Exhibit 4.3


 





SUBSCRIPTION ESCROW AGREEMENT


 


THIS SUBSCRIPTION ESCROW AGREEMENT,
dated as of [_____], 2014 (this “Agreement”), is entered into among Orchard Securities, LLC (the “Dealer
Manager”), Lightstone Value Plus Real Estate Investment Trust III, Inc. (the “Company”) and UMB Bank,
N.A., a national banking association, as escrow agent (the “Escrow Agent”).


 


WHEREAS, the Company intends to raise
cash funds from Investors (as defined below) pursuant to a public primary offering (the “Offering”) of not less
than 200,000 shares of common stock, par value $0.01 per share (“Common Shares”), for an aggregate offering
amount of $2,000,000 (the “Minimum Amount”), and not more than 30,000,000 Common Shares, pursuant to the registration
statement on Form S-11 of the Company (No. 333-195292) (as amended, the “Offering Document”).


 


WHEREAS, the Company desires to establish
an escrow account with the Escrow Agent for funds contributed by subscribers for Common Shares (“Investors”)
with the Escrow Agent, to be held for the benefit of the Investors and the Company until such time as (a) in the case of subscriptions
received from residents of New York (“New York Investors”), aggregate subscriptions from all Investors result
in a total minimum capital raised of $2,500,000 (the “New York Minimum Amount”), (b) in the case of subscriptions
received from residents of Tennessee (“Tennessee Investors”), aggregate subscriptions from all Investors result
in a total minimum capital raised of $20,000,000 (the “Tennessee Minimum Amount”), (c) in the case of subscriptions
received from residents of Pennsylvania (“Pennsylvania Investors”) aggregate subscriptions from all Investors
result in a total minimum capital raised of $75,000,000 (the “Pennsylvania Minimum Amount”) and (d) in the case
of all other Investors, the Minimum Amount (excluding proceeds from Common Shares sold to New York Investors, Tennessee Investors
and Pennsylvania Investors) has been deposited into escrow in accordance with the terms of this Agreement.


 


WHEREAS, the Escrow Agent is willing
to accept appointment as escrow agent only for the express duties set forth herein.


 


NOW, THEREFORE, in consideration
of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:


 


1.           Proceeds
to be Escrowed. On or before the date the Offering Document is initially declared effective by the Securities and Exchange
Commission (the “SEC”), the Company shall establish an interest-bearing escrow account with the Escrow Agent
to be invested in accordance with Section 10 titled “ESCROW ACCOUNT FOR THE BENEFIT OF INVESTORS IN COMMON SHARES
OF LIGHSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST III, INC.” (including such abbreviations as are required for the Escrow
Agent’s systems) (the “Escrow Account”). All funds received from Investors in payment for the Common Shares
(“Investor Funds”), along with all documents executed in connection with each subscription of Common Shares,
will be delivered to the Dealer Manager or any soliciting dealer retained by the Dealer Manager (a “Soliciting Dealer”),
and the Dealer Manager or such Soliciting Dealer, as applicable, will deliver all Investor Funds to the Escrow Agent within the
time period set forth in the final paragraph of this Section 1, and such Investor Funds shall, upon receipt by the Escrow
Agent, be retained in escrow by the Escrow Agent. Until the Termination Date (as defined in Section 7), the Company or its
agents shall cause all checks received for payment for the Common Shares to be payable to the Escrow Agent in accordance with Section
2 and delivered to the Escrow Agent for deposit in the Escrow Account.


 




    	 



    	 



    

 


Proceeds received from New York Investors
shall be accounted for separately in a subaccount entitled “ESCROW SUBACCOUNT FOR THE BENEFIT OF NEW YORK INVESTORS IN COMMON
SHARES OF LIGHSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST III, INC.” (including such abbreviations as are required for
the Escrow Agent’s systems) (the “New York Escrow Subaccount”), until such New York Escrow Subaccount
has closed pursuant to Section 4 hereof. The Company shall, and shall cause its agents to, cooperate with the Escrow Agent
in separately accounting for subscription proceeds from New York Investors in the New York Escrow Subaccount, and the Escrow Agent
shall be entitled to rely upon information provided by the Company or its agents in this regard.


 


Proceeds received from Tennessee Investors
shall be accounted for separately in a subaccount entitled “ESCROW SUBACCOUNT FOR THE BENEFIT OF TENNESSEE INVESTORS IN COMMON
SHARES OF LIGHSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST III, INC.” (including such abbreviations as are required for
the Escrow Agent’s systems) (the “Tennessee Escrow Subaccount”), until such Tennessee Escrow Subaccount
has closed pursuant to Section 5 hereof. The Company shall, and shall cause its agents to, cooperate with the Escrow Agent
in separately accounting for subscription proceeds from Tennessee Investors in the Tennessee Escrow Subaccount, and the Escrow
Agent shall be entitled to rely upon information provided by the Company or its agents in this regard.


