PROMISSORY
      NOTE

     

    
      	U.S. $127,250,000.00	
              January
                4,
                2007

            



    New
      York,
      New York

     

    FOR
      VALUE RECEIVED,
      1407
      BROADWAY REAL ESTATE LLC, a Delaware limited liability company, having its
      principal place of business at c/o The Lightstone Group, 326 Third Street,
      Lakewood, New Jersey 08701 (“Borrower”)
      absolutely and unconditionally promises to pay to the order of LEHMAN BROTHERS
      HOLDINGS INC., a Delaware corporation (individually and as lead arranger and
      administrative agent for itself and certain co-lenders), at Lender’s offices at
      399 Park Avenue, 8th Floor, New York, New York 10022 (“Lender”),
      the
      principal sum of ONE HUNDRED TWENTY-SEVEN MILLION TWO HUNDRED FIFTY THOUSAND
      AND
      NO/100 Dollars (U.S. $127,250,000.00), with interest on the unpaid principal
      balance to be computed from the date of this Promissory Note (this “Note”)
      on
      funds advanced from time to time at the Applicable Interest Rate (defined
      below), in lawful money of the United States of America, in immediately
      available funds, which shall at the time of payment be legal tender for payment
      of all debts and dues, public and private. This Note is secured by, among other
      things, that certain Leasehold Mortgage Trust, Assignment of Leases and Rents,
      Security Agreement and Fixture Financing Statement dated of even date herewith,
      executed by Borrower in favor of Lender (as amended, restated, supplemented
      or
      otherwise modified from time to time, the “Security
      Instrument”).
      All
      capitalized terms used in the Note and not otherwise defined in Section
      1.10
      hereof
      or elsewhere in this Note shall have the meanings assigned to such terms in
      the
      Loan Agreement (as hereinafter defined), all of the terms of the Loan Agreement
      being hereby incorporated into and made a part of this Note by reference for
      all
      purposes.

     

    1.  PAYMENT
      OF PRINCIPAL AND INTEREST.

     

    1.1  Payments.
      The
      principal, interest and all other sums due under this Note shall be payable
      at
      the office of Lender as set forth above, or at such other place as Lender may
      from time to time designate in writing, as follows:

     

    (a)  Commencing
      on the ninth (9th) day of February, 2007 and continuing on the ninth (9th)
      day
      of each and every successive month thereafter or, if such day is not a Business
      Day, the immediately preceding Business Day (each, a “Payment
      Date”)
      through and including the Maturity Date, Borrower shall pay (i) monthly
      installments of interest on the outstanding principal balance of this Note
      as of
      such Payment Date at the Applicable Interest Rate for the Interest Period in
      which such Payment Date occurs. Notwithstanding the foregoing, interest on
      the
      outstanding principal amount of this Note for the period from the date hereof
      through and including January 14, 2007 shall be paid by Borrower on the date
      hereof.

     

    (b)  Subject
      to Section
      1.11
      hereof,
      the entire outstanding principal balance of this Note, together with accrued
      and
      unpaid interest and any other amounts due under this Note and the other Loan
      Documents shall be due and payable on the Maturity Date and after a
      Securitization shall include, without limitation, all interest that would have
      accrued on the outstanding principal balance of this Note through the end of
      the
      Interest Period during which the Maturity Date occurs (even if such period
      extends beyond the Maturity Date).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)  All
      amounts due under this Note shall be payable without setoff, counterclaim or
      any
      other deduction whatsoever.

     

    (d)  Additionally,
      payments shall be made on this Note as required by the Loan Agreement and the
      other Loan Documents.

     

    1.2  Interest.
      Interest on the outstanding principal balance of this Note shall accrue at
      the
      Applicable Interest Rate from the date hereof to the Maturity Date and after
      a
      Securitization through the end of the Interest Period in which the Maturity
      Date
      occurs; provided, however, notwithstanding anything to the contrary contained
      herein or in any other Loan Document, any principal payments made on this Note
      from and including any Payment Date through and including the last day of the
      Interest Period in which such Payment Date occurs (each, a “Gap
      Period”)
      shall
      be disregarded for purposes of determining the interest payment due and payable
      on such Payment Date with respect to interest accruing during the corresponding
      Gap Period and shall be treated as if such principal payments were made on
      the
      first day of the next Interest Period. Adjustments to the Applicable Interest
      Rate in connection with changes in the LIBOR Rate (or the Treasury Rate, if
      applicable) shall be made on the first day of each Interest Period
      (“Interest
      Rate Adjustment
      Date”).

