Unassociated Document


    Exhibit
10.1

     

    ADVISORY
AGREEMENT AMONG

    LIGHTSTONE
VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC.,

    LIGHTSTONE
VALUE PLUS REIT LP

    and

    LIGHTSTONE
VALUE PLUS REIT LLC

     

    This
Advisory Agreement (this “Agreement”) dated as of April 22, 2005 is among
Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland corporation
(the “Company”), Lightstone Value Plus REIT LP, a Delaware limited partnership
(the “OP”), and Lightstone Value Plus REIT LLC, a Delaware limited liability
company (the “Advisor”). The Company and the OP are sometimes referred to herein
collectively as the “Advisees” and each individually as an
“Advisee.”

     

    W
I T N E S S E T H:

     

    WHEREAS,
the Company is a Maryland corporation created in accordance with applicable
provisions of the Maryland General Corporation Law, as amended from time to time
(the “Maryland GCL”); and

     

    WHEREAS,
the purposes of the Company are, as determined from time to time by the board of
directors of the Company (the “Board of Directors”), to engage in any lawful
business or activity for which a corporation may be created under the Maryland
GCL; and

     

    WHEREAS,
the Company is the general partner of the OP; and

     

    WHEREAS,
the Company desires, on its own behalf and as general partner of the OP, to
avail itself of the experience, sources of information, advice and assistance of
the Advisor and to have the Advisor undertake the duties and responsibilities
hereinafter set forth, on behalf of and subject to the supervision of the Board
of Directors, all as provided herein; and

     

    WHEREAS,
the Advisor is willing to render such services, subject to the supervision of
the Board of Directors, on the terms and conditions hereinafter set
forth;

     

    NOW,
THEREFORE, in consideration of the mutual covenants herein contained, IT IS
AGREED as follows:

     

    1. Definitions. Capitalized
terms used but not defined herein shall have the meaning ascribed to them in the
Company’s Charter (as herein defined), and the following terms, as used herein,
shall have the meanings set forth below:

     

    (a)
“Acquisition Expenses”
shall mean expenses related to the Advisee’s selection of, and investment in,
real properties and mortgage investments and other investments, whether or not
acquired or made, including but not limited to advertising costs, brokerage
fees, environmental, engineering and other due diligence expenses, legal fees
and expenses, travel and communications expenses, cost of appraisals, accounting
fees and expenses, title insurance and miscellaneous other
expenses.

     

    (b)
“Acquisition Fee” shall
have the meaning set forth in Section 11(a)(i).

     

    (c)
“Affiliate” means a
Person who is (i) in the case of an individual, any relative of such Person,
(ii) any officer, director, trustee, partner, manager, employee or holder of ten
percent (10%) or more of any class of the voting securities of or equity
interest in such Person; (iii) any corporation, partnership, limited liability
company, trust or other entity controlling, controlled by or under common
control with such Person; or (iv) any officer, director, trustee, partner,
manager, employee or holder of ten percent (10%) or more of the outstanding
voting securities of any corporation, partnership, limited liability company,
trust or other entity controlling, controlled by or under common control with
such Person. For purposes of this definition,

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    the term
“controls,” “is controlled by,” or “is under common control with” shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of an entity, whether through the ownership of
voting rights, by contract or otherwise.

     

    (d)
“Asset Management Fee”
shall have the meaning set forth in Section 11(a)(ii).

     

    (e)
“Average Invested
Assets” shall mean the average, at the end of each calendar month during
the calendar quarter in respect of which an Asset Management Fee is being
calculated, of the aggregate book value of the Advisees’ assets invested in
equity interests in and loans secured by real estate, before reserves for
depreciation or bad debt or other similar non-cash reserves.

     

    (f)
“Board of Directors”
shall have the meaning set forth in the recitals hereto.

     

    (g)
“Cause” shall mean (x)
fraud, criminal conduct, willful misconduct or illegal or negligent breach of
fiduciary duty by the Advisor or a breach of this Agreement by the Advisor; or
(y) if any of the following events occur: (i) the Advisor shall violate any
material provision of this Agreement, and after written notice of such
violation, shall not cure such default within 30 days or have begun action
within 30 days to cure the default which shall be completed with reasonable
diligence, (ii) the Advisor shall be adjudged bankrupt or insolvent by a court
of competent jurisdiction, or an order shall be made by a court of competent
jurisdiction for the appointment of a receiver, liquidator, or trustee of the
Advisor, for all or substantially all of its property by reason of the
foregoing, or if a court of competent jurisdiction approves any petition filed
against the Advisor for reorganization, and such adjudication or order shall
remain in force or unstayed for a period of 30 days, (iii) the Advisor shall
institute proceedings for voluntary bankruptcy or shall file a petition seeking
reorganization under the federal bankruptcy laws, or for relief under any law
for relief of debtors, or shall consent to the appointment of a receiver for
itself or for all or substantially all of its property, or shall make a general
assignment for the benefit of its creditors, or shall admit in writing its
inability to pay its debts, generally, as they become due.

