TAX PROTECTION AGREEMENT
 
THIS TAX PROTECTION AGREEMENT (“Agreement”), dated as of June 26, 2008, is made
by LIGHTSTONE VALUE PLUS REIT, L.P., a Delaware limited partnership (“LVP”),
PRIME OUTLETS ACQUISITION COMPANY LLC, a Delaware limited liability company
(“POAC”), and AR PRIME HOLDINGS, LLC, a Delaware limited liability company
(“ARP”) that will become a limited partner of LVP as a result of the
Contribution (defined below).
 
WHEREAS ARP owns a membership interest in POAC corresponding to a 25% Percentage
of Membership Interest (as defined in the Amended and Restated Limited Liability
Company Agreement of POAC, dated as of December 11, 2003);
 
WHEREAS POAC owns, indirectly through certain entities that are treated as
disregarded entities for U.S. federal tax purposes and certain other entities
that are treated as partnerships for U.S. federal tax purposes (the “Subsidiary
Partnerships”), the properties listed on Schedule A hereto (collectively, the
“Properties”);
 
WHEREAS, in that certain Contribution and Conveyance Agreement, dated as of the
date hereof, by and among the Lightstone Value Plus Real Estate Investment
Trust, Inc., ARP, and LVP (the “Contribution Agreement”), ARP and LVP have
agreed that, within thirty (30) days of the completion of financial audits with
respect to all of the subsidiaries of POAC, but not later than June 26, 2009,
ARP will contribute all of its membership interest in POAC (the “Contributed
Interest”) to LVP in exchange for Units (as defined in the Contribution
Agreement) of LVP (the “Contribution”);
 
WHEREAS, for federal income tax purposes, it is intended that the Contribution
will be treated as a tax-free contribution by ARP to LVP of the Contributed
Interest in exchange for Units under Section 721 of the Code;
 
WHEREAS, pursuant to the Contribution Agreement, LVP has agreed to make certain
undertakings to ARP as provided herein;
 
WHEREAS POAC desires to induce ARP to enter into the Contribution Agreement, and
the execution of this Agreement by POAC was a condition to ARP’s execution and
delivery of the Contribution Agreement;
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and intending to be legally bound hereby, the
parties agree as follows:
 
1. Definitions. All capitalized terms used and not otherwise defined in this
Agreement shall have the meaning set forth in the Partnership Agreement (as
defined below). As used herein, the following terms have the following meanings:
 
“Applicable Lightstone Party” shall mean (i) before the Contribution, POAC, and
(ii) from and after the Contribution, LVP.
 

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“Approved Firms” shall mean any of the following firms: Baker & McKenzie LLP,
Deloitte & Touche LLP, Dewey & LeBoeuf LLP, McKee Nelson LLP, Kaye Scholer LLP,
and DLA Piper; and if any of the aforementioned law firms shall disband, the
parties hereto shall each make a good faith effort to choose a replacement for
each such firm.
 
“Built-in Gain” means gain allocable under Section 704(c) of the Code or under
so-called “reverse” Section 704(c) principles pursuant to Treasury Regulation
Section 1.704-1(b)(4)(i) to ARP with respect to the Properties, the Subsidiary
Partnership Interests, or the Contributed Interest (taking into account any
special inside basis of ARP under Section 743(b) of the Code with respect to the
Properties, the Subsidiary Partnership Interests, or the Contributed Interest);
provided, however, that, subject to Section 2(a), the Built-in Gain with respect
to the Contributed Interest as of the date hereof shall be treated for purposes
of this Agreement as an amount equal to the excess of the fair market value of
the Contributed Interest over its adjusted basis for federal income tax
purposes, and such Built-in Gain shall thereafter be adjusted from time to time
pursuant to the principles set forth in the Code and the Regulations thereunder.
For purposes of determining Built-in Gain with respect to the Properties and the
Subsidiary Partnership Interests, the assets of POAC and the Subsidiary
Partnerships shall be deemed to have been revalued for federal income tax
purposes, and the capital accounts of the partners therein adjusted, as of the
date hereof pursuant to the principles of Treasury Regulation Section
1.704-2(b)(2)(iv)(f) (notwithstanding that no event described in Treasury
Regulation Section 1.704-2(b)(2)(iv)(f)(5) occurs with respect to POAC or the
Subsidiary Partnerships on the date hereof). After the date hereof, the Built-in
Gain shall be reduced from time to time pursuant to the principles set forth in
the Code and the Regulations thereunder.
 