 


Proceeds received from Pennsylvania Investors
shall be accounted for separately in a subaccount entitled “ESCROW SUBACCOUNT FOR THE BENEFIT OF PENNSYLVANIA INVESTORS IN
COMMON SHARES OF LIGHSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST III, INC.” (including such abbreviations as are required
for the Escrow Agent’s systems) (the “Pennsylvania Escrow Subaccount”), until such Pennsylvania Escrow
Subaccount has closed pursuant to Section 6 hereof. The Company shall, and shall cause its agents to, cooperate with the
Escrow Agent in separately accounting for subscription proceeds from Pennsylvania Investors in the Pennsylvania Escrow Subaccount,
and the Escrow Agent shall be entitled to rely upon information provided by the Company or its agents in this regard.


 


The escrow period shall commence upon the
effectiveness of this Agreement and shall continue until the Termination Date (as defined in Section 7).


 


The Escrow Agent shall have no duty to make
any disbursement, investment or other use of Investor Funds until and unless it has good and collected funds. If any checks deposited
in the Escrow Account are returned or prove uncollectible after the funds represented thereby have been released by the Escrow
Agent, then the Company shall promptly reimburse the Escrow Agent for any and all costs reasonably incurred for such, upon request,
and the Escrow Agent shall deliver the returned checks to the Company. The Escrow Agent shall be under no duty or responsibility
to enforce collection of any check delivered to it hereunder.


 




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When the internal supervisory procedures
of the Dealer Manager or Soliciting Dealer, as applicable, are conducted at the site at which the subscription agreement and check
were initially received by the Dealer Manager or Soliciting Dealer, as applicable, from the subscriber, the Dealer Manager or Soliciting
Dealer, as applicable, shall transmit the check to the Escrow Agent by the end of the next business day following receipt of the
check and subscription agreement. When, pursuant to the internal supervisory procedures of the Dealer Manager or Soliciting Dealer,
as applicable, the final internal supervisory procedures are conducted at a different location (the “Final Review Office”),
the Dealer Manager or Soliciting Dealer, as applicable, shall transmit the check and subscription agreement to the Final Review
Office by the end of the next business day following receipt of the subscription agreement and check. The Final Review Office will,
by the end of the next business day following its receipt of the subscription agreement and check, forward the check to the Escrow
Agent.


 


2.           Investors.
Investors will be instructed by the Dealer Manager or any Soliciting Dealer to remit the purchase price in the form of checks
(“instruments of payment”) payable to the order of “UMB BANK, N.A., ESCROW AGENT FOR LIGHTSTONE III.”
By 12:00 p.m. Eastern the next business day after receipt of instruments of payment, the Escrow Agent shall be furnished with a
list of the Investors who have paid for the Common Shares showing the name, address, tax identification number, number of Common
Shares subscribed for, the amount paid and whether such Investors are New York Investors, Tennessee Investors or Pennsylvania Investors
(the “List of Investors”). The information comprising the identity of Investors shall be provided to the Escrow
Agent in the format set forth in the “List of Investors” attached hereto as Exhibit C. The Escrow Agent shall
be entitled to conclusively rely upon the List of Investors in determining whether Investors are New York Investors, Tennessee
Investors or Pennsylvania Investors, and shall have no duty to independently determine or verify the same.


 


Any checks made payable to a party other
than the Escrow Agent shall be returned to the Dealer Manager or Soliciting Dealer that submitted the check. If any subscription
agreement for the purchase of Common Shares solicited by a Soliciting Dealer is rejected by the Dealer Manager or the Company,
then the subscription agreement and the related check for the purchase of Common Shares will be returned to the rejected subscriber
within ten (10) business days from the date of rejection. If an Investor sends a check to the Dealer Manager or any Soliciting
Dealer that does not conform to the subscription instructions, the Dealer Manager or Soliciting Dealer, as applicable, shall return
the check directly to such Investor not later than the end of the next business day after the date on which the Dealer Manager
or Soliciting Dealer, as applicable, received such check.


 


All Investor Funds deposited in the Escrow
Account shall not be subject to any liens or charges by the Company or the Escrow Agent, or judgments or creditors’ claims
against the Company, until and unless released to the Company as hereinafter provided. The Company understands and agrees that
the Company shall not be entitled to any Investor Funds on deposit in the Escrow Account and no such funds shall become the property
of the Company or any other entity except as released to the Company pursuant to Section 3, Section 4 for New York
Investors, Section 5 for Tennessee Investors or Section 6 for Pennsylvania Investors.


 


The Escrow Agent will not use the information
provided to it by the Company for any purpose other than to fulfill its obligations as Escrow Agent hereunder. The Escrow Agent
will treat all Investor information as confidential.