     

    (h)
“Change of Control”
shall mean a change of control of the Company of a nature that would be required
to be reported in response to the disclosure requirements of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), as enacted and in force on the date hereof, whether or not
the Company is then subject to such reporting requirements; provided, however,
that, without limitation, a Change of Control shall be deemed to have occurred
if: (i) any “person” (within the meaning of Section 13(d) of the Exchange Act,
as enacted and in force on the date hereof) is or becomes the “beneficial owner”
(as that term is defined in Rule 13d-3, as enacted and in force on the date
hereof, under the Exchange Act) of securities of the Company representing 9.8%
or more of the combined voting power of the Company’s securities then
outstanding; (ii) there occurs a merger, consolidation or other reorganization
of the Company which is not approved by the Board of Directors; (iii) there
occurs a sale, exchange, transfer or other disposition of substantially all of
the assets of the Company to another entity, which disposition is not approved
by the Board of Directors; or (iv) there occurs a contested proxy solicitation
of the Shareholders of the Company that results in the contesting party electing
candidates to a majority of the Board of Directors’ positions next up for
election.

     

    (i)
“Charter” shall mean
the Articles of Incorporation of the Company dated as of 30, 2004, as amended
from time to time.

     

    (j)
“Cumulative Non-Compound
Return” shall mean, for any period for which a calculation thereof is
being paid, the percentage resulting from dividing (i) the total distributions
paid on each distribution payment date during such period by (ii) the product of
(x) the daily average adjusted investor capital for such period and (b) the
number of years (including fractional years) elapsed during such period (based
on a year of 365 days).

     

    (k)
“Election Notice” shall
have the meaning set forth in Section 13(b).

     

    (l)
“Funds From Operations”
shall mean net income (computed in accordance with GAAP), excluding gains or
losses from debt restructuring and sales of properties, plus depreciation of
real property and amortization, and after adjustments for unconsolidated
partnerships and joint ventures.

     

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    (m)
“Funds From Operations Per
Weighted Average Share” shall mean the amount equal to four (4) times the
Funds From Operations per weighted average Share for the Company for the quarter
in which an Election Notice is delivered, based on and as described in the
quarterly report of the Company delivered to its stockholders for such
quarter.

     

    (n)
“GAAP” shall mean
United States generally accepted accounting principals, consistently
applied.

     

    (o)
“Good Reason” shall
mean, with respect to the termination of this Agreement, (x) any failure to
obtain a satisfactory agreement from any successor to an Advisee to assume and
agree to perform such Advisee’s obligations under this Agreement; or (y) any
material breach of this Agreement of any nature whatsoever by an
Advisee.

     

    (p)
“Independent Director”
shall have the meaning set forth in the By-laws of the Company, as amended from
time to time.

     

    (q)
“Initial Term” shall
have the meaning set forth in Section 17(a).

     

    (r)
“Partnership Agreement”
shall mean the Agreement of Limited Partnership of the OP dated as of 30, 2004,
as amended and restated from time to time.

     

    (s)
“Person” shall mean an
individual, corporation, partnership, joint venture, association, company
(whether of limited liability or otherwise), trust, bank or other entity, or
government or any agency or political subdivision of a government.

     

    (t)
“Preferred Return”
shall mean the receipt by the stockholders of the Company of (i) a Cumulative
Non-Compound Return of 7% per year on such stockholders’ net investment, and
(ii) the amount of such net investment.

     

    (u)
“Prospectus” shall mean
the final prospectus of the Company in connection with the initial registration
of the Shares filed with the SEC on Form S-11, as amended and supplemented from
time to time.

     

    (v)
“SEC” shall mean the
United States Securities and Exchange Commission.

     

    (w)
“Share” shall mean a
share of the Common Stock, par value $0.01, of the Company.

     

    (x)
“Special General
Partner” shall have the meaning set forth in the Partnership
Agreement.

     

    (y)
“Special Liquidation
Distribution” shall mean the liquidation distributions received by the
Special General Partner pursuant to Section 13.2 of the Partnership
Agreement.

     

    (aa)
“Total Operating
Expenses” of a Person means the aggregate of all expenses paid or
incurred by such Person, but excluding organization and offering expenses,
interest payments, taxes, non-cash expenditures, any Acquisition Fee or other
acquisition expenses.