     

    1.3  Computation.
      Interest on the outstanding principal balance of this Note shall be calculated
      by multiplying (a) the actual number of days elapsed in the period for which
      the
      calculation is being made by (b) a daily rate equal to the Applicable Interest
      Rate divided by three hundred sixty (360) by (c) the outstanding principal
      balance of this Note. In computing the number of days during which interest
      accrues, the day on which funds are advanced shall be included regardless of
      the
      time of day such advance is made, and the day on which funds are repaid shall
      be
      included unless repayment is credited prior to Lender's close of business.
      The
      amount of interest shall be rounded up to the nearest one eighth percent
      (.125%).

     

    1.4  Determination.
      Each
      determination of an Applicable Interest Rate by Lender pursuant to any provision
      of this Note shall be conclusive and binding on Borrower absent manifest error.
      Payments under this Note or any other Loan Document made in federal funds
      immediately available in the place designated for payment which are received
      by
      Lender prior to 2:00 p.m. local time at said place of payment shall be
      considered by Lender as having been received prior to close of business, while
      other payments may, at the option of Lender, not be credited until immediately
      available to Lender in federal funds in the place designated for payment prior
      to 2:00 p.m. local time at said place of payment on a day on which Lender is
      open for business.

     

    1.5  Making
      of Payments.
      Each
      payment by Borrower hereunder or under the Loan Agreement or any other Loan
      Document shall be made in funds settled through the New York Clearing House
      Interbank Payments System or other funds immediately available to Lender on
      the
      date such payment is due to Lender, without presentment, demand, protest or
      notice of any kind, all such notices being hereby waived and without setoff,
      counterclaim or other deduction of any nature. Whenever any payment hereunder
      or
      under the Loan Agreement or any other Loan Document shall be stated to be due
      on
      a day which is not a Business Day such payment shall be made on the next
      following Business Day.

     

    
      
         

      

      
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    1.6  Application.
      Prior
      to an Event of Default and except as otherwise expressly provided herein or
      in
      the Loan Agreement or any other Loan Document, payments under this Note shall
      be
      applied first,
      to the
      payment of late fees and other costs and charges due in connection with this
      Note, as Lender determines in its sole discretion, second
      to the
      payment of interest on the outstanding principal balance of this Note through
      the prepayment date; provided, however that after a Securitization interest
      shall be paid through the end of the Interest Period in which such payment
      is
      made and, if applicable, through the end of the Succeeding Interest Period,
      notwithstanding that such Interest Period or Succeeding Interest Period extends
      beyond the date of such payment, and third,
      to the
      reduction of the outstanding principal balance (in inverse order of maturity
      whether or not then due). After an Event of Default, payments under this Note
      shall be applied as Lender may determine in Lender's sole discretion. No
      principal amount repaid may be reborrowed.

     

    1.7  Additional
      Costs; Alternate Interest Rate.
      Anything herein to the contrary notwithstanding, if (i) on any date on
      which the LIBOR Rate would otherwise be set, Lender shall have determined in
      good faith (which determination shall be conclusive absent manifest error)
      that
      adequate and reasonable means do not exist for ascertaining the LIBOR Rate,
      or
      (ii) at any time Lender shall have determined in good faith (which determination
      shall be conclusive absent manifest error) that the making, maintenance or
      funding of any part of the Loan based on the LIBOR Rate has been made
      impracticable or unlawful by compliance by Lender in good faith with any law
      or
      guideline or interpretation or administration thereof by any Governmental
      Authority charged with the interpretation or administration thereof or with
      any
      request or directive of any such Governmental Authority (whether or not having
      the force of law); then and in any such event, Lender may notify Borrower of
      such determination (any such notice being referred to herein as a “Treasury
      Rate Notice”)
      which
      Treasury Rate Notice shall be given to Borrower by telephone at least one (1)
      Business Day prior to the last day of the related Interest Period, with a
      written confirmation of such determination promptly thereafter. If Lender gives
      Borrower a Treasury Rate Notice, the obligation of Lender to charge interest
      to
      Borrower at the LIBOR Rate shall be suspended until Lender shall have later
      notified Borrower of Lender's determination in good faith (which determination
      shall be conclusive absent manifest error) that the circumstances giving rise
      to
      such previous determination no longer exist as provided below. If Lender gives
      Borrower a Treasury Rate Notice, the LIBOR Rate shall automatically be converted
      to the sum of the Treasury Rate plus the LIBOR To Treasury Spread (such sum
      being the “Adjusted
      Treasury Rate”),
      and
      commencing on the first day of the next succeeding Interest Period, this Note
      shall bear interest at a rate of interest per annum equal to the greater of
      (i)
      the Adjusted Treasury Rate from time to time, as determined by Lender, plus
      the
      Margin, and (ii) the Eurodollar Rate in effect at the time Lender delivers
      the
      Treasury Rate Notice (in either case, rounded up, if necessary, to the nearest
      one eighth percent (.125%)) (such rate being referred to herein as the
“Alternate
      Interest Rate”).
      This
      Note shall continue to bear interest at the Alternate Interest Rate until Lender
      determines that the Eurodollar Rate can be determined in accordance with the
      provisions of this Note and gives notice to the Borrower by telephone of such
      determination, confirmed in writing, as soon as reasonably practical, but in
      no
      event later than one (1) Business Day prior to the last day of the then current
      Interest Period. If such notice is given, this Note shall bear interest at
      such
      Eurodollar Rate commencing on the first day of the next succeeding Interest
      Period. Notwithstanding anything to the contrary contained herein, in no event
      shall the Borrower have the right to elect to have the Loan bear interest at
      either the Eurodollar Rate or the Alternate Interest Rate.