“Burnoff Date” shall mean the day that is 365 days after the date hereof.
However, if the Contribution occurs after February 26, 2009, then the preceding
sentence shall be applied as if the number “365” were replaced by the sum of (i)
365 and (ii) the number of days from (but excluding) February 26, 2009, through
and including the Closing Date.
 
“Closing” shall mean the closing of the exchange of the Contributed Interest for
Units pursuant to the Contribution Agreement.
 
“Closing Date” shall mean the date on which the Closing occurs.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Contributed Interest” shall have the meaning set forth in the Recitals.
 
“Contribution” shall have the meaning set forth in the Recitals.
 
“Disposition” shall have the meaning set forth in Section 2(a).
 
“Excluded Transfer” shall have the meaning set forth in Section 2(b).
 
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“Nonrecourse Built-in Gain” means gain recognized under Section 731(a)(1) of the
Code as a result of a deemed distribution under Section 752(b) of the Code or
gain recognized under Section 465(e) of the Code as a result of a reduction of
the amount of liabilities allocable to ARP under Section 752 of the Code below
the Protected Amount.
 
“Partnership Agreement” shall mean the Amended and Restated Agreement of Limited
Partnership, dated as of April 22, 2005, of LVP, as amended.
 
“Permitted Transfer” shall mean (i) a transfer of any of the Properties or the
Contributed Interest in an involuntary bankruptcy against the Applicable
Lightstone Party, (ii) the condemnation or other taking of any of the Properties
by a governmental entity or authority in eminent domain proceedings, or (iii) an
Excluded Transfer.
 
“Prohibited Transaction” shall mean a transaction that is prohibited under
Section 2(a).
 
“Properties” shall have the meaning set forth in the Recitals.
 
“Protected Amount” shall mean an amount equal to the product of (i) ARP’s
negative tax capital account in POAC as of the date hereof and (ii) negative one
(-1), as such amount may be reduced pursuant to the following sentence. Upon any
other sale, exchange, transfer or disposition either (a) by ARP of some or all
of its equity interest in the Applicable Lightstone Party or (b) by any person
or entity of some or all of its direct or indirect equity interest in ARP, the
Protected Amount shall be reduced to the extent of (x) in situation (a), any
gain recognized by ARP, but only to the extent such gain is attributable to the
amount of nonrecourse liabilities of the Applicable Lightstone Party of which
ARP is deemed relieved under Section 752 of the Code and the regulations
thereunder as a result of such transaction, and (y) in situation (b), any gain
recognized by such person (or, in the case of a transfer resulting from the
death of such person, the difference between the adjusted tax basis, for federal
income tax purposes, of the transferee with respect to the transferred property
and the adjusted tax basis, for federal income tax purposes, of such person with
respect to such property), but only to the extent such gain is attributable to
the amount of nonrecourse liabilities of the Applicable Lightstone Party of
which such person is deemed relieved under Section 752 of the Code and the
regulations thereunder as a result of such transaction.
 
“Protected Period” means the five-year period beginning on the date hereof.
 
“Qualifying Opinion” shall have the meaning set forth in Section 3(d).
 
“Subsidiary Partnership” shall have the meaning set forth in the Recitals.
 
“Subsidiary Partnership Interest” shall mean an interest in a Subsidiary
Partnership held, directly or indirectly, by the Applicable Lightstone Party.
 
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2. Restrictions on Disposition of the Properties.
 
