shall each pay one-half (½) of EscrowHolder's escrow cancellation fees, if any; (e) Buyer shall return to Seller all Due Diligence Items in Buyer's possessionrelating to the Property; and (f) the respective obligations of Buyer and Seller under this Agreement shall terminate;provided, however, notwithstanding the foregoing, Buyer's indemnity obligations under Section 3.3.1(d) shall surviveany such termination of this Agreement, and the termination of this Agreement shall not release any other indemnityobligation of Buyer ("Surviving Indemnity"). 3.6 Seller's Conditions to Closing. The obligations of Seller to consummate the transactionsprovided for herein are subject to and contingent upon the satisfaction of the following conditions or the waiver ofsame by Seller in writing: 3.6.1 Covenants. Buyer having performed and satisfied all agreements and covenantsrequired hereby to be performed by Buyer prior to or at the Close of Escrow. 3.6.2 Representations and Warranties. All representations and Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 11 warranties of Buyer contained in this Agreement shall be materially true and correct as of the date made and as of theClose of Escrow with the same effect as though such representations and warranties were made at and as of the Close ofEscrow. 3.6.3 Payment of Purchase Price. Buyer shall have timely deposited into Escrow theAdditional Deposit and the Cash Payment. 3.7 Title and Title Insurance. 3.7.1 Deed. Seller shall convey title to the Real Property to Buyer by grant deed inthe form of Exhibit "B" attached hereto ("Deed"). 3.7.2 Buyer's Title Policy. At the Close of Escrow, Escrow Holder shall cause the TitleCompany to issue an ALTA 1992 Owner's Policy of Title Insurance with an insured amount equal to the PurchasePrice containing no exceptions other than as approved by Buyer pursuant to this Agreement ("Buyer's TitlePolicy"). Notwithstanding the foregoing, if Buyer does not provide the Title Company with a current ALTASurvey, Buyer's Title Policy shall be a CLTA 1992 Owner's Policy of Title Insurance. 3.8 Closing Costs and Charges. 3.8.1 Seller's Costs. Seller shall pay: (a) one-half (½) of Escrow Holder's fees in connectionwith the Escrow; (b) all documentary transfer taxes, other taxes; and (c); the premium for a standard coverage CLTAOwner's Title Policy insuring Buyer's title in an amount equal to the Purchase Price. 3.8.2 Buyer's Costs. Buyer shall pay: (a) one-half (½) of the Escrow Holder's fees inconnection with the Escrow; (b) the portion of the premium for Buyer's Title Policy equal to the premiumattributable to the ALTA extended coverage; (c) all recording fees payable in connection with the transfer of theProperty; and (d) all costs associated with any endorsements to Buyer's Title Policy. 3.8.3 Other Costs. All other costs, if any, shall be apportioned in the customary mannerfor real property transactions in Orange County. 3.9 Deposit of Documents and Funds by Seller. Not later than one (1) business day prior to theClosing Date, Seller shall deposit the following items into Escrow each of which shall be duly executed andacknowledged by Seller where appropriate: 3.9.1 The Deed; 3.9.2 Three (3) counterparts of the Assignment and Assumption of Leases, a form ofwhich is attached hereto as Exhibit "C" (the "Assignment and Assumption of Leases"); Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 12 3.9.3 Three (3) counterparts of the General Assignment and Assumption, a form ofwhich is attached hereto as Exhibit "D" (the "General Assignment and Assumption"); 3.9.4 The Certification of Non-Foreign Status in the form of Exhibit "E"("FIRPTA"); 3.9.5 Notice to Tenants in the form of Exhibit "F" ("Notice to Tenants"); 3.9.6 Seller's closing statement prepared by Escrow Holder; and 3.9.7 Other documents that may reasonably be required by Escrow Holder to closethe Escrow in accordance with this Agreement. Additionally, outside of Escrow, in connection with the Closing, Seller shall deliver or cause to be deliveredto Buyer, to the extent that Seller possesses the same, original copies of all Leases and all other licenses, permits, andgovernmental certificates and approvals relating to the Property, keys, if any, in Sellers possession to locks on theProperty. 3.10 Deposit of Documents and Funds by Buyer. Not later than one (1) business day prior to theClosing Date, Buyer shall deposit the following items into Escrow each of which shall be duly executed andacknowledged by Buyer where appropriate: 3.10.1 The Closing Payment; 3.10.2 Three (3) counterparts of the Assignment and Assumption of Leases; 3.10.3 Three (3) counterparts of the General Assignment and Assumption; 3.10.4 Buyer's closing statement prepared by Escrow Holder; 3.10.5 Notice to Tenants; and 3.10.6 All other funds and documents including all appropriate authority documents andcertificates as may reasonably be required by Escrow Holder to close the Escrow in accordance with this Agreement. 3.10.7 The parties hereto shall jointly deposit any required transfer declarations ordeclarations of value and mutually agreed closing statements. 3.11 Delivery of Documents and Funds at Closing. Provided that all conditions to closing set forthin this Agreement have been satisfied or, as to any Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 13 condition not satisfied, waived by the party intended to be benefited thereby, on the Scheduled Closing DateEscrow Holder shall conduct the Closing by recording or distributing the following documents and funds inthe following manner: 3.11.1 Recorded Documents. Record the Deed in the Official Records of OrangeCounty. 3.11.2 Buyer's Documents. Deliver to Buyer: (a) the original Buyer's Title Policy; (b) theoriginal FIRPTA; (c) an original counterpart of the Assignment and Assumption of Leases; (d) an original counterpartof the General Assignment and Assumption executed by Seller and Buyer; and (e) a counterpart copy of the Buyer'sclosing statement. 3.11.3 Seller's Documents. Deliver to Seller a counterpart or original (as applicable) ofevery document delivered to Buyer, and the Seller's closing statement. 3.11.4 Purchase Price. Deliver to Seller the Purchase Price and such other funds, if any,as may be due to Seller by reason of credits under this Agreement, less all items chargeable to Seller under thisAgreement and less the Holdback Amounts as defined in Section 3.12.5 below. 3.12 Prorations and Adjustments. 3.12.1 Generally. If any expenses are not determinable on the Close of Escrow, at theearliest possible opportunity following the Close of Escrow, Seller and Buyer shall make any interim and finaladjustments. The provisions of this Section 3.12 shall survive the Close of Escrow. 3.12.2 Taxes. Escrow Holder shall prorate real property taxes and assessments on theProperty as of the Close of Escrow for the current fiscal year based on the most current official real property taxinformation available from the County Assessor's office where the Real Property is located or other assessingauthorities. If real property tax and assessment figures for the current fiscal year are not available, real property taxesshall be prorated based on the real property taxes for the previous fiscal year. Seller shall pay any real property taxesattributable to the period of Seller's ownership of the Property and, if appropriate, reprorate taxes when the actual taxbills are available. Seller reserves the right to meet with governmental officials and to contest any reassessmentconcerning or affecting Seller's obligations under this Section 3.12.2. 3.12.3 Utility Costs and Deposits. Seller shall notify all water, gas, electric and otherutility companies servicing the Property (collectively, "Utility Companies") of the sale of the Property to Buyer andshall request that all Utility Companies send Seller a final bill for the period ending on the last day prior to the Closeof Escrow. Buyer shall notify all Utility Companies servicing the Property that as of the Close of Escrow, Buyer shallown the Property and that all utility bills for the period Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 14 commencing on the Close of Escrow are to be sent to Buyer. If any of the Utility Companies sends Seller or Buyer abill for a period in which the Close of Escrow occurs, Buyer and Seller shall prorate such bills outside the Escrow. Inconnection with such proration, it shall be presumed that utility charges were uniformly incurred during the billingperiod. 3.12.4 Rentals. Rent and other payments, including without limitation any additional rentand percentage rent, which are payable pursuant to the Leases, applicable to the time period in which the Close ofEscrow occurs, and have been received by Seller prior to the Closing Date, shall be pro-rated on a per diem basis as ofthe Closing Date. Seller shall use its commercially reasonable efforts to resolve, prior to the Closing Date, any rentarrearages arising under Leases for the period prior to the Closing Date; however, if any such arrearages exist atClosing, Buyer shall pay to Seller any rent actually collected after Closing which is applicable to the period precedingthe Closing Date in accordance with this Section 3.12.4. All rent, including any delinquent rent, collected by Buyerafter Closing shall be applied first to the current month's rent, second to unpaid, past due rent accruing after theClosing Date, and third to the unpaid rent accruing prior to the Closing Date (and such pre-Closing rent collected byBuyer shall be paid to Seller within ten (10) days after Buyer's receipt thereof). In no event shall delinquent rent beprorated. During the twelve (12) month period following Closing, Buyer shall bill tenants for any rent arrearages inrespect of the period prior to the Closing Date and shall use its commercially reasonable efforts to collect same,provided that Buyer shall not be required to incur any other cost or commence any legal proceeding in order to collectsuch arrearage. Any prepaid rentals including with respect to operating expenses shall be credited to Buyer as of theClose of Escrow. Buyer shall be credited and Seller shall be debited with an amount equal to all rent abatements andrent concessions applicable to periods after the Close of Escrow. Seller shall retain the right to take action to collectany delinquent rents or other amounts owing Seller applicable to the period prior to the Closing Date, except with tothe extent Seller is deemed to have waived its right to do so with respect to that Tenant commonly known as "SportsPlus" pursuant to Section 3.12.5 below. 3.12.5 Security Deposits. At the Close of Escrow, Buyer shall receive a credit against thePurchase Price in an amount equal to the aggregate of Tenant security deposits identified in Schedule 1.14 attachedhereto or such lesser amount as is set forth in a Tenant Estoppel Certificate delivered by the subject Tenant pursuant tothis Agreement, subject to the offsets for Grace's Flowers, Panaderia Ensenada, Chiquis Beauty, and Sports Plus asoutlined below. Seller and Buyer acknowledge that, as of the Agreement Date, the following Tenants are delinquent inthe payment of rent: (i) Grace's Flowers; (ii) Panaderia Ensenada; (iii) Chiquis Beauty; and (iv) Sports Plus. Withrespect Grace's Flowers, Seller shall be permitted to apply the entire security deposit paid by such Tenant to pre-Closing delinquent rents, so long as the space leased to such Tenant is vacant and Seller has legal rights to such spaceat the time of Closing. With respect to each of Panaderia Ensenada and Chiquis Beauty, Seller shall have the option of(A) Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 15 delivering the space leased to each such Tenant vacant at Closing with Seller having legal rights to such space at thetime of Closing, and retaining such Tenant's security deposit to the extent necessary to cover such Tenant'sdelinquencies, (B) if the space occupied by such Tenant is not vacant as of the Closing Date, so long as Seller has filedor caused to be filed unlawful detainer actions against such Tenant prior to Closing, retaining such Tenant's securitydeposit to the extent necessary to cover such Tenant's delinquencies, in which event, upon Closing, Seller shall assignits rights in any such actions to Buyer and shall remain responsible for all actual, reasonable out-of-pocket costsincurred by Buyer in completing such eviction process following the Closing, or (C) crediting Buyer at Closing withthe full amount of the security deposits for such Tenant as set forth on Schedule 1.14 attached hereto, in which eventSeller shall have no further obligation whatsoever with respect to any eviction process relating to such Tenant. Withrespect to Sports Plus, Seller shall have the option of (I) delivering the space leased to Sports Plus vacant at Closingand retaining Sports Plus' security deposit to the extent necessary to cover Sports Plus' delinquencies or completelysettling any ongoing rent dispute with Sports Plus by the Closing, or (II) crediting Buyer at Closing with the fullamount of the security deposit set forth in Sports Plus' Lease and waiving all further rights to proceed against SportsPlus for any pre-Closing delinquent rental amounts following the Closing. As of the Agreement Date, the amount ofTenant security deposits which are set forth in the Leases and other written agreements between Seller and the subjectTenant, along with the portions thereof that have been applied by Seller against Tenant delinquencies, are set forth onSchedule 1.14 attached hereto. 3.12.6 Adjustments for Common Area Expenses. (a) The phrase "Common Area Expenses" shall mean all costs, expenses andother amounts (including, but not limited to, taxes and insurance costs) incurred in connection with the repair,maintenance and operation of the common areas of the Shopping Center. All Common Area Expenses for the calendaryear 2010 shall be prorated as of the Close of Escrow based upon amounts budgeted by Seller for such calendar year,and there shall be no additional post-closing reconciliation of such amounts following the Close of Escrow. (b) To the extent that payments by Tenants to reimburse Seller for Common AreaExpenses are adjusted under the terms of the Leases at the end of calendar year 2009 ("Adjustment Period") to reflectthe actual Common Area Expenses incurred for such Adjustment Period, the following provisions shall apply: (i) Within ninety (90) days following the end of the Adjustment Periodand following the Close of Escrow, Seller shall compute the actual Common Area Expenses for such AdjustmentPeriod. Seller shall submit the adjustment statements required by the Leases to the Tenants, with Buyer's cooperationas reasonably requested by Seller. (ii) Seller shall promptly remit to applicable Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 16 Tenants the total amount of any overpayments by such Tenants attributable to the Adjustment Period. Seller shall beresponsible for collecting any underpayments of Common Area Expenses for the Adjustment Period, provided that tothe extent that Buyer receives any underpayments of Common Area Expenses from Tenants attributable to theAdjustment Period, Buyer shall promptly remit the same to Seller. Buyer covenants to use its commercially reasonableefforts to enforce, and to cooperate with Seller in enforcing, the provision in the Leases requiring reimbursement ofCommon Area Expenses during the Adjustment Period but shall not be required to give any notices to pay/perform orquit (provided that demand letters are expressly not excluded) or otherwise terminate any Lease or litigate for therecovery of such sums. Notwithstanding the foregoing, nothing herein shall preclude Seller from, and Seller herebyreserves the right to, seek to makes demands upon (including, without limitation, threats of litigation)Tenants for amounts owing under any Lease relating to claims arising prior to the Closing Date, provided that Sellershall only pursue litigation with respect to any Tenant (i) with respect to which Tenant has commenced such litigationprior to the Closing Date, or (ii) which has vacated its Premises in the Shopping Center prior to the Closing Date, andBuyer shall cooperate with Seller's efforts to so recover, provided that Buyer shall not be required to incur any out-of-pocket cost or expense in connection with any such cooperation. 3.12.7 Leasing Commissions. Seller shall be responsible for the payment of all leasingcommissions and the costs of all tenant improvement work and all other tenant concessions with respect to Leasesexecuted prior to the expiration of the Due Diligence Period. Buyer shall be responsible for the payment of leasingcommissions and the cost of all tenant improvement work and all other tenant concessions for leases executed on andafter the expiration of the Due Diligence Period. In addition, Buyer shall receive a credit to the Purchase Price atClosing in the amount equal to any unpaid leasing commissions or tenant improvements for any unleased space at theProperty as of the Closing Date. 3.12.8 Prorations. All prorations shall be made as of the Closing Date on the basis of theactual days of the month in which the Close of Escrow occurs. Such date shall be an income and expense day forBuyer. Seller shall be responsible for all expenses of the Property applicable to the period prior to the Close of Escrowand Buyer shall be responsible for all expenses applicable to the period from and after the Close of Escrow. 4. Delivery and Possession. Seller shall deliver possession of the Property to Buyer at the Close of Escrow,subject to the rights of the Tenants under the Leases and their sublessee(s) and occupant(s), if any. 5. Commissions. Except for James J. Manarino of James Manarino and Associates, Inc., representing Buyer(whose commission Buyer covenants to pay pursuant to separate agreement between Buyer and such broker), Buyerand Seller each represent and warrant to the other that there are no commissions, finder's fees or Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 17 brokerage fees arising out of the transactions contemplated by this Agreement. Each party shall indemnify and holdthe other party harmless from and against any and all liabilities, claims, demands, damages, costs and expenses,including, without limitation, reasonable attorneys' fees and court costs, in connection with claims for any suchcommissions, finders' fees or brokerage fees arising out of each such party's conduct or the inaccuracy of theforegoing representation and/or warranty of such party. Seller's representations and warranties in this Section 5 arenot subject to the limitations of Section 7 of this Agreement. This Section 5 shall survive the Closing. 