     

    
      
         

      

      
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    1.8  Capital
      Adequacy.
      If
      Lender determines that compliance with any law or regulation or with any
      guideline or request from any central bank or other governmental agency (whether
      or not having the force of law) affects or would affect the amount of capital
      required or expected to be maintained by Lender, or any corporation controlling
      Lender, as a consequence of, or with reference to, Lender's or such
      corporation's commitments or its making or maintaining advances below the rate
      which Lender or such corporation controlling Lender could have achieved but
      for
      such compliance (taking into account the policies of Lender or such corporation
      with regard to capital), then Borrower shall, from time to time, within thirty
      (30) days after written demand by Lender, pay to Lender additional amounts
      sufficient to compensate Lender or such corporation controlling Lender to the
      extent that Lender determines such increase in capital is allocable to Lender's
      obligations hereunder. A certificate as to such amounts, submitted to Borrower
      by Lender shall be conclusive and binding for all purposes, absent manifest
      error. 

     

    1.9  Indemnification.
      Borrower agrees to indemnify Lender and to hold Lender harmless from any actual
      loss or expense which Lender sustains or incurs as a consequence of (I) any
      default by Borrower in payment of the principal of or interest on this Note
      while bearing interest at the Eurodollar Rate, including, without limitation,
      any such loss or expense arising from interest or fees payable by Lender to
      lenders of funds obtained by it in order to maintain the Eurodollar Rate, (II)
      any prepayment (whether voluntary or mandatory) of this Note on a day that
      (A)
      is not a Payment Date or (B) is a Payment Date if Borrower did not give the
      prior written notice of such prepayment required pursuant to the terms of this
      Note or the Loan Agreement, including, without limitation, such loss or expense
      arising from interest or fees payable by Lender to lenders of funds obtained
      by
      it in order to maintain the Eurodollar Rate hereunder and (III) the conversion
      of the Applicable Interest Rate from the Eurodollar Rate to the Alternate
      Interest Rate pursuant to Section
      1.7
      on a
      date other than a Payment Date, including, without limitation, such loss or
      expenses arising from interest or fees payable by Lender to lenders of funds
      obtained by it in order to maintain the Eurodollar Rate hereunder (the amounts
      referred to in clauses (I), (II) and (III) are herein referred to collectively
      as the “Breakage
      Costs”).
      This
      provision shall survive payment of the Note and the satisfaction of all other
      obligations of Borrower hereunder and under the Loan Agreement and the other
      Loan Documents.

     

    1.10  Definitions.
      In
      addition to other terms defined elsewhere in this Note, as used herein, the
      following terms shall have the following meanings:

     

    “Applicable
      Interest Rate”
shall
      mean an interest rate per annum equal to (i) the Eurodollar Rate or (ii) the
      Alternate Interest Rate, if the Loan begins bearing interest at the Alternate
      Interest Rate in accordance with the provisions of Section
      1.7
      hereof.

     

    “Assumed
      Note Rate”
shall
      mean an interest rate equal to the sum of one percent (1.00%) plus the LIBOR
      Rate as determined on the preceding LIBOR Determination Date plus three percent
      (3.00%).

     

    
      
         

      

      
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    “Business
      Day”
shall
      mean a day on which commercial banks are not authorized or required by law
      to
      close in the State of New York.

     

    “Eurodollar
      Rate”
shall
      mean, with respect to any Interest Period, an interest rate equal to the LIBOR
      Rate plus three percent (3.00%) per annum.