(a) Subject to Section 2(b), LVP and POAC agree that during the Protected Period
neither the Applicable Lightstone Party, nor any entity in which the Applicable
Lightstone Party holds a direct or indirect interest, will consummate a sale,
transfer, exchange or other disposition of all or any portion of the Properties,
the Contributed Interest, or any indirect interest in all or any portion of the
Properties or the Contributed Interest (a “Disposition”), or engage in any other
transaction, that results in the recognition and allocation to ARP of all or any
portion of its Built-in Gain that it would not otherwise have recognized at such
time as a result of the application of the Code and Regulations in the absence
of such transaction or any other transaction. For purposes of the preceding
sentence, the Contributed Interest shall not be treated as having any Built-in
Gain until after the Contribution. In addition, the Applicable Lightstone Party
shall not enter into any transaction described in the first sentence of Section
3(d) unless the Applicable Lightstone Party shall have first provided ARP with a
Qualifying Opinion in a timely manner pursuant to the requirements of Section
3(d). ARP shall have the right to seek and obtain specific performance or
injunctive relief as a remedy with respect to any breach or threatened breach of
the covenant set forth in the preceding sentence.
 
(b) The first sentence of Section 2(a) shall not apply to (i) a transfer of any
of the Properties or the Contributed Interest in an involuntary bankruptcy
against the Applicable Lightstone Party or (ii) the condemnation or other taking
of any of the Properties by a governmental entity or authority in eminent domain
proceedings. Furthermore, if in any calendar year, taking into account all
direct or indirect Dispositions by LVP of one or more Properties or portions
thereof that (i) are taxable in whole or in part and (ii) occur during such
calendar year and after the Burnoff Date, LVP transfers Properties or portions
thereof having an aggregate value as of the date hereof as set forth on Schedule
A hereto that is less than or equal to ten percent (10%) of the total value of
the Properties as of the date hereof as set forth on Schedule A hereto, then the
first sentence of Section 2(a) shall not apply to such Dispositions (each such
Disposition, an “Excluded Transfer”); moreover, if the aggregate value (as of
the date hereof as set forth on Schedule A hereto) of the Properties transferred
in such Dispositions is less than ten percent (10%) of the total value of the
Properties as of the date hereof as set forth on Schedule A hereto, then such
deficit shall carry over to the following calendar year and increase the amount
of Properties the transfers of which may qualify as Excluded Transfers for such
year, and if such amounts are not transferred, all such amounts shall carry over
to the next successive year, and so on, until the term of this Agreement shall
expire. If the preceding sentence does not apply to Dispositions by LVP in any
calendar year because the aggregate value (as of the date hereof as set forth on
Schedule A hereto) of the Properties (or portions thereof) disposed of exceeds
ten percent (10%) of the total value of the Properties as of the date hereof as
set forth on Schedule A hereto, then only a ratable portion of each such
Disposition shall qualify as an Excluded Transfer not subject to Section 2(a).
With respect to the calendar year that includes the day after the Burnoff Date,
the preceding two sentences shall be applied by substituting for each occurrence
of “ten percent (10%)” the product of (i) ten percent (10%) and (ii) a fraction,
the numerator of which is the number of days from (but excluding) the Burnoff
Date to December 31 of such calendar year, and the denominator of which is 365.
Notwithstanding anything to the contrary herein, a direct or indirect
Disposition or other transfer of a Property or a portion thereof shall not
constitute an Excluded Transfer if such transfer is effectuated with a party
“related” to LVP (applying the principles of Code Sections 267(b) and 707(b)) in
a transaction that lacks a bona fide commercially motivated business purpose. No
later than the earlier of (i) the date that is 30 days after LVP consummates a
direct or indirect Disposition, taxable in whole or in part, of one or more
Properties or portions thereof and (ii) December 31 of the calendar year in
which such Disposition occurs, LVP shall provide ARP with written notification
of such disposition, including (I) the Property, Properties, or portions thereof
disposed of, (II) the amount and nature of the consideration received, and (III)
the amount of gain (including Built-in Gain) allocable to ARP as a result of
such Disposition; provided, however, that LVP shall not be required to provide
such notification if it shall have previously provided the identical information
to ARP pursuant to the notification provisions of Section 3(a).
 