6. Damage or Destruction: Condemnation. 6.1 Major Damage. Buyer shall have the right to terminate thisAgreement if all or a material part ofthe Property is destroyed without fault of Buyer or a material part of the Property is taken by eminent domain. Forpurposes of this Section 6, (a) a taking by eminent domain of a portion of the Property shall be deemed to affect a"material part" of the Property if the estimated value of the portion of the Property taken exceeds $300,000, and (b)the destruction of a "material part" of the Property shall be deemed to mean an insured or uninsured casualty to theProperty following Buyer's inspection of the Property and prior to the Close of Escrow having an estimated cost ofrepair which equals or exceeds $300,000. If Buyer does not terminate this Agreement and the transaction closeshereunder, any insurance proceeds or condemnation proceeds shall be payable to Buyer, whether or not the "materialpart" threshold is met. 6.2Definitions. The phrase "estimated value" shall mean an estimate obtained from a M.A.I.appraiser, who has at least five (5) years experience evaluating property located in the County where the Real Propertyis located, similar in nature and function to that of the Property, selected by Seller and approved by Buyer, and thephrase "estimated cost of repair" shall mean an estimate obtained from an independent contractor selected by Sellerand reasonably approved by Buyer. 6.3Notice; Credit to Buyer. Buyer shall give written notice of Buyer's election to terminate orproceed with this Agreement under the Act within ten (10) days after Buyer's receipt of written notice from Seller ofany damage to or condemnation of the Property which entitles Buyer to terminate this Agreement. Upon timelydelivery of such termination notice, Escrow Holder shall remit the Deposit to Buyer. If Buyer does not give suchnotice, then this Agreement shall not terminate. If Buyer elects to proceed with this Agreement and purchase theProperty, there shall be no reduction in the Purchase Price, but Seller shall, at Close of Escrow, assign to Buyer (a) anyinsurance proceeds payable with respect to such damage plus an amount equal to the applicable deductible, or (b) theentire award payable with respect to such condemnation proceeding, whichever is applicable. 7. Seller's Representations and Warranties. 7.1.1 Representations and Warranties. It is expressly Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 18 understood and agreed that all liability of Seller for breach of the representations and warranties contained in thisSection 7 shall terminate if no written claim of breach, specifying the representation or warranty allegedly breachedand the supporting evidence for the alleged breach, shall be delivered to Seller on or prior to the date which is twelve(12) months following the Closing Date. Seller represents and warrants to Buyer that as of the date of this Agreementand as of the Closing Date: 7.1.2 Seller is duly organized, validly existing, and in good standing under the laws of theState of its formation. 7.1.3 Seller has the full power and authority to execute, deliver and perform its obligationsunder this Agreement. 7.1.4 This Agreement and all agreements, instruments and documents herein provided tobe executed by Seller are and as of the Closing will be duly authorized, executed and delivered by and are and will bebinding upon Seller. 7.1.5 Seller has received no notice of any pending or threatened proceedings, eminentdomain or condemnation which would affect the Property, or a portion thereof, and Seller has not been involved, andhas no current actual knowledge of any other party being involved, in any settlement discussion with anygovernmental agency regarding a sale of the Property in lieu of condemnation. 7.1.6 Except as otherwise set forth in Schedule 7.1.6, attached hereto, Seller has noadditional knowledge as to the environmental or geotechnical condition of the Property and Seller lacks any actualknowledge of any Hazardous Materials on the Property. "Hazardous Materials" shall mean any hazardoussubstance, pollutant or contaminant regulated under the Comprehensive Environmental Response, Compensationand Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.Section 9601 et seq. ("CERCLA"); oil and petroleum products and natural gas, natural gas liquids, liquefied naturalgas, and synthetic gas useable for fuel; pesticides regulated under Federal Insecticide, Fungicide, and RodenticideAct, 7 U.S.C. Section 136 et seq. ("FIFRA"); asbestos, PCBs and other substances regulated under TSCA; sourcematerial, special nuclear material and byproduct materials regulated under the Atomic Energy Act; and industrialprocess and pollution control wastes whether or not hazardous within the meaning of RCRA. 7.1.7 Except as otherwise set forth in Schedule 7.1.7 attached hereto, Seller has notreceived notice that it is nor to its actual knowledge is now a party to any litigation, arbitration or other proceedings("Litigation") with respect to the Property and Seller shall give to Buyer prompt notice of the institution of anyLitigation prior to the Closing Date after Seller has received written notice of the same. 7.1.8 Neither the execution of this Agreement and the instruments to be executed ordelivered by Seller pursuant to this Agreement nor the consummation by Seller of the transactions contemplated bythis Agreement will: (i) Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 19 conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default, or result in atermination of any agreement or instrument to which Seller is a party; (ii) violate any restriction to which Seller issubject; (iii) constitute a violation of any applicable code, resolution, law, statute, regulation, ordinance, judgment,rule, decree or order; or (iv) result in the creation of any lien, charge or encumbrance upon the Property or any partthereof, except as provided herein and the Continuing Obligations described in Section 34 below. 7.1.9 Seller has not: (i) made a general assignment for the benefit of creditors; (ii) filed anyvoluntary petition in bankruptcy or suffered the filing of an involuntary petition by Seller's creditors; (iii) suffered theappointment of a receiver to take possession of all or substantially all of Seller's assets; (iv) suffered the attachment orother judicial seizure of all, or substantially all, of Seller's assets; or (v) admitted in writing its inability to pay its debtsas they come due. 7.1.10 The Leases described on Schedule 1.14 constitute all of the leases affecting theProperty as of the Agreement Date, and Seller has received no notice from any Tenant under any of the Leases thatSeller is in monetary default or material non-monetary default under any of such Leases that remains uncured as of theAgreement Date. To the extent that Seller has delivered a default notice to any Tenant under any of the Leases whichremains uncured as of the Agreement Date, such Tenants in default are set forth on Schedule 1.1.4. 7.1.11 Except as set forth on Schedule 7.1.11 attached hereto, Seller has received no writtennotice from any governmental authority having jurisdiction over the Property stating that Seller is currently not incompliance with applicable laws and ordinances that remains uncorrected or uncured as of the Agreement Date. 7.1.12 Other than those which are either (a) cancelable on thirty (30) days' notice withoutpayment of any fees, or (b) expressly assumed by Buyer in writing at the Closing, other than the Leases or instrumentsappearing in the public records, there are no Contracts or other agreements relating to the Property which will be inforce on the Closing Date, and Seller is not in monetary default or material non-monetary default thereunder thatremains uncured. 7.1.13 The rent roll applicable as of the Agreement Date delivered to Buyer, and theoperating statements that have been/will be provided to Buyer by Seller pursuant to this Agreement for the calendaryears 2007, 2008, and 2009, are to Seller's actual knowledge true and correct in all material respects. At Closing, Sellerwill deliver to Buyer an updated certified rent roll (current to within five (5) days of the Closing Date) that will be trueand correct in all material respects. 7.1.14 To Seller's actual knowledge, (i) the documents and files delivered or made availableto Buyer contain any and all notices of violations received by the Seller with respect to the Property from and afterJanuary 1, 2007, and (ii) all licenses, Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 20 approvals, permits and certificates from all applicable governmental authorities or private parties necessary for allProperty alterations completed by the Seller costing in excess of twenty-five thousand dollars ($25,000) in any singleinstance from and after January 1, 2007 were obtained prior to the commencement of such alterations (expresslyexcluding any alterations performed by any Tenant or other occupant of the Property. 7.1.15 Seller is not currently obligated to sell the Property to any party or entity other thanBuyer, nor do there exist any rights of first refusal or options to purchase the Property. 7.2Limitations on Seller's Representations and Warranties.Except as expressly herein otherwise provided, the representations and warranties of Seller set forth in this Agreementshall be true in all material aspects on and as of the Closing Date as if those representations and warranties were madeon and as of such time, subject to any qualifications thereof made by Seller in a written notice delivered to Buyerwithin five (5) days after Seller obtains new knowledge or information with respect thereto that would cause Seller tochange such representations or warranty but no later than three (3) days prior to the Closing Date. The representationsand warranties made to "Seller's current actual knowledge" or "Seller's actual knowledge" in this Agreement, or in anycertificate or document executed and delivered by Seller pursuant to this Agreement, are (i) limited to the actualknowledge of TR Gregory, Doug Schaffer and Steve Hargrave without any obligation or duty to inquire or make anyindependent investigation regarding the subject matter of such representations and warranties, and (ii) do notencompass any imputed or constructive knowledge. Buyer acknowledges that TR Gregory, Doug Schaffer and Seller'sproperty or asset manager responsible for the Property are named solely for the purpose of defining and narrowing thescope of Seller's knowledge and not for the purpose of imposing any liability on such individuals or creating anyduties running from such individuals or any of Seller's members to Buyer. Buyer covenants that it will bring no actionof any kind against such individuals related to or arising out of the representations and warranties set forth in Section7.1 of this Agreement provided the foregoing will not preclude an action by Buyer against Seller for breach of theforegoing representations or warranties. Except for those set forth in this Section 7, there are no other representationsor warranties of Seller, express or implied. 7.3Buyer's Remedies For Seller's Breach of Representations and Warranties. 7.3.1 Pre-Closing Remedies. If at or prior to the Closing, (A) Buyer shall become aware(whether through its own efforts, by written notice from Seller or any other third party) that any of the representationsor warranties made herein by Seller are untrue, inaccurate or incorrect and shall give Seller notice thereof at or prior tothe Closing, or (B) Seller shall notify Buyer that a representation or warranty made herein by Seller is untrue,inaccurate or incorrect, then Seller may, in its sole discretion, elect by notice to Buyer to adjourn the Closing one ormore times for up to ten (10) days in the aggregate in order to cure or correct such untrue, inaccurate or incorrectrepresentation or Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 21 warranty. If Buyer's damages as a result of such representations or warranties being untrue, inaccurate or incorrect are,in the aggregate, less than $50,000, and such misrepresentations or breaches of warranty are not cured or corrected bySeller on or before the Closing Date (whether or not the Closing is adjourned as provided above), Buyer shallnevertheless be deemed to, and shall, waive such misrepresentations or breaches of warranty and shall consummate thetransactions contemplated hereby without any reduction of or credit against the Purchase Price. If Buyer's damages as aresult of such representations or warranties being untrue, inaccurate or incorrect are, in the aggregate, greater than$50,000, and such misrepresentations or breaches of warranty are not cured or corrected by Seller on or before theClosing Date (whether or not the Closing is adjourned as provided above), then Buyer, as its sole remedy for any andall such untrue, inaccurate or incorrect representations or warranties, shall elect either (x) to waive suchmisrepresentations or breaches of warranties and consummate the transactions contemplated hereby without anyreduction of or credit against the Purchase Price, or (y) to terminate this Agreement by notice given to Seller on orbefore the Closing Date, in which event, this Agreement shall be terminated and neither party shall have any furtherrights, obligations or liabilities hereunder, except for the surviving Indemnities. 7.3.2 Post-Closing Remedies. Notwithstanding anything contained in this Agreement tothe contrary, in the event the Closing occurs, Buyer hereby expressly waives, relinquishes and releases any right orremedy available to it at law, in equity or under this Agreement to make a claim against Seller for damages that Buyermay incur, or to rescind this Agreement and the transactions contemplated hereby, as the result of any of Seller'srepresentations or warranties being untrue, inaccurate or incorrect if (1) Buyer knew that such representation orwarranty was untrue, inaccurate or incorrect at the time of the Closing and Buyer nevertheless closes title hereunder, or(2) Buyer's damages as a result of such representations or warranties being untrue, inaccurate or incorrect are, in theaggregate, less than $50,000. Buyer shall be "deemed to have known" that a representation or warranty was untrue,inaccurate or incorrect at the time of the Closing if any Property Information furnished or made available to orotherwise obtained by Buyer contains express information which is inconsistent with such representation or warranty. 7.4Ceiling on Liability. Notwithstanding anything contained herein to the contrary, if the Closingshall have occurred and Buyer or Seller shall not have waived, relinquished and released all rights or remediesavailable to it at law, in equity or otherwise as provided hereunder, the aggregate liability of either party arisingpursuant to or in connection with the representations, warranties, covenants and other obligations (whether express orimplied) of such party in this Agreement and/or any documents executed by such party in connection with thisAgreement (including, without limitation, the Deed, the Assignment and Assumption of Leases, and the GeneralAssignment), shall not exceed $1,000,000 in the aggregate. The provisions of this Section 7.4 shall survive theClosing. 8. Buyer's Representations and Warranties. Buyer represents and warrants to Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 22 Seller that as of the date of this Agreement and as of the Closing Date: 8.1 Buyer is duly organized, validly existing, and in good standing under the laws of the state of itsformation; 8.2 Buyer has the full power and authority to execute, deliver and perform Buyer's obligations underthis Agreement; 8.3 This Agreement and all agreements, instruments and documents herein provided to be executedby Buyer are and as of the Closing will be duly authorized, executed and delivered by and are and will be bindingupon Buyer; and 8.4 The execution and delivery of this Agreement and the performance of its obligations hereunderby Buyer will not conflict with, result in a breach of or constitute a default under any of the terms, conditions orprovisions of any agreement or instrument to which the Buyer is a party or by which it is bound, or any order or decreeapplicable to Buyer. 9. Default. 9.1 LIQUIDATED DAMAGES - DEPOSIT. NOTWITHSTANDING ANYTHING TO THECONTRARY CONTAINED IN THIS AGREEMENT, IF BUYER HAS NOT TERMINATED THIS AGREEMENTPRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD AND IF THE SALE OF THE PROPERTY TOBUYER IS NOT CONSUMMATED FOR ANY REASON OTHER THAN SELLER'S DEFAULT UNDER THISAGREEMENT OR AS OTHERWISE EXPRESSLY CONTEMPLATED TO RESULT IN THE RETURN OF THEDEPOSIT TO BUYER, SELLER SHALL BE ENTITLED TO RETAIN THE DEPOSIT AS SELLER'S LIQUIDATEDDAMAGES. THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY DIFFICULT TOASCERTAIN THE ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF BUYER'S FAILURE TOCOMPLETE THE PURCHASE OF THE PROPERTY PURSUANT TO THIS AGREEMENT, AND THAT UNDER THECIRCUMSTANCES EXISTING AS OF THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGESPROVIDED FOR IN THIS SECTION REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES WHICHSELLER WILL INCUR AS A RESULT OF SUCH FAILURE, PROVIDED, HOWEVER, THAT THIS PROVISIONSHALL NOT LIMIT SELLER'S RIGHTS TO RECEIVE REIMBURSEMENT FOR ATTORNEYS' FEES, NOR WAIVEOR AFFECT SELLER'S RIGHTS AND BUYER'S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS OF THISAGREEMENT. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES ISNOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODESECTION 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANTTO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676, AND 1677. THE PARTIES HAVE SET FORTH THEIRINITIALS BELOW TO INDICATE THEIR AGREEMENT Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 23 WITH THE LIQUIDATED DAMAGES PROVISION CONTAINED IN THIS SECTION. SELLER AGREES ITS RIGHTTO OBTAIN THE DEPOSIT AS LIQUIDATED DAMAGES SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDYHEREUNDER AT LAW OR EQUITY ON ACCOUNT OF BUYER'S DEFAULT HEREUNDER./s/ EB /s/ ST SELLER'S INITIALS BUYER'S INITIALS 9.2 Buyer's Pre-Closing Remedies. In the event Seller fails to perform any act required to beperformed by Seller pursuant to this Agreement on or before the Closing or a condition to Closing has not beensatisfied before the Closing, then Buyer shall execute and deliver to Seller written notice of such breach or non-satisfaction of condition, which notice shall set forth complete information about the nature of the breach or non-satisfaction of condition. Seller shall have a period of (10) days to cure such breach or satisfy such condition if suchnon-satisfaction can be completed by Seller. If such breach or non-satisfaction remains uncured beyond the ten (10)day period described above, then Buyer's sole and exclusive remedy shall be either: (i) to terminate this Agreementand the Escrow, in which event the Deposit shall be returned to Buyer; (ii) commence and pursue an action for specificperformance; or (iii) give Seller notice that Buyer elects to waive such breach or failure of condition and to CloseEscrow; provided, however, if Seller's breach resulted from the willful act or omission of Seller, in connection withsuch termination, Seller shall be obligated to reimburse Buyer an amount equal to Buyer's actual reasonable out-of-pocket third party costs and expenses incurred in connection with its contemplated acquisition of the Property, not toexceed Fifty Thousand Dollars ($50,000). 9.3 Post-Closing Remedies of Seller. If after the Closing, Buyer fails to perform its obligationswhich expressly survive the Closing pursuant to this Agreement, then Seller may exercise any remedies available to itat law or in equity, in any order it deems appropriate in its sole and absolute discretion, including but not limited toseeking specific performance or damages. In such event, the liquidated damages provisions contained in Section 9.1shall not limit Seller's damages. 9.4 Post-Closing Remedies of Buyer. If after the Closing, Seller fails to perform its obligationswhich expressly survive the Closing pursuant to this Agreement, then, subject to the limitations contained in Section7.3.2, Buyer may exercise any remedies available to it at law or in equity in any order it deems appropriate in its soleand absolute discretion including, but not limited to, seeking specific performance or damages. 10. Attorneys' Fees. If any action or proceeding is commenced by either party to enforce their rights underthis Agreement or to collect damages as a result of the breach of any of the provisions of this Agreement, theprevailing party in such action or proceeding, including any bankruptcy, insolvency or appellate proceedings, shallbe Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 24 entitled to recover all reasonable costs and expenses, including, without limitation, reasonable attorneys' fees andcourt costs, in addition to any other relief awarded by the court. 11. Notices. All notices, demands, approvals, and other communications provided for in this Agreement shallbe in writing and shall be effective upon the earliest of the following to occur: (a) when delivered to the recipient; (b)one (1) business day after deposit with a nationally recognized overnight-guaranteed delivery service; (c) by facsimilewith delivery of an original to the other party by overnight mail, but effective upon fax; or (d) upon receipt or refusalof receipt after deposit in a sealed envelope in the United States mail, postage prepaid by registered or certified mail,return receipt requested, addressed to the recipient as set forth below. All notices to Seller shall be sent to Seller'sAddress. All notices to Buyer shall be sent to Buyer's Address. All notices to Escrow Holder shall be sent to EscrowHolder's Address. If the date on which any notice to be given hereunder falls on a Saturday, Sunday or legal holiday,then such date shall automatically be extended to the next business day immediately following such Saturday, Sundayor legal holiday. The foregoing addresses may be changed by written notice given in accordance with this Section. 12. Amendment; Complete Agreement. All amendments and supplements to this Agreement must be inwriting and executed by Buyer and Seller. This Agreement contains the entire agreement and understanding betweenBuyer and Seller concerning the subject matter of this Agreement and supersedes all prior agreements, terms,understandings, conditions, representations and warranties, whether written or oral, made by Buyer or Sellerconcerning the Property or the other matters which are the subject of this Agreement. This Agreement has been draftedthrough a joint effort of the parties and their counsel and, therefore, shall not be construed in favor of or against eitherof the parties. 13. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of theState of California. 14. Severability. If any provision of this Agreement or application thereof to any person or circumstanceshall to any extent be invalid or unenforceable, the remainder of this Agreement (including the application of suchprovision to persons or circumstances other than those to which it is held invalid or unenforceable) shall not beaffected thereby, and each provision of this Agreement shall be valid and enforced to the fullest extent permitted bylaw. 15. Counterparts, Headings and Defined Terms. This Agreement may be executed in counterparts, each ofwhich shall be an original, but all of which together shall constitute one agreement. The headings to sections of thisAgreement are for convenient reference only and shall not be used in interpreting this Agreement. 16. Time of the Essence. Time is of the essence of this Agreement. Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 25 17. Waiver. No waiver by Buyer or Seller of any of the terms or conditions of this Agreement or any of theirrespective rights under this Agreement shall be effective unless such waiver is in writing and signed by the partycharged with the waiver. 18. Third Parties. This Agreement is entered into for the sole benefit of Buyer and Seller and their respectivepermitted successors and assigns. No party other than Buyer and Seller and such permitted successors and assigns shallhave any right of action under or rights or remedies by reason of this Agreement. 19. Additional Documents. Each party agrees to perform any further acts and to execute and deliver suchfurther documents which may be reasonably necessary to carry out the terms of this Agreement. 20. Independent Counsel. Buyer and Seller each acknowledge that: (i) they have been represented byindependent counsel in connection with this Agreement; (ii) they have executed this Agreement with the advice ofsuch counsel; and (iii) this Agreement is the result of negotiations between the parties hereto and the advice andassistance of their respective counsel. The fact that this Agreement was prepared by Seller's counsel as a matter ofconvenience shall have no import or significance. Any uncertainty or ambiguity in this Agreement shall not beconstrued against Seller because Seller's counsel prepared this Agreement in its final form. 21. Condition of Property. Buyer represents and warrants that, as specified in Section 3.3.1 hereof, Buyerhas, or shall have inspected and conducted tests and studies of the Property, and that Buyer is familiar with the generalcondition of the Property. Buyer understands and acknowledges that the Property may be subject to earthquake, fire,floods, erosion, high water table, dangerous underground soil conditions, hazardous materials and similar occurrencesthat may alter its condition or affect its suitability for any proposed use. Except to the extent otherwise specificallyprovided herein, Seller shall have no responsibility or liability with respect to any such occurrence. Except to theextent otherwise specifically provided herein, Buyer represents and warrants that Buyer is acting, and will act only,upon information obtained by Buyer directly from Buyer's own inspection of the Property. Seller hereby makes noclaims, representations or warranties as to the suitability or lack of suitability of the Property for any proposed orintended use, or availability or lack of availability of (a) permits or approvals of governmental or regulatoryauthorities, or (b) easements, licenses or other rights with respect to any such proposed or intended use of the Propertyshall not affect the rights or obligations of the Buyer hereunder. 22. Property "AS IS." 22.1 No Side Agreements or Representations. No person acting on behalf of Seller is authorized tomake, and by execution hereof, Buyer acknowledges that no person has made any representation, agreement,statement, warranty, guarantee or promise regarding the Property or the transaction contemplated herein or thezoning, construction, physical condition or other status of the Property except as may be Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 26 expressly set forth in this Agreement. No representation, warranty, agreement, statement, guarantee or promise, if any,made by any person acting on behalf of Seller which is not contained in this Agreement will be valid or binding onSeller. 22.2 AS IS CONDITION. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT FORSELLER'S EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 7 HEREIN, SELLERHAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANYREPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANYKIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST,PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (I) VALUE; (II) THE INCOME TO BEDERIVED FROM THE PROPERTY; (III) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIESAND USES WHICH BUYER MAY CONDUCT THEREON, INCLUDING THE POSSIBILITIES FOR FUTUREDEVELOPMENT OF THE PROPERTY; (IV) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY,PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (V) THE MANNER,QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (VI) THE NATURE, QUALITY ORCONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY;(VII) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES,ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (VIII) THEMANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THEPROPERTY; (IX) COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USELAWS, RULES, REGULATION, ORDERS OR REQUIREMENTS, INCLUDING BUT NOT LIMITED TO, TITLE III OFTHE AMERICANS WITH DISABILITIES ACT OF 1990, CALIFORNIA HEALTH & SAFETY CODE, THE FEDERALWATER POLLUTION CONTROL ACT, THE FEDERAL RESOURCE CONSERVATION AND RECOVERY ACT,THE U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40 C.F.R., PART 261, THECOMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, ASAMENDED, THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976, THE CLEAN WATER ACT, THESAFE DRINKING WATER ACT, THE HAZARDOUS MATERIALS TRANSPORTATION ACT, THE TOXICSUBSTANCE CONTROL ACT, AND REGULATIONS PROMULGATED UNDER ANY OF THE FOREGOING; (X)THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT TO THEPROPERTY; (XI) THE CONTENT, COMPLETENESS OR ACCURACY OF THE DUE DILIGENCE ITEMS ORPRELIMINARY REPORT REGARDING TITLE; (XII) THE CONFORMITY OF THE IMPROVEMENTS TO ANYPLANS OR SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THATMAY HAVE BEEN OR MAY BE PROVIDED TO BUYER; (XIII) THE CONFORMITY OF THE PROPERTY TO PAST, Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 27 CURRENT OR FUTURE APPLICABLE ZONING OR BUILDING REQUIREMENTS; (XIV) DEFICIENCY OF ANYUNDERSHORING; (XV) DEFICIENCY OF ANY DRAINAGE; (XVI) THE FACT THAT ALL OR A PORTION OF THEPROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (XVII) THE EXISTENCE OFVESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY; OR (XVIII) WITHRESPECT TO ANY OTHER MATTER. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEENGIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY AND REVIEW INFORMATION ANDDOCUMENTATION AFFECTING THE PROPERTY, BUYER IS, EXCEPT FOR SELLER'S REPRESENTATIONSAND WARRANTIES CONTAINED IN SECTION 7 HEREIN, RELYING SOLELY ON ITS OWN INVESTIGATION OFTHE PROPERTY AND REVIEW OF SUCH INFORMATION AND DOCUMENTATION, AND NOT ON ANYINFORMATION PROVIDED OR TO BE PROVIDED BY SELLER. BUYER FURTHER ACKNOWLEDGES ANDAGREES THAT ANY INFORMATION MADE AVAILABLE TO BUYER OR PROVIDED OR TO BE PROVIDED BYOR ON BEHALF OF SELLER WITH RESPECT TO THE PROPERTY, BY A THIRD PARTY INCLUDING, WITHOUTLIMITATION, THE PROPERTY EVALUATION REPORT, WAS OBTAINED FROM A VARIETY OF SOURCES ANDTHAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCHINFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCHINFORMATION. BUYER AGREES TO FULLY AND IRREVOCABLY RELEASE ALL SUCH SOURCES OFINFORMATION AND PREPARERS OF INFORMATION AND DOCUMENTATION AFFECTING THE PROPERTYWHICH WERE RETAINED BY SELLER FROM ANY AND ALL CLAIMS THAT THEY MAY NOW HAVE ORHEREAFTER ACQUIRE AGAINST SUCH SOURCES AND PREPARERS OF INFORMATION FOR ANY COSTS,LOSS, LIABILITY, DAMAGE, EXPENSE, DEMAND, ACTION OR CAUSE OF ACTION ARISING FROM SUCHINFORMATION OR DOCUMENTATION (EXCEPT FOR CLAIMS BASED ON A DIRECT RELATIONSHIP WITHANY SUCH SOURCES OR PREPARERS). EXCEPT FOR SELLER'S REPRESENTATIONS AND WARRANTIES ASSET FORTH IN SECTION 7 HEREIN, SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL ORWRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY, OR THEOPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OROTHER PERSON. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT TO THE MAXIMUM EXTENTPERMITTED BY LAW, THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS"CONDITION AND BASIS WITH ALL FAULTS, AND THAT SELLER HAS NO OBLIGATIONS TO MAKE REPAIRS,REPLACEMENTS OR IMPROVEMENTS EXCEPT AS MAY OTHERWISE BE EXPRESSLY STATED HEREIN.BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER THAT, EXCEPT FOR SELLER'S EXPRESSREPRESENTATIONS AND WARRANTIES AND COVENANTS SPECIFIED IN THIS AGREEMENT, BUYER ISRELYING SOLELY UPON BUYER'S OWN Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 28 INVESTIGATION OF THEPROPERTY. /s/ EB /s/ ST SELLER'S INITIALS BUYER'S INITIALS 23. Governmental Approvals. Nothing contained in this Agreement shall be construed as authorizing Buyerto apply for a zone change, variance, subdivision maps, lot line adjustment, or other discretionary governmental act,approval or permit with respect to the Property prior to the Close of Escrow, and Buyer agrees not to do so withoutSeller's prior written approval, which approval may be withheld in Seller's sole and absolute discretion. Buyer agreesnot to submit any reports, studies or other documents, including, without limitation, plans and specifications, impactstatements for water, sewage, drainage or traffic, environmental review forms, or energy conservation checklists to anygovernmental agency, or any amendment or modification to any such instruments or documents prior to the Close ofEscrow unless first approved by Seller, which approval Seller may withhold in Seller's sole discretion other thanreports mandated by law based upon any discovery of facts or conditions by Buyer at the Property. Buyer's obligationto purchase the Property shall not be subject to or conditioned upon Buyer's obtaining any variances, zoningamendments, subdivision maps, lot line adjustment or other discretionary governmental act, approval or permit. 24. Release. Buyer shall rely solely upon Buyer's own knowledge of the Property based on its investigationof the Property and its own inspection of the Property in determining the Property's physical condition. Except as mayrelate to any breach of a representation or warranty made by Seller contained in Section 7 herein, or the fraudulent actor omission of Seller or any partner, officer, director, employee or agent of Seller, Buyer and anyone claiming by,through or under Buyer hereby waives its right to recover from and fully and irrevocably releases Regency Centers,L.P. and Regency Centers Corporation and their respective members, employees, officers, directors, partners,shareholders, fiduciaries, representatives, agents, servants, attorneys, affiliates, parent, subsidiaries, successors andassigns, and all persons, firms, corporations and organizations acting in their behalf ("Released Parties") from anyand all claims that it may now have or hereafter acquire against any of the Released Parties for any costs, loss, liability,damage, expenses, demand, action or cause of action arising from or related to any construction defects, errors,omissions or other conditions, latent or otherwise, including environmental matters, affecting the Property, or anyportion thereof. This release includes claims of which Buyer is presently unaware or which Buyer does not presentlysuspect to exist which, if known by Buyer, would materially affect Buyer's release to Seller. Buyer specifically waivesthe provision of California Civil Code Section 1542, which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOWOR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IFKNOWN TO HIM Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 29 MUST HAVE MATERIALLY AFFECTED THE SETTLEMENT WITH THE DEBTOR." In this connection and to the fullest extent permitted by law, Buyer hereby agrees, represents andwarrants that Buyer realizes and acknowledges that factual matters now unknown to it may have given or mayhereafter give rise to causes of action, claims, demands, debts, controversies, damages, costs, losses and expenseswhich are presently unknown, unanticipated and unsuspected, and Buyer further agrees, represents and warrantsthat the waivers and releases herein have been negotiated and agreed upon in light of that realization and that, as amaterial portion of the consideration given to Seller by Buyer in exchange for Seller's performance hereunder,Buyer nevertheless hereby intends to release, discharge and acquit Seller from any such unknown causes of action,claims, demands, debts, controversies, damages, costs, losses and expenses which might in any way be included. Seller has given Buyer material concessions regarding this transaction in exchange for Buyeragreeing to the provisions of this Section 24. Seller and Buyer have each initialed this Section 24 to further indicatetheir awareness and acceptance of each and every provision hereof. /s/ ST /s/ EB BUYER'S INITIALS SELLER'S INITIALS 25. No Partnership Relationship. The relationship between Seller and Buyer arising from this Agreementshall not constitute in any manner or form a partnership or joint venture relationship between the parties hereto. 