     

    2. Duties of Advisor. The
Company, on its own behalf, and as general partner of the OP, hereby retains and
appoints the Advisor as the advisor of the Company and the OP to perform the
services hereinafter set forth, and the Advisor hereby accepts such appointment,
all subject to the terms and conditions hereinafter set forth. In the
performance of this undertaking, subject to the supervision of the Board of
Directors and consistent with the provisions of the Company’s Charter and the
Agreement of Limited Partnership of the OP (the “Partnership Agreement”), the
Advisor shall devote sufficient resources to the administration of the Company
to discharge is obligations hereunder and shall:

     

    a. obtain
for the Advisees, furnish and/or supervise the services necessary to perform any
ministerial functions in connection with the management of the day-to-day
operations of the Advisees;

     

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    b. use
its best efforts to seek out, present and recommend to the Advisees, whether
through its own efforts or those of third parties retained by it, suitable
investment opportunities that are consistent with the Advisees’ respective
investment objectives and policies and acquisition strategy and objectives, as
adopted by the Board of Directors from time to time, and negotiate on behalf of
the Advisees with respect to potential investments or the disposition
thereof;

     

    c.
exercise absolute discretion, subject to the Board of Directors’ review, in
decisions to originate, acquire, retain or sell real properties, provided, that, the Advisor may acquire
on behalf of the Advisees any real property with purchase price that is less
than $15,000,000, or finance such an acquisition on the Advisees’ behalf,
without the prior approval of the Board of Directors if and to the extent
that:

     

    i. the
proposed acquisition or financing would not, if consummated, violate or conflict
with the investment guidelines of the Advisees as set forth in the
Prospectus;

     

    ii. the
proposed acquisition or financing would not, if consummated, violate the
restriction set forth in section 2(f) below; and

     

    iii. the
consideration proposed to be paid for such real property does not exceed the
fair market value of such property, as determined by a qualified independent
real estate appraiser selected in good faith by the Advisor and acceptable to
the Independent Directors;

     

    d.
recommend investment opportunities consistent with the Advisees’ respective
investment objectives and policies and negotiate on behalf of the Advisees with
respect to potential investments or the disposition thereof;

     

    e.
structure the terms and conditions pursuant to which acquisitions of properties
will be made, subject to the Board of Directors’ review;

     

    f.
arrange for financing and refinancing of properties, subject to the Board of
Directors’ prior approval if such financing or refinancing, when consummated
causes the total leverage on each such property or on all such properties in the
aggregate to exceed 75% of such property’s or properties’, as the case may be,
fair market value;

     

    g. obtain
for the Advisees such other services as may be required in acquiring or
disposing of investments, disbursing and collecting the funds of the Advisees,
paying the debts and fulfilling the obligations of the Advisees, and handling,
prosecuting and settling any claims of the Advisees;

     

    h. obtain
for the Advisees such services as may be required for property management,
leasing, mortgage brokerage and servicing, and other activities relating to the
investment portfolio of the Advisees;

     

    i.
supervise the servicing of the Advisees’ loan portfolios;

     

    j.
administer the Advisee’s respective bookkeeping and accounting functions, and
prepare, or cause to be prepared, statements and other relevant information for
distribution to stockholders or partners, as the case may be, including annual
and quarterly reports and any filings required by regulatory
authorities;

     

    k.
monitor operations and expenses of the Advisees;

     

    l. from
time to time, or as requested by the Board of Directors, make reports to the
Advisees as to its performance of the foregoing services;

     

    m.
perform any other powers of the Board of Directors or the Company (as general
partner of the OP) which (with respect to the Company) are set forth in the
Charter and the Partnership Agreement, as applicable, which may be delegated to
it by the Board of Directors from time to time;

     

    n. render
such other services as the Board of Directors deems appropriate;
and

     

    o. do all
things necessary to assure its ability to render the services contemplated
herein.

     

    3. Fiduciary Relationship. The
Advisor, as a result of its relationship with the Advisees pursuant to this
Agreement, stands in a fiduciary relationship with the stockholders of the
Company and the partners of the OP.

     

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    4. No Partnership or Joint
Venture. The Advisees and the Advisor are not partners or joint venturers
with each other and nothing herein shall be construed to make them partners or
joint venturers or impose any liability as such on either of them.

     

    5. Records. At all times, the
Advisor shall keep books of account and records relating to services performed
hereunder, which books of account and records shall be accessible for inspection
by the Advisees and the Advisee’s appointees at any time during the ordinary
business hours of the Advisor.

     

    6. REIT Qualification; Other
Limitations on Advisor Actions. Anything else in this Agreement to the
contrary notwithstanding, the Advisor shall refrain from any action which, in
its sole judgment made in good faith, or, in the judgment of the Board of
Directors provided that the Board of Directors give the Advisor written notice
to such effect, would (a) adversely affect the status of the Company as a real
estate investment trust pursuant to Section 856 of the Code; (b) cause the
Advisees to be classified as an “investment company” for purposes of the
Investment Company Act of 1940, as amended, (c) cause the OP to be classified
other than as a partnership for purposes of the Code; (d) violate any law, rule,
regulation or statement of policy of any governmental body or agency having
jurisdiction over the Advisees or over their securities, or (e) be prohibited by
the Company’s Charter or the Partnership Agreement of the OP.

