Document:

Unassociated Document

    EXHIBIT 10.31

     

    FORM OF

    LIMITED LIABILITY COMPANY
AGREEMENT

    OF

    1407 BROADWAY MEZZ II LLC

    

    THIS
LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of
1407
BROADWAY MEZZ II LLC (the
“Company”), is
entered into by Lightstone 1407 Manager LLC, a Delaware limited liability
company, as the managing member (the “Managing
Member”), and
LVP 1407 Broadway LLC, a Delaware limited liability company (”LVP”;
together with the Managing Member, collectively, the “Members” and
individually, a “Member”), and
MICHELLE A. DREYER, as the Special Member (as defined on Schedule
A hereto).
LVP shall sometimes hereinafter also be referred to as the “Non-Managing
Member”.
Capitalized terms used and not otherwise defined herein have the meanings set
forth on Schedule
A
hereto.

     

    RECITALS

     

    WHEREAS,
the Company was formed on November 28, 2006 as a
limited liability company under the Delaware Limited Liability Company Act, as
amended from time to time (the “Act”); and

     

      WHEREAS,
the Members desire to state the terms and conditions of the
Company.

     

    NOW
THEREFORE, in consideration of the premises and the agreements herein contained,
the Members and the Special Member hereby agree as follows:

     

    Section
1. Name.

     

    The name
of the limited liability company formed hereby is 1407 BROADWAY MEZZ II
LLC.

     

    Section
2. Principal Business
Office.

     

    The
principal business office of the Company shall be located at 326 Third Street,
Lakewood, NJ 08701, or such other location as may hereafter be determined by the
Member.

     

    Section
3. Registered
Office.

     

    The
address of the registered office of the Company in the State of Delaware is c/o
Registered Agents Legal Services, LLC, 1220 N. Market Street, Suite 806,
Wilmington, DE 19801.

     

    Section
4. Registered
Agent.

     

    The name
and address of the registered agent of the Company for service of process on the
Company in the State of Delaware York is c/o Registered Agents Legal Services,
LLC, 1220 N. Market Street, Suite 806, Wilmington, DE 19801. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
5. Members.

     

    The
mailing address of each Member is set forth on Schedule
B attached
hereto. The Members were admitted to the Company as members of the Company upon
their execution of counterpart signature pages to this Agreement.

     

    Subject
to Section
9(d), the
Members may act by written consent.

     

    Upon the
occurrence of any event that causes the last
remaining Member to
cease to be a member of the Company (other than (i) upon an assignment by the
last remaining Member of all of its limited liability company interest in the
Company and the admission of the transferee pursuant to Sections 21 and
23, or (ii)
the resignation of the last remaining Member and the admission of an additional
member of the Company pursuant to Sections 22 and
23), the
person acting as an Independent Manager pursuant to Section
10 shall,
without any action of any Person and simultaneously with the last remaining
Member ceasing to be a member of the Company, automatically be admitted to the
Company as a Special Member and shall continue the Company without dissolution.
No Special Member may resign from the Company or transfer its rights as Special
Member unless (i) a successor Special Member has been admitted to the Company as
Special Member by executing a counterpart to this Agreement, and (ii) such
successor has also accepted its appointment as Independent Manager pursuant to
Section
10;
provided, however, each Special Member shall automatically cease to be a member
of the Company upon the admission to the Company of a substitute Member. Each
Special Member shall be a member of the Company that has no interest in the
profits, losses and capital of the Company and has no right to receive any
distributions of Company assets. Pursuant to Section 18-301 of the Act, a
Special Member shall not be required to make any capital contributions to the
Company and shall not receive a limited liability company interest in the
Company. A Special Member, in its capacity as Special Member, may not bind the
Company. Except as required by any mandatory provision of the Act, each Special
Member, in its capacity as Special Member, shall have no right to vote on,
approve or otherwise consent to any action by, or matter relating to, the
Company, including, without limitation, the merger, consolidation or conversion
of the Company. In order to implement the admission to the Company of each
Special Member, each person acting as an Independent Manager pursuant to
Section
10 shall
execute a counterpart to this Agreement. Prior to its admission to the Company
as Special Member, the person acting as an Independent Manager pursuant to
Section
10 shall
not be a member of the Company.

     

    Section
6. Certificates.

     

    Nancy
Bergmann is hereby designated as an “authorized person” within the meaning of
the Act, and executed, delivered and filed the Certificate of Formation of the
Company with the Secretary of State of the State of Delaware, and such
execution, delivery and filing is hereby approved and ratified. Upon the filing
of the Certificate of Formation with the Delaware Secretary of State, her powers
as an “authorized person” ceased, and the Managing Member thereupon became the
designated “authorized person” and shall continue as the designated “authorized
person” within the meaning of the Act. The Managing Member or an Officer shall
execute, deliver and file any other certificates (and any amendments and/or
restatements thereof) necessary for the Company to qualify to do business in any
jurisdiction in which the Company may wish to conduct business.

     

    
      
        
        

      

      
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    The
existence of the Company as a separate legal entity shall continue until
cancellation of the Certificate of Formation as provided in the
Act.

     

    Section
7. Purposes. The
purpose conducted or promoted by the Company has been since its formation and
will continue to be to engage in the following activities:

     

    (a)
  

     

    (i) to
acquire
and own hold, sell, transfer or otherwise dispose of a 100% limited liability
company interest (the “Membership
Interest”) in,
and to be and act as the sole member of, 1407 Broadway Mezz LLC, a Delaware
limited liability company (“Mezz LLC”), to
cause Mezz LLC to acquire and own, hold, sell, transfer or otherwise dispose of
a 100% limited liability company interest in, and to be and act as the sole
member of, 1407 Broadway Real Estate LLC, a Delaware limited liability company
(“Property
Owner”), and
to cause Property Owner to acquire, improve, finance, hold, own, operate, rent,
redevelop, sell, mortgage, exchange, convey, or otherwise dispose of the
Property, and to engage, and to cause the Subsidiaries to engage, in all actions
necessary and appropriate to accomplish the foregoing;

     

    (ii) to pledge
its Membership Interest in Mezz LLC to Lehman Brothers Holdings Inc.
(“Lehman”), in
connection with the Mezzanine Loan made by Lehman to Mezz LLC, and to execute
and deliver any documents and certificates or engage in any actions necessary or
desirable in connection therewith on behalf of itself and Mezz LLC;
and

     

    (iii) to engage
in any lawful act or activity and to exercise any powers permitted to limited
liability companies organized under the laws of the State of Delaware that are
related or incidental to and necessary, convenient or advisable for the
accomplishment of the above-mentioned purposes.

     

    (b) The
Company, by or through the Managing Member, or any Officer on behalf of the
Company, may enter into and perform the Basic Documents, and without any further
act, vote or approval of any other Person notwithstanding any other provision of
this Agreement, the Act or applicable law, rule or regulation. The foregoing
authorization shall not be deemed a restriction on the powers of the Managing
Member or any Officer to enter into other agreements on behalf of the
Company.

     

    Section
8. Powers.

     

    Subject
to Section
9(d), the
Company, the Managing Member and the Officers of the Company on behalf of the
Company, (i) shall have and exercise all powers necessary, convenient or
incidental to accomplish its purposes as set forth in Section 7 and (ii)
shall have and exercise all of the powers and rights conferred upon limited
liability companies formed pursuant to the Act.

     

    
      
        
        

      

      
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    Section
9. Management.

     

    (a) Subject
to Sections 9(d) and
9(e), the
business and affairs of the Company shall be managed by or under the direction
of the Managing Member. Subject to Section
10, the
Managing Member may determine at any time in its sole and absolute discretion
the number of Independent Managers. The initial number of Independent Managers
shall be one. The initial Independent Manager designated by the Managing Member
is Michelle A. Dreyer.

     

    (b) Powers. Subject
to Sections 9(d) and
9(e), the
Managing Member shall have the power to do any and all acts necessary,
convenient or incidental to or for the furtherance of the purposes described
herein, including all powers, statutory or otherwise. Subject to Sections 7 and
9, the
Managing Member has the authority to bind the Company. Notwithstanding the
foregoing, the parties expressly acknowledge that the
adoption, modification or revocation of a Major Decision requires the Approval
of the Non-Managing Member. If the Managing Member proposes to adopt, modify or
revoke a Major Decision, it shall deliver notice to the Non-Managing Member
describing the proposal, which notice shall contain a sentence in bold type
stating that if the Non-Managing Member fails to respond to the Managing Member
within ten (10) business days after notice of such proposal, then such proposal
shall be deemed to have been Approved. If the Non-Managing Member fails to
respond to the Managing Member within ten (10) business days after notice of
such proposal, then such proposal shall be deemed to have been
Approved.

     

    (c) Managing Member as
Agent. To the
extent of its powers set forth in this Agreement and subject to Section
9(d), the
Managing Member is an agent of the Company for the purpose of the Company's
business, and the actions of the Managing Member taken in accordance with such
powers set forth in this Agreement shall bind the Company.

     

    (d) Limitations on the Company's
Activities.

     

    (i) This
Section
9(d) is being
adopted in order to comply with certain provisions of the Loan Documents
required in order to qualify the Company as a “special purpose”
entity.

     

    (ii) The
Managing Member shall not, so long as any Obligation is outstanding, amend,
alter, change or repeal Sections
5,
7,
8,
9,
10,
16,
20,
21,
22,
23,
24,
25,
26 or
31 or
Schedule
A of this
Agreement without the unanimous written consent of the Members and the
Independent Manager, and, after securitization of the Loan, only if the Company
receives confirmation that the Rating Agency Condition is satisfied. Subject to
this Section
9(d), the
Managing Member reserves the right to amend, alter, change or repeal any
provisions contained in this Agreement in accordance with Section
31.

     

    (iii) A.
Notwithstanding
any other provision of this Agreement and any provision of law that otherwise so
empowers the Company, the Managing Member, any Officer or any other Person,
neither the Managing Member nor any Officer nor any other Person shall be
authorized or empowered, nor shall they permit the Company to, and the Company
shall not, with respect to itself, without the prior unanimous written vote of
the Members and the Independent Manager take any Bankruptcy Action provided,
however, that
the Members may not vote on, or authorize the taking of, any Bankruptcy Action,
unless there is at least one Independent Manager then serving in such
capacity.

     

    
      
        
        

      

      
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    B. Notwithstanding
any other provision of this Agreement and any provision of law that otherwise so
empowers the Company, the Managing Member, any Officer or any other Person, so
long as any Obligations remain outstanding, neither the Managing Member nor any
Officer nor any other Person shall be authorized or empowered, nor shall they
permit the Company, to take any Material Action without the consent of Lender
(which consent will not be withheld if such Material Action would result in
proceeds which would indefeasibly satisfy the Obligations in full in accordance
with the Basic Documents).

     

    (iv) The
Managing Member shall cause the Company to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
(charter and statutory) and franchises; provided, however, that
the Company shall not be required to preserve any such right or franchise if:
(1) the Managing Member shall determine that the preservation thereof is no
longer desirable for the conduct of its business and that the loss thereof is
not disadvantageous in any material respect to the Company and (2) the
Rating Agency Condition is satisfied. The Managing Member has not caused or
permitted the Company since its formation to and shall not cause or permit the
Company to, and the Company shall not:

     

    A. engage in
any business or activity other than as provided in Section 7 above;

     

    B. acquire
or own any assets other than as provided in Section 7 above;

     

    C. to the
fullest extent permitted by law, merge into or consolidate with any Person or
dissolve, wind-up, terminate or liquidate in whole or in part, sell, transfer or
otherwise dispose of all or substantially all of its assets or change its legal
structure, transfer or permit the direct or indirect transfer of any interest,
as applicable, other than as permitted in the Loan Documents or seek to
accomplish any of the foregoing;

     

    D. fail to
preserve its existence as a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware, fail to
remain qualified to do business and in good standing in each state in which the
conduct of its business will so require, amend, modify, terminate or fail to
comply with the single purpose entity provisions contained herein;

     

    
      
        
        

      

      
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    E. own any
subsidiary, other than Mezz LLC, or make any investment in, any Person without
the consent of Lender or acquire obligations or securities of its members (other
than the Membership Interests);

     

    F.
commingle
its assets with the assets of any other Person;

     

    G. incur any
debt, secured or unsecured, direct or contingent (including guaranteeing any
obligation), other than customary unsecured trade payables incurred in the
ordinary course of business provided the same (x) do not exceed, in the
aggregate, at any time a maximum amount of two percent (2%) of the outstanding
principal amount of the Note evidencing the Loan, and (y) are paid within sixty
(60) days of the date incurred;

     

    H. fail to
maintain its records, books of account, bank accounts, financial statements,
accounting records and other entity documents separate and apart from those of
any other Person and the Company shall not permit any affiliate independent
access to its bank accounts;

     

    I. enter
into any contract or agreement with any general partner, member, shareholder,
principal or affiliate of the Company, Guarantor or Indemnitor, or any general
partner, member, principal or affiliate thereof, except upon terms and
conditions that are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with third parties other than any
general partner, member, shareholder, principal or affiliate of the Company,
Guarantor or Indemnitor, or any general partner, member, principal or affiliate
thereof;

     

    J. maintain
its assets in such a manner that it will be costly or difficult to segregate,
ascertain or identify its individual assets from those of any other
Person;

     

    K. assume or
guaranty the debts of any other Person, hold itself out to be responsible for
the debts of another person or otherwise pledge its assets for the benefit of
any other Person or hold out its credit as being available to satisfy the
obligations of any other Person except to the extent provided in the Loan
Documents;

     

    L. make any
loans or advances to any third party, including, without limitation, any member
or affiliate of the Company, or any general partner, member, principal or
affiliate thereof;

     

    M. (i) if
required by applicable law, fail to file its own tax returns (subject to any
permitted extensions), or (ii) if the Company is part of a consolidated group
for purposes of filing tax returns, fail to cause the Company to be shown as a
separate member of such group whose assets are not available to satisfy the
obligations of such group and whose liabilities remain separate from such group,
or (iii) if the Company is identified in any of its member’s tax returns, fail
to cause the Company to be identified as a separate entity whose assets are not
available to satisfy the obligations of any such members and whose liabilities
remain separate from such members;

     

    
      
        
        

      

      
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    N. fail
either to hold itself out to the public as a legal entity separate and distinct
from any other entity or person or to conduct its business solely in its own
name or fail to correct any known misunderstanding regarding its separate
identity and the Company shall not identify itself as being a department or
division of any other Person;

     

    O. fail to
maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business
operations;

     

    P. fail to
pay its expenses and liabilities (including, without limitation, salaries of its
employees) only out of its own funds to the extent such funds are available and
the Company shall maintain a sufficient number of employees in light of its
contemplated business operations; 

     

    Q. fail to
allocate shared expenses (including, without limitation, shared office space)
and use separate stationary, invoices and checks; or

     

    R. acquire
any business assets from, or capital stock, or other ownership interest of, or
be a party to, any acquisition.

     

    Failure
of the Company, or the Managing Member on behalf of the Company, to comply with
any of the foregoing covenants or any other covenants contained in this
Agreement shall not affect the status of the Company as a separate legal entity
or the limited liability of the Managing Member or the Independent Manager. In
addition, none of the foregoing provisions shall require the Managing Member to
make any additional capital contributions to the Company.

     

    (v) So long
as any Obligation is outstanding, the Managing Member shall not cause or permit
the Company to and the Company shall not:

     

    A. except as
contemplated by the Loan Documents, guarantee any obligation of any Person,
including any Affiliate or become obligated for the debts of any Person or hold
out its credit as being available to pay the obligations of any other
Person;

     

    
      
        
        

      

      
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    B. engage,
directly or indirectly, in any business other than the actions required or
permitted to be performed under Section 7, the
Basic Documents or this Section
9(d);

     

    C. incur,
create or assume any indebtedness or liabilities other than as expressly
permitted under the Loan Documents;

     

    D. make or
permit to remain outstanding any loan or advance to, or own or acquire any stock
or securities of, any Person; 

     

    E. to the
fullest extent permitted by law, engage in, seek or consent to any dissolution,
winding up, liquidation, consolidation, merger, asset sale or transfer of
ownership interests other than such activities as are expressly permitted
pursuant to any provision of the Basic Documents; or

     

    F. other
than with respect to Mezz LLC, form, acquire or hold any subsidiary (whether
corporate, partnership, limited liability company or other) or own any equity
interest in any Person,.