     

    “Interest
      Period”
shall
      mean, in connection with the calculation of interest accrued with respect to
      any
      specified Payment Date, the period from and including the fifteenth (15th)
      calendar day of the prior calendar month to and including the fourteenth (14th)
      day of the calendar month in which the applicable Payment Date occurs. Each
      Interest Period shall be a full month and shall not be shortened by reason
      of
      any payment of the Loan prior to the expiration of such Interest
      Period.

     

    “LIBOR
      Business Day”
shall
      mean any day upon which United States dollar deposits may be dealt in on the
      London and the New York interbank markets and on which commercial banks and
      foreign exchange markets are open in London and New York City.

     

    “LIBOR
      Rate”
shall
      mean with respect to each Interest Period, the quoted offered rate for one-month
      United States dollar deposits with leading banks in the London interbank market
      that appears on Dow Jones Market Services (formerly Telerate) page 3750 (or
      the
      successor thereto) (“Page
      3750”)
      (provided that at least two offered rates appear on Page 3750)) as of 11:00
      a.m., London time, on the date which is two (2) LIBOR Business Days prior to
      the
      relevant Interest Rate Adjustment Date (“LIBOR
      Determination Date”)
      (rounded upward, if necessary, to the nearest one-sixteenth of one percent
      (1/16%)). If as of such time on any LIBOR Determination Date, no quotation
      is
      given on such Page 3750, then the Lender shall establish LIBOR on such LIBOR
      Determination Date by requesting four Reference Banks meeting the criteria
      set
      forth herein to provide the quotation offered by its principal London office
      for
      making one-month United States dollar deposits with leading banks in the London
      interbank market as of 11:00 a.m., London time, on such LIBOR Determination
      Date. If two or more Reference Banks provide such offered quotations, then
      the
      LIBOR Rate for the next Interest Period shall be the arithmetic mean of such
      offered quotations (rounded upward if necessary to the nearest whole multiple
      of
      1/1,000%. If only one or none of the Reference Banks provides such offered
      quotations, then the LIBOR Rate for the next Interest Period shall be the
      Reserve Rate. If on any LIBOR Determination Date, Lender is required but is
      unable to determine the LIBOR Rate in the manner provided in the immediately
      two
      preceding sentences, the LIBOR Rate for the next Interest Period shall be
      determined in accordance with the provisions of Section
      1.7
      hereof.

     

    “LIBOR
      To Treasury Spread”
shall
      mean the difference, if positive, between the LIBOR Rate and the Treasury Rate
      on the date of any Treasury Rate Notice. If such difference is negative, the
      LIBOR To Treasury Spread shall be deemed to be equal to zero.

     

    “Loan
      Agreement”
shall
      mean that certain Loan Agreement dated as of even date herewith between Borrower
      and Lender, as the same may be amended, restated, replaced, supplemented or
      otherwise modified from time to time.

     

    “Margin”
shall
      mean three percent (3.00%).

     

    
      
         

      

      
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    “Maturity
      Date”
shall
      mean (i) January 9,
      2010,
      or
      upon the valid exercise of the First Extension Option, January 9, 2011, or
      upon
      the valid exercise of the Second Extension Option, January 9, 2012 or (ii)
      any
      earlier date on which this Note is required to be paid in full, by acceleration
      or otherwise. 

     

    “Reference
      Bank”
shall
      mean a leading bank engaged in transactions in Eurodollar deposits in the
      international Eurocurrency market that has an established place of business
      in
      London. If any such Reference Bank should be removed from Page 3750 or in any
      other way fail to meet the qualifications of a Reference Bank, Lender may in
      its
      reasonable discretion designate alternative Reference Banks meeting the criteria
      specified above. 

     

    “Reserve
      Rate”
shall
      mean the rate per annum which Lender determines to be the arithmetic mean
      (rounded upwards if necessary to the nearest whole multiple of 1/1,000%) of
      the
      one-month United States dollar lending rates that at least three major New
      York
      City banks selected by Lender are quoting, at 11:00 a.m. (New York time) on
      the
      relevant LIBOR Determination Date, to the principal London offices of at least
      two of the Reference Banks. In the event that at least two such rates are not
      obtained, Reserve Rate shall mean the lowest one-month United States dollar
      lending rate which New York City banks reasonably selected by Lender are quoting
      as of 11:00 a.m. (New York time) on such LIBOR Determination Date to leading
      European banks.

     

    “Treasury
      Rate”
shall
      mean with respect to each Interest Rate Adjustment Date, the weekly average
      yield on United States Treasury Securities adjusted to a constant maturity
      of
      six months last published by the Federal Reserve Board prior to such Interest
      Rate Adjustment Date.