     

    7. Bank Accounts. The Advisor
may establish and maintain one or more bank accounts in the name of the Advisees
or in its own name as agent for the Advisees and may collect and deposit in and
disburse from any such account, any money on behalf of the Advisees, under such
terms and conditions as the Board of Directors may approve, provided that no
funds in such account shall be commingled with funds of the Advisor. From time
to time and upon appropriate request, the Advisor shall render appropriate
accounting of such collections and payments to the Board of Directors and the
auditors of the Advisees.

     

    8. Bond. If required by the
Board of Directors, the Advisor will maintain a fidelity bond with a responsible
surety company in such amounts as may be required by the Board of Directors,
covering all members or partners thereof together with employees and agents of
the advisor handling funds of the Advisees and investment documents or records
pertaining to investments of the Advisees. Such bonds shall inure to the benefit
of the Advisees in respect of losses from acts of such partners, employees and
agents through theft, embezzlement, fraud, negligence, error or omission or
otherwise. The premiums on such bonds shall be paid by the
Advisees.

     

    9. Information Furnished to
Advisor. The Board of Directors shall, at all times, keep the Advisor
fully informed with regard to the investment policies of the Advisees, including
any specific types of real properties, mortgage investments and mortgage
securities desired, and any criteria or conditions established by the Board of
Directors as to whether the Advisees will make a particular investment, the
capitalization policy of the Advisees (including the policy with regard to the
incurrence of indebtedness by the Advisees) and their intentions as to the
future operations of the Advisees. In particular, the Board of Directors shall
notify the Advisor promptly of their intention to either sell or otherwise
dispose of any of the Advisees’ investments, to make any new investment, to
incur any indebtedness or to issue any additional shares of Common Stock or
Preferred Stock of the Company or any partnership interests in the
OP.

     

    10. Consultation and Advice. In
addition to the services described above, the Advisor shall consult with the
Board of Directors and shall, at the request of the Board of Directors of the
Company, furnish advice and recommendations with respect to other aspects of the
business and affairs of the Advisees.

     

    11. Fees and Other Compensation of the
Advisor.

     

    a. The
Advisor or its designees shall be entitled to receive from the respective
Advisees (except those payable by others as noted below) the following fees and
other compensation, which shall be paid to the Advisor by the OP on its own
behalf or on behalf of the Company:

     

    (i) Acquisition
Fee. The Advisor or its Affiliates shall receive an acquisition fee (the
“Acquisition Fee”) of
two percent and three quarters (2.75%) of the gross contract purchase price of
each property

     

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    acquired
by an Advisee, including the amount of any mortgage securing such property,
payable by the OP on behalf of the applicable Advisee upon consummation of the
investment; provided,
that, the Acquisition
Fee, together with any and all Acquisition Expenses and other acquisition fees
paid to the Advisor or to any third parties, whether or not affiliated with the
Advisor or the Advisees, shall not exceed, in the aggregate, six percent (6.0%)
of the gross contract purchase price of a particular property, including the
amount of any mortgage securing such property. In the event that such
acquisition fees and expenses, including the Acquisition Fee, exceed such
limitation, the Acquisition Fee shall be reduced by such excess
amount.

     

    (ii) Asset Management
Fee. The Advisor or its Affiliates shall receive an asset management fee
(the “Asset Management
Fee”) in an amount equal to fifty five basis points (0.55%) per annum of
Average Invested Assets. The Asset Management Fee is payable quarterly, in
arrears at the end of each calendar quarter, in an amount of 0.1375% of Average
Invested Assets in the immediately preceding quarter.

     

    (iii) Fees for
Additional Services. Subject to Section 15 below, the Advisor shall be
entitled to receive compensation for any additional services requested from time
to time by the Advisees on separate agreed-upon terms, subject to approval by a
majority of the Independent Directors as being fair and reasonable to the
Company.

     

    b. No Property
Disposition Fee. The Advisor shall not be entitled to
receive any fee in connection with property sold or otherwise disposed of by any
Advisee, although independent third parties may be compensated in such
circumstances.

     

    c. Stockholder/Partner
Interests Distributions. The Advisor shall be
entitled to receive distributions from the Advisees in respect of any shares of
Common Stock of the Company or partner interests of the OP which it holds, along
with the other holders of such shares or interests.

     

    12. Statements. Prior to the
payment of any fees hereunder, the Advisor shall furnish to the Advisees a
statement showing the computation of the fees, if any, payable under Section 11
hereof.