     

    (e) Major
Decisions.
Notwithstanding any other provisions of this Agreement, the Company and/or the
Managing Member may not, without the approval of the Non-Managing Member of the
Company take any of the following actions or cause Mezz LLC or Property Owner to
take any of the following actions (each, a “Major
Decision”):

     

    (i) borrow
money (whether on a secured or unsecured basis, and whether senior, on par or
subordinate to the Loans, but excluding trade debt or amend the terms and
conditions of any financing of the Company or any of its Subsidiaries, including
the Loans, in any material respect or make elections with respect to interest
periods, interest rates or other material provisions under any such
financing;

     

    (ii) lend
money (whether on a secured or unsecured basis, but excluding trade
debt);

     

    (iii) grant any
mortgage, security interest or any other lien on any Property or any other
assets of the Company or any of its Subsidiaries;;

     

    (iv) subject
all or any part of any Property to a condominium statute or convert any Property
to condominium or cooperative form of ownership;

     

    (v) except as
otherwise provided herein, sell all or any portion of any Property;

     

    (vi) seek or
consent to any change in the zoning or other land use regulations affecting any
Property or any permits or approvals granted thereunder if such change will
materially adversely affect the value of the Property or the rights, interests
or obligations of the parties under this Agreement;

     

    
      
        
        

      

      
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    (vii) rebuild
or reconstruct the improvements on the Property if they are substantially
damaged by a fire or other casualty, except to the extent the Company or any of
its Subsidiaries is required to do so pursuant to the Loan Documents or except
to the extent that the cost to rebuild or reconstruct the improvements is less
than $1,000,000; 

     

    (viii) acquire
any real property (other than the Property), any direct or indirect interest in
real property, or any interest in any Person other than the
Subsidiaries;

     

    (ix) adopt the
annual operating budget of the Company and its Subsidiaries, which must be
submitted to the Non-Managing Member for its Approval by November 30 of the
preceding year (each such annual budget, as Approved, an “Approved
Budget”);

     

    (x) incur any
single capital expenditure in excess of $50,000, other than capital expenditures
which are (i) set forth in an Approved Budget, or (ii) otherwise specifically
Approved by the Non-Managing Member;

     

    (xi) assign,
transfer, pledge, compromise or release any of the claims of or debts or
insurance or condemnation proceeds due the Company exceeding $50,000 except in
connection with the receipt by the Company of payment in full of such claims or
debts;

     

    (xii) enter
into any lease for a portion of the Property in excess of 25,000 square
feet;

     

    (xiii) change
the Company’s or any Subsidiaries’ accounting method, either for financial or
tax reporting purposes or otherwise;

     

    (xiv) dissolve
the Company or any Subsidiary;

     

    (xv) effect
any merger, consolidation or restructuring of the Company or any Subsidiary;

     

    (xvi) purchase
or redeem all or any portion of the limited liability company interest of any
Member in the Company, except as provided herein with respect to permitted
transfers; 

     

    (xvii) form,
directly or indirectly, any subsidiary other than the Subsidiaries;

     

    (xviii) other
than in connection with the Loans, sell, assign, transfer, pledge, hypothecate
or otherwise dispose of or encumber all or any portion of any of the Company’s
interest in any Subsidiary or permit any Subsidiary to sell, assign, transfer,
pledge, hypothecate or otherwise dispose of or encumber all or any portion of
its assets or cause or permit any additional equity interests to be issued by or
new members to be admitted to any Subsidiary; 

     

    
      
        
        

      

      
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    (xix) amend or
otherwise modify any of the organizational documents of the Company or any
Subsidiary in any material respect or take any action which would result in the
Company not being able to manage or exercise control over any Subsidiary;

     

    (xx) enter
into or conduct any business or operations other than in connection with the
business of the Company as contemplated by Section 7 hereof or otherwise herein,
or take any action which would cause the Company or any Subsidiary to cease
being a “special purpose” entity as provided in Section 9(d) above;

     

    (xxi) employ
any Member or any Affiliate of any Member on behalf of the Company or any
Subsidiary or otherwise deal with the Company or any Subsidiary (whether as a
buyer, seller, lessor, lessee, manager, broker, agent, furnisher of services,
lender or otherwise) and pay to or receive from the Company, its Subsidiaries,
any Member and any of their Affiliates any compensation, price, fee, commission
or other payment therefore, except as contemplated by this Agreement or as set
forth on Schedule
D
hereto;

     

    (xxii) employ
any accountants for the Company or any attorneys for the Company (except that
the Members specifically approve Herrick, Feinstein LLP and Cozen O’Connor being
retained as attorneys for the Company and Amper, Politziner, Mattia and/or
Schonbraun McCann Group being retained as accountants for the
Company);

     

    (xxiii) settle
any casualty loss (except to the extent fully covered by insurance less any
deductible) or condemnation claim in excess of $250,000; 

     

    (xxiv) settle
any material litigation or threatened litigation, including without limitation
that certain litigation regarding the sub-leasehold interest in the
Property;

     

    (xxv) enter
into any material contract or amendment;

     

    (xxvi) issue
additional equity interests in itself or any Subsidiary; and

     

    (xxvii) take any
other actions which, pursuant to the terms of this Agreement, require Approval
of all of the Members.

     

    (f)  Deadlock
Regarding Significant Decisions; Buy/Sell Option. In the
event there is not a unanimous vote of the Members with respect to any Major
Decision or Bankruptcy Action (a "Deadlock"),
whether at a meeting of the Members or by an action by written consent in
accordance with this Section 9 of this Agreement, then within two (2) business
days after such vote (or such consent is requested by a Member) each Member
shall provide to the other Member a written notice describing in reasonable
detail the reason for its position with respect to the Major Decision or
Bankruptcy Action at issue. The Members shall then enter into good faith
negotiations to amicably resolve such Deadlock and continue such negotiations
for a period of at least five (5) business days (such period being the
"Cooling-Off
Period"). If a
Deadlock is not resolved during the Cooling-Off Period, then commencing on the
business day following the date that the Cooling-Off Period shall have
terminated (the "Termination
Date"), each
of the Members shall have the following rights:

     

    
      
        
        

      

      
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    (i) either
Member (the "Initiating
Member") shall
be entitled to deliver a written notice (the "Offer
Notice") to the
other (the "Deciding
Member")
specifying in such notice that the Initiating Member offers to purchase all, but
not less than all, of the limited liability company interest in the Company of
the Deciding Member upon the terms and conditions specified in reasonable detail
in the Offer Notice; and

     

    (ii) upon
receipt of an Offer Notice, the Deciding Member shall have three (3) business
days to deliver a written notice (the "Response
Notice") to the
Initiating Member specifying in the Response Notice either that:

     

    A. the
Deciding Member has elected to sell all of its limited liability company
interest in the Company to the Initiating Member at the price and upon the terms
and conditions specified in the Offer Notice, in which case, the Initiating
Member shall purchase, and the Deciding Member shall sell, all of the Deciding
Member's limited liability company interest in the Company at the price and upon
the terms and conditions specified in the Offer Notice; or

     

    B. the
Deciding Member has elected to purchase all of the Initiating Member's limited
liability company interest in the Company at the Offer Price (as defined below)
and upon the terms and conditions specified in the Offer Notice, in which case
the Deciding Member shall purchase, and the Initiating Member shall sell, all of
the Initiating Member's limited liability company interest in the Company at the
Offer Price and upon the terms and conditions specified in the Offer
Notice.

     

    (iii) An Offer
Notice shall only be valid if delivered on or after the Termination Date, and
any Offer Notice delivered prior to such time shall be deemed null and void and
have no force or effect. Each Member agrees that if an Offer Notice is not sent
within five (5) business days following the Termination Date, then the Deadlock
shall be deemed to have been amicably resolved and the proposed action that is
the subject of the Deadlock shall be deemed to have been adopted by the
Members.

     

    (iv) Upon
delivery of an Offer Notice to either Member, then the Deciding Member shall not
be permitted to deliver a subsequent Offer Notice and any such subsequent Offer
Notice shall be deemed null and void and have no force or effect; provided,
however, that in
the event that each Member shall have delivered to the other an Offer Notice on
the same day (without regard to the time of day such Offer Notice is received)
then, in such event, the Offer Notice which contains the lowest purchase price
for the other's limited liability company interest in the Company shall be
deemed null and void and have no force or effect.

     

    (v) Notwithstanding
any provision contained herein to the contrary, in the event that the Deciding
Member has not delivered a Response Notice within the three (3) business day
period provided for in Section 9(f)(ii) above, then for purposes of this
Agreement the Deciding Member shall be deemed to have made the election
specified in Section 9(f)(ii)(A) above and thereafter the Deciding Member shall
sell all of its limited liability company interest in the Company to the
Initiating Member at the price and upon the terms and conditions specified in
the Offer Notice.

     

    
      
        
        

      

      
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    (vi) The
Members agree that irreparable damage would occur in the event any of the
provisions of this Section 9(f) were not performed in accordance with the terms
hereof and that the Members shall be entitled to specific performance of the
terms and provisions of this Section 9(f), in addition to any other remedy at
law or equity. The Members further agree that time is of the essence with
respect to any time periods set forth in this Section 9(f).

     

    (vii) For
purposes of this Section 9(f), the "Offer
Price" means
the product obtained when multiplying (i) the quotient obtained when dividing
(x) the dollar amount of the price offered by the Initiating Member in the Offer
Notice by (y) the Percentage of limited liability company interest in the
Company of the Deciding Member multiplied by 100, and (ii) the Percentage of
limited liability company interest in the Company of the Initiating Member
multiplied by 100.

     

    Section
10. Independent
Manager.

     

    As long
as any Obligation is outstanding, the Managing Member shall cause the Company at
all times to have at least one Independent Manager who will be appointed by the
Managing Member. To the fullest extent permitted by law, including Section
18-1101(c) of the Act, the Independent Manager shall consider only the interests
of the Company, including its respective creditors, in acting or otherwise
voting on the matters referred to in Section
9(d)(iii). No
resignation or removal of an Independent Manager, and no appointment of a
successor Independent Manager, shall be effective until such successor shall
have executed a counterpart to this Agreement. In the event of a vacancy in the
position of Independent Manager, the Managing Member shall, as soon as
practicable, appoint a successor Independent Manager. All right, power and
authority of the Independent Manager shall be limited to the extent necessary to
exercise those rights and perform those duties specifically set forth in this
Agreement and the Independent Manager shall have no authority to bind the
Company. Except as provided in the second sentence of this Section
10, in
exercising their rights and performing their duties under this Agreement, any
Independent Manager shall have a fiduciary duty of loyalty and care similar to
that of a director of a business corporation organized under the General
Corporation Law of the State of Delaware. No Independent Manager shall at any
time serve as trustee in bankruptcy for any Affiliate of the
Company.

     

    Section
11. Officers.

     

    (a) Officers. The
initial Officers of the Company shall be designated by the Managing Member and
shall consist of at least a President and a Secretary. The Managing Member may
also choose one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers. Any number of offices may be held by the same person. The Managing
Member may appoint such other Officers and agents as it shall deem necessary or
advisable who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Managing Member. The salaries of all Officers and agents of the Company shall be
fixed by or in the manner prescribed by the Managing Member. The Officers of the
Company shall hold office until their successors are chosen and qualified. Any
Officer may be removed at any time, with or without cause, by the affirmative
vote of the Managing Member. Any vacancy occurring in any office of the Company
shall be filled by the Managing Member. The initial Officers of the Company
designated by the Managing Member are listed on Schedule
E
hereto.

     

    
      
        
        

      

      
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    (b) President. The
President shall be the chief executive officer of the Company, shall be
responsible for the general and active management of the business of the Company
and shall see that all orders and resolutions of the Company are carried into
effect. The President or any other Officer authorized by the President or the
Managing Member shall execute all bonds, mortgages and other contracts, except:
(i) where required or permitted by law or this Agreement to be otherwise signed
and executed, including Section
7(b) (ii)
where signing and execution thereof shall be expressly delegated by the Managing
Member to some other Officer or agent of the Company, and (iii) as otherwise
permitted in Section
11(c).

     

    (c) Vice
President. In the
absence of the President or in the event of the President's inability to act,
the Vice President, if any (or in the event there be more than one Vice
President, the Vice Presidents in the order designated by the Managing Member,
or in the absence of any designation, then in the order of their election),
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. The
Vice Presidents, if any, shall perform such other duties and have such other
powers as the Managing Member may from time to time prescribe.

     

    (d) Secretary and Assistant
Secretary. The
Secretary shall be responsible for filing legal documents and maintaining
records for the Company. The Secretary shall attend all meetings of the Company
and record all the proceedings of the meetings of the Company in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. The Secretary shall give, or shall cause to be given, notice of
all meetings of the Member, if any, and shall perform such other duties as may
be prescribed by the President, under whose supervision the Secretary shall
serve. The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Managing Member (or if there be no
such determination, then in order of their election), shall, in the absence of
the Secretary or in the event of the Secretary's inability to act, perform the
duties and exercise the powers of the Secretary and shall perform such other
duties and have such other powers as the Managing Member may from time to time
prescribe

     

    (e) Officers as
Agents. The
Officers, to the extent of their powers set forth in this Agreement or otherwise
vested in them by action of the Managing Member not inconsistent with this
Agreement, are agents of the Company for the purpose of the Company's business
and, subject to Section
9(d), the
actions of the Officers taken in accordance with such powers shall bind the
Company.

     

    (f) Duties of
Officers. Except
to the extent otherwise provided herein, each Independent Manager and Officer
shall have a fiduciary duty of loyalty and care similar to that of directors and
officers of business corporations organized under the General Corporation Law of
the State of Delaware.

     

    Section
12. Limited
Liability.

     

    
      
        
        

      

      
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    Except as
otherwise expressly provided by the Act, the debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise, shall be the
debts, obligations and liabilities solely of the Company, and neither the
Members nor the Special Member nor the Independent Manager shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member, Special Member or Independent Manager of the
Company.

     

    Section
13. Capital
Contributions.

     

    The
Members have contributed to the Company property of an agreed value as listed on
Schedule
B attached
hereto in consideration of their respective Percentage Interests (hereinafter
defined) in the Company. “Percentage Interest” means
the ownership
interest of each
Member in the
Company (the “Membership
Interests”),
expressed as a percentage, as set forth on Schedule
B. In
accordance with Section 5, the
Special Member shall not be required to make any capital contributions to the
Company. 

     

    Section
14. Additional
Contributions.

     

    The
Members are not required to make any additional capital contribution to the
Company. However, the Members may make additional capital contributions to the
Company at any time upon the written consent of the Members. To the extent that
a Member makes an additional capital contribution to the Company, the Managing
Member shall revise Schedule
B of this
Agreement. The provisions of this Agreement, including this Section
14, are
intended to benefit the Members and the Special Member and, to the fullest
extent permitted by law, shall not be construed as conferring any benefit upon
any creditor of the Company (other than Lender for so long as any Obligation is
outstanding) (and no such creditor of the Company shall be a third-party
beneficiary of this Agreement, except as provided in Section 29) and the Members
and the Special Member shall not have any duty or obligation to any creditor of
the Company to make any contribution to the Company or to issue any call for
capital pursuant to this Agreement.

     

    Section
15. Allocation of Profits and
Losses.

     

    All items of Company profit,
loss, gain, deduction and credit shall be allocated among the Members in
proportion to their respective Percentage Interests.

     

    Section
16. Distributions.

     

    Distributions
of Available Cash shall be
distributed to the Members from time to time, as determined by the Managing
Member. All
distributions shall be made on
a pro
rata
basis in
accordance with each
Member’s
respective
Percentage Interest. The Managing Member shall use its commercially reasonable
efforts to distribute sufficient Available Cash to permit Lightstone Value Plus
Real Estate Investment Trust, Inc. (the “REIT”), the indirect parent of LVP, to
distribute annually to its stockholders all of its taxable income. Notwithstanding
any provision to the contrary contained in this Agreement, the Company shall not
be required to make a distribution to any Member on account of its interest in
the Company if such distribution would violate the Act or any other applicable
law or any Basic Document.

     

    
      
        
        

      

      
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    Section
17. Books and
Records.

     

    (a) The
Managing Member shall keep or cause to be kept complete and accurate books of
account and records with respect to the Company's business. The books of the
Company shall at all times be maintained by the Managing Member. The Members and
their duly authorized representatives shall have the right to examine the
Company books, records and documents during normal business hours. The Company,
and the Managing Member on behalf of the Company, shall not have the right to
keep confidential from the other Member any information that the Managing Member
would otherwise be permitted to keep confidential from the Member pursuant to
Section 18-305(c) of the Act. The Company's books of account shall be kept using
the method of accounting determined by the Managing Member in accordance with
generally accepted accounting principles in the United States of America and in
a manner that will permit the REIT to satisfy any reporting requirements that
state regulators may impose upon it. The Company's independent auditor, if any,
shall be an independent public accounting firm selected by the Managing
Member.

     

    (b) All funds
of the Company shall be deposited in a bank account or accounts in the Company's
name.

     

    Section
18. Intentionally
Omitted.

     

    Section
19. Other
Business.

     

    The
Members, the Special Member and any Affiliate of the Members or the Special
Member may engage in or possess an interest in other business ventures
(unconnected with the Company) of every kind and description, independently or
with others notwithstanding any other duty existing at law or in equity. The
Company shall not have any rights in or to such independent ventures or the
income or profits therefrom by virtue of this Agreement.

     

    Section
20. Exculpation and
Indemnification.

     

    (a) Neither
the Members nor the Special Member nor any Officer, Independent Manager,
employee or agent of the Company nor any employee, representative, agent or
Affiliate of the Members or the Special Member nor any member of the Board of
Directors of the REIT (collectively, the “Covered
Persons”) shall,
to the fullest extent permitted by law, be liable to the Company or any other
Person who is bound by this Agreement for any loss, damage or claim incurred by
reason of any act or omission performed or omitted by such Covered Person in
good faith on behalf of the Company and in a manner reasonably believed to be
within the scope of the authority conferred on such Covered Person by this
Agreement, except that a Covered Person shall be liable for any such loss,
damage or claim incurred by reason of such Covered Person's gross negligence or
willful misconduct.