 




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3.           Disbursement
of Funds. Once proceeds from the sale of Common Shares equal the Minimum Amount (excluding proceeds from Common Shares sold
to New York Investors, Tennessee Investors and Pennsylvania Investors), the Company shall notify the Escrow Agent of the same in
writing. At the end of the third business day following the Termination Date (as defined in Section 7), the Escrow Agent
shall notify the Company of the amount of the Investor Funds received. If the Minimum Amount (excluding proceeds from Common Shares
sold to New York Investors, Tennessee Investors and Pennsylvania Investors) has been obtained on or before the Termination Date,
the Escrow Agent shall promptly notify the Company and, upon receiving acknowledgement of such notice and written instructions
from (a) the Company’s Chief Executive Officer, President, Secretary or Chief Financial Officer, and (b) the Dealer Manager’s
[Chief Executive Officer, Chief Operating Officer or Chief Compliance Officer] to disburse the Investor Funds, but subject to Sections
4, 5 or 6, the Escrow Agent shall disburse to the Company, by check or wire transfer, the funds in the Escrow
Account. The Escrow Agent agrees that funds in the Escrow Account shall not be released to the Company until and unless the Escrow
Agent receives written instructions to release the Investor Funds from (a) the Company’s Chief Executive Officer, President,
Secretary or Chief Financial Officer, and (b) the Dealer Manager’s [Chief Executive Officer, Chief Operating Officer or Chief
Compliance Officer].


 


If the Minimum Amount (excluding proceeds
from Common Shares sold to New York Investors, Tennessee Investors and Pennsylvania Investors) has not been sold on or prior to
the Termination Date, the Company shall notify the Escrow Agent in writing of such. If the Company notifies the Escrow Agent in
writing that the Minimum Amount (excluding proceeds from Common Shares sold to New York Investors, Tennessee Investors and Pennsylvania
Investors) has not been sold prior to the Termination Date, the Escrow Agent shall, promptly following the Termination Date, but
in no event more than 30 days after the Termination Date, refund to each Investor by check, funds deposited in the Escrow Account,
including interest or any other income earned thereon (except that in the case of Investors who have not provided an executed Form
W-9 or substitute Form W-9 (or the applicable substitute Form W-8 for foreign investors), the Escrow Agent shall withhold the applicable
percentage of the earnings attributable to those Investors in accordance with IRS regulations) or shall return the instruments
of payment delivered to Escrow Agent if such instruments have not been processed for collection prior to such time, directly to
each Investor at the address previously provided. Notwithstanding the foregoing, the Escrow Agent shall not be required to remit
any payments until funds represented by such payments have been collected by the Escrow Agent. Additionally, at the end of the
third business day following the Termination Date, the Escrow Agent shall notify the Company of the amount of the Investor Funds
received. Further, once the Offering has closed, the Company shall notify the Escrow Agent of the same in writing.


 


If the Escrow Agent receives written notice
from the Company that the Company intends to reject an Investor’s subscription, the Escrow Agent shall pay to the applicable
Investor, within a reasonable time not to exceed ten (10) business days after receiving notice of the rejection, by first class
United States mail at the address provided on such Investor’s subscription agreement, or at such other address as shall be
furnished to the Escrow Agent by the Investor in writing, all collected sums paid by the Investor for Common Shares and received
by the Escrow Agent (without interest thereon).


 




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4.          Disbursement of Proceeds for New York Investors. Notwithstanding
the foregoing, proceeds from New York Investors will not count towards meeting the Minimum Amount for purposes of Section 3.
Proceeds received from New York Investors will not be released from the New York Escrow Subaccount until the New York Minimum Amount
is obtained. If the New York Minimum Amount is obtained at any time prior to the Termination Date, the Escrow Agent shall promptly
notify the Company and, upon receiving joint written instructions to release the funds from (a) the Company’s Chief Executive
Officer, President, Secretary or Chief Financial Officer, and (b) the Dealer Manager’s [Chief Executive Officer, Chief Operating
Officer or Chief Compliance Officer], the Escrow Agent shall disburse to the Company, by check or wire transfer, the funds in the
New York Escrow Subaccount representing the gross purchase price of the Common Shares.


 


If the New York Minimum Amount has not been
obtained prior to the Termination Date, the Escrow Agent shall, within a reasonable time following the Termination Date, but in
no event more than thirty (30) days after the Termination Date, refund to each New York Investor by check funds deposited in the
New York Escrow Subaccount, or shall return the instruments of payment delivered to the Escrow Agent if such instruments have not
been processed for collection prior to such time, directly to each New York Investor at the address provided on the List of Investors.
Included in the remittance shall be a proportionate share of the income earned in the account allocable to each New York Investor’s
investment in accordance with the terms and conditions specified herein, except that in the case of New York Investors who have
not provided an executed Form W-9 or substitute Form W-9, the Escrow Agent shall withhold the applicable percentage of the earnings
attributable to those Investors in accordance with IRS regulations. Notwithstanding the foregoing, the Escrow Agent shall not be
required to remit any payments until funds represented by such payments have been collected by Escrow Agent.


 


5.          Disbursement of Proceeds for Tennessee Investors.
Notwithstanding the foregoing, proceeds from Tennessee Investors will not count towards meeting the Minimum Amount for purposes
of Section 3. Proceeds received from Tennessee Investors will not be released from the Tennessee Escrow Subaccount until
the Tennessee Minimum Amount is obtained. If the Tennessee Minimum Amount is obtained at any time prior to the Termination Date,
the Escrow Agent shall promptly notify the Company and, upon receiving joint written instructions to release the funds from (a)
the Company’s Chief Executive Officer, President, Secretary or Chief Financial Officer, and (b) the Dealer Manager’s
[Chief Executive Officer, Chief Operating Officer or Chief Compliance Officer], the Escrow Agent shall disburse to the Company,
by check or wire transfer, the funds in the Tennessee Escrow Subaccount representing the gross purchase price of the Common Shares.