     

    13. Business Combination of the Company
and the Advisor.

     

    a. The
Company shall have the option at any time, after the initial date of
effectiveness of the Prospectus upon prior written notice, during the term of
this Agreement without any consent of the Advisor, the Board of Directors or the
Company’s stockholders to cause the business conducted by the Advisor
(including, in such event, all of its assets) to be acquired by or consolidated
into the Company. The Advisor and/or its members or stockholders will receive in
connection with such acquisition and in exchange for terminating this Agreement
and the release or waiver of all fees (including any fees that have accrued
during the term of this Agreement) payable under the provisions of this
Agreement until its stated termination, but not paid, that number of Shares
determined in accordance with subsection (b) below. The Company will be
obligated to pay any fees accrued under this Agreement for services rendered
through the closing of such acquisition.

     

    b. The
number of Shares to be issued by the Company to the Advisor in the event of a
transaction of the type described in subsection (a) above shall be determined as
follows. The Company shall first send notice (the “Election Notice”) to the
Advisor of its election to proceed with such a transaction. Next, the net income
of the Advisor, for the six month period immediately preceding the month in
which the Election Notice is delivered, as determined by an independent audit
conducted in accordance with GAAP, shall be annualized. The Advisor shall bear
the cost of any such audit. Such amount shall than be multiplied by nine-tenths
(0.90) and then divided by the Funds From Operations Per Weighted Average Share.
The resulting quotient shall constitute the number of Shares to be issued by the
Company to the Advisor or its members or stockholders, with delivery thereof and
the closing of the transaction to occur within ninety (90) days of delivery of
the Election Notice. Any such transaction will occur, if at all, only if the
Board of Directors obtains a fairness opinion from a recognized financial
advisor or institution providing valuation services to the effect that the
consideration to be paid therefor is fair, from a financial point of view, to
the stockholders of the Company.

     

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    c. The
Company shall not terminate this Agreement solely for the purpose of avoiding
such a business combination, such as in anticipation of the listing of the
Shares on a national stock exchange or their inclusion in a national market
system, including, without limitation, Nasdaq.

     

    14. Expenses of the
Company.

     

    a. The
OP, on its own behalf and on behalf of the Company, shall pay all of the
Advisees’ expenses. Without limiting the foregoing, it is specifically agreed
that the following expenses of an Advisee shall be paid by the OP on its own
behalf or on behalf of the Company and shall not be borne by the Advisor unless
such expense is a fee or other service for which the Advisor is otherwise
receiving a fee from the Advisees:

     

    (i) the
cost of money borrowed by the Advisee;

     

    (ii) all
taxes applicable to the Advisee including, without limitation, taxes on income
and on assessments of real property;

     

    (iii)
fees and expenses paid to independent contractors, unaffiliated mortgage
servicers, consultants, managers and other agents employed by or no behalf of
the Advisee;

     

    (iv)
Acquisition Expenses and expenses directly connected with the ownership and
disposition of real property or other investments, and with the purchase or
origination of real property and mortgage investments (including the costs of
foreclosure, insurance premiums, legal services, brokerage and sales commission,
maintenance, repair and improvement of property);

     

    (v)
expenses of maintaining and managing real estate equity interests, processing
and servicing mortgage and other loans and managing the Advisee’s other
investments;

     

    (vi)
insurance coverage in connection with the business of the Advisee (including
officers’, directors’ and partners’ liability insurance);

     

    (vii) the
expenses of dissolving and liquidating the Advisee or revising, amending or
modifying its organizational documents;

     

    (viii)
expenses connected with payments of dividends or interest or distribution in
cash or any other form made or caused to be made by the Board of Directors to
the stockholders or partners, as the case may be, of such Advisee.

     

    (ix) all
expenses connected with communications to stockholders or partners, as the case
may be, and other bookkeeping and clerical work necessary in maintaining
relations with the stockholders or partners, as the case may be, including the
cost of printing and mailing certificates for securities, proxy solicitation
materials and reports to holders of the Advisee’s securities;

     

    (x) the
cost of any accounting, statistical or bookkeeping equipment necessary for the
maintenance of the books and records of the Advisee;

     

    (xi)
transfer agent’s and registrar’s fees and charges; and

     

    (xii)
other legal, accounting and auditing fees and expenses as well as any costs
incurred in connection with any litigation in which the Advisee is involved and
the examination, investigation or other proceedings conducted by any regulatory
agency with respect to the Advisee.

     

    b. The
Advisor shall bear the expenses it incurs in connection with performing its
duties under the advisory agreement. These include salaries and fringe benefits
of its directors and officers and travel and other administrative expenses of
its directors or officers.