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(c) Any property that is exchanged for or replaces any of the Properties, a
Subsidiary Partnership Interest, the Contributed Interest, or any portion
thereof and that is “substituted basis property,” as defined in
Section 7701(a)(42) of the Code, with respect thereto shall thereafter be
treated as a “Property,” a “Subsidiary Partnership Interest,” the “Contributed
Interest,” or a portion thereof, as the case may be, for all purposes of this
Agreement; provided, however, that (i) the Property, the Subsidiary Partnership
Interest, the Contributed Interest, or the portion thereof that was exchanged
for or replaced by such new property shall continue to be treated as a
“Property,” a “Subsidiary Partnership Interest,” the “Contributed Interest,” or
a portion thereof to the extent that a subsequent disposition of (or other
transaction involving) the Property, the Subsidiary Partnership Interest, the
Contributed Interest, or the portion thereof could result in the recognition and
allocation to ARP of any Built-in Gain, and provided further that (ii) the Units
received by ARP in exchange for the Contributed Interest in connection with the
Contribution shall not be treated as the Contributed Interest or as having
Built-in Gain under this Agreement.
 
(d) Within 18 weeks after the date hereof, POAC shall provide to ARP a
spreadsheet showing its calculation of (i) the Built-in Gain with respect to the
Properties and the Contributed Interest as of the date hereof and (ii) ARP’s
negative tax capital account in POAC as of the date hereof. The calculation of
the Built-in Gain shall be based on the fair market values for the Properties
and the Contributed Interest shown on Schedule A hereto. The calculation of the
Built-in Gain shall also reflect any Section 704(c) or “reverse” Section 704(c)
gain or loss existing with respect to the Properties immediately prior to the
date hereof. In addition, at the time of the Contribution, the Built-in Gain
with respect to the Properties, the Subsidiary Partnership Interests, and the
Contributed Interest shall be increased by the Additional Amount, as defined in
the Contribution Agreement. Within 2 weeks after the Contribution, LVP shall
provide to ARP a spreadsheet showing the allocation of the Additional Amount
among the Properties. Each Property shall be allocated its ratable share of the
Additional Amount based on the fair market value of such Property relative to
the fair market values of all of the Properties, as shown on Schedule A hereto.
The allocation of the Additional Amount among the Subsidiary Partnership
Interests shall be made based on and consistently with the allocation of the
Additional Amount among the Properties.
 
(e) For federal, state, and local income tax purposes, LVP shall report (i)
ARP’s contribution of the Contributed Interest to LVP as a tax-free contribution
pursuant to Section 721 of the Code (or the corresponding provision of state or
local law, as applicable) and (ii) ARP as a partner in LVP with respect to all
of the Units received by LVP; provided that, upon a reasonable request from
LVP’s accountant, ARP shall provide (at LVP’s expense) to the accountant, at
ARP’s election, either (i) a letter from Cooley Godward Kronish LLP to the
accountant, (ii) an opinion letter from Cooley Godward Kronish LLP which shall
provide that the accountant is entitled to rely on it, or (iii) an opinion
letter from an Approved Firm to the accountant, in each case providing the
required level of comfort to the accountant to sign the return or
returns. Notwithstanding the foregoing, LVP shall not be deemed to have breached
its obligations under this Section 2(e) solely because a governmental taxing
authority determines that LVP would be required to file an amended tax return or
amended information statement that reports the Contribution other than as a
contribution pursuant to Section 721 of the Code.
 
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3. Indemnity for Breach of Obligations set forth in Section 2.
 