 


If the Tennessee Minimum Amount has not
been obtained prior to the Termination Date, the Escrow Agent shall, within a reasonable time following the Termination Date, but
in no event more than thirty (30) days after the Termination Date, refund to each Tennessee Investor by check funds deposited in
the Tennessee Escrow Subaccount, or shall return the instruments of payment delivered to the Escrow Agent if such instruments have
not been processed for collection prior to such time, directly to each Tennessee Investor at the address provided on the List of
Investors. Included in the remittance shall be a proportionate share of the income earned in the account allocable to each Tennessee
Investor’s investment in accordance with the terms and conditions specified herein, except that in the case of Tennessee
Investors who have not provided an executed Form W-9 or substitute Form W-9, the Escrow Agent shall withhold the applicable percentage
of the earnings attributable to those Investors in accordance with IRS regulations. Notwithstanding the foregoing, the Escrow Agent
shall not be required to remit any payments until funds represented by such payments have been collected by Escrow Agent.


 




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6.           Disbursement
of Proceeds for Pennsylvania Investors.  Notwithstanding the foregoing, proceeds from Pennsylvania Investors will not count
towards meeting the Minimum Amount for purposes of Section 3. Proceeds received from Pennsylvania Investors will not be
released from the Pennsylvania Escrow Subaccount until the Pennsylvania Minimum Amount is obtained. If the Pennsylvania Minimum
Amount is obtained at any time prior to the Termination Date, the Escrow Agent shall promptly notify the Company and, upon receiving
joint written instructions to release the funds from (a) the Company’s Chief Executive Officer, President, Secretary or Chief
Financial Officer, and (b) the Dealer Manager’s [Chief Executive Officer, Chief Operating Officer or Chief Compliance Officer],
the Escrow Agent shall disburse to the Company, by check or wire transfer, the funds in the Pennsylvania Escrow Subaccount representing
the gross purchase price of the Common Shares.


 


If the Pennsylvania Minimum Amount has not
been obtained prior to the Termination Date, the Escrow Agent shall, within a reasonable time following the Termination Date, but
in no event more than thirty (30) days after the Termination Date, refund to each Pennsylvania Investor by check funds deposited
in the Pennsylvania Escrow Subaccount, or shall return the instruments of payment delivered to the Escrow Agent if such instruments
have not been processed for collection prior to such time, directly to each Pennsylvania Investor at the address provided on the
List of Investors. Included in the remittance shall be a proportionate share of the income earned in the account allocable to each
Pennsylvania Investor’s investment in accordance with the terms and conditions specified herein, except that in the case
of Pennsylvania Investors who have not provided an executed Form W-9 or substitute Form W-9, the Escrow Agent shall withhold the
applicable percentage of the earnings attributable to those Investors in accordance with IRS regulations. Notwithstanding the foregoing,
the Escrow Agent shall not be required to remit any payments until funds represented by such payments have been collected by Escrow
Agent.


 


If the Escrow Agent is not in receipt of
evidence of subscriptions accepted on or before the close of business on such date that is 120 days after the date the Offering
Document is initially declared effective by the SEC (the “Initial Escrow Period”), and instruments of payment
dated not later than that date, for the purchase of Common Shares providing for total purchase proceeds that equal or exceed the
Pennsylvania Minimum Amount, the Escrow Agent shall promptly notify the Company. Thereafter, the Company or its agents shall send
to each Pennsylvania Investor by certified mail within ten (10) calendar days after the end of the Initial Escrow Period a
notification substantially in the form of Exhibit D hereto. If, pursuant to such notification, a Pennsylvania Investor
requests the return of his or her Investor Funds within ten (10) calendar days after receipt of the notification (the “Request
Period”), the Escrow Agent shall promptly refund directly to each Pennsylvania Investor the collected funds deposited
in the Pennsylvania Escrow Subaccount on behalf of such Pennsylvania Investor or shall return the instruments of payment delivered,
but not yet processed for collection prior to such time, to the address provided on the List of Investors, upon which the Escrow
Agent shall be entitled to rely, together with interest income earned as determined in accordance with the terms and conditions
specified herein (which interest shall be paid within five business days after the first business day of the succeeding month).
Notwithstanding the above, if the Escrow Agent has not received an executed Form W-9 or substitute Form W-9 for such Pennsylvania
Investor, the Escrow Agent shall thereupon remit an amount to such Pennsylvania Investor in accordance with the provisions hereof,
withholding the applicable percentage for backup withholding in accordance with IRS regulations, as then in effect, from any interest
income earned on Investor Funds (determined in accordance with the terms and conditions specified herein) attributable to such
Pennsylvania Investor. However, the Escrow Agent shall not be required to remit such payments until the Escrow Agent has collected
funds represented by such payments.