     

    1.11  Payment
      on Maturity Date.
      Borrower shall pay to Lender on the Maturity Date the outstanding principal
      balance of this Note, all accrued and unpaid interest hereon and all other
      amounts due hereunder and under the Agreement and the other Loan Documents,
      including, without limitation, all interest that would have accrued on the
      outstanding principal balance of this Note through and including the Maturity
      Date; provided, however, that after a Securitization, interest shall be paid
      through the end of the Interest Period in which the Maturity Date occurs (even
      if such Interest Period extends beyond the Maturity Date).

     

    2.  DEFAULT.

     

    2.1  Late
      Fee.
      If any
      sum payable under this Note or any other Loan Document is not paid on or before
      the date on which it is due, Borrower shall pay to Lender upon demand an amount
      equal to the lesser of five percent (5.0%) of such unpaid sum or, if prohibited
      or restricted by Legal Requirements, the maximum amount permitted by applicable
      law to defray the expenses incurred by Lender in handling and processing such
      delinquent payment and to compensate Lender for the loss of the use of such
      delinquent payment and such amount shall be secured by the Security Instrument
      and the other Loan Documents.

     

    2.2  Remedies.
      The
      entire outstanding principal sum of this Note, together with all interest
      accrued and unpaid thereon and all other sums due under this Note, the Security
      Instrument, or any of the other Loan Documents, or any portion thereof,
      including without limitation, any amounts described in Section
      12.9
      of the
      Loan Agreement shall without notice become immediately due and payable at the
      option of Lender upon the occurrence of any Event of Default including without
      limitation, an Event of Default resulting from a Transfer in violation of the
      terms of the Loan Agreement. Time is of the essence in this Note, the Security
      Instrument and the other Loan Documents. All of the terms, covenants and
      conditions contained in the Security Instrument and the other Loan Documents
      are
      hereby made part of this Note to the same extent and with the same force as
      if
      they were fully set forth herein. If Borrower’s obligations under this Note or
      any of the other Loan Documents are enforced by Lender through an
      attorney-at-law, or any payment due under this Note or the other Loan Documents
      is collected by or through an attorney-at-law or collection agency, Borrower
      agrees to pay all out of pocket costs incurred by Lender in connection
      therewith, including, but not limited to, reasonable fees and disbursements
      of
      legal counsel (whether with respect to a retained firm or Lender’s in-house
      staff), collection agency costs, whether or not suit be brought, and any and
      all
      costs or fees arising as a result of the filing of or during the course of
      any
      case under any Bankruptcy Laws with respect to any of the Borrower
      Parties.

     

    
      
         

      

      
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    2.3  Default
      Rate.
      Upon
      the occurrence of an Event of Default, Lender shall be entitled to receive
      and
      Borrower shall pay interest on the entire unpaid principal sum at the Applicable
      Interest Rate plus five percent (5.0%) (the “Default
      Rate”).
      The
      Default Rate shall be automatically computed from the occurrence of the Event
      of
      Default until the actual receipt and collection of this Note in full or, if
      permitted by Lender or otherwise provided in the Loan Documents, the date such
      Event of Default is cured. This charge shall be added to this Note, and shall
      be
      deemed secured by the Security Instrument and the other Loan Documents. This
      clause, however, shall not be construed as an agreement or privilege to extend
      the date of the payment of this Note or any other sums payable under the Loan
      Documents, nor as a waiver of any other right or remedy accruing to Lender
      by
      reason of the occurrence of any Event of Default. In the event the Default
      Rate
      would otherwise exceed the maximum rate permitted by applicable law, the Default
      Rate shall be the maximum rate permitted by applicable law.

     

    2.4  Post-Judgment.
      Interest shall accrue on any judgment obtained by Lender in connection with
      the
      enforcement or collection of this Note or the other Loan Documents (including
      foreclosure of the Security Instrument) until such judgment amount is
      irrevocably paid in full at a rate equal to the greater of (a) the Default
      Rate or (b) the highest legal rate applicable to judgments within such
      jurisdiction; provided, however, that interest shall not accrue at a rate in
      excess of the maximum rate of interest, if any, which may be charged by Lender
      or collected from Borrower under applicable law.

     

    2.5  Remedies
      Cumulative.
      The
      remedies available to Lender under this Note and in the other Loan Documents,
      or
      at law or in equity, shall be cumulative and concurrent, and may be pursued
      singly, successively or together in Lender’s sole discretion and as often as
      occasion therefor shall arise.

     

    
      
         

      

      
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    3.  PREPAYMENT.