26. Assignment. Buyer shall neither assign its rights nor delegate its obligations hereunder without obtainingSeller's prior written consent, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, bywritten notice to Seller delivered no later than three (3) business days prior to the Scheduled Closing Date, Buyer shallhave the right to assign this Agreement to an affiliate which is wholly owned or controlled by, or controls, or is undercommon control with Buyer provided, however, Buyer shall provide Seller with a true and correct copy of suchassignment prior to the Close of Escrow evidencing the assignment and the relationship between Buyer and Buyer'sassignee. In no event shall any assignment relieve Buyer from its obligations under this Agreement. Any otherpurported or attempted assignment or delegation without obtaining Seller's prior written consent shall be void and ofno effect. 27. Successors and Assigns. Subject to the restrictions on transfer set forth in Section 26 hereof, thisAgreement shall be binding upon and inure to the benefit of the heirs, successors and assigns of the parties hereto. Inno event shall Buyer have any right to delay or postpone the Close of Escrow to create a partnership, corporation orother form of business association or to obtain financing to acquire title to the Property or to coordinate with any othersale, transfer, exchange or conveyance. Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 30 28. Exhibits. Each reference to a Section or Exhibit in this Agreement shall mean the sections of thisAgreement and the exhibit attached to this Agreement, unless the context requires otherwise. Each such exhibit isincorporated herein by this reference. 29. No Reservation of Property. The preparation and/or delivery of unsigned drafts of this Agreement shallnot create any legally binding rights in the Property and/or obligations of the parties, and Buyer and Selleracknowledge that this Agreement shall be of no effect until it is duly executed by both Buyer and Seller. Buyerunderstands and agrees that Seller shall have the right to continue to market the Property and/or to negotiate withother potential purchasers of the Property until the expiration of the Due Diligence Period and the satisfaction orwaiver in writing of all conditions to the obligations of Buyer under this Agreement. 30. Counterparts and Facsimile. This Agreement may be executed in counterparts, each of which shall bedeemed an original, but all of which together, shall constitute on and the same instrument. This Agreement will beconsidered to be executed and delivered by a party when an original or facsimile copy of the Agreement, bearingevery signature indicated for that party, has been received by the other party. A party delivering this Agreement byfacsimile transmission will promptly deliver an original, bearing the party's original signature, to the other party. 31. Business Day. If the day for performance of any act required under this Agreement falls on a Saturday,Sunday or legal holiday, then the day for such performance shall be the next following regular business day. 32. Indemnifications. 32.1 Buyer's Indemnifications. Buyer shall hold harmless, indemnify and defend Seller and itsaffiliates from and against: (i) any and all obligations, liabilities, claims, liens or encumbrances whether direct,contingent or consequential, in any way related to the Property and arising or accruing on or after the Closing Dateor in any way related to or arising from any negligent act by Buyer at any time or times on or after the Closing Date,including, without limitation, any claim arising or accruing under the Leases on or after the Closing Date; (ii) anyloss or damage to Seller resulting from any breach or default of Buyer under this Agreement or any of the documentsdescribed herein; and (iii) all costs and expenses, including attorneys' fees, related to an action, suits or judgmentsincident to any of the foregoing. 32.2 Seller's Indemnifications. Seller shall hold harmless, indemnify and defend Buyer and itsaffiliates from and against: (i) any and all obligations, liabilities, claims, liens or encumbrances whether direct,contingent or consequential, in any way related to the Property and arising or accruing prior to the Closing Date or inany way related to or arising from any negligent act by Seller at any time or times prior to the Closing Date,including, without limitation, any claim arising or accruing under the Leases prior to the Closing Date; (ii) any loss ordamage to Buyer resulting from any breach or default of Seller under this Agreement or any of the documentsdescribed Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 31 herein; and (iii) all costs and expenses, including attorneys' fees, related to an action, suits or judgments incidentto any of the foregoing. 33. Operations of Property. Seller, from the date hereof through the Closing Date, shall continue to manageand maintain the Property in the same manner as it does as of the date hereof. From and after the expiration of the DueDiligence Period, Seller shall not, except as required pursuant to the Leases, without Buyer's prior written consent,which consent may be withheld in Buyer's sole and absolute discretion, make any alterations, improvements,additions or capital expenditures, amend or enter into any new contracts or agreements pertaining to the Propertywhich would survive the Closing. 34. Natural Hazard Disclosure Statement. Buyer shall have the right to obtain from the Title Company, atBuyer's sole cost and expense, a Natural Hazard Disclosure Statement (the "Natural Hazards DisclosuresStatement"). As of the Close of Escrow, to the extent permitted by Law, Buyer shall be deemed to have knowingly,voluntarily and intentionally waived the right to the disclosures ("Natural Hazards Disclosures") set forth in: (a)California Government Code Section 8589.3 (a special flood area); (b) California Government Code Section 8589.4(dam failure inundation area); (c) California Government Code Section 51183.5 (earthquake fault zone); (d)California Public Resources Code Section 2621.9 (seismic hazard zone); (e) California Public Resources CodeSection 4136 (wildland fire area); and (f) California Public Resources Code Section 2694 (high fire severity area).Buyer acknowledges and represents that it has extensive experience acquiring and conducting due diligence forcommercial properties. This waiver by Buyer includes, to the extent permitted by Law, any remedies Buyer may havefor Seller's nondisclosure of the Natural Hazards Disclosures. Seller has not verified, and Seller is not obligated toverify, the information contained in the Natural Hazards Disclosures. Seller makes no representation or warranty,express or implied, as to the truth or accuracy of any information contained in the Natural Hazards Disclosures. ANYNATURAL HAZARDS DISCLOSED BY THE NATURAL HAZARDS DISCLOSURES OR THE NATURALHAZARDS DISCLOSURES STATEMENT MAY LIMIT THE BUYER'S ABILITY TO DEVELOP THE PROPERTY,TO OBTAIN INSURANCE, OR TO RECEIVE ASSISTANCE AFTER A DISASTER. THE MAPS ON WHICH THESEDISCLOSURES ARE BASED ESTIMATE WHERE NATURAL HAZARDS EXIST. THEY ARE NOT DEFINITIVEINDICATORS OF WHETHER OR NOT THE PROPERTY WILL BE AFFECTED BY A NATURAL DISASTER.BUYER MAY WISH TO OBTAIN PROFESSIONAL ADVICE REGARDING THESE HAZARDS AND OTHERHAZARDS THAT MAY AFFECT THE PROPERTY 35. Notices. From and after the date hereof, Seller covenants and agrees to promptly deliver to Buyer true,correct and complete copies of any and all notices, correspondence or other written communication received bySeller from Tenants under the Leases. Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 32 36. Survival. The covenants, agreements, representations and warranties made herein shall, subject to Section7.1, survive the Closing and the delivery of the Deed and this Agreement and shall, subject to Section 26 hereof,extend to the respective successors, heirs and assigns of Seller and Buyer. 37. Confidentiality. Prior to the Closing, all information and documents delivered or furnished by Seller toBuyer regarding the Property including, but not limited to the Due Diligence Items and the Leases, and all informationobtained by Buyer with respect to this transaction shall be held in strictest confidence by Buyer and shall not bereleased to any party except the advisor to Buyer and its attorneys, consultants, and contractors engaged by Buyerwith respect to the potential purchase of the Property. 38. Tax Deferred Exchange. Buyer and Seller hereby agree to cooperate with each other and shall executeany and all documents reasonably necessary, in the form reasonably approved by the both parties, which shall assignall of such party's right, title and interest in and to this Agreement to an intermediary, which intermediary shallcomplete the sale/purchase of the Property, in order to accommodate a tax-deferred exchange for such party pursuantto the provisions of Section 1031 of the Internal Revenue Code of 1986, as amended provided, however neither partyshall incur additional costs, expenses or liabilities in assisting the party with the tax-deferred exchange other than forreview of the exchange documents, such exchange shall not delay the Closing, neither party shall be released orrelieved of or from its obligations under this Agreement by reason of any assignment to an intermediary pursuant tothis Section 38, and neither party be required to take title to other real property. [SIGNATURES TO FOLLOW ON NEXT PAGE] Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 – Final) 33 IN WITNESS WHEREOF, Buyer and Seller do hereby execute this Agreement as of the date firstwritten above. SELLER: REGENCY CENTERS, LP., a Delawarelimited partnership By: Regency Centers Corporation,a Florida corporation,its general partner By: /s/ Erwin Bucy Name: Erwin BucyIts: SVP BUYER: RETAIL OPPORTUNITY INVESTMENT CORP.,a Delaware corporation By: /s/ Stuart TanzName: Stuart TanzIts: C.E.O. Acceptance by Escrow Holder Escrow Holder acknowledges receipt of the foregoing Agreement and accepts the instructionscontained therein. Dated: January 4, 2010 FIRST AMERICAN TITLE INSURANCE COMPANY By: /s/ Carolyn MarcialName: Carolyn MarcialIts: National Escrow Department, Escrow Officer Retail Opportunity Investment Corp./RegencySanta Ana Downtown Plaza.P&S Agt(v8 -- Final) 34Execution Version EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT dated as of December 9, 2009, by and between Retail Opportunity Investments Corp.(formerly known as NRDC Acquisition Corp.), a Delaware corporation (the “Company”), and Richard K. Schoebel,residing at the address set forth on the signature page hereof (the “Executive”). WHEREAS, the Company wishes to offer employment to the Executive, and the Executive wishes to accept such offeron the terms set forth below. Accordingly, in consideration of the mutual covenants contained herein and for other good and valuableconsideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Term. The Company hereby employs the Executive, and the Executive hereby accepts such employment, foran initial term commencing on November 30, 2009 (the “Commencement Date”) and continuing for a three-year (3)period, unless sooner terminated in accordance with the provisions of Section 4 or Section 5; with such employment tocontinue for successive one-year (1) periods in accordance with the terms of this Agreement (subject to termination asaforesaid) unless the Company notifies the Executive of non-renewal in writing six (6) months prior to the expirationof the initial term and each annual renewal, as applicable (the period during which the Executive is employedhereunder being hereinafter referred to as the “Term”). 2. Duties. During the Term, the Executive shall be employed by the Company as Chief Operating Officer, and, assuch, the Executive shall faithfully perform for the Company the duties of said office and shall perform such otherduties of an executive, managerial or administrative nature as shall be specified and designated from time to time bythe Chief Executive Officer of the Company. The Executive shall devote substantially all of his business time andeffort to the performance of his duties  hereunder; provided, however, that the Executive may engage in other activities for the Executive’s own accountwhile employed hereunder, including, without limitation, charitable, community and other business activities,provided that such other activities do not materially interfere with the performance of the Executive’s dutieshereunder. 3. Compensation. 3.1 Salary. The Company shall pay the Executive during the Term a salary at the rate of$275,000 per annum, in accordance with the customary payroll practices of the Company applicable to seniorexecutives. At least annually, the Board of Directors of the Company (the “Board”) shall review the Executive’sAnnual Salary and may provide for increases therein as it may in its discretion deem appropriate (such annual salary,as increased, the “Annual Salary”). 3.2 Bonus. During the Term, in addition to the Annual Salary, for each fiscal year of theCompany ending during the Term, the Executive shall receive an annual bonus of between 0% and 100% of AnnualSalary, as determined in the sole discretion of the Board and based on both the Executive’s performance and theperformance of the Company (the “Annual Bonus”). Each Annual Bonus shall be paid in the fiscal year following theyear for which such bonus is awarded, and in any event shall be paid within 30 days after the financial statements forsuch prior fiscal year are finalized. 3.3 Benefits - In General. Except with respect to benefits of a type otherwise provided forunder Section 3.4, the Executive shall be permitted during the Term to participate in any group life, hospitalization ordisability insurance plans, health programs, equity incentive plans, retirement plans, fringe benefit programs andsimilar benefits that may be available to other senior executives of the Company generally, in each case to the extentthat the Executive is eligible under the terms of such plans or programs. 3.4 Specific Benefits. Without limiting the generality of Section 3.3, the Executive shall beentitled to vacation of twenty (20) business days per year (to be taken at reasonable times in accordance with theCompany’s policies) and an automobile allowance of $1,500 per month. In addition, 2 for a period of six months beginning on the Commencement Date, the Executive shall receive a living allowance of$5,000 per month. 3.5 Equity Incentive Compensation. As of the Commencement Date, the Executive shall begranted an award consisting of 35,000 shares of restricted stock and 35,000 stock options under the Company’s EquityIncentive Plan. In accordance with the terms of the Company's Equity Incentive Plan, the exercise price of such stockoptions shall be at fair market value of the shares of the Company's common stock on the date on which the optionsare granted. The stock options and restricted stock shall each vest in equal installments on the first five anniversariesof the grant date thereof. 3.6 Expenses. The Company shall pay or reimburse the Executive for all ordinary andreasonable out-of-pocket expenses actually incurred (and, in the case of reimbursement, paid) by the Executive duringthe Term in the performance of the Executive’s services under this Agreement; provided that the Executive submitsproof of such expenses, with the properly completed forms as prescribed from time to time by the Company inaccordance with the Company’s policies, plans and/or programs. In addition, the Company shall reimburse theExecutive for up to $20,000 in moving and travel expenses actually paid or incurred in the Executive’s relocation tothe New York metropolitan area (“Relocation Expenses”), provided, however, that in the event the Executivevoluntarily terminates his employment (other than under Section 5.2 or Section 5.3 herein) during the twenty-four (24)month period beginning on the Commencement Date, the Executive shall refund to the Company the portion of hisRelocation Expenses equal to the ratio that the number of whole months remaining thereafter, of the twenty-four (24)month period, bears to twenty-four (24). 4. Termination upon Death or Disability. If the Executive dies during the Term, the Term shall terminate as ofthe date of death, and the obligations of the Company to or with respect to the Executive shall terminate in theirentirety upon such date except as otherwise provided under this Section 4. If there is a determination by the Companythat the Executive has become physically or mentally incapable of performing his duties under the Agreement andsuch disability has disabled the Executive for a cumulative period of one hundred eighty (180) days within a twelve(12) month period (a “Disability”), 3 the Company shall have the right, to the extent permitted by law, to terminate the employment of the Executive uponnotice in writing to the Executive. Upon termination of employment due to death or Disability, (i) the Executive (orthe Executive’s estate or beneficiaries in the case of the death of the Executive) shall be entitled to receive, in a lumpsum payment (subject to Section 7.16 of this Agreement) within thirty (30) days following the Executive’s terminationof employment, (A) Annual Salary, Annual Bonus and other benefits earned and accrued under this Agreement prior tothe date of termination (and reimbursement under this Agreement for expenses incurred prior to the date oftermination), (B) (x) the Executive’s Annual Salary and (y) an amount equal to the average of the Annual Bonusesawarded to the Executive for the last two years immediately preceding the year in which the Executive’s employmentis terminated, provided, however, that if no Annual Bonus is awarded to the Executive for the year (or two years)preceding the year in which the Executive’s employment is terminated, the Executive will be entitled to a minimumbonus equal to 50% of the Executive’s Annual Salary (i.e., initially $137,500), and (C) the Executive’s car allowancefor one (1) year; (ii) all outstanding unvested equity-based incentives and awards held by the Executive shallthereupon vest and become free of restrictions and be exercisable in accordance with their terms; and (iii) theExecutive (or, in the case of his death, his estate and beneficiaries) shall have no further rights to any othercompensation or benefits hereunder on or after the termination of employment, or any other rights hereunder. 