     

    c. The OP
shall reimburse the Advisor and its Affiliates on its own behalf or on behalf of
the Company for (i) advertising expenses, expense reimbursements, and legal and
accounting fees; (ii) the actual cost of goods and materials used by the
Advisees and obtained from entities not affiliated with the Advisor; (iii)
administrative services (including personnel costs; provided, however, that no
reimbursement shall be made

     

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    for costs
of personnel to the extent that such personnel perform services in transactions
for which the Advisor receives a separate fee); (iv) acquisition expenses, which
include travel and expenses related to the selection and acquisition of
properties, for goods and services provided by the Advisor; (v) rent, leasehold
improvement costs, utilities or other administrative items generally
constituting Advisor’s overhead; and (vi) expenses related to negotiating and
servicing mortgage loans. In no event shall the OP reimburse the Advisor for any
services for which the Advisor shall receive a separate fee. The amounts charged
to an Advisee for services performed shall not exceed the lesser of (a) the
actual cost of such services, or (b) the amount which such Advisee would be
required to pay to independent parties for comparable services.

     

    d.
Notwithstanding the foregoing, reimbursements of expenses and payment of fees
under this Agreement will be subject to approval by the Board of Directors
(including the approval of the majority of Independent Directors).

     

    15. Reimbursement by Advisor. For
any year which the Company qualifies as a real estate investment trust under the
Internal Revenue Code of 1986, as amended, the Advisor shall be obligated to
reimburse the Advisees for the amounts, if any, by which the sum of Advisees’
Total Operating Expenses and Asset Management Fees paid during the immediately
prior fiscal year exceed the greater of (i) 2.0% of the Company’s and the OP’s
Average Invested Assets during the four quarters of such fiscal year, or (ii)
25.0% of the Company’s and the OP’s net income for such fiscal year; provided, however, that the Board of
Directors (including a majority of the Independent Directors) may require a
lower amount which the Advisor shall be obligated to reimburse the Company, upon
a determination that such lower reimbursement amount is justified in light of
such unanticipated, unusual or non-recurring factors which may have occurred
within sixty (60) days after the end of the quarter for which the excess
occurred, and there shall be sent to the stockholders of the Company a written
disclosure of such determination, together with an explanation of the factors
the Board of Directors considered in arriving at the conclusion that the higher
Total Operating Expenses were justified.

     

    16. Other Activities of
Advisor.

     

    (a)
Except as set forth in this Section 16, nothing in this Agreement shall prevent
the Advisor or any of its Affiliates from engaging in other business activities
related to real estate, mortgage investments or other investments whether
similar or dissimilar to those made by any of the Advisees or from acting as
advisor to any other person or entity having investment policies whether similar
or dissimilar to those of the Company or the OP (including other REITs or
partnerships); provided, that, before the Advisor and
all Persons controlled by the Advisor may take advantage of an opportunity for
their own account or present or recommend it to others, they are obligated to
present an investment opportunity to an Advisee if (i) such opportunity is
compatible with such Advisee’s investment objectives and policies (including
such Advisee’s requirements relating to all pertinent factors, including
diversification, property type and location), (ii) such opportunity is of a
character which could be taken by such Advisee, and (iii) the Advisee has the
financial resources to take advantage of such opportunity. In furtherance, and
not in limitation, of the immediately preceding sentence, neither the Advisor
nor any Affiliate of the Advisor may make any investment in residential, retail,
industrial and office properties where the investment objective is substantially
similar to the investment objectives of the Advisees until such time as seventy
five percent (75.0%) of the total gross proceeds from the offering of the
Company’s shares offered for sale pursuant to a registration statement on form
S-11 filed with the SEC, following final closing of such offering, have been
invested or committed for investment in such properties.

     

    (b) The
Advisor will use its best efforts to present suitable investments to the
Advisees consistent with their investment procedures, objectives and policies.
If the Advisor or any of its Affiliates is presented with a potential investment
in a property which might be made by more than one investment entity which it
advises or manages, the decision as to the suitability of the property for
investment by a particular entity will be based upon a review of the investment
portfolio of each entity and upon factors such as: (i) cash flow from the
property; (ii) the effect of the acquisition of the property on the
diversification of each entity’s portfolio; (iii) rental payments during any
renewal period; (iv) the amount of equity required to make the

     

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    investment;
(v) the policies of each entity relating to leverage; (vi) the funds of each
entity available for investment; and (vii) the length of time the funds have
been available for investment and the manner in which the potential investment
can be structured by each entity. To the extent that a particular property might
be determined to be suitable for more than one investment entity, priority
generally will be given to the investment entity having uninvested funds for the
longest period of time.

     

    17. Term; Termination of
Agreement. This Agreement shall continue in force for a period of one
year from the date hereof (the “Initial Term”) and thereafter it may be renewed
from year to year by written consent of the parties hereto. Notwithstanding any
other provision to the contrary, this Agreement may be terminable by the Advisor
or by the Advisees (upon determination of the majority of the Independent
Directors) at any time upon 60 days’ prior written notice to the non-terminating
party. In the event of the termination of this Agreement, the Advisor will
cooperate with the Advisees and take all reasonable steps requested to assist
the Advisees in making an orderly transition of the advisory
function.