     

    3.1  Prepayment.
      Provided no Event of Default exists, the principal balance of this Note may
      be
      prepaid in whole or in part at any time provided (i) written notice of such
      prepayment specifying the intended date of prepayment is received by Lender
      not
      more than sixty (60) days and not less than thirty (30) days prior to the date
      of such prepayment, (ii) such prepayment is accompanied by all interest accrued
      hereunder and all other sums due hereunder or under the other Loan Documents
      through the date of prepayment, (iii) in addition to the payment required in
      clause (ii) above, if a Securitization has occurred, such prepayment includes
      an
      amount equal to the interest that would have accrued at the Applicable Interest
      Rate on the amount of principal being prepaid through the end of the Interest
      Period in which such prepayment occurs, notwithstanding that such Interest
      Period extends beyond the date of prepayment, (iv) in addition to the payments
      required in clauses (ii) and (iii) above, if a Securitization has occurred
      and
      if such prepayment is made during the period from and including the first day
      after a Payment Date through and including the last day of the Interest Period
      in which such prepayment occurs, such prepayment includes all interest on the
      principal amount being prepaid which would have accrued from the first day
      of
      the Interest Period immediately following the Interest Period in which the
      prepayment occurs (the “Succeeding
      Interest Period”)
      through and including the end of the Succeeding Interest Period, calculated
      at
      (1) the Applicable Interest Rate if such prepayment occurs on or after the
      LIBOR
      Determination Date for the Succeeding Interest Period or (2) the Assumed Note
      Rate if such prepayment occurs before the LIBOR Determination Date for the
      Succeeding Interest Period (the sums due under clauses (ii), (iii) and (iv)
      of
      this Section
      3.1
      hereinafter collectively referred to as the “Interest
      Shortfall”),
      (v)
      such prepayment includes all Breakage Costs, if any, without duplication of
      any
      sums paid pursuant to the preceding clause (iv); and (vi) such prepayment
      includes all other sums then due under this Note, the Loan Agreement or the
      other Loan Documents. Notwithstanding anything to the contrary in this Note,
      the
      Security Instrument or the other Loan Documents, any notice of prepayment
      pursuant to this Section shall be irrevocable and the principal balance of
      the
      Note shall be absolutely and unconditionally due and payable on the date
      specified in any notice given pursuant to this Section
      3.1
      unless
      Borrower (i) revokes such notice of prepayment in writing at least two (2)
      days
      prior to the date designated as the prepayment date in such notice of
      prepayment, and (ii) pays all of Lender's costs and expenses incurred related
      to
      such prospective prepayment, including, without limitation, any Breakage Costs.
      Notwithstanding the foregoing or anything to the contrary contained herein
      or in
      any other Loan Document, Borrower shall not be permitted to prepay the principal
      balance of this Note in whole or in part at any time prior to the Lockout Date
      except for and to the extent of prepayments of principal resulting from the
      application of any Casualty/Condemnation Involuntary Prepayments. No principal
      amount repaid may be reborrowed. 

     

    If
      the
      Interest Shortfall (or any portion thereof) was calculated based upon the
      Assumed Note Rate, upon determination of the LIBOR Rate on the LIBOR
      Determination Date for the Succeeding Interest Period, (i) if the Applicable
      Interest Rate for such Succeeding Interest Period is less than the Assumed
      Note
      Rate, Lender shall promptly refund to Borrower the amount of such Interest
      Shortfall paid, calculated at a rate equal to the difference between the Assumed
      Note Rate and the Applicable Interest Rate, or (ii) if the Applicable Interest
      Rate for such Succeeding Interest Period is greater than the Assumed Note Rate,
      Borrower shall promptly (and in no event later than the ninth (9th) day of
      the
      following month) pay Lender, without additional interest or other late charges
      or penalties, the amount of such additional Interest Shortfall calculated at
      a
      rate equal to the excess of the Applicable Interest Rate over the Assumed Note
      Rate.