(a) In the event that either LVP or POAC engages in a Prohibited Transaction in
breach of its obligations set forth in Section 2(a), LVP and POAC shall be
jointly and severally liable to ARP for, and shall pay to ARP, an amount equal
to (i) the aggregate federal, state and local income taxes deemed incurred by
ARP with respect to any portion of its Built-in Gain that it recognizes as a
result of such Prohibited Transaction plus (ii) a “gross-up” amount so that,
after the hypothetical payment by ARP of all federal, state and local income
taxes on amounts received pursuant to this Section 3(a), ARP would retain from
such payments hereunder an amount equal to its total deemed income tax liability
incurred as a result of the Prohibited Transaction and its recognition of such
Built-in Gain. If (i) gain is recognized by ARP or allocated to ARP as a result
of the closing of the transactions contemplated by the Contribution Agreement
and (ii) such gain recognition is attributable to (I) incorrect information
provided by POAC or an affiliate or agent thereof to ARP or (II) a breach of
LVP’s or the Lightstone Value Plus Real Estate Investment Trust, Inc.’s
obligations under the Contribution Agreement or this Agreement, then LVP and
POAC shall indemnify ARP for such Built-in Gain under this Section 3(a) as if
such Built-in Gain had resulted from a Prohibited Transaction. Notwithstanding
anything herein to the contrary, it is the understanding and the intention of
the parties hereto that this Agreement shall in no manner create liability for
LVP as a result of any tax that may be recognized as a result of (i) the
structure and effectuation of the transactions contemplated hereby and by the
Contribution Agreement or (ii) any conversion of Units into stock of the REIT at
ARP’s election and that the only liability that may arise as to LVP shall be as
a result of its breach of its obligations imposed by this Agreement or the
Contribution Agreement, if any, or as a result of any provision of incorrect
information. At the time LVP enters into an agreement to consummate a Prohibited
Transaction that, if consummated, would breach Section 2(a) hereof and result in
the recognition by ARP of all or any portion of its Built-in Gain, and in any
case not less than thirty (30) days prior to consummating such Prohibited
Transaction, the Applicable Lightstone Party shall notify ARP in writing of such
proposed Prohibited Transaction and of the approximate sales price or other
amount to be realized for income tax purposes in connection therewith and all
other relevant details of the Prohibited Transaction and shall request from ARP
such information that is within ARP’s possession or control as is reasonably
necessary for the Applicable Lightstone Party to calculate the amount of the
indemnity set forth herein. Upon receipt of such notice, ARP shall provide the
Applicable Lightstone Party with any information reasonably requested by the
Applicable Lightstone Party of ARP that is within ARP’s possession or control
and is relevant to calculation of the indemnity set forth herein within ten (10)
days of such request. Within ten (10) days after receipt of such information
from ARP (or, if no such information is requested, at the same time that the
Applicable Lightstone Party notifies ARP of the Prohibited Transaction as
provided above), the Applicable Lightstone Party shall provide to ARP (i) a
computation of the indemnity payment, if any, owing to ARP under this Section
3(a). The Applicable Lightstone Party shall make any required indemnity payment
owing to ARP pursuant to this Section 3(a) no later than five (5) days prior to
the due date of the quarterly estimated tax payment for individuals which next
follows the date that the Prohibited Transaction is consummated or, if later,
ten (10) days after the date required for the Applicable Lightstone Party’s
delivery of the computation of the indemnity payment to ARP. For purposes of
determining the amount of the deemed income taxes incurred by ARP and the amount
of the indemnity for Built-in Gain under this Section 3(a), (i) all income
arising from a transaction or event that is taxable at ordinary income rates
(including, without limitation, “recapture” under Code Sections 1245 or 1250 and
net short-term capital gain) under the applicable provisions of the Code and
allocable to ARP shall be treated as subject to federal, state and local income
tax at the then applicable effective tax rate imposed on ordinary income of
individuals residing in the city of New York, New York, determined using the
maximum federal rate of tax on ordinary income and the maximum state and local
rates of tax on ordinary income then in effect in New York City and New York
State, (ii) all long-term capital gain arising from the transaction or event
allocable to ARP shall be treated as subject to federal, state, and local income
tax at the then applicable effective tax rate imposed on long-term capital gains
of individuals residing in the city of New York, New York, determined using the
maximum federal, state and local rates on long-term capital gains then in effect
(taking into account any special capital gains rate attributable to recapture of
prior depreciation deductions), and (iii) any amounts payable with respect to
state and local income taxes shall be assumed to be fully deductible (without
limitation or phaseout) for federal income tax purposes.
 