 




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 The Investor Funds of Pennsylvania
Investors who do not request the return of their Investor Funds within the Request Period shall remain in the Pennsylvania Escrow
Subaccount for successive 120-day escrow periods (a “Successive Escrow Period”), each commencing automatically
upon the termination of the prior Successive Escrow Period, and the Company and Escrow Agent shall follow the notification and
payment procedure set forth above with respect to the Initial Escrow Period for each Successive Escrow Period until the occurrence
of the earliest of (i) the Termination Date, (ii) the receipt and acceptance by the Company of subscriptions for the
purchase of Common Shares with total purchase proceeds that equal or exceed the Pennsylvania Minimum Amount and the disbursement
of the Pennsylvania Escrow Subaccount on the terms specified herein and (iii) all funds held in the Pennsylvania Escrow Subaccount
having been returned to the Pennsylvania Investors in accordance with the provisions hereof.


 


7.           Term
of Escrow. The “Termination Date” shall be the earliest of: (a) the close of business on [_____], 2015;
(b) the date all Investment Funds held in the Escrow Account are distributed to the Company or to Investors pursuant to Section
3 and for New York Investors, Section 4, for Tennessee Investors, Section 5 and for Pennsylvania Investors, Section
6, and the Company has informed the Escrow Agent in writing to close the Escrow Account; (c) the date the Escrow Agent receives
written notice from the Company that it is abandoning the sale of the Common Shares pursuant to the Offering; and (d) the date
the Escrow Agent receives notice from the SEC or any other federal or state regulatory authority that a stop or similar order has
been issued with respect to the Offering Document and that such stop or similar order has remained in effect for at least twenty
(20) days. After the Termination Date, the Company and its agents shall not deposit, and the Escrow Agent shall not accept, any
additional amounts representing payments by prospective Investors.


 




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8.           Duty
and Liability of the Escrow Agent. The sole duty of the Escrow Agent shall be to receive Investor Funds and subscription agreements
and hold them subject to release, in accordance herewith, and the Escrow Agent shall be under no duty to determine whether the
Company, the Dealer Manager or any Soliciting Dealer is complying with requirements of this Agreement, the Offering or applicable
securities or other laws in tendering the Investor Funds to the Escrow Agent. No other agreement entered into between the parties
(other than the Escrow Agent), or any of them, shall be considered as adopted or binding, in whole or in part, upon the Escrow
Agent, notwithstanding that any such other agreement may be referred to herein or deposited with the Escrow Agent or that the Escrow
Agent may have knowledge thereof, including specifically but without limitation the Offering Document or any other document related
to the Offering (including the subscription agreement and exhibits thereto), and the Escrow Agent’s rights and responsibilities
shall be governed solely by this Agreement. The Escrow Agent shall not be responsible for or be required to enforce any of the
terms or conditions of the Offering Document or any other document related to the Offering (including the subscription agreement
and exhibits thereto) or other agreement between the Company and any other party. The Escrow Agent may conclusively rely upon and
shall be protected in acting upon any statement, certificate, notice, request, consent, order or other document believed by it
to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall have no duty or liability
to verify any such statement, certificate, notice, request, consent, order or other document, and its sole responsibility shall
be to act only as expressly set forth in this Agreement. Concurrently with the execution of this Agreement, the Company and the
Dealer Manager shall each deliver to the Escrow Agent an authorized signers form in the form of Exhibit A or Exhibit
A-1 hereto, as applicable. The Escrow Agent shall be under no obligation to institute or defend any action, suit or proceeding
in connection with this Agreement unless first indemnified to its satisfaction. The Escrow Agent may consult counsel of its own
choice with respect to any question arising under this Agreement and the Escrow Agent shall not be liable for any action taken
or omitted in good faith upon advice of such counsel. The Escrow Agent shall not be liable for any action taken or omitted by it
in good faith except to the extent that a court of competent jurisdiction determines that the Escrow Agent’s gross negligence
or willful misconduct was the primary cause of loss. The Escrow Agent is acting solely as escrow agent hereunder and owes no duties,
covenants or obligations, fiduciary or otherwise, to any other person by reason of this Agreement, except as otherwise stated herein,
and no implied duties, covenants or obligations, fiduciary or otherwise, shall be read into this Agreement against the Escrow Agent.
In the event of any disagreement between any of the parties to this Agreement (other than the Escrow Agent), or between any of
them and any other person, including any Investor, resulting in adverse claims or demands being made in connection with the matters
covered by this Agreement, or if the Escrow Agent is in doubt as to what action it should take hereunder, the Escrow Agent may,
at its option, refuse to comply with any claims or demands on it, or refuse to take any other action hereunder, so long as such
disagreement continues or such doubt exists, and in any such event, the Escrow Agent shall not be or become liable in any way or
to any person for its failure or refusal to act, and the Escrow Agent shall be entitled to continue so to refrain from acting until
(a) the rights of all interested parties shall have been fully and finally adjudicated by a court of competent jurisdiction, or
(b) all differences shall have been adjudged and all doubt resolved by agreement among all the interested persons, and the Escrow
Agent shall have been notified thereof in writing signed by all such persons. Notwithstanding the foregoing, the Escrow Agent may
in its discretion obey the order, judgment, decree or levy of any court, whether with or without jurisdiction, and the Escrow Agent
is hereby authorized in its sole discretion to comply with and obey any such orders, judgments, decrees or levies. If any controversy
should arise with respect to this Agreement, the Escrow Agent shall have the right, at its option, to institute an interpleader
action in any court of competent jurisdiction to determine the rights of the parties. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE,
DIRECTLY OR INDIRECTLY, FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL LOSSES OR DAMAGES OF ANY KIND WHATSOEVER (INCLUDING WITHOUT
LIMITATION LOST PROFITS), EVEN IF THE ESCROW AGENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES AND REGARDLESS
OF THE FORM OF ACTION. The parties hereto agree that the Escrow Agent has no role in the preparation of the Offering Documents
(including the subscription agreement and exhibits thereto) and makes no representations or warranties with respect to the information
contained therein or omitted therefrom. The Escrow Agent shall have no obligation, duty or liability with respect to compliance
with any federal or state securities, disclosure or tax laws concerning the Offering Documents or any other document related to
the Offering (including the subscription agreement and exhibits thereto) or the issuance, offering or sale of the Common Shares.
The Escrow Agent shall have no duty or obligation to monitor the application and use of the Investor Funds once transferred to
the Company, that being the sole obligation and responsibility of the Company.