     

    (b) To the
fullest extent permitted by applicable law, a Covered Person shall be entitled
to indemnification from the Company for any loss, damage or claim incurred by
such Covered Person by reason of any act or omission performed or omitted by
such Covered Person in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of the authority conferred on such
Covered Person by this Agreement, except that no Covered Person shall be
entitled to be indemnified in respect of any loss, damage or claim incurred by
such Covered Person by reason of such Covered Person's gross negligence or
willful misconduct with respect to such acts or omissions; provided, however, that
any indemnity under this Section
20 by the
Company shall be provided out of and to the extent of Company assets only, and
the Members and the Special Member shall not have personal liability on account
thereof and provided further, that so
long as any Obligation is outstanding, any indemnity payment from funds of the
Company (as distinct from funds from other sources, such as insurance) of any
indemnity under this Section
20 shall be
subordinate to payments then due pursuant to the Basic Documents.

     

    
      
        
        

      

      
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    (c) To the
fullest extent permitted by applicable law, expenses (including reasonable legal
fees) incurred by a Covered Person defending any claim, demand, action,

    suit or
proceeding shall, from time to time, be advanced by the Company prior to the
final disposition of such claim, demand, action, suit or proceeding upon receipt
by the Company of an undertaking by or on behalf of the Covered Person to repay
such amount if it shall be determined that the Covered Person is not entitled to
be indemnified as authorized in this Section
20.

     

    (d) A Covered
Person shall be fully protected in relying in good faith upon the records of the
Company and upon such information, opinions, reports or statements presented to
the Company by any Person as to matters the Covered Person reasonably believes
are within such other Person's professional or expert competence and who has
been selected with reasonable care by or on behalf of the Company, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, or any other facts pertinent to the existence and amount of
assets from which distributions to the Members might properly be
paid.

     

    (e) To the
extent that, at law or in equity, a Covered Person has duties (including
fiduciary duties) and liabilities relating thereto to the Company or to any
other Covered Person, a Covered Person acting under this Agreement shall not be
liable to the Company or to any other Covered Person for its good faith reliance
on the provisions of this Agreement or any approval or authorization granted by
the Company or any other Covered Person. The provisions of this Agreement, to
the extent that they restrict the duties and liabilities of a Covered Person
otherwise existing at law or in equity, are agreed by the Members and the
Special Member to replace such other duties and liabilities of such Covered
Person.

     

    (f) The
foregoing provisions of this Section
20 shall
survive any termination of this Agreement.

     

    Section
21. Assignments;
Transfers.

     

    (a) Except as
otherwise provided in this Agreement, (i) no Member may sell, transfer, assign,
hypothecate, pledge or otherwise dispose of or encumber (including the grant of
an option with respect to any of the foregoing), directly or indirectly
(“Transfer”), all
or any part of its limited liability company interest in the Company or withdraw
from the Company, and (ii) no Transfer of any direct or indirect interest in a
Member shall be permitted, except (in the case of both clauses (i) and (ii))
with the prior written approval of the Managing Member, which approval may be
granted or withheld by the Managing Member in its sole and absolute discretion.

     

    
      
        
        

      

      
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    (b) To the
fullest extent permitted by law, any Transfer not in compliance with the
requirements of this Section
21 shall be
void as against the Company and the other Members and shall be disregarded by
all of the Members and the Company for all purposes of allocations and
distributions hereunder. The Company shall be entitled to treat the record owner
of a limited liability company interest in the Company as the absolute owner
thereof for all purposes and shall incur no liability to any purported
transferee or any other Person for distributions of money or other property in
good faith made to the record owner of such limited liability company interest
in the Company, unless and until all conditions of any Transfer shall have been
fulfilled in accordance herewith to the satisfaction of the Company, subject to
the prior written approval of the Managing Member which approval may be granted
or withheld by the Managing Member in its sole and absolute
discretion.

     

    (c) Unless a
transferee is substituted as a Member in accordance with this Section 21(c), the
transferee shall not be entitled to any of the rights of a Member hereunder with
respect to the limited liability company interest in the Company transferred. A
transferee of a limited liability company interest in the Company may be
substituted as a Member and shall thereupon be entitled to the rights of a
Member with respect to such limited liability company interest in the Company,
only upon satisfaction of the following conditions:

     

    (i) the
transferor shall have granted the transferee the right to be substituted as a
Member in its place;

     

    (ii) the
Managing Member has approved the Transfer in writing, which it may refuse to do
for any reason or for no reason; 

     

    (iii) the
transferee shall have paid, or made arrangement satisfactory to the Managing
Member to pay, to the Company all costs and expenses incurred by the Company in
connection with such substitution, including any costs incurred in amending this
Agreement, the certificate of formation, if necessary, or any other document
filed with respect to the Company in any jurisdiction; 

     

    (iv) the
transferee shall have executed and delivered such instruments, in form and
substance satisfactory to the Managing Member, as the Managing Member may deem
to be necessary or desirable to effect such substitution and to confirm the
agreement of the transferee to be bound by and subject to all of the terms and
provisions of this Agreement and any other relevant agreements relating to the
Company to which the Transferor and the Company or other Members are
parties;

     

    (v) such
Transfer shall not result in the termination of the Company or any of its
Subsidiaries pursuant to Code Section 708;

     

    (vi) the
Managing Member has received an opinion of the Company’s counsel that the
proposed Transfer is permissible under all applicable federal or state
securities laws and will not cause the Company to be classified other than as a
partnership for federal income tax purposes or cause the Company to terminate
for federal income tax purposes; and

     

    
      
        
        

      

      
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    (vii) such
assignment shall not result in a default or event of default under any of the
Loan Documents or any other material instruments or agreements to which the
Company or any of the Subsidiaries is a party or to which the Property is
subject and the Company and the Managing Member shall have obtained all consents
to such assignment required pursuant to the Loan Documents.

     

    (d) Right to
Force Sale of Property. Notwithstanding any provision contained herein to the
contrary, at any time after seven years from the date hereof, the Non-Managing
Member shall have the right to force the Company to dispose of the Property by
delivering written notice thereof (a “Sale
Notice”) to the
Managing Member. Any Sale Notice shall indicate the appraised value of the
Property, as determined by an independent, third party appraiser selected by the
Board of Directors of the REIT (the “Appraised
Value”). Upon
receipt of a Sale Notice, the Managing Member shall have the right to elect to
either (i) initiate a sale of the Property for the Appraised Value or (ii)
within ninety (90) days of receipt of a Sale Notice, purchase the Non-Managing
Member’s Membership Interest in the Company for an amount equal to the amount of
cash that would be distributed to the Non-Managing Member under Article 16, if
the Property were sold for the Appraised Value, assuming that all Company
indebtedness were repaid in full (including prepayment penalties that would be
then due and payable) and transaction costs equal to the sum of (i) the transfer
taxes that would be due upon such sale and (ii) two and one-half percent (2.5%)
of the Appraised Value were to be paid prior to the hypothecated liquidation
distributions.

     

    (e) Right of
First Refusal; Tag-Along Right. Notwithstanding any provision contained herein
to the contrary, if at any time a Member
shall
desire to sell all or any portion of its limited liability company interest in
the Company to an unaffiliated third party purchaser (the “Third Party
Purchaser”), then
before any such sale may be consummated, the terms and provisions of this
Section 11(e) must be complied with.

     

    (i) In the
event that a Member intends to accept a bona fide written offer received from a
Third Party Purchaser to purchase all or any portion of its limited liability
company interest in the Company (the “Selling
Member”), then
such Selling Member shall promptly give written notice (the “Sale
Notice”)
thereof to the remaining Member (the “Remaining
Member”)
setting forth the terms of the offer and the identity of the Third Party
Purchaser and include therewith copies of all relevant documents, to the extent
such documentation exists. For a period of ten (10) business days (the
“Ten Day
Period”) after
receipt of the Sale Notice, the Remaining Member shall have the right by
delivering the written notice provided in Section 11(e)(ii)(A) or Section
11(e)(iii)(A) below to either:

     

    A. purchase
that portion of the Selling Member’s limited liability company interest in the
Company which the Third Party Purchaser intends to acquire (the “Offered Company
Interest”) in
accordance with Section 11(e)(ii) below at an aggregate purchase price (the
“First Refusal Purchase
Price”) equal
to the purchase price offered in writing by the Third Party Purchaser for the
Offered Company Interest (the “First Refusal
Right”);
or

     

    
      
        
        

      

      
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    B. sell to
the Third Party Purchaser in accordance with Section 11(e)(iii) below that
portion of Remaining Member’s limited liability company interest in the Company
(the “Tag-Along
Portion”) equal
to the product obtained when multiplying: (I) the Remaining Member’s
limited liability company interest in the Company immediately prior to the sale
to the Third Party Purchaser, and (II) the aggregate amount of limited liability
company interest in the Company the Third Party Purchaser desires to acquire
from the Selling Member and that the Selling Member desires to sell to the Third
Party Purchaser at an aggregate purchase price (the “Tag-Along Purchase
Price”) equal
to the product obtained when multiplying (I) the purchase price offered in
writing by the Third Party Purchaser for the Offered Company Interest, and (II)
the Remaining Member’s Percentage Interest in the Company immediately prior to
the sale to the Third Party Purchaser (the “Tag-Along
Right”).

     

    (ii) A. If the
Remaining Member shall elect to exercise the First Refusal Right pursuant to
Section 11(e)(i)(A) above, then within the Ten Day Period the Remaining
Member: (x) shall send a written notice (the “First Refusal
Notice”) to the
Selling Member specifying the date on which the purchase and sale of the Offered
Company Interest (the “First Refusal
Closing”) shall
occur, which date shall not be earlier than ten (10) calendar days nor later
than sixty (60) calendar days from the date such notice is delivered; and (y)
shall pay to the Selling Member in immediately available funds by bank wire
transfer, certified check or bank cashier’s check a non refundable deposit in an
amount equal to the lesser of (a)
$500,000, (b) the dollar amount of the First Refusal Purchase Price, or (c) the
dollar amount of any deposit offered or made by the Third Party Purchaser (the
“First Refusal
Deposit”), which
First Refusal Deposit, in any event, shall be credited against the First Refusal
Purchase Price if the First Refusal Closing shall occur.

     

    B. At the
First Refusal Closing: (i) the Remaining Member shall pay to the Selling
Member the First Refusal Purchase Price less the First Refusal Deposit in cash
in immediately available funds by bank wire transfer, certified check or bank
cashier’s check; and (ii) the Selling Member shall transfer and assign to the
Remaining Member the Offered Company Interest free and clear of any encumbrance
and shall execute and deliver to the Company all necessary documentation
reasonably required in order to effectuate the transfer and sale of the Offered
Company Interest. In the event the Remaining Member does not consummate the
First Refusal Closing as aforesaid as a result of the Remaining Member’s breach
or default of its obligations hereunder, the First Refusal Deposit shall be
retained by the Selling Member as liquidated damages and not as a
penalty.

     

    (iii) A. If the
Remaining Member shall elect to exercise the Tag-Along Right pursuant to Section
11(e)(i)(B) above, then within the Ten Day Period the Remaining Member shall
send a written notice (the “Tag-Along
Notice”) to the
Selling Member which notice: (x) shall specify the Remaining Member’s desire to
exercise the Tag-Along Right pursuant to Section 11(e)(i)(B) above; and (y)
shall contain a covenant and undertaking by the Remaining Member to transfer and
assign the Tag-Along Portion to the Third Party Purchaser at a closing (the
“Tag-Along
Closing”)
determined by the Selling Member and the Third Party Purchaser and to execute
and deliver documentation substantively and substantially identical to the
documentation that the Selling Member is executing and delivering in connection
with the sale to the Third Party Purchaser.

     

    
      
        
        

      

      
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    B. At the
Tag-Along Closing: (i) the Third Party Purchaser shall pay the Tag-Along
Purchase Price to the Remaining Member in the same manner as the Third Party
Purchaser pays the remaining portion of the purchase price for that portion of
the Selling Member’s limited liability company interest in the Company which is
subject to the Third Party Purchaser’s offer, and (ii) the Remaining Member
shall transfer and assign to the Third Party Purchaser the Tag-Along Portion of
the Remaining Member’s limited liability company interest in the Company to the
Third Party Purchaser free and clear of any encumbrance, and shall execute and
deliver to the Third Party Purchaser all necessary documentation reasonably
required by the Selling Member in order to effectuate the transfer and sale of
the Tag-Along Portion to the Third Party Purchaser; provided,
however, that
the Remaining Member shall only be required to execute documentation
substantively and substantially identical to the documentation that the Selling
Member is executing and delivering in connection with the Selling Member’s sale
of its limited liability company interest in the Company to the Third Party
Purchaser.

     

    (iv) The
failure of the Remaining Member to give either (x) a First Refusal Notice and to
fund the First Refusal Deposit provided for in Section 11(e)(ii)(A) above within
the time period required pursuant to Section 11(e)(ii)(A), or (y) the Tag-Along
Notice provided for in Section 11(e)(iii)(A) above within the time period
required pursuant to Section 11(e)(iii)(A) shall be deemed to be an election by
the Remaining Member not to exercise the First Refusal Right or the Tag-Along
Right, as the case may be, as to such offer. The election by the Remaining
Member not to exercise the First Refusal Right or the Tag-Along Right, as the
case may be, as to any offer shall not affect the Remaining Member’s First
Refusal Right or the Tag-Along Right as to any subsequent offer. If the
Remaining Member elects not to exercise the First Refusal Right or the Tag-Along
Right, then the Selling Member may proceed to transfer the Offered Company
Interest in accordance with the terms of the third party offer within a period
of one hundred and eighty (180) days after the date of the Sale Notice; but if
such sale is not consummated within such one hundred and eighty (180) day
period, then the limited liability company interest in the Company covered by
the offer will be again be subject to the First Refusal Right and Tag-Along
Right provided by this Section 11(e); provided,
however, that if
the Remaining Member shall timely deliver the First Refusal Notice and fund the
First Refusal Deposit in accordance with Section 11(e)(ii)(A) but later fails to
consummate the acquisition of the Offered Company Interest at the First Refusal
Closing, then, in addition to retaining the First Refusal Deposit as liquidated
damages (and not as a penalty) the Selling Member shall have a period of an
additional ninety (90) days from the date of the First Refusal Closing to
consummate the sale of the Offered Company Interest that was subject to the
First Refusal Right to the Third Party Purchaser; and provided further,
however, that if
the Remaining Member shall timely deliver the Tag-Along Notice in accordance
with Section 11(e)(iii)(A) but later fails to sell the Tag-Along Portion to the
Third Party Purchaser at the Tag-Along Closing, then the Selling Member shall
have a period of an additional ninety (90) days from the date of the Tag-Along
Closing to consummate the sale of the entire amount of limited liability company
interest in the Company that the Third Party Purchaser originally intended to
acquire from the Selling Member. 

     

    
      
        
        

      

      
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    (v) Any Third
Party Purchaser to whom the Offered Company Interest or the Tag-Along Portion is
transferred under this Section 11(e) shall hold such limited liability company
interest in the Company subject to all terms and conditions of this Agreement
and shall, as a condition of receiving such limited liability company interest
in the Company, execute and deliver any and all documentation, and comply with
any and all terms and conditions, reasonably requested by the Managing
Member.

     

    Section
22. Resignation.

     

    Except as
expressly provided in this Agreement, the Managing Member shall not resign or
withdraw as managing member of the Company without the prior written approval of
the other Members, which approval may be withheld by such Members in their sole
discretion.

     

    Section
23. Admission of Additional
Members.

     

    One or
more additional Members of the Company may be admitted to the Company with the
written consent of the Managing Member; provided,
however, that,
notwithstanding the foregoing, so long as any Obligation remains outstanding, no
additional Member may be admitted to the Company unless the Rating Agency
Condition is satisfied.

     

    Section
24. Dissolution.

     

    (a)  Subject
to Section
9(d), the
Company shall be dissolved, and its affairs shall be wound up upon the first to
occur of the following: (i) the termination of the legal existence of the last
remaining member of the Company or the occurrence of any other event which
terminates the continued membership of the last remaining member of the Company
in the Company unless the Company is continued without dissolution in a manner
permitted by this Agreement or the Act or (ii) the entry of a decree of judicial
dissolution under Section 18-802 of the Act. Upon the occurrence of any event
that causes the last remaining member of the Company to cease to be a member of
the Company or that causes the last remaining Member to cease to be a member of
the Company (other than (i) upon an assignment by the last remaining Member of
all of its limited liability company interest in the Company and the admission
of the transferee pursuant to Sections 21 and
23, or (ii)
the resignation of the last remaining Member and the admission of an additional
member of the Company pursuant to Sections 22 and
23), to the
fullest extent permitted by law, the personal representative of such member is
hereby authorized to, and shall, within 90 days after the occurrence of the
event that terminated the continued membership of such member in the Company,
agree in writing (i) to continue the Company and (ii) to the admission of the
personal representative or its nominee or designee, as the case may be, as a
substitute member of the Company, effective as of the occurrence of the event
that terminated the continued membership of the last remaining Member in the
Company.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

       

    

    (b) Notwithstanding
any other provision of this Agreement, the Bankruptcy of a Member or the Special
Member shall not cause such Member or Special Member, respectively, to cease to
be a member of the Company or cause the Company to be dissolved or its affairs
to be wound up and upon the occurrence of such an event, the Company shall
continue without dissolution. Except as otherwise required by law,
notwithstanding any other provision of this Agreement, the dissolution of a
Member or the Special Member shall not, by itself, cause the Company to be
dissolved or its affairs to be wound up and upon the occurrence of such an
event, the Company shall continue without dissolution.