5. Certain Terminations of Employment. 5.1 Termination by the Company for Cause; Termination by the Executive without GoodReason. (a) For purposes of this Agreement, “Cause” shall mean the Executive’s: (i) deliberate misrepresentation in connection with, or willful failure to cooperate with, a bonafide internal investigation or an investigation by regulatory or law enforcement authorities, afterbeing instructed by the Company to cooperate, or the willful destruction or failure to preservedocuments or other materials known to be relevant to such investigation or the willful inducement ofothers to fail to cooperate or to produce documents or other materials;(ii) failure to perform his material duties hereunder (other than any such failure resulting fromthe Executive’s incapacity due to physical or mental illness) which failure 4 continues for a period of thirty (30) business days after written demand for corrective action isdelivered by the Company specifically identifying the manner in which the Company believes theExecutive has not performed his duties;(iii) conduct by the Executive constituting a material act of willful misconduct in connectionwith the performance of his duties, including, without limitation, misappropriation of funds orproperty of the Company other than the occasional, customary and de minimis use of the Company’sproperty for personal purposes;(iv) public disparagement of the Company, its officers, trustees, employees or partners;(v) soliciting any existing employee of the Company above the level of an administrativeassistant to work at another company; or(vi) the commission by the Executive of a felony or misdemeanor involving moral turpitude,deceit, dishonesty or fraud.provided that the Company shall not be permitted to terminate the Executive for Cause except on written notice givento the Executive at any time following the occurrence of any of the events described in clause (i), (ii), (iii) or (vi) aboveand on written notice given to the Executive at any time not more than 30 days following the occurrence of any of theevents described in clause (iv) or (v) above (or, if later, the Company’s knowledge thereof). (b) The Company may terminate the Executive’s employment hereunder for Cause, and theExecutive may terminate his employment on at least thirty (30) days’ written notice. If the Company terminates theExecutive for Cause, or the Executive terminates his employment and the termination by the Executive is not coveredby Section 4, 5.2 or 5.3, (i) the Executive shall receive Annual Salary, Annual Bonus for the preceding fiscal year (ifunpaid), and other benefits (but, in all events, and without increasing the Executive’s rights under any other provisionhereof, excluding any bonuses not yet paid) earned and accrued under this Agreement prior to the termination ofemployment (and reimbursement under this Agreement for expenses incurred prior to the termination of employment),and (ii) the Executive shall have no further rights to any other compensation or benefits hereunder on or after thetermination of employment, or any other rights hereunder. 5.2 Termination by the Company without Cause; Termination by the Executive for Good Reason;Expiration/Non-Renewal of the Agreement by the Company. 5 (a) For purposes of this Agreement, “Good Reason” shall mean the following, unless consentedto by the Executive: (i)any material breach of the employment agreement by the Company which shall include, butnot be limited to, a material, adverse alteration in the nature of the Executive’s duties,responsibilities or authority; (ii)a material reduction in the Executive’s Annual Salary as in effect at the time in question, ora failure to pay such amounts when due which is not cured within thirty (30) days afterwritten notice; (iii)if the Company relocates the Executive’s office to any place other thanWestchester County, New York or Manhattan (New York, New York); or (iv)a change in the Executive’s direct reporting to anyone other than the Chief ExecutiveOfficer of the Company.Notwithstanding the foregoing, (i) Good Reason shall not be deemed to exist unless notice of termination on accountthereof is given no later than thirty (30) days after the time at which the event or condition purportedly giving rise toGood Reason first occurs or arises; and (ii) if there exists (without regard to this clause (ii)) an event or condition thatconstitutes Good Reason, the Company shall have thirty (30) days from the date notice of such a termination is givento cure such event or condition and, if the Company does so, such event or condition shall not constitute GoodReason hereunder. (b) The Company may terminate the Executive’s employment at any time for any reason or no reason. TheExecutive may terminate the Executive’s employment with the Company at any time for any reason or no reason, andfor Good Reason under this Section 5.2. If the Company terminates the Executive’s employment and the terminationis not covered by Section 4, 5.1 or 5.3, or the Executive terminates his employment for Good Reason and thetermination by the Executive is not covered by Section 5.3, or upon expiration of the Term if the Company hasnotified the Executive of non-renewal of this Agreement under Section 1, above, (i) the Executive shall be entitled toreceive, in a lump sum payment (subject to Section 7.16 of this Agreement) within thirty (30) days following theExecutive’s termination of employment, (A) Annual Salary, Annual Bonus and other benefits earned and accruedunder this Agreement prior to the date of termination (and reimbursement under this Agreement for expenses incurredprior to the date of termination), (B) (x) two times Annual Salary and (y) two times the 6 average of the Annual Bonuses awarded to the Executive for the last two years immediately preceding the year inwhich the Executive’s employment is terminated (to the extent applicable), provided, however, that if no AnnualBonus is awarded to the Executive for the year (or two years) preceding the year in which the Executive’s employmentis terminated, the Executive will be entitled to a minimum bonus equal to 50% of the Executive’s Annual Salary (i.e.,initially $137,500 x 2), and (C) the Executive’s car allowance for one (1) year; (ii) all outstanding unvested equity-based incentives and awards shall thereupon vest and become free of restrictions and be exercisable in accordancewith their terms; and (iii) the Executive shall have no further rights to any other compensation or benefits hereunderon or after the termination of employment, or any other rights hereunder. 5.3 Change in Control. (a) Within the twelve (12) month period following a Change in Control (as defined underSection 5.3(b)), in addition to (but without duplicating) his rights under Section 5.2, above, the Executive mayvoluntarily terminate his employment with the Company, for any or no reason, in which event he will receive thepayments set forth in Section 5.2(b). (b) For purposes of this Agreement, “Change in Control” means the occurrence of any of thefollowing events: (i) any “person” or “group” of persons, as such terms are used in Sections 13 and 14 of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), other than any employeebenefit plan sponsored by the Company, becomes the “beneficial owner”, as such term is used inSection 13 of the Exchange Act (irrespective of any vesting or waiting periods) of (A) commonshares in an amount equal to thirty percent (30%) or more of the sum total of the common sharesissued and outstanding immediately prior to such acquisition as if they were a single class anddisregarding any equity raise in connection with the financing of such transaction; provided,however, that in determining whether a Change in Control has occurred, outstanding shares orvoting securities which are acquired in an acquisition by (x) the Company or any of its subsidiariesor (y) an employee benefit plan (or a trust forming a part thereof) maintained by the Company or anyof its subsidiaries shall not constitute an acquisition which can cause a Change in Control;(ii) the approval of the dissolution or liquidation of the Company;(iii) the approval of the sale or other disposition of all or substantially all of its assets in one (1)or more transactions; or 7 (iv) a turnover, during any two (2) year period, of the majority of the members of the Board,without the consent of the majority of the members of the Board as to the appointment of the newBoard members.For the avoidance of doubt, in the event the Company merges with or into another entity, such merger (or similarcorporate transaction) shall not be deemed to constitute a Change in Control of the Company under this Agreement ifthe Executive continues, or has the opportunity to continue, in his employment with the merged companies as ChiefOperating Officer (or an equivalent title thereto) with the same terms and conditions as provided herein, unless theExecutive agrees otherwise. 6. Covenants of the Executive. 6.1 Covenant Against Competition; Other Covenants. The Executive acknowledges that (i)the principal business of the Company (which expressly includes for purposes of this Section 6 (and any relatedenforcement provisions hereof), its successors and assigns) is to invest in, acquire (either directly or through debtacquisitions), own, lease, reposition and manage a diverse portfolio of necessity-based retail properties, including, butnot limited to, well located community and neighborhood shopping centers, anchored by national or regionalsupermarkets and drugstores (such businesses, and any and all other businesses in which, at the time of the Executive’stermination, the Company is actively and regularly engaged or actively pursuing, herein being collectively referred toas the “Business”); (ii) the Company is one of the limited number of persons who have developed such a business; (iii)the Company’s Business is national in scope; (iv) the Executive’s work for the Company has given and will continueto give him access to the confidential affairs and proprietary information of the Company; (v) the covenants andagreements of the Executive contained in this Section 6 are essential to the business and goodwill of the Company;and (vi) the Company would not have entered into this Agreement but for the covenants and agreements set forth inthis Section 6. Accordingly, the Executive covenants and agrees that: (a) By and in consideration of the salary and benefits to be provided by the Companyhereunder, including the severance arrangements set forth herein, and further in consideration of the Executive’sexposure to the proprietary information of the Company, the Executive covenants and agrees 8 that, during the period commencing on the date hereof and ending six (6) months following the date upon which theExecutive shall cease to be an employee of the Company and its affiliates, he shall not directly or indirectly, whetheras an owner, partner, shareholder, principal, agent, employee, consultant or in any other relationship or capacity, (i)engage in any element of the Business (other than for the Company or its affiliates) or otherwise compete with theCompany or its affiliates, (ii) render any services related to the Business to any person, corporation, partnership orother entity (other than the Company or its affiliates) engaged in any element of the Business, or (iii) render servicesrelated to the Business to any person, corporation, partnership or other entity (other than the Company or its affiliates)as a partner, shareholder, principal, agent, employee, consultant or in any other relationship or capacity; provided,however, that, notwithstanding the foregoing, the Executive may invest in securities of any entity, solely forinvestment purposes and without participating in the business thereof, if (A) such securities are traded on any nationalsecurities exchange or the National Association of Securities Dealers, Inc. Automated Quotation System, (B) theExecutive is not a controlling person of, or a member of a group which controls, such entity and (C) the Executivedoes not, directly or indirectly, own 1% or more of any class of securities of such entity. (b) During and after the Term, the Executive shall keep secret and retain in strictest confidence,and shall not use for his benefit or the benefit of others, except in connection with the business and affairs of theCompany and its affiliates, all non-public confidential matters relating to the Company’s Business and the business ofany of its affiliates and to the Company and any of its affiliates, learned by the Executive heretofore or hereafterdirectly or indirectly from the Company or any of its affiliates (the “Confidential Company Information”), and shallnot disclose such Confidential Company Information to anyone outside of the Company except with the Company’sexpress written consent and except for Confidential Company Information which is at the time of receipt or thereafterbecomes publicly known through no wrongful act of the Executive or is received from a third party not under anobligation to keep such information confidential and without breach of this Agreement. Notwithstanding theforegoing, the Executive may disclose Confidential Company Information to his attorneys (for the 9 purpose of seeking legal advice), to his accountants (for the purposes of seeking professional advice), to his immediatefamily members whom the Executive agrees will not divulge such information to any other party, and in response to asubpoena; court, regulatory, or arbitral order; or other valid legal process. (c) During the period commencing on the date hereof and ending one (1) year following thedate upon which the Executive shall cease to be an employee of the Company and its affiliates, the Executive shallnot, without the Company’s prior written consent, directly or indirectly, (i) solicit or encourage to leave theemployment or other service of the Company, or any of its affiliates, any employee, agent or independent contractorthereof or (ii) hire (on behalf of the Executive or any other person or entity) any employee who has left theemployment of the Company or any of its affiliates within the one-year period which follows the termination of suchemployee’s employment with the Company and its affiliates. During the period commencing on the date hereof andending one (1) year following the date upon which the Executive shall cease to be an employee of the Company andits affiliates, the Executive shall not, whether for his own account or for the account of any other person, firm,corporation or other business organization, solicit for a competing business or intentionally interfere with theCompany’s or any of its affiliates’ relationship with, or endeavor to entice away from the Company or any of itsaffiliates for a competing business, any person who during the Term is or was a customer, client, agent, or independentcontractor of the Company or any of its affiliates. (d) All memoranda, notes, lists, records, property and any other tangible product anddocuments (and all copies thereof), whether visually perceptible, machine-readable or otherwise, made, produced orcompiled by the Executive or made available to the Executive containing Confidential Company Information (i) shallat all times be the property of the Company (and, as applicable, any affiliates) and shall be delivered to the Companyat any time upon its request, and (ii) upon the Executive’s termination of employment, shall be immediately returnedto the Company. This section shall not apply to materials that the Executive possessed prior to his businessrelationship with the Company, to the Executive’s personal effects and documents, and to materials prepared by theExecutive for the purposes of seeking legal or other professional advice. 10 (e) While the Executive’s non-compete obligations under Section 6.1(a) are in effect, neitherthe Company nor the Executive shall publish any statement or make any statement under circumstances reasonablylikely to become public that (i) with respect to statements by the Executive, is critical of the Company or any of itsaffiliates, or in any way otherwise maligning the Business or reputation of the Company or any of its affiliates or (ii)with respect to statements by the Company, is critical of the Executive or in any way otherwise maligning thereputation of the Executive, in either of the foregoing instances unless otherwise required by applicable law orregulation or by judicial order. 6.2 Rights and Remedies upon Breach. (a) The Executive acknowledges and agrees that any breach by him of any of the provisions ofSection 6.1 or any subparts thereof (individually or collectively the “Restrictive Covenants”) would result inirreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if theExecutive breaches, or threatens to commit a breach of, any of the provisions of Section 6.1 or any subpart thereof, theCompany and its affiliates, in addition to, and not in lieu of, any other rights and remedies available to the Companyand its affiliates under law or in equity (including, without limitation, the recovery of damages), shall have the rightand remedy to have the Restrictive Covenants specifically enforced (without posting bond and without the need toprove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against theExecutive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations,threatened or actual, and whether or not then continuing, of such covenants. (b) The Executive agrees that the provisions of Section 6.1 of this Agreement and eachsubsection thereof are reasonably necessary for the protection of the Company’s legitimate business interests and ifenforced, will not prevent the Executive from obtaining gainful employment should his employment with theCompany end. The Executive agrees that in any action seeking specific performance or other equitable relief, he willnot assert or contend that any of the provisions of this Section 6 are unreasonable or otherwise unenforceable asdrafted. The existence of any claim or cause of 11 action by the Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to theenforcement of the Restrictive Covenants. 