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(b) Notwithstanding any provision of this Agreement to the contrary, other than
the last sentence of Section 2(a), Section 3(c), and Section 3(d), the sole and
exclusive rights and remedies of ARP for a breach or violation of the covenants
set forth in Sections 2(a) and 3(a) shall be a claim for payment against LVP
and/or POAC, computed as set forth in Section 3(a), and for interest and
enforcement costs as provided in Section 9(e). Except as provided in Sections
2(a), 3(c), and 3(d), ARP shall not be entitled to pursue a claim for specific
performance of the covenant set forth in Section 2(a) or bring a claim against
any person that acquires the Contributed Interest or any of the Properties in
violation of Section 2(a).
 
(c) Notwithstanding anything to the contrary herein, the Applicable Lightstone
Party may not enter into a Prohibited Transaction unless, at least fourteen (14)
days prior to entering into such transaction, the Applicable Lightstone Party
will have provided ARP with evidence reasonably satisfactory to ARP that,
following such transaction, and including any proceeds from such transaction,
LVP and POAC will have the requisite liquidity to make any necessary
indemnification payments required pursuant to this Agreement. ARP shall have the
right to seek and obtain specific performance or injunctive relief as a remedy
with respect to any breach or threatened breach of this covenant.
 
(d) Prior to the time that the Applicable Lightstone Party enters into an
agreement to consummate a transaction that (i) may result in the realization of
Built-in Gain but (ii) which the Applicable Lightstone Party may report, for
federal, state, or local income tax purposes, as not resulting (in whole or in
part) in the recognition of such realized Built-in Gain, and in any case not
less than thirty (30) days prior to consummating such transaction, the
Applicable Lightstone Party shall provide ARP with a written description of the
transaction containing all relevant details and shall thereafter, as promptly as
possible upon ARP’s reasonable request, and in any case not less than twenty
(20) days prior to consummating such transaction, provide ARP with an opinion
from any Approved Firm that (i) meets all the requirements for “covered
opinions” set forth in Section 10.35(c) of IRS Circular 230, including the
requirement that a covered opinion consider all significant federal tax issues,
(ii) is based on a statement of facts that is not inaccurate or unreasonable in
any material respect, and (iii) concludes, at at least a “more likely than not”
level of comfort, that all or part of the Built-in Gain realized in such
transaction will not be recognized for tax purposes (such an opinion, a
“Qualifying Opinion”). If the Applicable Lightstone Party does not provide ARP
with a description of the transaction and, if reasonably requested by ARP, a
Qualifying Opinion in a timely manner pursuant to the first sentence of this
paragraph, then the Applicable Lightstone Party shall not consummate such
transaction. Furthermore, the Applicable Lightstone Party shall not report any
transaction as resulting (in whole or in part) in the realization, but not the
nonrecognition, of Built-in Gain unless either (i) the Applicable Lightstone
Party previously provided ARP with a Qualifying Opinion in a timely manner
pursuant to the first sentence of this paragraph or (ii) the Applicable
Lightstone Party obtains the consent of ARP prior to taking such reporting
position. ARP shall have the right to seek and obtain specific performance or
injunctive relief as a remedy with respect to any breach or threatened breach of
the covenants set forth in this paragraph.
 
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4. Section 704(c) Method. LVP and POAC shall use, and each of LVP and POAC shall
cause any other entity in which it has a direct or indirect interest to use, the
“traditional method” under Treasury Regulation Section 1.704-3(b) without
curative allocations for purposes of making allocations under Section 704(c) of
the Code or reverse Section 704(c) allocations with respect to the Contributed
Interest and the Properties to take into account the book-tax disparities as of
the date hereof with respect to the Contributed Interest and the Properties.
 