     

    (c) Notwithstanding
any other provision of this Agreement, each Member and the Special Member waives
any right it might have to agree in writing to dissolve the Company upon the
Bankruptcy of a Member or the Special Member, or the occurrence of an event that
causes a Member or the Special Member to cease to be a member of the
Company.

     

    (d) In the
event of dissolution, the Company shall conduct only such activities as are
necessary to wind up its affairs (including the sale of the assets of the
Company in an orderly manner), and the assets of the Company shall be applied in
the manner, and in the order of priority, set forth in Section 18-804 of the
Act.

     

    (e) The
Company shall terminate when (i) all of the assets of the Company, after payment
of or due provision for all debts, liabilities and obligations of the Company
shall have been distributed to the Members in the manner provided for in this
Agreement and (ii) the Certificate of Formation shall have been canceled in the
manner required by the Act.

     

    Section
25. Waiver of Partition; Nature
of Interest.

     

    Except as
otherwise expressly provided in this Agreement, to the fullest extent permitted
by law, each Member and the Special Member hereby irrevocably waives any right
or power that such Person might have to cause the Company or any of its assets
to be partitioned, to cause the appointment of a receiver for all or any portion
of the assets of the Company, to compel any sale of all or any portion of the
assets of the Company pursuant to any applicable law or to file a complaint or
to institute any proceeding at law or in equity to cause the dissolution,
liquidation, winding up or termination of the Company. The Members shall not
have any interest in any specific assets of the Company, and the Members shall
not have the status of a creditor with respect to any distribution pursuant to
Section
16 hereof.
The interest of the Members in the Company are personal property.

     

    Section
26. Benefits of Agreement; No
Third-Party Rights.

     

    None of
the provisions of this Agreement shall be for the benefit of or enforceable by
any creditor of the Company other than the Lender (for so long as any Obligation
is outstanding) or by any creditor of the Members or the Special Member. Nothing
in this Agreement shall be deemed to create any right in any Person (other than
Covered Persons and for so long as any Obligation is outstanding, the Lender)
not a party hereto, and this Agreement shall not be construed in any respect to
be a contract in whole or in part for the benefit of any third Person (except as
provided in Section
29).

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

    Section
27. Severability of
Provisions.

     

    Each
provision of this Agreement shall be considered severable and if for any reason
any provision or provisions herein are determined to be invalid, unenforceable
or illegal under any existing or future law, such invalidity, unenforceability
or illegality shall not impair the operation of or affect those portions of this
Agreement which are valid, enforceable and legal.

     

    Section
28. Entire
Agreement.

     

    This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof.

     

    Section
29. Binding
Agreement.

     

    Notwithstanding
any other provision of this Agreement, the Members agree that this Agreement,
including, without limitation, Sections 5,
7,
8,
9,
10,
16,
20,
21,
22,
23,
24,
25,
26,
29 and
31,
constitutes a legal, valid and binding agreement of the Members, and is
enforceable against the Members by the Independent Manager in accordance with
its terms. In addition, the Independent Manager and Lender (so long as any
Obligations are outstanding) shall be intended beneficiaries of this
Agreement.

     

    Section
30. Governing
Law.

     

    This
Agreement shall be governed by and construed under the laws of the State of
Delaware (without regard to conflict of laws principles), all rights and
remedies being governed by said laws.

     

    Section
31. Amendments.

     

    Subject
to Section
9(d), this
Agreement may be modified, altered, supplemented or amended pursuant to a
written agreement executed and delivered by the Managing Member. Notwithstanding
anything to the contrary in this Agreement, so long as any Obligation is
outstanding, this Agreement may not be modified, altered, supplemented or
amended unless the Lender consents in writing and the Rating Agency Condition is
satisfied except: (i) to cure any ambiguity or (ii) to convert or supplement any
provision in a manner consistent with the intent of this Agreement and the other
Basic Documents.

     

    Section
32. Counterparts.

     

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

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

      
         

        Section
33. Notices.

      

       

    

    Any
notices required to be delivered hereunder shall be in writing and personally
delivered, mailed or sent by telecopy, electronic mail or other similar form of
rapid transmission, and shall be deemed to have been duly given upon receipt (a)
in the case of the Company, to the Company at its address in Section 2, (b) in
the case of a Member, to such Member at its address as listed on Schedule
B attached
hereto and (c) in the case of either of the foregoing, at such other address as
may be designated by written notice to the other party.

     

    Section
34. Tax
Matters. It is
the intention of the Members that the Company shall be taxed as a "partnership"
for federal, state, local and foreign income tax purposes. The Members shall
take all reasonable actions, including the amendment of this Agreement and the
execution of other documents, as may reasonably be required in order for the
Company to qualify for and receive "partnership" treatment for Federal, state,
local and foreign income tax purposes. The books and records of the Company
shall be maintained by the Managing Member in accordance with generally accepted
accounting principles, consistently applied, and Section 704(b) of the Internal
Revenue Code of 1986, as amended (the “Code”) and
the Regulations promulgated thereunder. A capital
account shall be established and maintained by the Managing Member on behalf of
each Member in accordance with the Treasury Regulation issued pursuant to
Section 704(b) of the Code. The Managing Member shall be the “tax matters
partner” as defined in Section 6231(a)(6) of the Code, with respect to the
Company.

     

    Section
35. Subsidiaries. Any and
all references herein to the Company or any Member or Managing Member causing or
directing any action on behalf of a Subsidiary shall be deemed to refer to the
Company causing (or such Member or Managing Member causing the Company to
cause), in its capacity as a direct or indirect manager or member of such
Subsidiary, such action to be taken for and on behalf of such
Subsidiary.

     

    Section
36. Effectiveness.

     

    Pursuant
to the Act, this Agreement shall be effective as of the execution of this
Agreement.

     

    [SIGNATURE PAGE
FOLLOWS]

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has duly
executed this Limited Liability Company Agreement as of the __ day of January,
2007.

    
      	 	 	 
	 	
              MEMBERS:

               

              LVP 1407 BROADWAY
      LLC,

              a
      Delaware limited liability company

              

              By: Lightstone
      Value Plus REIT LP, 

              its
      sole member 

                 

                By:
      Lightstone Value Plus Real Estate Investment Trust, Inc., 

                   
      a Maryland corporation, its general partner

              

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:
      Michael Schurer 

              Title:
      Chief Financial Officer

            
	 	
            

    

    
      	 	 	 
	 	
              LIGHTSTONE 1407 MANAGER
      LLC,

              a
      Delaware limited liability company

              

              By: Lightstone
      Holdings LLC,

              its
      managing member

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              Name:
      David Lichtenstein

              Title:
      President

            
	 	
            

    

    
      	 	 	 
	 	SPECIAL MEMBER/INDEPENDENT
      MANAGER:
	 
 	 
 	 
 
	 	 	 
	 	
              
      Michelle A. Dreyer

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
A

    

    Definitions

     

    A. Definitions

     

    When used
in this Agreement, the following terms not otherwise defined herein have the
following meanings:

     

    “Act” has the
meaning set forth in the preamble to this Agreement.

     

    “Affiliate” means,
with respect to any Person, any other Person directly or indirectly Controlling
or Controlled by or under direct or indirect common Control with such
Person.

     

    “Agreement” means
this Limited Liability Company Agreement of the Company, together with the
schedules attached hereto, as amended, restated or supplemented or otherwise
modified from time to time.

     

    “Approval” (and any
variation thereof) of a Member shall mean the prior written approval of such
Member. Use of the term “reasonable” or “reasonably” in connection with the term
“Approval” or any variation thereof or with the term “satisfactory” means that
such Approval shall not be withheld, conditioned or delayed unreasonably. Unless
either of such terms is used in connection with the term “Approval” (or any
variation thereof), such Approval may be granted or withheld in a Member’s (or
its authorized representative’s) sole discretion.

     

    “Certificate of
Formation” means
the Certificate of Formation of the Company filed with the Secretary of State of
the State of Delaware on November 28, 2006, as amended or amended and restated
from time to time.

     

    “Available
Cash” means,
at any particular time, all cash and cash items (from whatever source received)
held by the Company at such time, to the extent such cash is not reasonably
necessary (in the judgement of the Managing Member) to cover (a) obligations or
expenses of the Company at such time, or reserves for working capital and
capital expenditures (taking into account expected revenues) anticipated within
a reasonable period thereafter.

     

    “Bankruptcy” means,
with respect to any Person, if such Person (i) makes an assignment for the
benefit of creditors, (ii) files a voluntary petition in bankruptcy, (iii) is
adjudged a bankrupt or insolvent, or has entered against it an order for relief,
in any bankruptcy or insolvency proceedings, (iv) files a petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
liquidation or similar relief under any statute, law or regulation, (v) files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against it in any proceeding of this nature,
(vi) seeks, consents to or acquiesces in the appointment of a trustee, receiver
or liquidator of the Person or of all or any substantial part of its properties,
or (vii) if 120 days after the commencement of any proceeding against the Person
seeking reorganization, arrangement, composition, readjustment, liquidation or
similar relief under any statute, law or regulation, if the proceeding has not
been dismissed, or if within 90 days after the appointment without such Person's
consent or acquiescence of a trustee, receiver or liquidator of such Person or
of all or any substantial part of its properties, the appointment is not vacated
or stayed, or within 90 days after the expiration of any such stay, the
appointment is not vacated. The foregoing definition of “Bankruptcy” is intended
to replace and shall supersede and replace the definition of “Bankruptcy” set
forth in Sections 18-101(1) and 18-304 of the Act.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Bankruptcy
Action” means
to institute proceedings to have the Company be adjudicated bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency proceedings
against the Company or file a petition seeking, or consent to, reorganization or
relief with respect to the Company under any applicable federal or state law
relating to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Company or a
substantial part of its property, or make any assignment for the benefit of
creditors of the Company, or admit in writing the Company's inability to pay its
debts generally as they become due, or declare or effectuate a moratorium on the
payment of any obligation, or take action in furtherance of any such
action.

     

    “Basic
Documents” means
this Agreement and the Loan Documents to which the Company is a party and all
documents and certificates contemplated thereby or delivered in connection
therewith.

     

    “Company” means
1407 Broadway Mezz II LLC, a Delaware limited liability company.

     

    “Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities or general partnership or managing member
interests, by contract or otherwise. “Controlling” and “Controlled” shall have
correlative meanings. Without limiting the generality of the foregoing, a Person
shall be deemed to Control any other Person in which it owns, directly or
indirectly, ten percent (10%) or more of the ownership interests.

     

    “Covered
Persons” has the
meaning set forth in Section
20(a).

     

    “Guarantor” has the
meaning assigned to that term in the Loan Documents. 

     

    “Indemnitor” has the
meaning assigned to that term in the Loan Documents. 

     

    "Independent
Manager" means a
natural person who, for the five-year period prior to his or her appointment as
Independent Manager has not been, and during the continuation of his or her
service as Independent Manager is not: (i) an employee, manager, stockholder,
partner or officer of the Company or any of its Affiliates (other than his or
her service as an Independent Manager or similar capacity of the Company or any
of its Affiliates); (ii) a customer or supplier of the Company or any of its
Affiliates (other than an Independent Manager provided by a corporate services
company that provides independent managers in the ordinary course of its
business); or (iii) any member of the immediate family of a person described in
(i) or (ii). Each Independent Manager is hereby designated as a “manager” of the
Company within the meaning of the Act.

     

    “Lender” shall
mean Lehman Brothers Holdings Inc., a Delaware corporation, its
successors and assigns.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

     “Loan
Documents” means
the documents evidencing, securing or otherwise relating to the Senior Loan
and/or the Mezzanine loan.

     

    “Loans” means
collectively, the Senior Loan and the Mezzanine Loan.

     

    “Management
Agreement” means
the agreement of the Independent Manager in the form attached hereto as
Schedule
C. The
Management Agreement shall be deemed incorporated into, and a part of, this
Agreement

     

    “Material
Action” means
to consolidate or merge the Company with or into any Person, or sell, transfer,
dispose of or encumber (except with respect to the Lender) all or substantially
all of the assets of the Company or, to the fullest extent permitted by law,
dissolve, wind-up, or liquidate the Company or acquire all or substantially all
of the assets of any Person.

     

    “Members” means,
collectively, Lightstone 1407 Manager LLC and LVP 1407 Broadway LLC, each a
Delaware limited liability company, as the initial members of the Company, and
includes any Person admitted as an additional member of the Company or a
substitute member of the Company pursuant to the provisions of this Agreement,
each in its capacity as a member of the Company; provided, however, the term
“Member” shall not include the Special Member. Each Member is hereby designated
as a “manager” of the Company within the meaning of the Act.

     

    “Mezzanine
Loan” means
that certain mezzanine loan made by Lender to Mezz LLC.

     

    “Mezzanine
Note” means
that certain mezzanine promissory note in the original principal amount of
$__________________ made by Mezz LLC to Lender in connection with the Mezzanine
Loan.

     

    “Notes” means
collectively, the Senior Note and the Mezzanine Note.

     

    “Obligations” shall
mean the indebtedness, liabilities and obligations of the Company, as the sole
member of Mezz LLC under or in connection with the Loan Documents or any related
document in effect as of any date of determination.

     

    “Officer” means
an officer of the Company described in Section
11.

     

    “Person” means
any individual, corporation, partnership, joint venture, limited liability
company, limited liability partnership, association, joint stock company, trust,
unincorporated organization, or other organization, whether or not a legal
entity, and any governmental authority.

     

    “Property” means
that certain real property located at 1407 Broadway, New York, New
York.

     

    “Rating
Agency” has the
meaning assigned to that term in the Loan Documents.

     

    “Rating Agency
Condition” means,
with respect to any action, that each Rating Agency shall have been given ten
days prior notice thereof and that each of the Rating Agencies shall have
notified the Company in writing that such action will not result in a reduction
or withdrawal, downgrade or qualification of the then current rating by such
Rating Agency of the Loan or any pool or loans of which the Loan forms a part,
or of any of the securities issued in connection with the Securitization (as
defined in the Loan Documents).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Special
Member” means,
upon such person's admission to the Company as a member of the Company pursuant
to Section 5, a
person acting as Independent Manager, in such person's capacity as a member of
the Company. A Special Member shall only have the rights and duties expressly
set forth in this Agreement.

     

    “Senior
Loan” means
that certain mortgage loan made by Lender to Property Owner.

     

    “Senior
Note” means
that certain promissory note in the original principal amount of
$__________________ made by Property Owner to Lender in connection with the
Senior Loan.

     

    “Subsidiaries” means
collectively, Mezz LLC and Property Owner. Each individually is also a
“Subsidiary”.

     

    B. Rules of
Construction

     

    Definitions
in this Agreement apply equally to both the singular and plural forms of the
defined terms. The words “include” and “including” shall be deemed to be
followed by the phrase “without limitation.” The terms “herein,” “hereof' and
“hereunder” and other words of similar import refer to this Agreement as a whole
and not to any particular Section, paragraph or subdivision. The Section titles
appear as a matter of convenience only and shall not affect the interpretation
of this Agreement. All Section, paragraph, clause, Exhibit or Schedule
references not attributed to a particular document shall be references to such
parts of this Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
B

    

    Members

    

      
        	
                Name

              	 	
                Mailing
      Address

              	 	
                Agreed
      Value of Capital Contribution

              	 	
                Percentage
      Interest

              
	
                Lightstone
      1407 Manager LLC

              	 	
                326
      Third Street

                Lakewood,
      NJ 08701

              	 	
                $_____

              	 	
                51%

              
	
                LVP
      1407 Broadway LLC

              	 	
                326
      Third Street

                Lakewood,
      NJ 08701

              	 	
                $_____

              	 	
                49%

              

      

    

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
C

    

    Management
Agreement

     

    January
____, 2007

     

    ______________________

    c/o The
Lightstone Group LLC

    326 Third
Street

    Lakewood,
NJ 08701

     

    RE:
Management Agreement - 1407
Broadway Mezz II LLC

    

    Ladies
and Gentlemen:

    

    For good
and valuable consideration, each of the undersigned Persons, who have been
designated as the Managing Member and Independent Manager of 1407 Broadway Mezz
II LLC, a Delaware limited liability company (the “Company”), in
accordance with the Limited Liability Company Agreement of the Company, dated as
of the date hereof, as it may be amended or restated from time to time (the
“LLC
Agreement”),
hereby agree as follows:

     

    1.  Each of
the undersigned accepts such Person's rights and authority as the Managing
Member or Independent Manager (as applicable) under the LLC Agreement and agrees
to perform and discharge such Person's duties and obligations as the Managing
Member or Independent Manager (as applicable) under the LLC Agreement, and
further agrees that such rights, authorities, duties and obligations under the
LLC Agreement shall continue until such Person's successor as the Managing
Member or Independent Manager (as applicable) is designated or until such
Person's resignation or removal as the Managing Member or Independent Manager
(as applicable) in accordance with the LLC Agreement. Each of the undersigned
agrees and acknowledges that it has been designated as a “manager” of the
Company within the meaning of the Delaware Limited Liability Company
Act.

     

    2.  So long
as any Obligation is outstanding, each of the undersigned agrees, solely in its
capacity as a creditor of the Company on account of any indemnification or other
payment owing to the undersigned by the Company, not to acquiesce, petition or
otherwise invoke or cause the Company to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against the Company under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Company or any substantial part of
the property of the Company, or ordering the winding up or liquidation of the
affairs of the Company.