     

    
      
         

      

      
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    3.2  Mandatory
      Prepayments Resulting From Casualty and Condemnation.
      The
      Loan is subject to mandatory prepayment (unless otherwise agreed to by Lender)
      in certain instances of Casualty and Condemnation (each, a “Casualty/Condemnation
      Involuntary Prepayment”),
      in
      the manner and to the extent set forth in the Loan Agreement. Each
      Casualty/Condemnation Involuntary Prepayment shall be made in accordance with
      the Loan Agreement. On the Payment Date immediately following the date on which
      Borrower actually receives any Insurance Proceeds and/or Condemnation Proceeds
      or sooner, if requested by Borrower, if and to the extent Lender is not
      obligated to or does not otherwise agree to make such Insurance Proceeds and/or
      Condemnation Proceeds available to Borrower for the Restoration of the Property,
      Borrower shall prepay (without Prepayment Premium) the outstanding principal
      balance of this Note in an amount equal to one hundred percent (100%) of such
      Insurance Proceeds and/or Condemnation Proceeds. Provided no Event of Default
      has occurred and is continuing, such prepayment shall be applied, (a)
first,
      to
      interest on the outstanding principal balance of this Note accrued at the
      Applicable Interest Rate on the amount prepaid through and including the date
      of
      prepayment and, if a Securitization has occurred, to interest on the outstanding
      principal balance of the Loan that would have accrued at the Applicable Interest
      Rate on the amount prepaid through the end of the Interest Period in which
      such
      prepayment occurs, notwithstanding that such Interest Period extends beyond
      the
      date of prepayment, (b) second,
      to
      Breakage Costs, if any, and any other sums due under this Note, the Loan
      Agreement or the other Loan Documents and (c) third,
      toward
      the outstanding principal balance of this Note.

     

    3.3  Prepayment
      Upon Default.
      If
      following the occurrence of any Event of Default, Lender shall accelerate the
      Loan, Borrower shall pay all amounts payable under this Note or any of the
      other
      Loan Documents (which amounts shall include all amounts payable under
Section
      3.1).
      If
      Borrower shall tender payment of an amount sufficient to satisfy the Debt at
      any
      time prior to a sale of the Property or any part thereof, either through
      foreclosure or the exercise of the other remedies available to Lender under
      the
      Loan Documents, such tender by Borrower shall be deemed to be voluntary and
      Borrower shall pay all amounts due and payable under the Loan Documents and
      any
      other amounts described in this Section 3.

     

    4.  SECURITY.
      The
      indebtedness evidenced by this Note is governed by the Loan Agreement and the
      obligations created hereby (including without limitation the amounts authorized
      by Section 2
      to be
      collected by Lender) are secured by, among other things, the Security Instrument
      and other Loan Documents.

     

    5.  EXCULPATION.
      Notwithstanding anything to the contrary contained in this Note, the liability
      of Borrower to pay this Note and for the performance of the other agreements,
      covenants and obligations contained herein and in the other Loan Documents
      shall
      be limited as set forth in Article IX
      of the
      Loan Agreement, the terms of which are incorporated herein by this
      reference.

     

    6.  GENERAL.

     

    6.1  Written
      Amendment Only.
      This
      Note may not be modified, amended, waived, extended, changed, discharged or
      terminated orally or by any act or failure to act on the part of Borrower or
      Lender, but only by an agreement in writing signed by Borrower and
      Lender.

     

    
      
         

      

      
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    6.2  Certain
      Waivers.
      Except
      for any notices specifically required by the Loan Agreement, Borrower and all
      others who may become liable for the payment of all or any part of the Debt
      do
      hereby severally waive presentment and demand for payment, notice of dishonor,
      protest and notice of protest, notice of non-payment and notice of intent to
      accelerate the maturity hereof (and of such acceleration). No release of any
      security for the Loan or extension of time for payment of this Note or any
      installment hereof, and no alteration, amendment or waiver of any provision
      of
      this Note or the other Loan Documents made by agreement between Lender and
      any
      other Person shall release, modify, amend, waive, extend, change, discharge,
      terminate or affect the liability of Borrower, or any other Person who may
      become liable for the payment of all or any part of the Debt, under this Note
      and the other Loan Documents. Lender may release any guarantor or indemnitor
      of
      the Loan from liability, in every instance without the consent of Borrower
      hereunder, and without waiving any rights the Lender may have hereunder, the
      other Loan Documents or by virtue of the laws of the State in which the Property
      is located or any other state of the United States.

     

    6.3  Severability.
      If any
      provision or obligation under this Note and the other Loan Documents shall
      be
      determined by a court of competent jurisdiction to be invalid, illegal or
      unenforceable, that provision shall be deemed severed from the Loan Documents
      and the validity, legality and enforceability of the remaining provisions or
      obligations shall remain in full force as though the invalid, illegal, or
      unenforceable provision had never been a part of the Loan
      Documents.

     

    6.4  Notices.
      All
      notices or other written communications hereunder shall be given and become
      effective as provided Section
      12.5
      of the
      Loan Agreement.