 




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9.           Escrow
Agent’s Fees. The Escrow Agent shall be entitled to compensation for its services as stated in the fee schedule attached
hereto as Exhibit B, which compensation shall be paid by the Company. The fees agreed upon for the services rendered hereunder
are intended as full compensation for the Escrow Agent’s services as contemplated by this Agreement; provided, however,
that if (a) the conditions for the disbursement of funds under this Agreement are not fulfilled, (b) the Escrow Agent renders any
material service not contemplated in this Agreement, (c) there is any assignment of interest in the subject matter of this Agreement,
(d) there is any material modification hereof, (e) any material controversy arises hereunder, or (f) the Escrow Agent is made a
party to any litigation pertaining to this Agreement or the subject matter hereof, then the Escrow Agent shall be reasonably compensated
for such extraordinary services and reimbursed for all costs and expenses, including reasonable attorneys’ fees, occasioned
by any delay, controversy, litigation or event, and the same shall be recoverable from the Company. The Company’s obligations
under this Section 9 shall survive the resignation or removal of the Escrow Agent and the assignment or termination of this
Agreement.


 


10.         Investment
of Investor Funds. Investor Funds shall be deposited in the Escrow Account in accordance with Section 1. Subject to
compliance with Rule 15c2-4 of the Exchange Act, the Escrow Agent may invest in bank accounts, including saving accounts and bank
money market accounts that enable the Escrow Agent to promptly and directly transmit Investor Funds to the person entitled thereto.
The Escrow Agent may also invest in short-term certificates of deposit issued by a bank or short-term securities issued or guaranteed
by the United States government. Interest and any other income resulting from the investment of the funds in the Escrow Account
shall be retained by the Escrow Agent and distributed according to this Agreement. The Escrow Agent shall provide to the Company
monthly statements (or more frequently as reasonably requested by the Company) on the account balance in the Escrow Account and
the activity in the Escrow Account since the last report.


 


11.         Notices.
All notices, requests, demands, and other communications under this Agreement (each, a “Notice”) shall be
in writing and shall be deemed to have been duly given (a) on the date of service if served personally on the party to whom notice
is to be given, (b) on the day of transmission if sent by facsimile transmission bearing an authorized signature to the facsimile
number given below, and written confirmation of receipt is obtained promptly after completion of transmission, (c) on the day after
delivery to Federal Express or similar overnight courier or the Express Mail service maintained by the United States Postal Service,
or (d) on the fifth day after mailing, if mailed to the party to whom Notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, return receipt requested, to the party as follows:


 


If to the Company:


 


Lightstone Value Plus Real Estate Investment Trust III, Inc.


1985 Cedar Bridge Ave., Suite 1


Lakewood, New Jersey 08701


Fax: (732) 612-1444


Attention: David Lichtenstein, Chief Executive Officer and Chairman
of the Board of Directors


 




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with a copy to:


 


Proskauer Rose LLP


Eleven Times Square


New York, New York 10036


Fax: (212) 969-2900


Attention: Peter M. Fass, Esq.


   James P. Gerkis, Esq.


 


If to the Dealer Manager:


 


Orchard Securities, LLC


170 Interstate Plaza


Suite 320


Lehi, Utah 84043


Fax: [     ]


Attention: Cameron Hellewell, General Counsel


 


with a copy to:


 


Martin A. Hewitt, Esq.


11 Quaker Drive


East Brunswick, NJ 08816-3228


Fax: [     ]


Attention: Martin A. Hewitt, Esq., Attorney at Law


 


If to the Escrow Agent:


 


UMB Bank, N.A.


Corporate Trust & Escrow Services


1010 Grant Blvd., 4th Floor


Kansas City, MO 64106


Fax: (816) 860-3029


Attention: Lara L. Stevens


 


Any party may change its address for purposes of this Section
by giving the other parties Notice of the new address in the manner set forth above.