5. Obligation to Maintain Certain Debt.
 
(a) At all times through the Protected Period, the Applicable Lightstone Party
agrees to maintain, directly or indirectly, an amount of indebtedness allocable
to ARP under Section 752 of the Code (and specifically as one or more
nonrecourse liabilities under Treasury Regulation Section 1.752-3) at least
equal to the Protected Amount. ARP shall have the right to seek and obtain
specific performance or injunctive relief as a remedy with respect to any breach
or threatened breach of this covenant. For the avoidance of doubt, the purpose
of this Section 5(a) is not to require the Applicable Lightstone Party to
increase the amount of liabilities to which the Properties or any other
properties are subject, provided that the Applicable Lightstone Party maintains
in place the liabilities of POAC and its subsidiary entities existing as of the
date hereof and does not take any actions (or cause or permit any actions to be
taken) that would decrease the amounts of such liabilities that are allocable to
ARP under Section 752 and the regulations thereunder.
 
(b) Federal, state and local income tax returns filed by POAC (and, after the
Contribution, by LVP) for all taxable periods beginning prior to the expiration
of the Protected Period shall report allocations of nonrecourse liabilities to
ARP in an amount at least equal to the Protected Amount.
 
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6. Indemnity for Breach of Obligations set forth in Section 5. In the event that
(i) either LVP or POAC breaches its obligations set forth in Section 5 and as a
result ARP recognizes Nonrecourse Built-in Gain and (ii) such breach has not
occurred in connection with a Permitted Transfer, LVP and POAC shall be jointly
and severally liable to ARP for, and shall pay to ARP upon written demand by
ARP, an amount equal to (i) the aggregate federal, state and local income taxes
deemed incurred by ARP as a result of such Nonrecourse Built-in Gain recognized
by ARP by reason of such breach plus (ii) a “gross-up” amount so that, after the
hypothetical payment by ARP of all federal, state and local income taxes on
amounts received pursuant to this Section 6, ARP would retain from such payments
hereunder an amount equal to its total income tax liability deemed incurred as a
result of the breach by LVP or POAC of its obligations set forth in Section 5
and ARP’s recognition of such Nonrecourse Built-in Gain. The principles and tax
rates set forth in Section 3(a) shall apply for purposes of determining the
timing and amount of payment to be made to ARP pursuant to this Section 6
(including, without limitation, the calculation of the aggregate federal, state
and local income taxes deemed incurred by ARP). In addition, the notification
procedures set forth in Section 3(a) shall apply for purposes of this Section 6
with respect to transactions that would result in a breach of Section 5.
 
7. Requests for Information. Upon the request of LVP or POAC, ARP shall provide
to LVP or POAC copies of such tax returns, schedules and other information that
is within the possession or control of ARP (including, without limitation,
copies of state and federal tax returns and related working papers) reasonably
requested by LVP or POAC (“Tax Protection Information”) to enable it to make any
necessary calculations with respect to payments required to be made by LVP and
POAC hereunder, including, without limitation, calculations of Built-in Gain and
Nonrecourse Built-in Gain claimed to be recognized by ARP. No Tax Protection
Information acquired by LVP or POAC or any of its representatives may be
disclosed to any individual or entity other than (i) those representatives of
LVP or POAC who need to know the Tax Protection Information for the purpose of
assisting LVP or POAC in evaluating and performing its obligations under this
Agreement (it being understood that prior to such disclosure LVP’s or POAC’s
representatives will be informed of the confidential nature of the Tax
Protection Information and shall agree in writing to be bound by the
requirements of this Section 7 of this Agreement), (ii) as required by
applicable law, or (iii) if necessary, upon the advice of counsel, in order to
comply with any judicial order, civil or criminal subpoena or any discovery
demand in pending litigation, whether or not LVP, POAC, or any of the
representatives of LVP or POAC is a party thereto. LVP and POAC agree to be
responsible for any breach of this Agreement by the representatives of LVP or
POAC.
 