     

    3.  THIS
MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY
SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Initially
capitalized terms used and not otherwise defined herein have the meanings set
forth in the LLC Agreement.

     

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

     

    IN
WITNESS WHEREOF, the undersigned have executed this Management Agreement as of
the day and year first above written.

    
      	 	 	 
	 	
              LIGHTSTONE
      1407 MANAGER LLC

               

              By:
      Lightstone Holdings LLC, 

              its
      managing member

            
	 
 	 
 	 
 
	 	By:  	 
	 	
              

              David
      Lichtenstein

              President
      

            
	 	
            

    

    
       

      
        	 	       
      	 
	
              	 	 
	 	
                

                Michelle
      A. Dreyer

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

       

    

     

    SCHEDULE
D

     

    INDEPENDENT
MANAGER

    

    Michelle
A. Dreyer

     

    
      
        
        

      

      
        
        

        
          

        

      

       

    

    SCHEDULE
E

    

    OFFICERS

    
      

        
          	
                  OFFICERS 

                	 	
                       TITLE

                
	
                   

                	 	 
	
                  David
      Lichtenstein 

                	 	
                      President

                
	
                   

                	 	 
	
                  Michael
      Schurer 

                	 	
                      SecretaryUnassociated Document

    EXHIBIT
10.32

     

    Prepared by, recorded and return
to:

     

    
      	
              Cassin
      Cassin & Joseph LLP

              711
      Third Avenue, 20th
      Floor

              New
      York, New York 10017

              Attn:
      Carol M. Joseph, Esq.

            	 	County:
  Hillsborough
	 	 	 

    

     

    (Reserved)

     

    MULTIFAMILY
MORTGAGE,

    ASSIGNMENT OF
RENTS

    AND SECURITY
AGREEMENT

     

    (FLORIDA)

    

     

    

     

    Isles Apartments

    6202 and 6210 N. Sheldon
Road

    Tampa, Florida 

     

     

     

    

      
        	 	 	 
	 	 	 
	
                FANNIE MAE MULTIFAMILY SECURITY
      INSTRUMENT -

              	
                Form
4010

              	
                11/01

              
	
                FLORIDA 

              	 	 
	
                ©
      1997-2001 Fannie Mae

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    TABLE OF
CONTENTS

     

    
      	 	 	 	
              PAGE

            
	
              1.

            	
              DEFINITIONS.

            	 	
              1

            
	
              2.

            	
              UNIFORM
      COMMERCIAL CODE SECURITY AGREEMENT.

            	 	
              6

            
	
              3.

            	
              ASSIGNMENT
      OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.

            	 	
              7

            
	
              4.

            	
              ASSIGNMENT
      OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.

            	 	
              9

            
	
              5.

            	
              PAYMENT
      OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT
      PREMIUM.

            	 	
              11

            
	
              6.

            	
              EXCULPATION.

            	 	
              11

            
	
              7.

            	
              DEPOSITS
      FOR TAXES, INSURANCE AND OTHER CHARGES.

            	 	
              11

            
	
              8.

            	
              COLLATERAL
      AGREEMENTS.

            	 	
              12

            
	
              9.

            	
              APPLICATION
      OF PAYMENTS.

            	 	
              12

            
	
              10.

            	
              COMPLIANCE
      WITH LAWS.

            	 	
              13

            
	
              11.

            	
              USE
      OF PROPERTY.

            	 	
              13

            
	
              12.

            	
              PROTECTION
      OF LENDER’S SECURITY.

            	 	
              13

            
	
              13.

            	
              INSPECTION.

            	 	
              14

            
	
              14.

            	
              BOOKS
      AND RECORDS; FINANCIAL REPORTING.

            	 	
              14

            
	
              15.

            	
              TAXES;
      OPERATING EXPENSES.

            	 	
              16

            
	
              16.

            	
              LIENS;
      ENCUMBRANCES.

            	 	
              16

            
	
              17.

            	
              PRESERVATION,
      MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

            	 	
              17

            
	
              18.

            	
              ENVIRONMENTAL
      HAZARDS.

            	 	
              17

            
	
              19.

            	
              PROPERTY
      AND LIABILITY INSURANCE.

            	 	
              23

            
	
              20.

            	
              CONDEMNATION.

            	 	
              24

            
	
              21.

            	
              TRANSFERS
      OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.

            	 	
              25

            
	
              22.

            	
              EVENTS
      OF DEFAULT.

            	 	
              28

            
	
              23.

            	
              REMEDIES
      CUMULATIVE.

            	 	
              29

            

    

     

    
      
        
        

      

      
        Page
i

        
          

        

      

      
        
        

      

    

     

    
      	
              24.

            	
              FORBEARANCE.

            	 	
              29

            
	
              25.

            	
              LOAN
      CHARGES.

            	 	
              30

            
	
              26.

            	
              WAIVER
      OF STATUTE OF LIMITATIONS.

            	 	
              30

            
	
              27.

            	
              WAIVER
      OF MARSHALLING.

            	 	
              30

            
	
              28.

            	
              FURTHER
      ASSURANCES.

            	 	
              31

            
	
              29.

            	
              ESTOPPEL
      CERTIFICATE.

            	 	
              31

            
	
              30.

            	
              GOVERNING
      LAW; CONSENT TO JURISDICTION AND VENUE.

            	 	
              31

            
	
              31.

            	
              NOTICE.

            	 	
              32

            
	
              32.

            	
              SALE
      OF NOTE; CHANGE IN SERVICER.

            	 	
              32

            
	
              33.

            	
              SINGLE
      ASSET BORROWER.

            	 	
              32

            
	
              34.

            	
              SUCCESSORS
      AND ASSIGNS BOUND.

            	 	
              32

            
	
              35.

            	
              JOINT
      AND SEVERAL LIABILITY.

            	 	
              33

            
	
              36.

            	
              RELATIONSHIP
      OF PARTIES; NO THIRD PARTY BENEFICIARY.

            	 	
              33

            
	
              37.

            	
              SEVERABILITY;
      AMENDMENTS.

            	 	
              33

            
	
              38.

            	
              CONSTRUCTION.

            	 	
              33

            
	
              39.

            	
              LOAN
      SERVICING.

            	 	
              33

            
	
              40.

            	
              DISCLOSURE
      OF INFORMATION.

            	 	
              34

            
	
              41.

            	
              NO
      CHANGE IN FACTS OR CIRCUMSTANCES.

            	 	
              34

            
	
              42.

            	
              SUBROGATION.

            	 	
              34

            
	
              43.

            	
              ACCELERATION;
      REMEDIES; WAIVER OF PERMISSIVE COUNTERCLAIMS.

            	 	
              34

            
	
              44.

            	
              RELEASE.

            	 	
              34

            
	
              45.

            	
              FUTURE
      ADVANCES.

            	 	
              35

            
	
              46.

            	
              WAIVER
      OF TRIAL BY JURY.

            	 	
              35

            

    

    

    
      
        
        

      

      
        Page
ii

        
          

        

      

      
        
        

      

    

     

    THIS IS A BALLOON MORTGAGE AND THE
FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY IS
$26,204,468.90, TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ALL ADVANCEMENTS
MADE BY THE MORTGAGEE (LENDER) UNDER THE TERMS OF THIS
MORTGAGE

     

    MULTIFAMILY
MORTGAGE,

    ASSIGNMENT OF
RENTS

    AND SECURITY
AGREEMENT

     

    THIS
MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
“Instrument”) is dated as of the 16th day of
November, 2007, between LVP TAMPA ISLES
LLC, a
limited liability company organized and existing under the laws of Delaware,
whose address is c/o The Lightstone Group, 326 Third Street, Lakewood, New
Jersey 08701, as mortgagor (“Borrower”), and WACHOVIA MULTIFAMILY CAPITAL,
INC., a
corporation organized and existing under the laws of Delaware, whose address is
The Seagram Building, 375 Park Avenue - NY4060, New York, New York 10152, as
mortgagee (“Lender”).

     

    Borrower
is indebted to Lender in the principal amount of $27,712,300.00, as
evidenced by Borrower’s Multifamily Note payable to Lender dated as of the date
of this Instrument, and maturing on December 1, 2014.

     

    TO SECURE
TO LENDER the repayment of the Indebtedness, and all renewals, extensions and
modifications of the Indebtedness, and the performance of the covenants and
agreements of Borrower contained in the Loan Documents, Borrower mortgages,
warrants, grants, conveys and assigns to Lender the Mortgaged Property,
including the Land located in Hillsborough County, State of
Florida and
described in Exhibit
A attached
to this Instrument.

     

    Borrower
represents and warrants that Borrower is lawfully seized of the Mortgaged
Property and has the right, power and authority to mortgage, grant, convey,
bargain, sell, transfer and assign the Mortgaged Property, and that the
Mortgaged Property is unencumbered. Borrower covenants that Borrower will
warrant and defend generally the title to the Mortgaged Property against all
claims and demands, subject to any easements and restrictions listed in a
schedule of exceptions to coverage in any title insurance policy issued to
Lender contemporaneously with the execution and recordation of this Instrument
and insuring Lender’s interest in the Mortgaged Property.

     

    Covenants. Borrower
and Lender covenant and agree as follows:

     

    1. DEFINITIONS. 

     

    The
following terms, when used in this Instrument (including when used in the above
recitals), shall have the following meanings:

     

    (a) “Borrower”
means all persons or entities identified as “Borrower” in the first paragraph of
this Instrument, together with their successors and assigns.

     

    
      
        
        

      

      
        Page
1

        
          

        

      

      
        
        

      

    

     

    (b) “Collateral
Agreement” means any separate agreement between Borrower and Lender for the
purpose of establishing replacement reserves for the Mortgaged Property,
establishing a fund to assure completion of repairs or improvements specified in
that agreement, or assuring reduction of the outstanding principal balance of
the Indebtedness if the occupancy of or income from the Mortgaged Property does
not increase to a level specified in that agreement, or any other agreement or
agreements between Borrower and Lender which provide for the establishment of
any other fund, reserve or account.

     

    (c) “Environmental
Permit” means any permit, license, or other authorization issued under any
Hazardous Materials Law with respect to any activities or businesses conducted
on or in relation to the Mortgaged Property.

     

    (d) “Event of
Default” means the occurrence of any event listed in Section 22. 

     

    (e) “Fixtures”
means all property which is so attached to the Land or the Improvements as to
constitute a fixture under applicable law, including: machinery, equipment,
engines, boilers, incinerators, installed building materials; systems and
equipment for the purpose of supplying or distributing heating, cooling,
electricity, gas, water, air, or light; antennas, cable, wiring and conduits
used in connection with radio, television, security, fire prevention, or fire
detection or otherwise used to carry electronic signals; telephone systems and
equipment; elevators and related machinery and equipment; fire detection,
prevention and extinguishing systems and apparatus; security and access control
systems and apparatus; plumbing systems; water heaters, ranges, stoves,
microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers
and other appliances; light fixtures, awnings, storm windows and storm doors;
pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets,
paneling, rugs and floor and wall coverings; fences, trees and plants; swimming
pools; and exercise equipment.

     

    (f) “Governmental
Authority” means any board, commission, department or body of any municipal,
county, state or federal governmental unit, or any subdivision of any of them,
that has or acquires jurisdiction over the Mortgaged Property or the use,
operation or improvement of the Mortgaged Property.

     

    (g) “Hazardous
Materials” means petroleum and petroleum products and compounds containing them,
including gasoline, diesel fuel and oil; explosives; flammable materials;
radioactive materials; polychlorinated biphenyls (“PCBs”) and compounds
containing them; lead and lead-based paint; asbestos or asbestos containing
materials in any form that is or could become friable; underground or
above-ground storage tanks, whether empty or containing any substance; any
substance the presence of which on the Mortgaged Property is prohibited by any
federal, state or local authority; any substance that requires special handling;
and any other material or substance now or in the future defined as a “hazardous
substance,” “hazardous material,” “hazardous waste,” “toxic substance,” “toxic
pollutant,” “contaminant,” or “pollutant” within the meaning of any Hazardous
Materials Law.

     

    (h) “Hazardous
Materials Laws” means all federal, state, and local laws, ordinances and
regulations and standards, rules, policies and other governmental requirements,
administrative rulings and court judgments and decrees in effect now or in the
future and including all amendments, that relate to Hazardous Materials and
apply to Borrower or to the Mortgaged Property. Hazardous Materials Laws
include, but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the Toxic
Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act, 33
U.S.C. Section 1251, et seq., and the Hazardous Materials Transportation Act, 49
U.S.C. Section 5101, et seq., and their state analogs.

     

    
      
        
        

      

      
        Page
2

        
          

        

      

      
        
        

      

    

     

    (i) “Impositions”
and “Imposition Deposits” are defined in Section 7(a).

     

    (j) “Improvements”
means the buildings, structures, improvements, and alterations now constructed
or at any time in the future constructed or placed upon the Land, including any
future replacements and additions.

     

    (k) “Indebtedness”
means the principal of, interest on, and all other amounts due at any time
under, the Note, this Instrument or any other Loan Document, including
prepayment premiums, late charges, default interest, and advances as provided in
Section 12 to protect the security of this Instrument.

     

    (l) [Intentionally
omitted]

     

    (m) “Key
Principal” means the natural person(s) or entity identified as such at the foot
of this Instrument, and any person or entity who becomes a Key Principal after
the date of this Instrument and is identified as such in an amendment or
supplement to this Instrument.

     

    (n) “Land”
means the land described in Exhibit A.

     

    (o) “Leases”
means all present and future leases, subleases, licenses, concessions or grants
or other possessory interests now or hereafter in force, whether oral or
written, covering or affecting the Mortgaged Property, or any portion of the
Mortgaged Property (including proprietary leases or occupancy agreements if
Borrower is a cooperative housing corporation), and all modifications,
extensions or renewals.

     

    (p) “Lender”
means the entity identified as “Lender” in the first paragraph of this
Instrument and its successors and assigns, or any subsequent holder of the
Note.

     

    (q) “Loan
Documents” means the Note, this Instrument, all guaranties, all indemnity
agreements, all Collateral Agreements, O&M Programs, and any other documents
now or in the future executed by Borrower, Key Principal, any guarantor or any
other person in connection with the loan evidenced by the Note, as such
documents may be amended from time to time.

     

    (r) “Loan
Servicer” means the entity that from time to time is designated by Lender to
collect payments and deposits and receive notices under the Note, this
Instrument and any other Loan Document, and otherwise to service the loan
evidenced by the Note for the benefit of Lender. Unless Borrower receives notice
to the contrary, the Loan Servicer is the entity identified as “Lender” in the
first paragraph of this Instrument. 

     

    
      
        
        

      

      
        Page
3

        
          

        

      

      
        
        

      

    

     

    (s) “Mortgaged
Property” means all of Borrower’s present and future right, title and interest
in and to all of the following:

     

    
      	 	
              (1)

            	
              the
      Land;

            

    

     

    
      	 	
              (2)

            	
              the
      Improvements;

            

    

     

    
      	 	
              (3)

            	
              the
      Fixtures;

            

    

     

    
      	 	
              (4)

            	
              the
      Personalty;

            

    

     

    
      	 	
              (5)

            	
              all
      current and future rights, including air rights, development rights,
      zoning rights and other similar rights or interests, easements, tenements,
      rights of way, strips and gores of land, streets, alleys, roads, sewer
      rights, waters, watercourses, and appurtenances related to or benefitting
      the Land or the Improvements, or both, and all rights-of-way, streets,
      alleys and roads which may have been or may in the future be
      vacated;

            

    

     

    
      	 	
              (6)

            	
              all
      proceeds paid or to be paid by any insurer of the Land, the Improvements,
      the Fixtures, the Personalty or any other part of the Mortgaged Property,
      whether or not Borrower obtained the insurance pursuant to Lender’s
      requirement;

            

    

     

    
      	 	
              (7)

            	
              all
      awards, payments and other compensation made or to be made by any
      municipal, state or federal authority with respect to the Land, the
      Improvements, the Fixtures, the Personalty or any other part of the
      Mortgaged Property, including any awards or settlements resulting from
      condemnation proceedings or the total or partial taking of the Land, the
      Improvements, the Fixtures, the Personalty or any other part of the
      Mortgaged Property under the power of eminent domain or otherwise and
      including any conveyance in lieu
thereof;

            

    

     

    
      	 	
              (8)

            	
              all
      contracts, options and other agreements for the sale of the Land, the
      Improvements, the Fixtures, the Personalty or any other part of the
      Mortgaged Property entered into by Borrower now or in the future,
      including cash or securities deposited to secure performance by parties of
      their obligations;

            

    

     

    
      	 	
              (9)

            	
              all
      proceeds from the conversion, voluntary or involuntary, of any of the
      above into cash or liquidated claims, and the right to collect such
      proceeds;

            

    

     

    
      	 	
              (10)

            	
              all
      Rents and Leases;

            

    

     

    
      
        
        

      

      
        Page
4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (11)

            	
              all
      earnings, royalties, accounts receivable, issues and profits from the
      Land, the Improvements or any other part of the Mortgaged Property, and
      all undisbursed proceeds of the loan secured by this Instrument and, if
      Borrower is a cooperative housing corporation, maintenance charges or
      assessments payable by shareholders or residents;
  

            

    

     

    
      	 	
              (12)

            	
              all
      Imposition Deposits; 

            

    

     

    
      	 	
              (13)

            	
              all
      refunds or rebates of Impositions by any municipal, state or federal
      authority or insurance company (other than refunds applicable to periods
      before the real property tax year in which this Instrument is
      dated);

            

    

     

    
      	 	
              (14)

            	
              all
      tenant security deposits which have not been forfeited by any tenant under
      any Lease; and

            

    

     

    
      	 	
              (15)

            	
              all
      names under or by which any of the above Mortgaged Property may be
      operated or known, and all trademarks, trade names, and goodwill relating
      to any of the Mortgaged Property.