 


12.         Indemnification
of Escrow Agent. The Company and the Dealer Manager hereby agree to, jointly and severally, indemnify, defend and hold harmless
the Escrow Agent from and against any and all losses, liabilities, costs, damages and expenses, including, without limitation,
reasonable attorneys’ fees and expenses, which the Escrow Agent may suffer or incur by reason of any action, claim or proceeding
brought against the Escrow Agent arising out of or relating in any way to this Agreement or any transaction to which this Agreement
relates unless such loss, liability, cost, damage or expense is finally determined by a court of competent jurisdiction to have
been primarily caused by the gross negligence or willful misconduct of the Escrow Agent. The terms of this Section 12 shall
survive the termination of this Agreement and the resignation or removal of the Escrow Agent.


 




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13.         Successors
and Assigns. Except as otherwise provided in this Agreement, no party hereto shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other parties hereto and any such attempted assignment without such prior written
consent shall be void and of no force and effect. This Agreement shall inure to the benefit of and shall be binding upon the successors
and permitted assigns of the parties hereto. Any corporation or association into which the Escrow Agent may be converted or merged,
or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business
and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, merger,
consolidation, sale or transfer to which the Escrow Agent is a party, shall be and become the successor Escrow Agent under this
Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges of its predecessor, without the execution
or filing of any instrument or paper or the performance of any further act.


 


14.         Governing
Law; Jurisdiction. This Agreement shall be construed, performed, and enforced in accordance with, and governed by, the internal
laws of the State of New York, without giving effect to the principles of conflicts of laws thereof.


 


15.         Severability.
If any provision of this Agreement is declared by any court or other judicial or administrative body to be null, void, or unenforceable,
said provision shall survive to the extent it is not so declared, and all the other provisions of this Agreement shall remain in
full force and effect.


 


16.         Amendments;
Waivers. This Agreement may be amended or modified, and any of the terms, covenants, representations, warranties or conditions
hereof may be waived, only by a written instrument executed by the parties hereto, or in the case of a waiver, by the party waiving
compliance. Any waiver by any party of any condition, or of the breach of any provision, term, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall not be deemed to be nor construed as a further or continuing waiver
of any other condition, or of the breach of any other provision, term, covenant, representation or warranty contained in this Agreement.
The Company and the Dealer Manager agree that any requested waiver, modification or amendment of this Agreement shall be consistent
with the terms of the Offering.


 


17.         Entire
Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the escrow
contemplated hereby and supersedes and replaces all prior and contemporaneous agreements and understandings, oral or written, with
regard to such escrow.


 


18.         Section
Headings. The section headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.


 




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19.         Counterparts.
This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in counterparts, each
of which shall be deemed an original, but all of which shall constitute the same instrument. Copies, telecopies, facsimiles, electronic
files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original
documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law.


 


20.         Resignation.
The Escrow Agent may resign upon 30 days’ advance written notice to the parties hereto. If a successor escrow agent is
not appointed by the Company within the 30-day period following such notice, the Escrow Agent may petition any court of competent
jurisdiction to name a successor escrow agent, or may interplead the Investor Funds with such court, whereupon the Escrow Agent’s
duties hereunder shall terminate.


 


21.         References
to Escrow Agent. Other than the Offering Document, any of the other documents related to the Offering (including any prospectus,
prospectus supplement and the subscription agreement and exhibits thereto) and any amendments thereof or supplements thereto, no
printed or other matter in any language (including, without limitation, notices, reports and promotional material) which mentions
the Escrow Agent’s name or the rights, powers or duties of the Escrow Agent shall be issued by the Company or the Dealer
Manager, or on the Company’s or the Dealer Manager’s behalf, unless the Escrow Agent shall have first given its specific
written consent thereto. Notwithstanding the foregoing, any amendment or supplement to the Offering Document or any other document
related to the Offering (including any prospectus, prospectus supplement and the subscription agreement and exhibits thereto) that
revises, alters, modifies, changes or adds to the description of the Escrow Agent or its rights, powers or duties hereunder shall
not be issued by the Company or the Dealer Manager, or on the Company’s or the Dealer Manager’s behalf, unless the
Escrow Agent shall have first given its specific written consent thereto.


  


[Signature page follows.]


 




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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date and year first set forth above.


 


LIGHTSTONE VALUE PLUS REAL ESTATE INVESTMENT TRUST III, INC.


 


	By: 	 	 
	 	Name: David Lichtenstein	 
	 	Title:   Chief Executive Officer	 
	 	 	 
	ORCHARD SECURITIES, LLC	 
	 	 	 
	By: 	 	 
	 	Name:	 
	 	Title:	 
	 	 	 
	UMB BANK, N.A., as Escrow Agent	 
	 	 	 
	By: 	 	 
	 	Name: Lara L. Stevens	 
	 	Title:   Vice President	 


 


 




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Exhibit A


 


Certificate
as to Authorized Signatures


 


		Account Name:	Escrow Account for the Benefit of Investors in Common
Shares of Lightstone Value Plus Real Estate Investment Trust III, Inc.