7. Other Provisions. 7.1 Severability. The Executive acknowledges and agrees that (i) he has had an opportunity toseek advice of counsel in connection with this Agreement and (ii) the Restrictive Covenants are reasonable ingeographical and temporal scope and in all other respects as drafted. If it is determined that any of the provisions ofthis Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is invalid orunenforceable, the remainder of the provisions of this Agreement shall not thereby be affected and shall be given fulleffect, without regard to the invalid portions. 7.2 Duration and Scope of Covenants. If any court or other decision-maker of competentjurisdiction determines that any of the Executive’s covenants contained in this Agreement, including, withoutlimitation, any of the Restrictive Covenants, or any part thereof, is unenforceable because of the duration orgeographical scope of such provision, then the duration or scope of such provision, as the case may be, shall bereduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceableand shall be enforced. 7.3 Enforceability; Jurisdiction; Arbitration. (a) The Company and the Executive intend to and hereby confer jurisdiction to enforce theRestrictive Covenants set forth in Section 6 upon the courts of any jurisdiction within the geographical scope of theRestrictive Covenants. If the courts of any one or more of such jurisdictions hold the Restrictive Covenants whollyunenforceable by reason of breadth of scope or otherwise it is the intention of the Company and the Executive thatsuch determination not bar or in any way affect the Company’s right, or the right of any of its affiliates, to the reliefprovided above in the courts of any other jurisdiction within the geographical scope of such Restrictive Covenants, asto breaches of such Restrictive Covenants in such other respective jurisdictions, such Restrictive Covenants as theyrelate to each jurisdiction’s being, for this purpose, severable, diverse and independent covenants, subject, where 12 appropriate, to the doctrine of res judicata. The parties hereby agree to waive any right to a trial by jury for any and alldisputes hereunder (whether or not relating to the Restricted Covenants). (b) Any controversy or claim arising out of or relating to this Agreement or the breach of thisAgreement (other than a controversy or claim arising under Section 6, to the extent necessary for the Company (or itsaffiliates, where applicable) to avail itself of the rights and remedies referred to in Section 6.2) that is not resolved bythe Executive and the Company (or its affiliates, where applicable) shall be submitted to arbitration in New York, NewYork in accordance with New York law and the employment arbitration rules and procedures of the AmericanArbitration Association, before an arbitrator experienced in employment disputes who is licensed to practice law in theState of New York. The determination of the arbitrator(s) shall be conclusive and binding on the Company (or itsaffiliates, where applicable) and the Executive and judgment may be entered on the arbitrator(s)’ award in any courthaving jurisdiction. 7.4 Notices. Any notice or other communication required or permitted hereunder shall be inwriting and shall be delivered personally, telegraphed, telexed, sent by facsimile transmission or sent by certified,registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally,telegraphed, telexed or sent by facsimile transmission or, if mailed, five days after the date of deposit in the UnitedStates mails as follows: (i) If to the Company, to: Retail Opportunity Investments Corp.3 Manhattanville RoadPurchase, New York 10577 with a copy to: Clifford Chance US LLP31 West 52nd StreetNew York, New York 10019-6131Attention: Jay Bernstein(ii) If to the Executive, to:Richard K. Schoebel 13 24857 SE 200th StreetMaple Valley, WA 98038 with a copy to: Judith Lockhart, Esq.Carter Ledyard & Milburn LLP2 Wall StreetNew York, NY 10005Any such person may by notice given in accordance with this Section 7.4 to the other parties hereto designate anotheraddress or person for receipt by such person of notices hereunder. 7.5 Entire Agreement. This Agreement contains the entire agreement between the parties withrespect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto. 7.6 Waivers and Amendments. This Agreement may be amended, superseded, canceled,renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties or, in thecase of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power orprivilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right,power or privilege nor any single or partial exercise of any such right, power or privilege, preclude any other or furtherexercise thereof or the exercise of any other such right, power or privilege. 7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANYPRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANYJURISDICTION OTHER THAN THE STATE OF NEW YORK. 7.8 Assignment. This Agreement, and the Executive’s rights and obligations hereunder, maynot be assigned by the Executive; any purported assignment by the Executive in violation hereof shall be null andvoid. In the event of any sale, transfer or other disposition of all or substantially all of the Company’s assets orbusiness, whether by merger, consolidation or otherwise, the Company 14 may assign this Agreement and its rights hereunder, provided that the successor or purchaser agrees, as a condition ofsuch transaction, to assume all of the Company’s obligations hereunder. 7.9 Withholding. The Company shall be entitled to withhold from any payments or deemedpayments any amount of tax withholding it determines to be required by law. 7.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of theparties and their respective successors, permitted assigns, heirs, executors and legal representatives. 7.11 Counterparts. This Agreement may be executed by the parties hereto in separatecounterparts, each of which when so executed and delivered shall be an original but all such counterparts togethershall constitute one and the same instrument. Each counterpart may consist of two copies hereof each signed by oneof the parties hereto. 7.12 Survival. Anything contained in this Agreement to the contrary notwithstanding, theprovisions of Sections 6, 7.3, 7.9 and 7.14, and the other provisions of this Section 7 (to the extent necessary toeffectuate the survival of Sections 6, 7.3, 7.9 and 7.14), shall survive termination of this Agreement and anytermination of the Executive’s employment hereunder. 7.13 Existing Agreements. The Executive represents to the Company that he is not subject or aparty to any employment or consulting agreement, non-competition covenant or other agreement, covenant orunderstanding which might prohibit him from executing this Agreement or limit his ability to fulfill hisresponsibilities hereunder. 7.14 Indemnification. The Company shall cause the Executive (together with other officersand directors) to be indemnified for any actions taken or omissions made within the scope of his employment to thefullest extent provided under the Company’s bylaws, operating agreements, and directors and officers liabilityinsurance (which the Company agrees to maintain throughout the Term), with coverage in such amounts as aregenerally provided by similarly situated employers in the Business. The Company shall continue to indemnify theExecutive as provided above and maintain such liability insurance coverage for the Executive, after the Term hasended for any claims that may be made against 15 him with respect to actions taken or omissions made within the scope of the Executive’s employment or service as anofficer or trustee of the Company. 7.15 Headings. The headings in this Agreement are for reference only and shall not affect theinterpretation of this Agreement. 7.16 Section 409A Compliance. Any payments under this Agreement that are deemed to bedeferred compensation subject to the requirements of Section 409A of the Code, are intended to comply with therequirements of Section 409A. To this end and notwithstanding any other provision of this Agreement to the contrary,if at the time of the Executive’s termination of employment with the Company, (i) the Company’s securities arepublicly traded on an established securities market; (ii) the Executive is a “specified employee” (as defined in Section409A); and (iii) the deferral of the commencement of any payments or benefits otherwise payable pursuant to thisAgreement as a result of such termination of employment is necessary in order to prevent any accelerated or additionaltax under Section 409A, then the Company will defer the commencement of such payments (without any reduction inamount ultimately paid or provided to the Executive) that are not paid within the short-term deferral rule underSection 409A (and any regulations thereunder) or within the “involuntary separation” exemption of TreasuryRegulation § 1.409A-1(b)(9)(iii). Such deferral shall last until the date that is six (6) months following the Executive’stermination of employment with the Company (or the earliest date as is permitted under Section 409A). Any amountsthe payment of which are so deferred shall be paid in a lump sum payment within ten (10) days after the end of suchdeferral period. If the Executive dies during the deferral period prior to the payment of any deferred amount, then theunpaid deferred amount shall be paid to the personal representative of the Executive’s estate within sixty (60) daysafter the date of the Executive’s death. 16 IN WITNESS WHEREOF, the parties hereto have signed their names as of the day and year first above written. RETAIL OPPORTUNITY INVESTMENTS CORP. By: /s/ Stuart A. Tanz Name: Stuart A. TanzTitle: President and Chief Executive Officer/s/ Richard K. SchoebelRichard K. Schoebel 17 Execution VersionRETAIL OPPORTUNITY INVESTMENTS CORP.2009 EQUITY INCENTIVE PLANOPTION AWARD AGREEMENT THIS OPTION AWARD AGREEMENT is by and between Retail Opportunity Investments Corp., a Delawarecorporation (the “Company”) and Richard K. Schoebel (the “Optionee”), dated as of the 9th day of December, 2009. WHEREAS, the Company maintains the Retail Opportunity Investments Corp. 2009 Equity Incentive Plan(the “Plan”) (capitalized terms used but not defined herein shall have the respective meanings ascribed thereto by thePlan); WHEREAS, the Optionee is an Eligible Person; and WHEREAS, the Committee and the Board have determined that it is in the best interests of the Company andits stockholders to grant an Option to the Optionee subject to the terms and conditions set forth below. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Grant of Stock Option. The Company hereby grants the Optionee an option (the “Option”) to purchase thirty-five thousand (35,000)shares of Common Stock, subject to the following terms and conditions and subject to the provisions of the Plan. ThePlan is hereby incorporated herein by reference as though set forth herein in its entirety. The Option is not intended to be and shall not be qualified as an “incentive stock option” under Section 422of the Code. 2. Option Price. The Option Price per Share shall be $10.40. 3. Initial Exercisability. Subject to paragraph 5 below, the Option, to the extent that there has been no Termination of Service and theOption has not otherwise expired or been forfeited, shall first become exercisable in equal installments on the first fiveanniversaries of the date hereof. 4. Exercisability Upon and After Termination of Optionee. (a) Subject to clauses (b) and (c) below, if the Optionee has a Termination of Service, then no exercise ofan Option may occur after the expiration of the three-month period to follow the Termination ofService, or if earlier, the expiration of the term of the Option as provided under paragraph 5 below;provided that, if the Optionee has a Termination of Service by a Participating Company for Cause orby the Optionee for any reason other than Good Reason (as defined in the employment agreement byand between Retail Opportunity Investments Corp. and the Grantee dated December 9, 2009 (the  "Employment Agreement")), any Option not exercised in full prior to such termination shall becancelled. (b) In the event the Optionee has a Termination of Service on account of death or Disability, or onaccount of Termination of Service by the Company for any reason other than for Cause or uponexpiration of the Optionee's term of employment due to the non-renewal of the EmploymentAgreement by the Company or by the Optionee for Good Reason, any then unvested Option shallimmediately vest and become exercisable by the Successor of the Optionee or by the Optionee untilthe earlier of (i) one year from the date of the Termination of Service of the Optionee, or (ii) the dateon which the term of the Option expires in accordance with paragraph 5 below. (c) In the event the Grantee has a Termination of Service (other than a Termination of Service by theCompany for Cause) within 12 months following a Change of Control, any then unvested Optionshall immediately vest and become exercisable; provided that such Option shall only be exercisableuntil the date on which the term of the Option expires in accordance with paragraph 5 below. (d) Notwithstanding the foregoing, no Option (or portion thereof) which had not become exercisable ator before the time of Termination of Service shall ever be or become exercisable. No provision ofthis paragraph 4 is intended to or shall permit the exercise of the Option to the extent the Option wasnot exercisable upon Termination of Service. 5. Term. Unless earlier forfeited, the Option shall, notwithstanding any other provision of this Agreement, expire in itsentirety upon the tenth anniversary of the date hereof. The Option shall also expire and be forfeited at suchearlier times and in such circumstances as otherwise provided hereunder or under the Plan. 6. Miscellaneous. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCEWITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANYPRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION OFTHE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. Thecaptions of this Agreement are not part of the provisions hereof and shall have no force oreffect. This Agreement may not be amended or modified except by a written agreement executed bythe parties hereto or their respective successors and legal representatives. The invalidity orunenforceability of any provision of this Agreement shall not affect the validity or enforceability ofany other provision of this Agreement. (b) All notices hereunder shall be in writing, and if to the Company or the Committee, shall be deliveredto the Board or mailed to its principal office, addressed to the attention of the Board; and if to theOptionee, shall be delivered personally, sent by facsimile transmission or mailed to the Optionee atthe address appearing in the records of the Company. Such addresses may be changed at any time bywritten notice to the other party given in accordance with this paragraph 6(b). - 2 - (c) The failure of the Optionee or the Company to insist upon strict compliance with any provision ofthis Agreement or the Plan, or to assert any right the Optionee or the Company, respectively, mayhave under this Agreement or the Plan, shall not be deemed to be a waiver of such provision or rightor any other provision or right of this Agreement or the Plan. (d) The Optionee agrees that, at the request of the Committee, the Optionee shall represent to theCompany in writing that the Shares being acquired are acquired for investment only and not with aview to distribution and that such Shares will be disposed of only if registered for sale under the Actor if there is an available exemption for such disposition. The Optionee expressly understands andagrees that, in the event of such a request, the making of such representation shall be a conditionprecedent to receipt of Shares upon exercise of the Option. (e) The Company shall be entitled to withhold from any payments or deemed payments any amount oftax withholding it determines to be required by law. (f) Nothing in this Agreement shall confer on the Optionee any right to continue in the employ or otherservice of the Company or its Subsidiaries or interfere in any way with the right of the Company orits Subsidiaries and its stockholders to terminate the Optionee’s employment or other service at anytime. (g) This Agreement contains the entire agreement between the parties with respect to the subject matterhereof and supersedes all prior agreements, written or oral, with respect thereto. - 3 - IN WITNESS WHEREOF, the Company and the Optionee have executed this Agreement as of the day andyear first above written. RETAIL OPPORTUNITY INVESTMENTS CORP. By: /s/ Stuart A. TanzName: Stuart A. TanzTitle: President and Chief Executive Officer /s/ Richard K. SchoebelRichard K. Schoebel - 4 -Execution VersionRETAIL OPPORTUNITY INVESTMENTS CORP.2009 EQUITY INCENTIVE PLANOPTION AWARD AGREEMENT THIS OPTION AWARD AGREEMENT is by and between Retail Opportunity Investments Corp., a Delawarecorporation (the “Company”) and Richard K. Schoebel (the “Optionee”), dated as of the 9th day of December, 2009. WHEREAS, the Company maintains the Retail Opportunity Investments Corp. 2009 Equity Incentive Plan(the “Plan”) (capitalized terms used but not defined herein shall have the respective meanings ascribed thereto by thePlan); WHEREAS, the Optionee is an Eligible Person; and WHEREAS, the Committee and the Board have determined that it is in the best interests of the Company andits stockholders to grant an Option to the Optionee subject to the terms and conditions set forth below. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Grant of Stock Option. The Company hereby grants the Optionee an option (the “Option”) to purchase thirty-five thousand (35,000)shares of Common Stock, subject to the following terms and conditions and subject to the provisions of the Plan. ThePlan is hereby incorporated herein by reference as though set forth herein in its entirety. The Option is not intended to be and shall not be qualified as an “incentive stock option” under Section 422of the Code. 2. Option Price. The Option Price per Share shall be $10.40. 3. Initial Exercisability. Subject to paragraph 5 below, the Option, to the extent that there has been no Termination of Service and theOption has not otherwise expired or been forfeited, shall first become exercisable in equal installments on the first fiveanniversaries of the date hereof. 4. Exercisability Upon and After Termination of Optionee. (a) Subject to clauses (b) and (c) below, if the Optionee has a Termination of Service, then no exercise ofan Option may occur after the expiration of the three-month period to follow the Termination ofService, or if earlier, the expiration of the term of the Option as provided under paragraph 5 below;provided that, if the Optionee has a Termination of Service by a Participating Company for Cause orby the Optionee for any reason other than Good Reason (as defined in the employment agreement byand between Retail Opportunity Investments Corp. and the Grantee dated December 9, 2009 (the  "Employment Agreement")), any Option not exercised in full prior to such termination shall becancelled. (b) In the event the Optionee has a Termination of Service on account of death or Disability, or onaccount of Termination of Service by the Company for any reason other than for Cause or uponexpiration of the Optionee's term of employment due to the non-renewal of the EmploymentAgreement by the Company or by the Optionee for Good Reason, any then unvested Option shallimmediately vest and become exercisable by the Successor of the Optionee or by the Optionee untilthe earlier of (i) one year from the date of the Termination of Service of the Optionee, or (ii) the dateon which the term of the Option expires in accordance with paragraph 5 below. (c) In the event the Grantee has a Termination of Service (other than a Termination of Service by theCompany for Cause) within 12 months following a Change of Control, any then unvested Optionshall immediately vest and become exercisable; provided that such Option shall only be exercisableuntil the date on which the term of the Option expires in accordance with paragraph 5 below. (d) Notwithstanding the foregoing, no Option (or portion thereof) which had not become exercisable ator before the time of Termination of Service shall ever be or become exercisable. No provision ofthis paragraph 4 is intended to or shall permit the exercise of the Option to the extent the Option wasnot exercisable upon Termination of Service. 5. Term. Unless earlier forfeited, the Option shall, notwithstanding any other provision of this Agreement, expire in itsentirety upon the tenth anniversary of the date hereof. The Option shall also expire and be forfeited at such earliertimes and in such circumstances as otherwise provided hereunder or under the Plan. 6. Miscellaneous. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCEWITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANYPRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION OFTHE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. Thecaptions of this Agreement are not part of the provisions hereof and shall have no force oreffect. This Agreement may not be amended or modified except by a written agreement executed bythe parties hereto or their respective successors and legal representatives. The invalidity orunenforceability of any provision of this Agreement shall not affect the validity or enforceability ofany other provision of this Agreement. (b) All notices hereunder shall be in writing, and if to the Company or the Committee, shall be deliveredto the Board or mailed to its principal office, addressed to the attention of the Board; and if to theOptionee, shall be delivered personally, sent by facsimile transmission or mailed to the Optionee atthe address appearing in the records of the Company. Such addresses may be changed at any time bywritten notice to the other party given in accordance with this paragraph 6(b). - 2 - (c) The failure of the Optionee or the Company to insist upon strict compliance with any provision ofthis Agreement or the Plan, or to assert any right the Optionee or the Company, respectively, mayhave under this Agreement or the Plan, shall not be deemed to be a waiver of such provision or rightor any other provision or right of this Agreement or the Plan. (d) The Optionee agrees that, at the request of the Committee, the Optionee shall represent to theCompany in writing that the Shares being acquired are acquired for investment only and not with aview to distribution and that such Shares will be disposed of only if registered for sale under the Actor if there is an available exemption for such disposition. The Optionee expressly understands andagrees that, in the event of such a request, the making of such representation shall be a conditionprecedent to receipt of Shares upon exercise of the Option. (e) The Company shall be entitled to withhold from any payments or deemed payments any amount oftax withholding it determines to be required by law. (f) Nothing in this Agreement shall confer on the Optionee any right to continue in the employ or otherservice of the Company or its Subsidiaries or interfere in any way with the right of the Company orits Subsidiaries and its stockholders to terminate the Optionee’s employment or other service at anytime. (g) This Agreement contains the entire agreement between the parties with respect to the subject matterhereof and supersedes all prior agreements, written or oral, with respect thereto. - 3 - IN WITNESS WHEREOF, the Company and the Optionee have executed this Agreement as of the day andyear first above written. RETAIL OPPORTUNITY INVESTMENTS CORP. By: /s/ Stuart A. TanzName: Stuart A. TanzTitle: President and Chief Executive Officer /s/ Richard K. SchoebelRichard K. Schoebel - 4 -EXECUTION VERSIONRETAIL OPPORTUNITY INVESTMENTS CORP.2009 EQUITY INCENTIVE PLANCOMMON STOCK AWARD THIS AWARD is made by Retail Opportunity Investments Corp., a Delaware corporation (the “Company”) toMelvin S. Adess (the “Grantee”), dated as of the 11th day of December, 2009 and effective as of October 20, 2009. WHEREAS, the Company maintains the Retail Opportunity Investments Corp. 2009 Equity Incentive Plan(the “Plan”) (capitalized terms used but not defined herein shall have the respective meanings ascribed thereto by thePlan); WHEREAS, the Grantee is an Eligible Person; and WHEREAS, in accordance with the Plan, the Committee and the Board have determined that it is in the bestinterests of the Company and its stockholders to grant Shares of Common Stock of the Company (the “Shares”) to theGrantee. NOW, THEREFORE, IT IS HEREBY GRANTED AS FOLLOWS: The Company hereby grants the Grantee twenty-five thousand (25,000) Shares in accordance with theprovisions of the Plan. The Shares granted to the Grantee hereunder shall not be considered to be Restricted Stockunder the Plan. The holding of the Shares is subject to all federal, state and/or local securities law restrictions imposedgenerally upon the Grantee with respect to the Shares. The Shares have not been registered under the Securities Act of1933, as amended. Unless they are registered, the Shares may only be offered or sold in transactions that are exemptfrom registration under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction. To theextent relevant, the Plan is hereby incorporated herein by reference as though set forth herein in its entirety. IN WITNESS WHEREOF, the Company has granted this Award to the Grantee as of the day and year firstabove written. RETAIL OPPORTUNITY INVESTMENTS CORP. By: /s/ John B. RocheName: John B. RocheTitle: Chief Financial OfficerAcknowledged:/s/ Melvin S. AdessMelvin S. AdessEXECUTION VERSIONRETAIL OPPORTUNITY INVESTMENTS CORP.2009 EQUITY INCENTIVE PLANCOMMON STOCK AWARD THIS AWARD is made by Retail Opportunity Investments Corp., a Delaware corporation (the “Company”) toCharles J. Persico (the “Grantee") dated as of the 11th day of December, 2009 and effective as of October 20, 2009. WHEREAS, the Company maintains the Retail Opportunity Investments Corp. 2009 Equity Incentive Plan(the “Plan”) (capitalized terms used but not defined herein shall have the respective meanings ascribed thereto by thePlan); WHEREAS, the Grantee is an Eligible Person; and WHEREAS, in accordance with the Plan, the Committee and the Board have determined that it is in the bestinterests of the Company and its stockholders to grant Shares of Common Stock of the Company (the “Shares”) to theGrantee. NOW, THEREFORE, IT IS HEREBY GRANTED AS FOLLOWS: The Company hereby grants the Grantee twenty-five thousand (25,000) Shares in accordance with theprovisions of the Plan. The Shares granted to the Grantee hereunder shall not be considered to be Restricted Stockunder the Plan. The holding of the Shares is subject to all federal, state and/or local securities law restrictions imposedgenerally upon the Grantee with respect to the Shares. The Shares have not been registered under the Securities Act of1933, as amended. Unless they are registered, the Shares may only be offered or sold in transactions that are exemptfrom registration under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction. To theextent relevant, the Plan is hereby incorporated herein by reference as though set forth herein in its entirety. IN WITNESS WHEREOF, the Company has granted this Award to the Grantee as of the day and year firstabove written. RETAIL OPPORTUNITY INVESTMENTS CORP. By: /s/ John B. RocheName: John B. RocheTitle: Chief Financial OfficerAcknowledged:/s/ Charles J. PersicoCharles J. PersicoRETAIL OPPORTUNITY INVESTMENTS CORP. CODE OF BUSINESS CONDUCT AND ETHICS INTRODUCTION It is the policy of Retail Opportunity Investments Corp. (the “Company”) that its business shall be conducted inaccordance with the highest moral, legal and ethical standards. The Company’s reputation for integrity is of theutmost importance and each officer, director and employee must contribute to the care and preservation of that asset. This Code of Business Conduct and Ethics (the “Code of Conduct”) sets forth basic principles to guide all officers,directors and employees of the Company (collectively, “Company Personnel”). No code of business conduct orethics can, however, effectively substitute for the thoughtful behavior of an ethical officer, director or employee. ThisCode of Conduct is presented to assist Company Personnel in guiding their conduct to enhance the reputation of theCompany. This Code of Conduct has been drafted broadly. In that respect, it is the Company’s intent to exceed the minimumrequirements of the law and industry practice. Mere compliance with the letter of the law is not sufficient to attain thehighest ethical standards. Good judgment and great care must also be exercised to comply with the spirit of the lawand of this Code of Conduct. This Code of Conduct is intended to meet the standards for a code of ethics under the Sarbanes-Oxley Act of 2002, asamended, and the listing standards of the NASDAQ Stock Market (“NASDAQ”). Any waiver of this Code of Conductfor any Company Personnel may be made only upon the affirmative vote of the Company’s Board of Directors (the“Board”) and must be promptly disclosed to stockholders, as required by applicable law. The Company intends to enforce the provisions of this Code of Conduct vigorously. Violations could lead tosanctions, including dismissal in the case of an employee, as well as, in some cases, civil and criminal liability. Upholding this Code of Conduct is the responsibility of every officer, director and employee of theCompany. Executive officers of the Company are responsible for enforcement of this Code of Conduct among theemployees who report to them. QUESTIONS ABOUT THE CODE; REPORTING SUSPECTED VIOLATIONS Any questions about how to interpret this Code of Conduct should be raised with the compliance officer (the“Compliance Officer”) for this Code of Conduct. John Roche, the Company’s Chief Financial Officer has beendesignated as the Compliance Officer for purposes of enforcing this Code of Conduct and he may be contacted bytelephone at (914) 272-8067 or by e-mail at jroche@roireit.net. If any Company Personnel knows of or suspects any illegal or unethical conduct, or any other violation of this Code ofConduct, they should promptly report this to the Compliance Officer. In dealing with any issues arising under, orrelating to, this Code of Conduct, the Compliance Officer shall, to the extent necessary or appropriate, report to and/orconfer with the members of the Board and/or any of its committees. If any Company Personnel are not comfortable indoing so for any reason, or if they feel appropriate action is not being taken, they should contact the Company’s ChiefExecutive Officer or the Chair of the Board’s Nominating and Corporate Governance Committee or Audit Committee,as appropriate. No Company Personnel shall be required to identify themselves when reporting a violation. - 1 - To the extent possible, the Company will endeavor to keep confidential the identity of anyone reporting a violation ofthis Code of Conduct. The Company will also keep confidential the identities of Company Personnel about whomallegations of violations are brought, unless or until it is established that a violation has occurred. It is the Company’spolicy that retaliation against employees who report actual or suspected violations of this Code of Conduct isprohibited; anyone who attempts to retaliate will be subject to disciplinary action, up to and including dismissal. COMPLIANCE WITH APPLICABLE LAWS The Company is committed to conducting its business in strict compliance with all applicable governmental, state andlocal laws, rules and regulations, including, but not limited to, laws, rules and regulations related to securities, labor,employment and workplace safety matters. As a public reporting company with its stock trading on NASDAQ, theCompany is also subject to regulation by the Securities and Exchange Commission (“SEC”) and to the applicablelisting standards of NASDAQ. All Company Personnel are expected at all times to conduct their activities on behalf ofthe Company in accordance with this principle. Any violation of applicable laws, rules and regulations by anyCompany Personnel should be reported to the Compliance Officer. Company Personnel should seek guidancewhenever they are in doubt as to the applicability of any law, rule or regulation or regarding any contemplated courseof action. CONFLICTS OF INTEREST The Company relies on the integrity and undivided loyalty of its officers, directors and employees to maintain thehighest level of objectivity in performing their duties. Company Personnel are expected to avoid any situation inwhich their personal interests conflict, or have the appearance of conflicting, with those of the Company. CompanyPersonnel must not allow personal considerations or relationships to influence them in any way when representing theCompany in business dealings. Conflicts of interest are prohibited as a matter of Company policy, except under guidelines approved by the Board. Aconflict situation can arise when an officer, director or employee takes actions or has interests that may make itdifficult to perform work on behalf of the Company objectively and effectively. Conflicts also arise when CompanyPersonnel, or a member of his or her family, receives improper personal benefits as a result of his or her position withthe Company. Company Personnel must exercise great care any time their personal interests might conflict with those of theCompany. The appearance of a conflict often can be as damaging as an actual conflict. Prompt and full disclosure isalways the correct first step towards identifying and resolving any potential conflict of interest. Non-employeedirectors are expected to make appropriate disclosures to the Board and to take appropriate steps to recuse themselvesfrom Board decisions with respect to transactions or other matters involving the Company as to which they areinterested parties or with respect to which a real or apparent conflict of interest exists. The following sections review several common problems involving conflicts of interest. The list is notexhaustive. Company Personnel have a special responsibility to use his or her best judgment to assess objectivelywhether there might be even the appearance of acting for reasons other than to benefit the Company and to discuss anyconflict openly and candidly with the Company. Conflicts of interest may not always be evident and CompanyPersonnel should consult with the Compliance Officer if they are uncertain about any situation. - 2 - Payments and Gifts Company Personnel who deal with the Company’s lenders, suppliers or other third parties are placed in a specialposition of trust and must exercise great care to preserve their independence. As a general rule, no Company Personnelshould ever receive a payment or anything of value in exchange for a decision involving the Company’sbusiness. Similarly, no Company Personnel should ever offer anything of value to government officials or others toobtain a particular result for the Company. Bribery, kickbacks or other improper payments have no place in theCompany’s business. The Company recognizes exceptions for token gifts, which are not excessive in value or are consistent with customarybusiness practices, and customary business entertainment when a clear business purpose is involved. If you are indoubt about the policy’s application, the Compliance Officer should be consulted. Personal Financial Interests; Outside Business Interests Company Personnel should avoid any outside financial interests that might be in conflict with the interests of theCompany. No