            

    

     

    (t) “Note”
means the Multifamily Note described on page 1 of this Instrument, including the
Acknowledgment and Agreement of Key Principal to Personal Liability for
Exceptions to Non-Recourse Liability (if any), and all schedules, riders,
allonges and addenda, as such Multifamily Note may be amended from time to time.

     

    (u) “O&M
Program” is defined in Section 18(a).

     

    (v) “Personalty”
means all equipment, inventory, general intangibles which are used now or in the
future in connection with the ownership, management or operation of the Land or
the Improvements or are located on the Land or in the Improvements, including
furniture, furnishings, machinery, building materials, appliances, goods,
supplies, tools, books, records (whether in written or electronic form),
computer equipment (hardware and software) and other tangible personal property
(other than Fixtures) which are used now or in the future in connection with the
ownership, management or operation of the Land or the Improvements or are
located on the Land or in the Improvements, and any operating agreements
relating to the Land or the Improvements, and any surveys, plans and
specifications and contracts for architectural, engineering and construction
services relating to the Land or the Improvements and all other intangible
property and rights relating to the operation of, or used in connection with,
the Land or the Improvements, including all governmental permits relating to any
activities on the Land.

     

    (w) “Property
Jurisdiction” is defined in Section 30(a). 

     

    (x) “Rents”
means all rents (whether from residential or non-residential space), revenues
and other income of the Land or the Improvements, including subsidy payments
received from any sources (including, but not limited to payments under any
Housing Assistance Payments Contract), parking fees, laundry and vending machine
income and fees and charges for food, health care and other services provided at
the Mortgaged Property, whether now due, past due, or to become due, and
deposits forfeited by tenants. 

     

    
      
        
        

      

      
        Page
5

        
          

        

      

      
        
        

      

    

     

    (y) “Taxes”
means all taxes, assessments, vault rentals and other charges, if any, general,
special or otherwise, including all assessments for schools, public betterments
and general or local improvements, which are levied, assessed or imposed by any
public authority or quasi-public authority, and which, if not paid, will become
a lien, on the Land or the Improvements.

     

    (z) “Transfer”
means (A) a sale, assignment, transfer or other disposition (whether voluntary,
involuntary or by operation of law); (B) the granting, creating or attachment of
a lien, encumbrance or security interest (whether voluntary, involuntary or by
operation of law); (C) the issuance or other creation of an ownership interest
in a legal entity, including a partnership interest, interest in a limited
liability company or corporate stock; (D) the withdrawal, retirement, removal or
involuntary resignation of a partner in a partnership or a member or manager in
a limited liability company; or (E) the merger, dissolution, liquidation, or
consolidation of a legal entity. “Transfer” does not include (i) a conveyance of
the Mortgaged Property at a judicial or non-judicial foreclosure sale under this
Instrument or (ii) the Mortgaged Property becoming part of a bankruptcy estate
by operation of law under the United States Bankruptcy Code. For purposes of
defining the term “Transfer,” the term “partnership” shall mean a general
partnership, a limited partnership, a joint venture and a limited liability
partnership, and the term “partner” shall mean a general partner, a limited
partner and a joint venturer.

     

    2. UNIFORM COMMERCIAL CODE SECURITY
AGREEMENT. 

     

    This
Instrument is also a security agreement under the Uniform Commercial Code for
any of the Mortgaged Property which, under applicable law, may be subject to a
security interest under the Uniform Commercial Code, whether acquired now or in
the future, and all products and cash and non-cash proceeds thereof
(collectively, “UCC Collateral”), and Borrower hereby grants to Lender a
security interest in the UCC Collateral. Borrower hereby authorizes Lender to
file financing statements, continuation statements and financing statement
amendments in such form as Lender may require to perfect or continue the
perfection of this security interest and Borrower agrees, if Lender so requests,
to execute and deliver to Lender such financing statements, continuation
statements and amendments. Borrower shall pay all filing costs and all costs and
expenses of any record searches for financing statements that Lender may
require. Without the prior written consent of Lender, Borrower shall not create
or permit to exist any other lien or security interest in any of the UCC
Collateral. If an Event of Default has occurred and is continuing, Lender shall
have the remedies of a secured party under the Uniform Commercial Code, in
addition to all remedies provided by this Instrument or existing under
applicable law. In exercising any remedies, Lender may exercise its remedies
against the UCC Collateral separately or together, and in any order, without in
any way affecting the availability of Lender’s other remedies. This Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture. 

     

    
      
        
        

      

      
        Page
6

        
          

        

      

      
        
        

      

    

     

    3. ASSIGNMENT OF RENTS; APPOINTMENT OF
RECEIVER; LENDER IN POSSESSION. 

     

    (a) As part
of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all Rents. It is the intention
of Borrower to establish a present, absolute and irrevocable transfer and
assignment to Lender of all Rents and to authorize and empower Lender to collect
and receive all Rents without the necessity of further action on the part of
Borrower. Promptly upon request by Lender, Borrower agrees to execute and
deliver such further assignments as Lender may from time to time require.
Borrower and Lender intend this assignment of Rents to be immediately effective
and to constitute an absolute present assignment and not an assignment for
additional security only. For purposes of giving effect to this absolute
assignment of Rents, and for no other purpose, Rents shall not be deemed to be a
part of the “Mortgaged Property,” as that term is defined in Section 1(s).
However, if this present, absolute and unconditional assignment of Rents is not
enforceable by its terms under the laws of the Property Jurisdiction, then the
Rents shall be included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this Instrument create and
perfect a lien on Rents in favor of Lender, which lien shall be effective as of
the date of this Instrument.

     

    (b) After the
occurrence of an Event of Default, Borrower authorizes Lender to collect, sue
for and compromise Rents and directs each tenant of the Mortgaged Property to
pay all Rents to, or as directed by, Lender, and Borrower shall, upon Borrower’s
receipt of any Rents from any sources (including, but not limited to subsidy
payments under any Housing Assistance Payments Contract), pay the total amount
of such receipts to the Lender. However, until the occurrence of an Event of
Default, Lender hereby grants to Borrower a revocable license to collect and
receive all Rents, to hold all Rents in trust for the benefit of Lender and to
apply all Rents to pay the installments of interest and principal then due and
payable under the Note and the other amounts then due and payable under the
other Loan Documents, including Imposition Deposits, and to pay the current
costs and expenses of managing, operating and maintaining the Mortgaged
Property, including utilities, Taxes and insurance premiums (to the extent not
included in Imposition Deposits), tenant improvements and other capital
expenditures. So long as no Event of Default has occurred and is continuing, the
Rents remaining after application pursuant to the preceding sentence may be
retained by Borrower free and clear of, and released from, Lender’s rights with
respect to Rents under this Instrument. From and after the occurrence of an
Event of Default, and without the necessity of Lender entering upon and taking
and maintaining control of the Mortgaged Property directly, or by a receiver,
Borrower’s license to collect Rents shall automatically terminate and Lender
shall without notice be entitled to all Rents as they become due and payable,
including Rents then due and unpaid. Borrower shall pay to Lender upon demand
all Rents to which Lender is entitled. At any time on or after the date of
Lender’s demand for Rents, Lender may give, and Borrower hereby irrevocably
authorizes Lender to give, notice to all tenants of the Mortgaged Property
instructing them to pay all Rents to Lender, no tenant shall be obligated to
inquire further as to the occurrence or continuance of an Event of Default, and
no tenant shall be obligated to pay to Borrower any amounts which are actually
paid to Lender in response to such a notice. Any such notice by Lender shall be
delivered to each tenant personally, by mail or by delivering such demand to
each rental unit. Borrower shall not interfere with and shall cooperate with
Lender’s collection of such Rents.

     

    
      
        
        

      

      
        Page
7

        
          

        

      

      
        
        

      

    

     

    (c) Borrower
represents and warrants to Lender that Borrower has not executed any prior
assignment of Rents (other than an assignment of Rents securing indebtedness
that will be paid off and discharged with the proceeds of the loan evidenced by
the Note), that Borrower has not performed, and Borrower covenants and agrees
that it will not perform, any acts and has not executed, and shall not execute,
any instrument which would prevent Lender from exercising its rights under this
Section 3, and that at the time of execution of this Instrument there has been
no anticipation or prepayment of any Rents for more than two months prior to the
due dates of such Rents. Borrower shall not collect or accept payment of any
Rents more than two months prior to the due dates of such Rents.

     

    (d) If an
Event of Default has occurred and is continuing, Lender may, regardless of the
adequacy of Lender’s security or the solvency of Borrower and even in the
absence of waste, enter upon and take and maintain full control of the Mortgaged
Property in order to perform all acts that Lender in its discretion determines
to be necessary or desirable for the operation and maintenance of the Mortgaged
Property, including the execution, cancellation or modification of Leases, the
collection of all Rents, the making of repairs to the Mortgaged Property and the
execution or termination of contracts providing for the management, operation or
maintenance of the Mortgaged Property, for the purposes of enforcing the
assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property
or the security of this Instrument, or for such other purposes as Lender in its
discretion may deem necessary or desirable. Alternatively, if an Event of
Default has occurred and is continuing, regardless of the adequacy of Lender’s
security, without regard to Borrower’s solvency and without the necessity of
giving prior notice (oral or written) to Borrower, Lender may apply to any court
having jurisdiction for the appointment of a receiver for the Mortgaged Property
to take any or all of the actions set forth in the preceding sentence. If Lender
elects to seek the appointment of a receiver for the Mortgaged Property at any
time after an Event of Default has occurred and is continuing, Borrower, by its
execution of this Instrument, expressly consents to the appointment of such
receiver, including the appointment of a receiver ex parte if permitted by
applicable law. Lender or the receiver, as the case may be, shall be entitled to
receive a reasonable fee for managing the Mortgaged Property. Immediately upon
appointment of a receiver or immediately upon the Lender’s entering upon and
taking possession and control of the Mortgaged Property, Borrower shall
surrender possession of the Mortgaged Property to Lender or the receiver, as the
case may be, and shall deliver to Lender or the receiver, as the case may be,
all documents, records (including records on electronic or magnetic media),
accounts, surveys, plans, and specifications relating to the Mortgaged Property
and all security deposits and prepaid Rents. In the event Lender takes
possession and control of the Mortgaged Property, Lender may exclude Borrower
and its representatives from the Mortgaged Property. Borrower acknowledges and
agrees that the exercise by Lender of any of the rights conferred under this
Section 3 shall not be construed to make Lender a mortgagee-in-possession of the
Mortgaged Property so long as Lender has not itself entered into actual
possession of the Land and Improvements.

     

    
      
        
        

      

      
        Page
8

        
          

        

      

      
        
        

      

    

     

    (e) If Lender
enters the Mortgaged Property, Lender shall be liable to account only to
Borrower and only for those Rents actually received. Lender shall not be liable
to Borrower, anyone claiming under or through Borrower or anyone having an
interest in the Mortgaged Property, by reason of any act or omission of Lender
under this Section 3, and Borrower hereby releases and discharges Lender from
any such liability to the fullest extent permitted by law.

     

    (f) If the
Rents are not sufficient to meet the costs of taking control of and managing the
Mortgaged Property and collecting the Rents, any funds expended by Lender for
such purposes shall become an additional part of the Indebtedness as provided in
Section 12. 

     

    (g) Any
entering upon and taking of control of the Mortgaged Property by Lender or the
receiver, as the case may be, and any application of Rents as provided in this
Instrument shall not cure or waive any Event of Default or invalidate any other
right or remedy of Lender under applicable law or provided for in this
Instrument.

     

    4. ASSIGNMENT OF LEASES; LEASES
AFFECTING THE MORTGAGED PROPERTY. 

     

    (a) As part
of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all of Borrower’s right, title
and interest in, to and under the Leases, including Borrower’s right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease. It is the intention of Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender of all of Borrower’s right, title
and interest in, to and under the Leases. Borrower and Lender intend this
assignment of the Leases to be immediately effective and to constitute an
absolute present assignment and not an assignment for additional security only.
For purposes of giving effect to this absolute assignment of the Leases, and for
no other purpose, the Leases shall not be deemed to be a part of the “Mortgaged
Property,” as that term is defined in Section 1(s). However, if this present,
absolute and unconditional assignment of the Leases is not enforceable by its
terms under the laws of the Property Jurisdiction, then the Leases shall be
included as a part of the Mortgaged Property and it is the intention of the
Borrower that in this circumstance this Instrument create and perfect a lien on
the Leases in favor of Lender, which lien shall be effective as of the date of
this Instrument.

     

    (b) Until
Lender gives notice to Borrower of Lender’s exercise of its rights under this
Section 4, Borrower shall have all rights, power and authority granted to
Borrower under any Lease (except as otherwise limited by this Section or any
other provision of this Instrument), including the right, power and authority to
modify the terms of any Lease or extend or terminate any Lease. Upon the
occurrence of an Event of Default, the permission given to Borrower pursuant to
the preceding sentence to exercise all rights, power and authority under Leases
shall automatically terminate. Borrower shall comply with and observe Borrower’s
obligations under all Leases, including Borrower’s obligations pertaining to the
maintenance and disposition of tenant security deposits.

     

    (c) Borrower
acknowledges and agrees that the exercise by Lender, either directly or by a
receiver, of any of the rights conferred under this Section 4 shall not be
construed to make Lender a mortgagee-in-possession of the Mortgaged Property so
long as Lender has not itself entered into actual possession of the Land and the
Improvements. The acceptance by Lender of the assignment of the Leases pursuant
to Section 4(a) shall not at any time or in any event obligate Lender to take
any action under this Instrument or to expend any money or to incur any
expenses. Lender shall not be liable in any way for any injury or damage to
person or property sustained by any person or persons, firm or corporation in or
about the Mortgaged Property. Prior to Lender’s actual entry into and taking
possession of the Mortgaged Property, Lender shall not (i) be obligated to
perform any of the terms, covenants and conditions contained in any Lease (or
otherwise have any obligation with respect to any Lease); (ii) be obligated to
appear in or defend any action or proceeding relating to the Lease or the
Mortgaged Property; or (iii) be responsible for the operation, control, care,
management or repair of the Mortgaged Property or any portion of the Mortgaged
Property. The execution of this Instrument by Borrower shall constitute
conclusive evidence that all responsibility for the operation, control, care,
management and repair of the Mortgaged Property is and shall be that of
Borrower, prior to such actual entry and taking of possession.

     

    
      
        
        

      

      
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    (d) Upon
delivery of notice by Lender to Borrower of Lender’s exercise of Lender’s rights
under this Section 4 at any time after the occurrence of an Event of Default,
and without the necessity of Lender entering upon and taking and maintaining
control of the Mortgaged Property directly, by a receiver, or by any other
manner or proceeding permitted by the laws of the Property Jurisdiction, Lender
immediately shall have all rights, powers and authority granted to Borrower
under any Lease, including the right, power and authority to modify the terms of
any such Lease, or extend or terminate any such Lease.

     

    (e) Borrower
shall, promptly upon Lender’s request, deliver to Lender an executed copy of
each residential Lease then in effect. All Leases for residential dwelling units
shall be on forms approved by Lender, shall be for initial terms of at least six
months and not more than two years, and shall not include options to purchase.
If customary in the applicable market, residential Leases with terms of less
than six months may be permitted with Lender’s prior written
consent.

     

    (f) Borrower
shall not lease any portion of the Mortgaged Property for non-residential use
except with the prior written consent of Lender and Lender’s prior written
approval of the Lease agreement. Borrower shall not modify the terms of, or
extend or terminate, any Lease for non-residential use (including any Lease in
existence on the date of this Instrument) without the prior written consent of
Lender. Borrower shall, without request by Lender, deliver an executed copy of
each non-residential Lease to Lender promptly after such Lease is signed. All
non-residential Leases, including renewals or extensions of existing Leases,
shall specifically provide that (1) such Leases are subordinate to the lien of
this Instrument (unless waived in writing by Lender); (2) the tenant shall
attorn to Lender and any purchaser at a foreclosure sale, such attornment to be
self-executing and effective upon acquisition of title to the Mortgaged Property
by any purchaser at a foreclosure sale or by Lender in any manner; (3) the
tenant agrees to execute such further evidences of attornment as Lender or any
purchaser at a foreclosure sale may from time to time request; (4) the Lease
shall not be terminated by foreclosure or any other transfer of the Mortgaged
Property; (5) after a foreclosure sale of the Mortgaged Property, Lender or any
other purchaser at such foreclosure sale may, at Lender’s or such purchaser’s
option, accept or terminate such Lease; and (6) the tenant shall, upon receipt
after the occurrence of an Event of Default of a written request from Lender,
pay all Rents payable under the Lease to Lender.

     

    
      
        
        

      

      
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    (g) Borrower
shall not receive or accept Rent under any Lease (whether residential or
non-residential) for more than two months in advance. 