     

    18.
[RESERVED]

     

    19. Amendments. This Agreement
shall not be changed, modified, terminated or discharged in whole or in part
except by an instrument in writing signed by all parties hereto, or their
respective successors or permitted assigns, or otherwise as provided
herein.

     

    20. Assignment. This Agreement
may not be assigned by the Advisor, except to an Affiliate of the Advisor, and
then only upon the consent of the Advisees and the approval of a majority of the
Independent Directors. Any assignee of the Advisor shall be bound hereunder to
the same extent as the Advisor. This Agreement shall not be assigned by any
Advisee without the written consent of the Advisor, except to a corporation,
association, trust or other organization which is a successor to such Advisee.
Such successor shall be bound hereunder to the same extent as such Advisee.
Notwithstanding anything to the contrary contained herein, the economic rights
of the Advisor hereunder, including the right to receive all compensation
hereunder, may be sold, transferred or assigned by the Advisor without the
consent of the Advisees.

     

    21. Action Upon Termination. From
and after the effective date of termination of this Agreement, pursuant to
Section 17 hereof, the Advisor shall not be entitled to compensation for further
service rendered hereunder but shall be paid all compensation and reimbursed for
all expenses accrued through the date of termination within thirty (30) days of
such termination. The Advisor shall forthwith upon such
termination:

     

    (a) Pay
over to the Advisees all moneys collected and held for the account of such
Advisees pursuant to this Agreement, after deducting any accrued compensation
and reimbursement for its expenses to which it is then entitled;

     

    (b)
Deliver to the Advisees a full accounting, including a statement showing all
payments collected by it and a statement of all moneys held by it, covering the
period following the date of the last accounting furnished to the Advisees;
and

     

    (c)
Deliver to the Advisees all property and documents of the Advisees then in the
custody of the Advisor.

     

    22. Incorporation of the Charter and the
Partnership Agreement. To the extent the Charter or the Partnership
Agreement impose obligations or restrictions on the Advisor or grant the Advisor
certain rights which are not set forth in this Agreement, the Advisor shall
abide by such obligations or restrictions and such rights shall inure to the
benefit of the Advisor with the same force and effect as if they were set forth
herein.

     

    23. Standard of
Care.

     

    a. The
Advisor assumes no responsibility under this Agreement other than to render the
services called for hereunder in good faith, and shall not be responsible for
any action of the Advisees in following or

     

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    declining
to follow any advice or recommendations of the Advisor. Neither the advisor nor
its directors, officers, partners, members, and employees shall be liable to the
Advisees, or to the stockholders, partners or directors of the Advisees, as the
case may be, or to any successor or assignee of the Advisees, except by reason
of acts constituting bad faith, gross negligence or willful misconduct. This
shall in no way affect the standard for indemnification but shall only
constitute a standard of liability. The duties to be performed by the Advisor
pursuant to this Agreement may be performed by it or by officers, members or
directors or by Affiliates of the foregoing under the direction of the Advisor
or delegated to unaffiliated third parties under its direction.

     

    b. The
Advisor shall look solely to the assets of the Advisees for satisfaction of all
claims against the Advisees, and in no event shall any stockholder, partner or
director of the Advisees, as the case may be, have any personal liability for
the obligations of the Advisees under this Agreement.

     

    24. Indemnification of
Advisor.

     

    a.
Subject to sections (b)-(d) below, the Advisees shall indemnify the Advisor and
its Affiliates for any loss arising out of any of their acts or omissions in
connection with this Agreement and the Advisor and its Affiliates will be held
harmless for any loss of liability suffered by the Advisees.

     

    b. The
Advisees shall not indemnify the Advisor or its Affiliates for any liability
loss suffered by the Advisor or its Affiliates, nor shall it hold the Advisor or
its Affiliates harmless for any loss or liability suffered by the Advisees
unless all of the following conditions are met: (i) the Advisor or its
Affiliates determined in good faith that the course of conduct which caused the
loss or liability was in the best interests of the Advisees, (ii) the Advisor or
its Affiliates were acting on behalf of the Advisees or performing services for
the Advisees, (iii) such liability or loss or expense was not the result of
negligence or misconduct on the part of the Advisor or its Affiliates and (iv)
such indemnification or agreement to hold harmless shall be recoverable only out
of the net assets of the Advisees and not from the stockholders, partners or
members of the Advisees.