8. Term. This Agreement shall terminate upon the expiration of the Protected
Period; provided, however, that if the Contribution does not occur prior to the
effective date of the termination of the Contribution Agreement, then this
Agreement shall terminate effective as of midnight (Eastern Standard Time) on
the effective date of the termination of the Contribution Agreement; provided
that, if the Contribution Agreement is terminated under circumstances that
require LVP to pay liquidated damages to ARP, then this Agreement shall not be
terminated until all such liquidated damages have been received by ARP. In
addition, Section 5 of this Agreement shall terminate in the event that the
Protected Amount is reduced to zero. Notwithstanding the foregoing, LVP's and
POAC’s payment obligations under Sections 3, 6 and 9(e) shall survive the
termination of this Agreement or the termination of Section 5, as the case may
be, to the extent such obligations relate to a breach of LVP’s or POAC’s
obligations under Section 2 or 5 occurring before such termination of this
Agreement (or in the case of liability under Section 6, the termination of
Section 5).
 
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9. General Provisions.
 
(a) Notices. All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given if delivered
personally, sent by overnight courier (providing proof of delivery) or sent by
telecopy (providing confirmation of transmission) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
 
(i) if to LVP or POAC, to:
 
c/o The Lightstone Group
326 Third Street
Lakewood, NJ 08701
Attn: Joseph E. Teichman
Fax No.: 732-612-1444

with a copy to:
 
Herrick, Feinstein LLP
2 Park Avenue
New York, NY 10016
Attn: Sheldon Chanales, Esq.
Fax No.: (212) 545-3313

(ii) if to ARP, to:
 
c/o Arbor Commercial Mortgage LLC
333 Earle Ovington Boulevard
Uniondale, NY 11553
Attention: Guy R. Milone, Jr.
Fax No.: (516) 506-4045

with a copy to:
 
Cooley Godward Kronish LLP
1114 Avenue of the Americas
New York, NY 10036
Fax No.: (212) 479-6275
Attn: Thomas D. O’Connor, Esq.

(b) Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party.
 
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(c) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
 
(d) Severability. If any term, covenant or condition of this Agreement shall be
held to be invalid, illegal or unenforceable in any respect, this Agreement
shall be construed without such provision.
 
(e) Interest and Enforcement Costs. In the event that LVP and POAC fail to pay
ARP any amount due pursuant to this Agreement on the date such amount is due,
or, if no due date is specified herein, within five (5) days after demand by ARP
for such payment, then such past due amount shall bear interest from such due
date or the date demand for payment is made, as applicable, until the date paid
at a rate equal to 15% per annum. In the event of any breach by LVP or POAC of
any of its covenants in this Agreement, LVP and POAC shall be jointly and
severally liable to pay, and shall pay, all of ARP’s costs of enforcement of its
rights under this Agreement, including but not limited to reasonable attorneys’
fees, disbursements, expenses and court costs.
 
(f) Subsidiary Entities. All references herein to the consummation, engaging in,
entering into, or reporting of a Disposition or other transaction, or entering
into an agreement to do any of the foregoing, by the Applicable Lightstone
Entity, LVP, or POAC shall also apply to and include the consummation, engaging
in, entering into, or reporting of a Disposition or other transaction, or
entering into an agreement to do any of the foregoing, by any entity in which
the Applicable Lightstone Entity, LVP, or POAC owns, directly or indirectly, an
equity interest.
 
(g) List of Properties Correct and Complete. LVP and POAC represent to ARP that
the list of Properties on Schedule A hereto is correct and complete and that the
Properties are owned indirectly by POAC.
 
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IN WITNESS WHEREOF, LVP, POAC, and ARP have caused this Agreement to be signed
by their respective authorized signatories all as of the date first written
above.

       
LIGHTSTONE VALUE PLUS REIT, L.P.
By Lightstone Value Plus Real Estate Investment Trust, Inc., its general partner
 
   
   
 
By:  
 

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Name:
 
Title:

 

       
PRIME OUTLETS ACQUISITION COMPANY LLC
By Lightstone Prime, LLC, its managing member 
 
   
   
 
By:
 

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Name:
 
Title:

 

       
 ARBOR MILL RUN JRM, LLC
 By Arbor Commercial Mortgage, LLC, Member
 
   
   
   By    

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Name:   Title:

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