     

    5. PAYMENT OF INDEBTEDNESS; PERFORMANCE
UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM. 

     

    Borrower
shall pay the Indebtedness when due in accordance with the terms of the Note and
the other Loan Documents and shall perform, observe and comply with all other
provisions of the Note and the other Loan Documents. Borrower shall pay a
prepayment premium in connection with certain prepayments of the Indebtedness,
including a payment made after Lender’s exercise of any right of acceleration of
the Indebtedness, as provided in the Note.

     

    6. EXCULPATION. 

     

    Borrower’s
personal liability for payment of the Indebtedness and for performance of the
other obligations to be performed by it under this Instrument is limited in the
manner, and to the extent, provided in the Note. 

     

    7. DEPOSITS FOR TAXES, INSURANCE AND
OTHER CHARGES. 

     

    (a) Borrower
shall deposit with Lender on the day monthly installments of principal or
interest, or both, are due under the Note (or on another day designated in
writing by Lender), until the Indebtedness is paid in full, an additional amount
sufficient to accumulate with Lender the entire sum required to pay, when due
(1) any water and sewer charges which, if not paid, may result in a lien on all
or any part of the Mortgaged Property, (2) the premiums for fire and other
hazard insurance, rent loss insurance and such other insurance as Lender may
require under Section 19, (3) Taxes, and (4) amounts for other charges and
expenses which Lender at any time reasonably deems necessary to protect the
Mortgaged Property, to prevent the imposition of liens on the Mortgaged
Property, or otherwise to protect Lender’s interests, all as reasonably
estimated from time to time by Lender. The amounts deposited under the preceding
sentence are collectively referred to in this Instrument as the “Imposition
Deposits”. The obligations of Borrower for which the Imposition Deposits are
required are collectively referred to in this Instrument as “Impositions”. The
amount of the Imposition Deposits shall be sufficient to enable Lender to pay
each Imposition before the last date upon which such payment may be made without
any penalty or interest charge being added. Lender shall maintain records
indicating how much of the monthly Imposition Deposits and how much of the
aggregate Imposition Deposits held by Lender are held for the purpose of paying
Taxes, insurance premiums and each other obligation of Borrower for which
Imposition Deposits are required. Any waiver by Lender of the requirement that
Borrower remit Imposition Deposits to Lender may be revoked by Lender, in
Lender’s discretion, at any time upon notice to Borrower. 

     

    
      
        
        

      

      
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11

        
          

        

      

      
        
        

      

    

     

    (b) Imposition
Deposits shall be held in an institution (which may be Lender, if Lender is such
an institution) whose deposits or accounts are insured or guaranteed by a
federal agency. Lender shall not be obligated to open additional accounts or
deposit Imposition Deposits in additional institutions when the amount of the
Imposition Deposits exceeds the maximum amount of the federal deposit insurance
or guaranty. Lender shall apply the Imposition Deposits to pay Impositions so
long as no Event of Default has occurred and is continuing. Unless applicable
law requires, Lender shall not be required to pay Borrower any interest,
earnings or profits on the Imposition Deposits. Borrower hereby pledges and
grants to Lender a security interest in the Imposition Deposits as additional
security for all of Borrower’s obligations under this Instrument and the other
Loan Documents. Any amounts deposited with Lender under this Section 7 shall not
be trust funds, nor shall they operate to reduce the Indebtedness, unless
applied by Lender for that purpose under Section 7(e).

     

    (c) If Lender
receives a bill or invoice for an Imposition, Lender shall pay the Imposition
from the Imposition Deposits held by Lender. Lender shall have no obligation to
pay any Imposition to the extent it exceeds Imposition Deposits then held by
Lender. Lender may pay an Imposition according to any bill, statement or
estimate from the appropriate public office or insurance company without
inquiring into the accuracy of the bill, statement or estimate or into the
validity of the Imposition.

     

    (d) If at any
time the amount of the Imposition Deposits held by Lender for payment of a
specific Imposition exceeds the amount reasonably deemed necessary by Lender,
the excess shall be credited against future installments of Imposition Deposits.
If at any time the amount of the Imposition Deposits held by Lender for payment
of a specific Imposition is less than the amount reasonably estimated by Lender
to be necessary, Borrower shall pay to Lender the amount of the deficiency
within 15 days after notice from Lender. 

     

    (e) If an
Event of Default has occurred and is continuing, Lender may apply any Imposition
Deposits, in any amounts and in any order as Lender determines, in Lender’s
discretion, to pay any Impositions or as a credit against the Indebtedness. Upon
payment in full of the Indebtedness, Lender shall refund to Borrower any
Imposition Deposits held by Lender.

     

    8. COLLATERAL
AGREEMENTS. 

     

    Borrower
shall deposit with Lender such amounts as may be required by any Collateral
Agreement and shall perform all other obligations of Borrower under each
Collateral Agreement. 

     

    9. APPLICATION OF
PAYMENTS. 

     

    If at any
time Lender receives, from Borrower or otherwise, any amount applicable to the
Indebtedness which is less than all amounts due and payable at such time, then
Lender may apply that payment to amounts then due and payable in any manner and
in any order determined by Lender, in Lender’s discretion. Neither Lender’s
acceptance of an amount which is less than all amounts then due and payable nor
Lender’s application of such payment in the manner authorized shall constitute
or be deemed to constitute either a waiver of the unpaid amounts or an accord
and satisfaction. Notwithstanding the application of any such amount to the
Indebtedness, Borrower’s obligations under this Instrument and the Note shall
remain unchanged.

     

    
      
        
        

      

      
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12

        
          

        

      

      
        
        

      

    

     

    10. COMPLIANCE WITH
LAWS. 

     

    Borrower
shall comply with all laws, ordinances, regulations and requirements of any
Governmental Authority and all recorded lawful covenants and agreements relating
to or affecting the Mortgaged Property, including all laws, ordinances,
regulations, requirements and covenants pertaining to health and safety,
construction of improvements on the Mortgaged Property, fair housing, zoning and
land use, and Leases. Borrower also shall comply with all applicable laws that
pertain to the maintenance and disposition of tenant security deposits. Borrower
shall at all times maintain records sufficient to demonstrate compliance with
the provisions of this Section 10. Borrower shall take appropriate measures to
prevent, and shall not engage in or knowingly permit, any illegal activities at
the Mortgaged Property that could endanger tenants or visitors, result in damage
to the Mortgaged Property, result in forfeiture of the Mortgaged Property, or
otherwise materially impair the lien created by this Instrument or Lender’s
interest in the Mortgaged Property. Borrower represents and warrants to Lender
that no portion of the Mortgaged Property has been or will be purchased with the
proceeds of any illegal activity. 

     

    11. USE OF PROPERTY. 

     

    Unless
required by applicable law, Borrower shall not (a) except for any change in use
approved by Lender, allow changes in the use for which all or any part of the
Mortgaged Property is being used at the time this Instrument was executed, (b)
convert any individual dwelling units or common areas to commercial use, (c)
initiate or acquiesce in a change in the zoning classification of the Mortgaged
Property, or (d) establish any condominium or cooperative regime with respect to
the Mortgaged Property. 

     

    12. PROTECTION OF LENDER’S
SECURITY. 

     

    (a) If
Borrower fails to perform any of its obligations under this Instrument or any
other Loan Document, or if any action or proceeding is commenced which purports
to affect the Mortgaged Property, Lender’s security or Lender’s rights under
this Instrument, including eminent domain, insolvency, code enforcement, civil
or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent
conveyance or reorganizations or proceedings involving a bankrupt or decedent,
then Lender at Lender’s option may make such appearances, disburse such sums and
take such actions as Lender reasonably deems necessary to perform such
obligations of Borrower and to protect Lender’s interest, including (1) payment
of fees and out-of-pocket expenses of attorneys, accountants, inspectors and
consultants, (2) entry upon the Mortgaged Property to make repairs or secure the
Mortgaged Property, (3) procurement of the insurance required by Section 19, and
(4) payment of amounts which Borrower has failed to pay under Sections 15 and
17.

     

    (b) Any
amounts disbursed by Lender under this Section 12, or under any other provision
of this Instrument that treats such disbursement as being made under this
Section 12, shall be added to, and become part of, the principal component of
the Indebtedness, shall be immediately due and payable and shall bear interest
from the date of disbursement until paid at the “Default Rate”, as defined in
the Note.

     

    
      
        
        

      

      
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13

        
          

        

      

      
        
        

      

    

     

    (c) Nothing
in this Section 12 shall require Lender to incur any expense or take any
action.

     

    13. INSPECTION. 

     

    Lender,
its agents, representatives, and designees may make or cause to be made entries
upon and inspections of the Mortgaged Property (including environmental
inspections and tests) during normal business hours, or at any other reasonable
time.

     

    14. BOOKS AND RECORDS; FINANCIAL
REPORTING. 

     

    (a) Borrower
shall keep and maintain at all times at the Mortgaged Property or the management
agent’s offices, and upon Lender’s request shall make available at the Mortgaged
Property, complete and accurate books of account and records (including copies
of supporting bills and invoices) adequate to reflect correctly the operation of
the Mortgaged Property, and copies of all written contracts, Leases, and other
instruments which affect the Mortgaged Property. The books, records, contracts,
Leases and other instruments shall be subject to examination and inspection at
any reasonable time by Lender.

     

    (b) Borrower
shall furnish to Lender all of the following:

     

    
      	 	
              (1)

            	
              within
      120 days after the end of each fiscal year of Borrower, a statement of
      income and expenses for Borrower’s operation of the Mortgaged Property for
      that fiscal year, a statement of changes in financial position of Borrower
      relating to the Mortgaged Property for that fiscal year and, when
      requested by Lender, a balance sheet showing all assets and liabilities of
      Borrower relating to the Mortgaged Property as of the end of that fiscal
      year;

            

    

     

    
      	 	
              (2)

            	
              within
      120 days after the end of each fiscal year of Borrower, and at any other
      time upon Lender’s request, a rent schedule for the Mortgaged Property
      showing the name of each tenant, and for each tenant, the space occupied,
      the lease expiration date, the rent payable for the current month, the
      date through which rent has been paid, and any related information
      requested by Lender;

            

    

     

    
      	 	
              (3)

            	
              within
      120 days after the end of each fiscal year of Borrower, and at any other
      time upon Lender’s request, an accounting of all security deposits held
      pursuant to all Leases, including the name of the institution (if any) and
      the names and identification numbers of the accounts (if any) in which
      such security deposits are held and the name of the person to contact at
      such financial institution, along with any authority or release necessary
      for Lender to access information regarding such
  accounts;

            

    

     

    
      
        
        

      

      
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              (4)

            	
              within
      120 days after the end of each fiscal year of Borrower, and at any other
      time upon Lender’s request, a statement that identifies all owners of any
      interest in Borrower and the interest held by each, if Borrower is a
      corporation, all officers and directors of Borrower, and if Borrower is a
      limited liability company, all managers who are not
    members;

            

    

     

    
      	 	
              (5)

            	
              upon
      Lender’s request, a monthly property management report for the Mortgaged
      Property, showing the number of inquiries made and rental applications
      received from tenants or prospective tenants and deposits received from
      tenants and any other information requested by Lender;
  

            

    

     

    
      	 	
              (6)

            	
              upon
      Lender’s request, a balance sheet, a statement of income and expenses for
      Borrower and a statement of changes in financial position of Borrower for
      Borrower’s most recent fiscal year;
and

            

    

     

    
      	 	
              (7)

            	
              if
      required by Lender, a statement of income and expense for the Mortgaged
      Property for the prior month or
quarter.

            

    

     

    (c) Each of
the statements, schedules and reports required by Section 14(b) shall be
certified to be complete and accurate by an individual having authority to bind
Borrower, and shall be in such form and contain such detail as Lender may
reasonably require. Lender also may require that any statements, schedules or
reports be audited at Borrower’s expense by independent certified public
accountants acceptable to Lender.

     

    (d) If
Borrower fails to provide in a timely manner the statements, schedules and
reports required by Section 14(b), Lender shall have the right to have
Borrower’s books and records audited, at Borrower’s expense, by independent
certified public accountants selected by Lender in order to obtain such
statements, schedules and reports, and all related costs and expenses of Lender
shall become immediately due and payable and shall become an additional part of
the Indebtedness as provided in Section 12.

     

    (e) If an
Event of Default has occurred and is continuing, Borrower shall deliver to
Lender upon written demand all books and records relating to the Mortgaged
Property or its operation.

     

    (f) Borrower
authorizes Lender to obtain a credit report on Borrower at any
time.

     

    (g) If an
Event of Default has occurred and Lender has not previously required Borrower to
furnish a quarterly statement of income and expense for the Mortgaged Property,
Lender may require Borrower to furnish such a statement within 45 days after the
end of each fiscal quarter of Borrower following such Event of
Default.

     

    
      
        
        

      

      
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    15. TAXES; OPERATING
EXPENSES. 

     

    (a) Subject
to the provisions of Section 15(c) and Section 15(d), Borrower shall pay, or
cause to be paid, all Taxes when due and before the addition of any interest,
fine, penalty or cost for nonpayment. 

     

    (b) Subject
to the provisions of Section 15(c), Borrower shall pay the expenses of
operating, managing, maintaining and repairing the Mortgaged Property (including
insurance premiums, utilities, repairs and replacements) before the last date
upon which each such payment may be made without any penalty or interest charge
being added. 

     

    (c) As long
as no Event of Default exists and Borrower has timely delivered to Lender any
bills or premium notices that it has received, Borrower shall not be obligated
to pay Taxes, insurance premiums or any other individual Imposition to the
extent that sufficient Imposition Deposits are held by Lender for the purpose of
paying that specific Imposition. If an Event of Default exists, Lender may
exercise any rights Lender may have with respect to Imposition Deposits without
regard to whether Impositions are then due and payable. Lender shall have no
liability to Borrower for failing to pay any Impositions to the extent that any
Event of Default has occurred and is continuing, insufficient Imposition
Deposits are held by Lender at the time an Imposition becomes due and payable or
Borrower has failed to provide Lender with bills and premium notices as provided
above.

     

    (d) Borrower,
at its own expense, may contest by appropriate legal proceedings, conducted
diligently and in good faith, the amount or validity of any Imposition other
than insurance premiums, if (1) Borrower notifies Lender of the commencement or
expected commencement of such proceedings, (2) the Mortgaged Property is not in
danger of being sold or forfeited, (3) Borrower deposits with Lender reserves
sufficient to pay the contested Imposition, if requested by Lender, and (4)
Borrower furnishes whatever additional security is required in the proceedings
or is reasonably requested by Lender, which may include the delivery to Lender
of the reserves established by Borrower to pay the contested Imposition.

     

    (e) Borrower
shall promptly deliver to Lender a copy of all notices of, and invoices for,
Impositions, and if Borrower pays any Imposition directly, Borrower shall
promptly furnish to Lender receipts evidencing such payments. 

     

    16. LIENS;
ENCUMBRANCES. 

     

    Borrower
acknowledges that, to the extent provided in Section 21, the grant, creation or
existence of any mortgage, deed of trust, deed to secure debt, security interest
or other lien or encumbrance (a “Lien”) on the Mortgaged Property (other than
the lien of this Instrument) or on certain ownership interests in Borrower,
whether voluntary, involuntary or by operation of law, and whether or not such
Lien has priority over the lien of this Instrument, is a “Transfer” which
constitutes an Event of Default.

     

    
      
        
        

      

      
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    17. PRESERVATION, MANAGEMENT AND
MAINTENANCE OF MORTGAGED PROPERTY. 

     

    (a) Borrower
(1) shall not commit waste or permit impairment or deterioration of the
Mortgaged Property, (2) shall not abandon the Mortgaged Property, (3) shall
restore or repair promptly, in a good and workmanlike manner, any damaged part
of the Mortgaged Property to the equivalent of its original condition, or such
other condition as Lender may approve in writing, whether or not insurance
proceeds or condemnation awards are available to cover any costs of such
restoration or repair, (4) shall keep the Mortgaged Property in good repair,
including the replacement of Personalty and Fixtures with items of equal or
better function and quality, (5) shall provide for professional management of
the Mortgaged Property by a residential rental property manager satisfactory to
Lender under a contract approved by Lender in writing, and (6) shall give notice
to Lender of and, unless otherwise directed in writing by Lender, shall appear
in and defend any action or proceeding purporting to affect the Mortgaged
Property, Lender’s security or Lender’s rights under this Instrument. Borrower
shall not (and shall not permit any tenant or other person to) remove, demolish
or alter the Mortgaged Property or any part of the Mortgaged Property except in
connection with the replacement of tangible Personalty. 

     

    (b) If, in
connection with the making of the loan evidenced by the Note or at any later
date, Lender waives in writing the requirement of Section 17(a)(5) above that
Borrower enter into a written contract for management of the Mortgaged Property
and if, after the date of this Instrument, Borrower intends to change the
management of the Mortgaged Property, Lender shall have the right to approve
such new property manager and the written contract for the management of the
Mortgaged Property and require that Borrower and such new property manager enter
into an Assignment of Management Agreement on a form approved by Lender. If
required by Lender (whether before or after an Event of Default), Borrower will
cause any Affiliate of Borrower to whom fees are payable for the management of
the Mortgaged Property to enter into an agreement with Lender, in a form
approved by Lender, providing for subordination of those fees and such other
provisions as Lender may require. “Affiliate of Borrower” means any corporation,
partnership, joint venture, limited liability company, limited liability
partnership, trust or individual controlled by, under common control with, or
which controls Borrower (the term “control” for these purposes shall mean the
ability, whether by the ownership of shares or other equity interests, by
contract or otherwise, to elect a majority of the directors of a corporation, to
make management decisions on behalf of, or independently to select the managing
partner of, a partnership, or otherwise to have the power independently to
remove and then select a majority of those individuals exercising managerial
authority over an entity, and control shall be conclusively presumed in the case
of the ownership of 50% or more of the equity interests). 