 


Account Number:[_____]


 


The specimen signatures shown below are
the specimen signatures of the individuals who have been designated as Authorized Representatives of Lightstone Value Plus Real
Estate Investment Trust III, Inc. and are authorized to initiate and approve transactions of all types for the above-mentioned
account on behalf of Lightstone Value Plus Real Estate Investment Trust III, Inc.


 


	Name/Title	 	Specimen Signature
	 	 	 
	David Lichtenstein	 	 
	Chief Executive Officer	 	Signature
	 	 	 
	Mitchell Hochberg	 	 
	President and Chief Operating Officer	 	Signature
	 	 	 
	Joseph Teichman	 	 
	General Counsel and Secretary	 	Signature


 


	Donna Brandin	 	 
	Chief Financial Officer and Treasurer	 	Signature
	 	 	 


 




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Exhibit A-1


 


Certificate
as to Authorized Signatures


 


		Account Name:	Escrow Account for the Benefit of Investors in Common
Shares of Lightstone Value Plus Real Estate Investment Trust III, Inc.



 


		Account	Number:[_____]



 


The specimen signatures shown below are
the specimen signatures of the individuals who have been designated as Authorized Representatives of Orchard Securities, LLC
and are authorized to initiate and approve transactions of all types for the above-mentioned account on behalf of Orchard
Securities, LLC. 


 


	Name/Title 	 	Specimen Signature
	 	 	 
	[NAME]	 	 
	[TITLE]	 	Signature
	 	 	 
	[NAME]	 	 
	[TITLE]	 	Signature
	 	 	 
	[NAME]	 	 
	[TITLE]	 	Signature


 




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Exhibit B


 


ESCROW FEES


 


	Acceptance Fee 	 
	Review document and establish account	$3,000
	 	 
	Annual Fee 	 
	Annual Escrow Agent	$2,500
	 	 
	Transactional Fees	 
	Outgoing Wire Transfer	$35 each
	Overnight Delivery/Mailings	$16.50 each
	IRS Tax Reporting	$10 per 1099


 


Acceptance fee will be payable at the initiation
of the escrow. Annual fee and transactional fees, if any, will be billed quarterly in arrears.


 


Fees specified are for the regular, routine
services contemplated by this Agreement, and fees for any additional or extraordinary services, including but not limited to those
involving a dispute or arbitration, or administration while a dispute, controversy or adverse claim is in existence, will be charged
based upon time required at the then standard hourly rate.


 




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Exhibit C


 


List of Investors


 


Pursuant to the Subscription Escrow Agreement,
dated [        ], 2014, among Lightstone Value Plus Real Estate Investment Trust III, Inc., (the “Company”), Orchard
Securities, LLC and UMB Bank, N.A. (the “Escrow Agent”), the Company hereby certifies that the following investors
have paid money for the purchase of shares of the Company’s common stock, par value $0.01 per share, and that the money has
been deposited with the Escrow Agent:


  


		1.	Name of Investor



Address


Tax Identification Number


Number of Common Shares subscribed for


Amount of money paid and deposited with Escrow Agent


Is Investor a resident of New York (Yes or No)?


Is Investor a resident of Tennessee (Yes or No)?


Is Investor a resident of Pennsylvania (Yes or No)?


 


		2.	Name of Investor



Address


Tax Identification Number


Number of Common Shares subscribed for


Amount of money paid and deposited with Escrow Agent


Is Investor a resident of New York (Yes or No)?


Is Investor a resident of Tennessee (Yes or No)?


Is Investor a resident of Pennsylvania (Yes or No)?


  


Company: _________________________________


By: ________________________


Its: ________________________


Date: ______________________


 




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Exhibit D


 


[Form of Notice to Pennsylvania Investors]


 


You have tendered a subscription to purchase shares of common
stock, par value $0.01 per share (“Common Shares”), of Lightstone Value Plus Real Estate Investment Trust III,
Inc. (the “Company”). Your subscription is currently being held in escrow. The guidelines of the Pennsylvania
Securities Commission do not permit the Company to accept subscriptions from Pennsylvania residents until an aggregate of $75,000,000
of gross offering proceeds have been received by the Company. The Pennsylvania guidelines provide that until this minimum amount
of gross offering proceeds is received by the Company, every 120 days during the offering period Pennsylvania Investors may
request that their subscription be returned. If you wish to continue your subscription in escrow until the Pennsylvania minimum
subscription amount is received, nothing further is required.


 


If you wish to terminate your subscription for Common Shares
and have your subscription returned, please so indicate below, sign, date, and return to the Escrow Agent, UMB Bank, N.A.


 


 



 


I hereby terminate my prior subscription to purchase Common
Shares and request the return of my subscription funds. I certify to Lightstone Value Plus Real Estate Investment Trust III, Inc.
that I am a resident of Pennsylvania.


 


	 	 	 	 	 	 
	 	 	 	Signature:	 
	 	 	 	 	 	 
	 	 	 	Name:	 
	 	 	 	 	        (please print)	 
	 	 	 	 	 	 
	 	 	 	Date:	 


 


	Please send the subscription refund to: 	 	 
	 	 	 
	 	 	 
	 	 	 


 




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