officer or employee of the Company may have any significant direct or indirect financial interest in, orany business relationship with, a person or entity that does business with the Company or is a competitor of theCompany. A financial interest includes any interest as an owner, creditor or debtor. Indirect interests include thosethrough an immediate family member or other person acting on his or her behalf. This policy does not apply to anemployee’s arms-length purchases of goods or services for personal or family use or to the ownership of shares in apublicly held corporation. Except as otherwise approved by the Board, officers and employees of the Company should not engage in outside jobsor other business activities that compete with the Company in any way. Further, any outside or secondaryemployment (i.e., moonlighting) by full-time employees may interfere with the job being performed for the Companyand is discouraged. Under no circumstances may Company Personnel have outside interests that are in any waydetrimental to the best interests of the Company. Company Personnel must disclose to the Compliance Officer any personal activities or financial interests that couldnegatively influence, or give the appearance of negatively influencing, your judgment or decisions with respect to theCompany. The Compliance Officer will then determine if there is a conflict and, if so, how to resolve it withoutcompromising the Company’s interests. Corporate Boards The director of an organization has access to confidential and sensitive information and charts the course of theentity. If Company Personnel are invited to serve as a director of an outside organization, the Company must takesafeguards to shield both the Company and such individuals from even the appearance of impropriety. For thatreason, any employee invited to join the board of directors of another organization (including a nonprofit or othercharitable organization) must obtain the prior approval of the Chief Executive Officer or the ComplianceOfficer. Directors who are invited to serve on other the boards of directors of another organization should promptlynotify the Executive Chairman of the Board. Corporate Opportunities Company Personnel must not divert for personal gain any business opportunity available to the Company. The dutyof loyalty to the Company is violated if any Company Personnel personally profits from a business opportunity thatrightfully belongs to the Company. This problem could arise, for example, if any Company Personnel becomes awarethrough the use of corporate property, information or position of - 3 - an investment opportunity (either a loan or equity transaction) in which the Company is or may be interested, and thenparticipates in the transaction personally or informs others of the opportunity before the Company has the chance toparticipate in the transaction. Company Personnel also are prohibited from using corporate property, information orposition for personal gain. Company Personnel owe a duty to the Company to advance its legitimate interests whenthe opportunity to do so arises and, in the case of a non-employee director, such director is aware of the Company’spossible interest through use of corporate property, information or position. Loans to Company Personnel The Company will not make any loans to, or guarantee any personal loans of, Company Personnel. COMPLIANCE WITH SECURITIES LAWS As a public reporting company with its stock trading on NASDAQ, the Company is subject to regulation by the SECand to the applicable listing standards of NASDAQ and to compliance with federal, state and local securities laws,rules and regulations (collectively, “Securities Laws”). As detailed in the Company’s “Statement of Corporate PolicyRegarding Equity Transactions,” the Company insists on strict compliance with the spirit and letter of these SecuritiesLaws and Company Personnel must pay particular attention to potential violations thereof. USE AND PROTECTION OF COMPANY ASSETS Proper use and protection of the Company’s assets is the responsibility of all Company Personnel. Company facilities,materials, equipment, information and other assets should be used only for conducting the Company’s business andare not to be used for any unauthorized purpose. Company Personnel should guard against waste and abuse ofCompany assets in order to improve the Company’s productivity. CONFIDENTIALITY One of the Company’s most important assets is its confidential corporate information. The Company’s legalobligations and its competitive position often mandate that this information remain confidential. Confidential corporate information relating to the Company’s financial performance (e.g., quarterly financial results ofthe Company’s operations) or other transactions or events can have a significant impact on the value of theCompany’s securities. Premature or improper disclosure of such information may expose the individual involved toonerous civil and criminal penalties. Company Personnel must not disclose confidential corporate information to anyone outside the Company, except fora legitimate business purpose (such as contacts with the Company’s accountants or its outside lawyers). Even withinthe Company, confidential corporate information should be discussed only with those who have a need to know theinformation. Company Personnel’s obligation to safeguard confidential corporate information continues even afterthey leave the Company. The same rules apply to confidential information relating to other companies with which the Company doesbusiness. In the course of the many pending or proposed transactions that this Company has under consideration atany given time, there is a great deal of non-public information relating to other companies to which CompanyPersonnel may have access. This could include “material” information that is likely to affect the value of thesecurities of the other companies. - 4 - Company Personnel who learn material information about lenders, customers, venture partners, acquisition targets orcompetitors through their work at the Company must keep it confidential and must not buy or sell stock in suchcompanies until after the information becomes public. Company Personnel must not give tips about such companiesto others who may buy or sell the stocks of such companies. The Company has issued a detailed “Statement of Corporate Policy Regarding Equity Transactions” regarding the useof confidential information in connection with trading in securities. You should become familiar with this policy andthe procedures it requires. If you have any questions regarding trading in the Company’s securities or on the basis ofconfidential information, you should contact the Compliance Officer. DEALINGS WITH THE PRESS AND COMMUNICATIONS WITH THE PUBLIC The Company’s Chief Executive Officer, Executive Chairman and Chief Financial Officer are the Company’s principalpublic spokesmen. If someone outside the Company asks Company Personnel questions or requests informationregarding the Company, its business or financial results, do not attempt to answer. All requests for information - fromreporters, securities analysts, stockholders or the general public - should be referred to the Chief Executive Officer orExecutive Chairman, who will handle the request or delegate it to an appropriate person. ACCOUNTING MATTERS Internal Accounting Controls The Company places the highest priority on “best practices” disclosure. The Company’s annual reports, quarterlyreports and press releases, and other public disclosure of the Company’s financial results, reflect how seriously it takesthis responsibility. Company Personnel share this responsibility with senior management and the Board and must help maintain theintegrity of the Company’s financial records. The Company trusts that every employee understands that protectingthe integrity of its information gathering, information quality, internal control systems and public disclosures is one ofthe highest priorities it has as a firm. Any Company Personnel who observes conduct that causes them to question the integrity of the Company’s internalaccounting controls and/or disclosure, or if they otherwise have reason to doubt the accuracy of Company’s financialreporting, it is imperative that such concerns are brought to the Company’s attention immediately. In accordance withthe Company’s “Whistleblowing Procedures for Accounting and Auditing Matters” policy, Company Personnelshould promptly report any concerns to any member of the Audit Committee of the Board. If any Company Personnelare not comfortable providing their name, they may report anonymously. Any kind of retaliation against CompanyPersonnel for raising these issues is strictly prohibited and will not be tolerated. Improper Influence on the Conduct of Audits It is unlawful for Company Personnel, or any other person acting under the direction of any such persons, to take anyaction to fraudulently influence, coerce, manipulate, or mislead the independent accountants engaged in theperformance of an audit of the Company’s financial statements for the purpose of rendering such financial statementsmaterially misleading. Any such action is a violation of this Code of Conduct. Any Company Personnel who engagesin such conduct will be subject to sanctions under this Code of Conduct, including dismissal in the case of anemployee, in addition to potential civil and criminal liability. - 5 - RECORDS RETENTION Company Personnel should retain documents and other records for such period of time as they and their colleagueswill reasonably need such records in connection with the Company’s business activities. All documents not requiredto be retained for business or legal reasons, including draft work product, should not be retained and should bedestroyed in order to reduce the high cost of storing and handling the vast amounts of material that would otherwiseaccumulate. However, under unusual circumstances, such as litigation, governmental investigation or if required byapplicable state and federal law and regulations, the Compliance Officer may notify Company Personnel if retention ofdocuments or other records is necessary. FAIR DEALING It is the Company’s policy to deal fairly with its customers, lenders, suppliers, competitors and Company Personnel. Inthe course of business dealings on behalf of the Company, no Company Personnel should take advantage of anotherperson or party through manipulation, concealment, abuse of privileged information, misrepresentation of materialfacts or any other unfair business practice. DISCRIMINATION AND HARASSMENT The Company is firmly committed to providing equal opportunity in all aspects of employment and will not tolerateillegal discrimination or harassment of any kind. Company Personnel are encouraged to report any acts ofdiscrimination or harassment to the Chief Executive Officer, President or Compliance Officer or to any member of theNominating and Corporate Governance of the Board. If any Company Personnel are not comfortable providing theirname, they may report anonymously. Any kind of retaliation against Company Personnel for raising these issues isstrictly prohibited and will not be tolerated. HEALTH AND SAFETY The Company strives to provide Company Personnel with a safe and healthy work environment. Company Personnelhave a responsibility for maintaining a safe and healthy workplace for all other Company Personnel by followingsafety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices and conditions. Violence and threatening behavior are not permitted. Company Personnel should report to work in a condition toperform their duties, free from the influence of illegal drugs and alcohol. The use of illegal drugs in the workplace willnot be tolerated. ENFORCEMENT The conduct of each Company Personnel matters vitally to the Company. A misstep by a single Company Personnelcan cost the Company dearly; it undermines all of the reputations of all parties concerned. For these reasons,violations of this Code of Conduct may lead to significant penalties, including dismissal. WAIVERS Any waiver of this Code of Conduct for executive officers or directors of the Company may be made only by theBoard, or by a Committee of the Board specifically authorized for this purpose, and must be promptly disclosed to theCompany’s stockholders. Waivers of this Code of Conduct for non-officer - 6 - employees may be made by the Chief Executive Officer or President, but only upon such employee making fulldisclosure in advance of the transaction in question. This Code of Conduct may be amended or modified at any timeby the Board. ACKNOWLEDGEMENT Company Personnel will be asked annually to sign a statement affirming that they have read and understood this Codeof Conduct and that they are in compliance with this Code of Conduct. Adopted: March 4, 2010 - 7 -EXHIBIT 21.1 LIST OF SUBSIDIARIES OF RETAIL OPPORTUNITY INVESTMENTS CORP. CompanyJurisdiction of Organization Retail Opportunity Investments Partnership, LPDelaware ROIC Paramount Plaza, LLCDelaware EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in Registration Statement (No. 333-163866) on Form S-3 of RetailOpportunity Investments Corp. of our reports dated March 11, 2010, relating to our audits of the consolidatedfinancial statements, the financial statement schedules and internal control over financial reporting, which appear inthis Annual Report on Form 10-K of Retail Opportunity Investments Corp. for the year ended December 31, 2009. /s/ McGLADREY & PULLEN, LLP McGLADREY & PULLEN, LLP New York, New York March 11, 2010EXHIBIT 31.1 CERTIFICATIONS I, Stuart A. Tanz, certify that: 1.I have reviewed this Annual Report on Form 10-K of Retail Opportunity Investments Corp.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report,fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controlover financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and proceduresto be designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control overfinancial reporting to be designed under our supervision, to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented inthis report our conclusions about the effectiveness of the disclosure controls and procedures, as ofthe end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant's internal control over financial reporting thatoccurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in thecase of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting; and 5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'sboard of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal controlover financial reporting which are reasonably likely to adversely affect the registrant's ability torecord, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant's internal control over financial reporting. Date: March 11, 2010By: /s/ Stuart A. Tanz Name: Stuart A. TanzTitle: Chief Executive Officer EXHIBIT 31.2 CERTIFICATIONS I, John B. Roche, certify that: 1.I have reviewed this Annual Report on Form 10-K of Retail Opportunity Investments Corp.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report,fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this report; 4.The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controlover financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and proceduresto be designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control overfinancial reporting to be designed under our supervision, to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented inthis report our conclusions about the effectiveness of the disclosure controls and procedures, as ofthe end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant's internal control over financial reporting thatoccurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in thecase of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting; and 5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrant's auditors and the audit committee of the registrant'sboard of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal controlover financial reporting which are reasonably likely to adversely affect the registrant's ability torecord, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant's internal control over financial reporting. Date: March 11, 2010By: /s/ John B. Roche Name: John B. RocheTitle: Chief Financial OfficerEXHIBIT 32.1 Certification of Chief Executive Officer and Chief Financial OfficerPursuant to18 U.S. C. Section 1350as adopted pursuant toSection 906 of The Sarbanes-Oxley Act of 2002 The undersigned, the Chief Executive Officer of Retail Opportunity Investments Corp. (the "Company"),hereby certifies to the best of his knowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant toSection 906 of The Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K for the year ended December31, 2009 (the "Form 10-K"), filed concurrently herewith by the Company, fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in theForm 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 11, 2010By: /s/ Stuart A. Tanz Name: Stuart A. TanzTitle: Chief Executive OfficerThe undersigned, the Chief Financial Officer of Retail Opportunity Investments Corp. (the "Company"),hereby certifies to the best of his knowledge on the date hereof, pursuant to 18 U.S.C. 1350(a), as adopted pursuant toSection 906 of The Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K for the year ended December31, 2009 (the "Form 10-K"), filed concurrently herewith by the Company, fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in theForm 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 11, 2010By: /s/ John B. Roche Name: John B. RocheTitle: Chief Financial OfficerPursuant to the Securities and Exchange Commission Release 34-47551, dated March 21, 2003, thiscertification is being furnished and shall not be deemed filed by the Company for purposes of Section 18 of theSecurities Exchange Act of 1934, as amended or incorporated be reference in any registration statement of theCompany filed under the Securities Act of 1933, as amended. A signed original of this written statement required by Section 906 has been provided to the Company andwill be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. 

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