     

    c. Not
withstanding anything to the contrary in subsection b, the Advisees shall not
indemnify the Advisor or its Affiliates or any persons acting as a broker-dealer
for any losses, liabilities or expenses arising from or out of an alleged
violation of federal or state securities laws by such party unless one or more
of the following conditions are met: (i) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular Indemnitee, (ii) such claims have been dismissed
with prejudice on the merits by a court of competent jurisdiction as to the
particular Indemnitee or (iii) a court of competent jurisdiction approves a
settlement of the claims against a particular Indemnitee and finds that
indemnification of the settlement and related costs should be made, and the
court considering the matter has been advised of the position of the Securities
and Exchange Commission and the published position of any state securities
regulatory authority as to indemnification for violations of securities
law.

     

    d. The
Advisees will advance amounts to the Advisor or its Affiliates for legal
expenses and other costs incurred as a result of any legal action for which
indemnification is being sought is permissible only if all of the following
conditions are satisfied: (i) the legal action relates to acts or omissions with
respect to the performance of duties or services on behalf of the Advisees, (ii)
the legal action is initiated by a third party who is not a Stockholder or is
initiated by a Stockholder acting in his or her capacity as such and a court of
competent jurisdiction specifically approves the advancement and (iii) the
Advisor or its Affiliates undertake in writing to repay the advanced funds to
the Advisees, together with the applicable legal rate of interest thereon, in
cases in which such the Advisor or its Affiliates are found not to be entitled
to indemnification.

     

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    25. Notices. Any notice, report
or other communication required or permitted to be given hereunder shall be in
writing, and shall be given by delivering such notice by hand or by certified
mail, return receipt requested, postage pre-paid, at the following addresses of
the parties hereto:

     

    Advisees:

     

    The Company:

     

    Lightstone
Value Plus Real Estate Investment Trust, Inc.

    326 Third
Street

    Lakewood,
New Jersey 08701

    Attn:  
David Lichtenstein

              
Chief Executive Officer

     

    With a
copy to:

     

    Proskauer
Rose LLP

    1585
Broadway

    New York,
New York 10036

    Attention:
Peter M. Fass, Esq.

     

    The OP

     

    Lightstone
Value Plus Reit LP

    [326
Third Street

    Lakewood,
New Jersey 08701]

     

    With a
copy to:

     

    Proskauer
Rose LLP

    1585
Broadway

    New York,
New York 10036

    Attention:
Peter M. Fass, Esq.

     

    The Advisor:

     

    Lightstone
Value Plus Reit LLC

    326 Third
Street

    Lakewood,
New Jersey 08701

    Attn:  
David Lichtenstein

              
Chief Executive Officer

     

    With a
copy to:

     

    Proskauer
Rose LLP

    1585
Broadway

    New York,
New York 10036

    Attention:
Peter M. Fass, Esq.

     

    Any party
may at any time change its address for the purpose of this Section 25 by like
notice.

     

    26. Headings. The section
headings herein have been inserted for convenience of reference only and shall
not be construed to affect the meaning, construction or effect of this
Agreement.

     

    27. No Waivers. Neither the
failure nor any delay on the party of a party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise

     

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    of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrences. No waiver shall be effective unless it is in writing and
is signed by the party asserted to have granted such waiver.

     

    28. Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, and all of which shall together constitute one and the same
instrument.

     

    29. Entire Agreement. This
Agreement contains the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express
or implied, oral or written, of any nature whatsoever with respect to the
subject matter hereof.

     

    30. Governing Law. The
provisions of this Agreement shall be construed and interpreted in accordance
with the laws of the State of New York as at the time in effect.

     

    [END OF
TEXT]

     

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    Exhibit
10.1

     

    IN
WITNESS WHEREOF, the undersigned have caused this Agreement to be signed as of
the day and year first above written.

     

    
      
        
          
            
              	 
      	 
      	 
      
	
                      LIGHTSTONE
      VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC.

                    
	 
      	 
      
	
                      By:

                    	 
      	
                      /S/    DAVID LICHTENSTEIN

                    
	 
      	 
      	
                      Name:
      David Lichtenstein

                    
	 
      	 
      	
                      Title:
      Chief Executive Officer

                    
	 
      
	
                      LIGHTSTONE
      VALUE PLUS REIT LP

                    
	 
      	 
      
	
                      By:

                    	 
      	
                      Lightstone
      Value Plus Real Estate

                      Investment
      Trust, Inc.,

                    
	 
      	 
      	
                      its
      General Partner

                    
	 
      	 
      
	
                      By:

                    	 
      	
                      /S/    DAVID LICHTENSTEIN

                    
	 
      	 
      	
                      Name:
      David Lichtenstein

                    
	 
      	 
      	
                      Title:
      Chief Executive Officer

                    
	 
      
	
                      LIGHTSTONE
      VALUE PLUS REIT LLC

                    
	 
      	 
      
	
                      By:

                    	 
      	
                      /S/    DAVID LICHTENSTEIN

                    
	 
      	 
      	
                      Name:
      David Lichtenstein

                    
	 
      	 
      	
                      Title:
      Authorized
Person