     

    6.5  Set-Off
      Preference.
      Borrower is and shall be obligated to pay principal, interest, and any and
      all
      other amounts which become payable hereunder or under the other Loan Documents
      absolutely and unconditionally and without any abatement, postponement,
      diminution or deduction and without any reduction for counterclaim or setoff.
      In
      the event that at any time any payment received by Lender hereunder shall be
      deemed by a court of competent jurisdiction to have been a voidable preference
      or fraudulent conveyance under any bankruptcy, insolvency or other debtor relief
      law, then the obligation to make such payment shall survive any cancellation
      or
      satisfaction of this Note or return thereof to Borrower and shall not be
      discharged or satisfied with any prior payment thereof or cancellation of this
      Note, but shall remain a valid and binding obligation enforceable in accordance
      with the terms and provisions hereof, and such payment shall be immediately
      due
      and payable upon demand.

     

    6.6  Successors
      and Assigns.
      The
      terms and provisions hereof shall be binding upon and inure to the benefit
      of
      Borrower and Lender and their respective heirs, executors, legal
      representatives, successors, successors-in-title and permitted assigns, whether
      by voluntary action of the parties or by operation of law. As used in this
      Note
      and the other Loan Documents, the terms “Borrower”
and
      “Lender”
shall
      be deemed to include their respective heirs, executors, legal representatives,
      successors, successors-in-title and permitted assigns (no right to assign on
      the
      part of Borrower being implied hereby), whether by voluntary action of the
      parties or by operation of law.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    6.7  Interpretation.
      Section
      1.2
      of the
      Loan Agreement is hereby incorporated into this Note by reference for all
      purposes.

     

    6.8  WAIVER
      OF TRIAL BY JURY.
      BORROWER AND LENDER BY ACCEPTING THIS NOTE HEREBY AGREE NOT TO ELECT A TRIAL
      BY
      JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY
      JURY
      FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD
      TO THIS NOTE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
      VOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
      EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO TRIAL BY JURY WOULD
      OTHERWISE ACCRUE OR ARISE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF
      THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY THE
      OTHER PARTY.

     

    6.9  GOVERNING
      LAW.
      THIS NOTE WAS NEGOTIATED IN WHOLE OR IN PART IN THE STATE OF NEW YORK AND
      ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE
      DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH
      STATE
      THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
      UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
      LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY
      AND
      PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED
      BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
      APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
      PRINCIPLES OF CONFLICT OF LAWS) AND ANY LEGAL REQUIREMENTS OF THE UNITED STATES
      OF AMERICA. AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION AND
      ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT TO THE LOAN
      DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE
      OF NEW YORK. THIS CHOICE OF GOVERNING LAW IS MADE PURSUANT TO NEW YORK GENERAL
      OBLIGATION LAW SECTION 5-1401.

     

    
      
         

      

      
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    ANY
      SUIT, ACTION OR PROCEEDING AGAINST BORROWER ARISING OUT OF OR RELATING TO THIS
      NOTE MAY AT LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE
      CITY OF NEW YORK, COUNTY OF NEW YORK, AND BORROWER WAIVES ANY OBJECTIONS WHICH
      IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF
      ANY
      SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO
      THE
      JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. ANY SUIT,
      ACTION OR PROCEEDING BROUGHT BY BORROWER ARISING OUT OF OR RELATING TO THIS
      NOTE
      OR THE OTHER LOAN DOCUMENTS OR THE LENDER-BORROWER RELATIONSHIP CREATED THEREBY
      (WHETHER IN CONTRACT OR IN TORT) SHALL ONLY BE INSTITUTED IN ANY FEDERAL OR
      STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, AND BORROWER WAIVES
      ANY
      OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
      CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
      IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION
      OR
      PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT HERRICK,
      FEINSTEIN LLP, 2 PARK AVENUE, NEW YORK, NEW YORK 10016, ATTENTION: SHELDON
      CHANALES, ESQ.
      AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF
      ANY
      AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING
      IN
      ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
      PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
      MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED IN THE LOAN AGREEMENT
      SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER,
      IN
      ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK.


     

    BORROWER
      (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS
      AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
      DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK
      (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
      FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A
      SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW
      YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

     

    6.10  COUNTERPARTS.
      This
      Note may be executed in any number of counterparts, each of which shall be
      an
      original, but all of which shall constitute one and the same
      instrument.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    


    
      
         

      

      
        12

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, Borrower has duly executed this Note the day and year first
      above written.


     

    
      	 	 	 
	 	
              1407
                BROADWAY REAL ESTATE LLC,

              a
                Delaware limited liability company

            
	 
 	 
 	 
 
	 	By:  	/s/
              David Lichtenstein
	 	
              
Name:
              David Lichtenstein
	 	
              Title:
                President