     

    18. ENVIRONMENTAL
HAZARDS. 

     

    (a) Except
for matters covered by a written program of operations and maintenance approved
in writing by Lender (an “O&M Program”) or matters described in Section
18(b), Borrower shall not cause or permit any of the following:

     

    
      	 	
              (1)

            	
              the
      presence, use, generation, release, treatment, processing, storage
      (including storage in above ground and underground storage tanks),
      handling, or disposal of any Hazardous Materials on or under the Mortgaged
      Property or any other property of Borrower that is adjacent to the
      Mortgaged Property;

            

    

     

    
      
        
        

      

      
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17

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (2)

            	
              the
      transportation of any Hazardous Materials to, from, or across the
      Mortgaged Property; 

            

    

     

    
      	 	
              (3)

            	
              any
      occurrence or condition on the Mortgaged Property or any other property of
      Borrower that is adjacent to the Mortgaged Property, which occurrence or
      condition is or may be in violation of Hazardous Materials Laws;
      or

            

    

     

    
      	 	
              (4)

            	
              any
      violation of or noncompliance with the terms of any Environmental Permit
      with respect to the Mortgaged Property or any property of Borrower that is
      adjacent to the Mortgaged Property.

            

    

     

    The
matters described in clauses (1) through (4) above are referred to collectively
in this Section 18 as “Prohibited Activities or Conditions”.

     

    (b) Prohibited
Activities and Conditions shall not include the safe and lawful use and storage
of quantities of (1) pre-packaged supplies, cleaning materials and petroleum
products customarily used in the operation and maintenance of comparable
multifamily properties, (2) cleaning materials, personal grooming items and
other items sold in pre-packaged containers for consumer use and used by tenants
and occupants of residential dwelling units in the Mortgaged Property; and (3)
petroleum products used in the operation and maintenance of motor vehicles from
time to time located on the Mortgaged Property’s parking areas, so long as all
of the foregoing are used, stored, handled, transported and disposed of in
compliance with Hazardous Materials Laws. 

     

    (c) Borrower
shall take all commercially reasonable actions (including the inclusion of
appropriate provisions in any Leases executed after the date of this Instrument)
to prevent its employees, agents, and contractors, and all tenants and other
occupants from causing or permitting any Prohibited Activities or Conditions.
Borrower shall not lease or allow the sublease or use of all or any portion of
the Mortgaged Property to any tenant or subtenant for nonresidential use by any
user that, in the ordinary course of its business, would cause or permit any
Prohibited Activity or Condition.

     

    (d) If an
O&M Program has been established with respect to Hazardous Materials,
Borrower shall comply in a timely manner with, and cause all employees, agents,
and contractors of Borrower and any other persons present on the Mortgaged
Property to comply with the O&M Program. All costs of performance of
Borrower’s obligations under any O&M Program shall be paid by Borrower, and
Lender’s out of pocket costs incurred in connection with the monitoring and
review of the O&M Program and Borrower’s performance shall be paid by
Borrower upon demand by Lender. Any such out-of-pocket costs of Lender which
Borrower fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12.

     

    
      
        
        

      

      
        Page
18

        
          

        

      

      
        
        

      

    

     

    (e) Borrower
represents and warrants to Lender that, except as previously disclosed by
Borrower to Lender in writing:

     

    
      	 	
              (1)

            	
              Borrower
      has not at any time engaged in, caused or permitted any Prohibited
      Activities or Conditions;

            

    

     

    
      	 	
              (2)

            	
              to
      the best of Borrower’s knowledge after reasonable and diligent inquiry, no
      Prohibited Activities or Conditions exist or have
  existed;

            

    

     

    
      	 	
              (3)

            	
              except
      to the extent previously disclosed by Borrower to Lender in writing, the
      Mortgaged Property does not now contain any underground storage tanks,
      and, to the best of Borrower’s knowledge after reasonable and diligent
      inquiry, the Mortgaged Property has not contained any underground storage
      tanks in the past. If there is an underground storage tank located on the
      Property which has been previously disclosed by Borrower to Lender in
      writing, that tank complies with all requirements of Hazardous Materials
      Laws;

            

    

     

    
      	 	
              (4)

            	
              Borrower
      has complied with all Hazardous Materials Laws, including all requirements
      for notification regarding releases of Hazardous Materials. Without
      limiting the generality of the foregoing, Borrower has obtained all
      Environmental Permits required for the operation of the Mortgaged Property
      in accordance with Hazardous Materials Laws now in effect and all such
      Environmental Permits are in full force and effect;
  

            

    

     

    
      	 	
              (5)

            	
              no
      event has occurred with respect to the Mortgaged Property that
      constitutes, or with the passing of time or the giving of notice would
      constitute, noncompliance with the terms of any Environmental
      Permit;

            

    

     

    
      	 	
              (6)

            	
              there
      are no actions, suits, claims or proceedings pending or, to the best of
      Borrower’s knowledge after reasonable and diligent inquiry, threatened
      that involve the Mortgaged Property and allege, arise out of, or relate to
      any Prohibited Activity or Condition;
and

            

    

     

    
      	 	
              (7)

            	
              Borrower
      has not received any complaint, order, notice of violation or other
      communication from any Governmental Authority with regard to air
      emissions, water discharges, noise emissions or Hazardous Materials, or
      any other environmental, health or safety matters affecting the Mortgaged
      Property or any other property of Borrower that is adjacent to the
      Mortgaged Property.

            

    

     

    
      
        
        

      

      
        Page
19

        
          

        

      

      
        
        

      

    

     

    The
representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the Indebtedness
has been paid in full. 

     

    (f) Borrower
shall promptly notify Lender in writing upon the occurrence of any of the
following events:

     

    
      	 	
              (1)

            	
              Borrower’s
      discovery of any Prohibited Activity or Condition;
  

            

    

     

    
      	 	
              (2)

            	
              Borrower’s
      receipt of or knowledge of any complaint, order, notice of violation or
      other communication from any Governmental Authority or other person with
      regard to present or future alleged Prohibited Activities or Conditions or
      any other environmental, health or safety matters affecting the Mortgaged
      Property or any other property of Borrower that is adjacent to the
      Mortgaged Property; and 

            

    

     

    
      	 	
              (3)

            	
              any
      representation or warranty in this Section 18 becomes untrue after the
      date of this Agreement.

            

    

     

    Any such
notice given by Borrower shall not relieve Borrower of, or result in a waiver
of, any obligation under this Instrument, the Note, or any other Loan
Document.

     

    (g) Borrower
shall pay promptly the costs of any environmental inspections, tests or audits
(“Environmental Inspections”) required by Lender in connection with any
foreclosure or deed in lieu of foreclosure, or as a condition of Lender’s
consent to any Transfer under Section 21, or required by Lender following a
reasonable determination by Lender that Prohibited Activities or Conditions may
exist. Any such costs incurred by Lender (including the fees and out of pocket
costs of attorneys and technical consultants whether incurred in connection with
any judicial or administrative process or otherwise) which Borrower fails to pay
promptly shall become an additional part of the Indebtedness as provided in
Section 12. The results of all Environmental Inspections made by Lender shall at
all times remain the property of Lender and Lender shall have no obligation to
disclose or otherwise make available to Borrower or any other party such results
or any other information obtained by Lender in connection with its Environmental
Inspections. Lender hereby reserves the right, and Borrower hereby expressly
authorizes Lender, to make available to any party, including any prospective
bidder at a foreclosure sale of the Mortgaged Property, the results of any
Environmental Inspections made by Lender with respect to the Mortgaged Property.
Borrower consents to Lender notifying any party (either as part of a notice of
sale or otherwise) of the results of any of Lender’s Environmental Inspections.
Borrower acknowledges that Lender cannot control or otherwise assure the
truthfulness or accuracy of the results of any of its Environmental Inspections
and that the release of such results to prospective bidders at a foreclosure
sale of the Mortgaged Property may have a material and adverse effect upon the
amount which a party may bid at such sale. Borrower agrees that Lender shall
have no liability whatsoever as a result of delivering the results of any of its
Environmental Inspections to any third party, and Borrower hereby releases and
forever discharges Lender from any and all claims, damages, or causes of action,
arising out of, connected with or incidental to the results of, the delivery of
any of Lender’s Environmental Inspections.

     

    
      
        
        

      

      
        Page
20

        
          

        

      

      
        
        

      

    

     

    (h) If any
investigation, site monitoring, containment, clean-up, restoration or other
remedial work (“Remedial Work”) is necessary to comply with any Hazardous
Materials Law or order of any Governmental Authority that has or acquires
jurisdiction over the Mortgaged Property or the use, operation or improvement of
the Mortgaged Property under any Hazardous Materials Law, Borrower shall, by the
earlier of (1) the applicable deadline required by Hazardous Materials Law or
(2) 30 days after notice from Lender demanding such action, begin performing the
Remedial Work, and thereafter diligently prosecute it to completion, and shall
in any event complete the work by the time required by applicable Hazardous
Materials Law. If Borrower fails to begin on a timely basis or diligently
prosecute any required Remedial Work, Lender may, at its option, cause the
Remedial Work to be completed, in which case Borrower shall reimburse Lender on
demand for the cost of doing so. Any reimbursement due from Borrower to Lender
shall become part of the Indebtedness as provided in Section 12.

     

    
      	 	
              (i)

            	
              Borrower
      shall cooperate with any inquiry by any Governmental Authority and shall
      comply with any governmental or judicial order which arises from any
      alleged Prohibited Activity or
Condition.

            

    

     

    (i) Borrower
shall indemnify, hold harmless and defend (i) Lender, (ii) any prior owner or
holder of the Note, (iii) the Loan Servicer, (iv) any prior Loan Servicer, (v)
the officers, directors, shareholders, partners, employees and trustees of any
of the foregoing, and (vi) the heirs, legal representatives, successors and
assigns of each of the foregoing (collectively, the “Indemnitees”) from and
against all proceedings, claims, damages, penalties and costs (whether initiated
or sought by Governmental Authorities or private parties), including fees and
out-of-pocket expenses of attorneys and expert witnesses, investigatory fees,
and remediation costs, whether incurred in connection with any judicial or
administrative process or otherwise, arising directly or indirectly from any of
the following:

     

    
      	 	
              (1)

            	
              any
      breach of any representation or warranty of Borrower in this Section 18;
      

            

    

     

    
      	 	
              (2)

            	
              any
      failure by Borrower to perform any of its obligations under this Section
      18;

            

    

     

    
      	 	
              (3)

            	
              the
      existence or alleged existence of any Prohibited Activity or
      Condition;

            

    

     

    
      	 	
              (4)

            	
              the
      presence or alleged presence of Hazardous Materials on or under the
      Mortgaged Property or any property of Borrower that is adjacent to the
      Mortgaged Property; and 

            

    

     

    
      	 	
              (5)

            	
              the
      actual or alleged violation of any Hazardous Materials Law.
    

            

    

     

    
      
        
        

      

      
        Page
21

        
          

        

      

      
        
        

      

    

     

    (j) Counsel
selected by Borrower to defend Indemnitees shall be subject to the approval of
those Indemnitees. However, any Indemnitee may elect to defend any claim or
legal or administrative proceeding at the Borrower’s expense. 

     

    (k) Borrower
shall not, without the prior written consent of those Indemnitees who are named
as parties to a claim or legal or administrative proceeding (a “Claim”), settle
or compromise the Claim if the settlement (1) results in the entry of any
judgment that does not include as an unconditional term the delivery by the
claimant or plaintiff to Lender of a written release of those Indemnitees,
satisfactory in form and substance to Lender; or (2) may materially and
adversely affect Lender, as determined by Lender in its discretion.

     

    (l) Lender
agrees that the indemnity under this Section 18 shall be limited to the assets
of Borrower and Lender shall not seek to recover any deficiency from any natural
persons who are general partners of Borrower.

     

    (m) Borrower
shall, at its own cost and expense, do all of the following:

     

    
      	 	
              (1)

            	
              pay
      or satisfy any judgment or decree that may be entered against any
      Indemnitee or Indemnitees in any legal or administrative proceeding
      incident to any matters against which Indemnitees are entitled to be
      indemnified under this Section 18;

            

    

     

    
      	 	
              (2)

            	
              reimburse
      Indemnitees for any expenses paid or incurred in connection with any
      matters against which Indemnitees are entitled to be indemnified under
      this Section 18; and

            

    

     

    
      	 	
              (3)

            	
              reimburse
      Indemnitees for any and all expenses, including fees and out-of-pocket
      expenses of attorneys and expert witnesses, paid or incurred in connection
      with the enforcement by Indemnitees of their rights under this Section 18,
      or in monitoring and participating in any legal or administrative
      proceeding.

            

    

     

    (n) In any
circumstances in which the indemnity under this Section 18 applies, Lender may
employ its own legal counsel and consultants to prosecute, defend or negotiate
any claim or legal or administrative proceeding and Lender, with the prior
written consent of Borrower (which shall not be unreasonably withheld, delayed
or conditioned), may settle or compromise any action or legal or administrative
proceeding. Borrower shall reimburse Lender upon demand for all costs and
expenses incurred by Lender, including all costs of settlements entered into in
good faith, and the fees and out-of-pocket expenses of such attorneys and
consultants. 

     

    (o) The
provisions of this Section 18 shall be in addition to any and all other
obligations and liabilities that Borrower may have under applicable law or under
other Loan Documents, and each Indemnitee shall be entitled to indemnification
under this Section 18 without regard to whether Lender or that Indemnitee has
exercised any rights against the Mortgaged Property or any other security,
pursued any rights against any guarantor, or pursued any other rights available
under the Loan Documents or applicable law. If Borrower consists of more than
one person or entity, the obligation of those persons or entities to indemnify
the Indemnitees under this Section 18 shall be joint and several. The obligation
of Borrower to indemnify the Indemnitees under this Section 18 shall survive any
repayment or discharge of the Indebtedness, any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the lien of this Instrument.

     

    
      
        
        

      

      
        Page
22

        
          

        

      

      
        
        

      

    

     

    19. PROPERTY AND LIABILITY
INSURANCE. 

     

    (a) Borrower
shall keep the Improvements insured at all times against such hazards as Lender
may from time to time require, which insurance shall include but not be limited
to coverage against loss by fire and allied perils, general boiler and machinery
coverage, and business income coverage. Lender’s insurance requirements may
change from time to time throughout the term of the Indebtedness. If Lender so
requires, such insurance shall also include sinkhole insurance, mine subsidence
insurance, earthquake insurance, and, if the Mortgaged Property does not conform
to applicable zoning or land use laws, building ordinance or law coverage. If
any of the Improvements is located in an area identified by the Federal
Emergency Management Agency (or any successor to that agency) as an area having
special flood hazards, and if flood insurance is available in that area,
Borrower shall insure such Improvements against loss by flood.

     

    (b) All
premiums on insurance policies required under Section 19(a) shall be paid in the
manner provided in Section 7, unless Lender has designated in writing another
method of payment. All such policies shall also be in a form approved by Lender.
All policies of property damage insurance shall include a non-contributing,
non-reporting mortgage clause in favor of, and in a form approved by, Lender.
Lender shall have the right to hold the original policies or duplicate original
policies of all insurance required by Section 19(a). Borrower shall promptly
deliver to Lender a copy of all renewal and other notices received by Borrower
with respect to the policies and all receipts for paid premiums. At least 30
days prior to the expiration date of a policy, Borrower shall deliver to Lender
the original (or a duplicate original) of a renewal policy in form satisfactory
to Lender.

     

    (c) Borrower
shall maintain at all times commercial general liability insurance, workers’
compensation insurance and such other liability, errors and omissions and
fidelity insurance coverages as Lender may from time to time
require.

     

    (d) All
insurance policies and renewals of insurance policies required by this Section
19 shall be in such amounts and for such periods as Lender may from time to time
require, and shall be issued by insurance companies satisfactory to Lender.

     

    (e) Borrower
shall comply with all insurance requirements and shall not permit any condition
to exist on the Mortgaged Property that would invalidate any part of any
insurance coverage that this Instrument requires Borrower to
maintain.

     

    (f) In the
event of loss, Borrower shall give immediate written notice to the insurance
carrier and to Lender. Borrower hereby authorizes and appoints Lender as
attorney in fact for Borrower to make proof of loss, to adjust and compromise
any claims under policies of property damage insurance, to appear in and
prosecute any action arising from such property damage insurance policies, to
collect and receive the proceeds of property damage insurance, and to deduct
from such proceeds Lender’s expenses incurred in the collection of such
proceeds. This power of attorney is coupled with an interest and therefore is
irrevocable. However, nothing contained in this Section 19 shall require Lender
to incur any expense or take any action. Lender may, at Lender’s option, (1)
hold the balance of such proceeds to be used to reimburse Borrower for the cost
of restoring and repairing the Mortgaged Property to the equivalent of its
original condition or to a condition approved by Lender (the “Restoration”), or
(2) apply the balance of such proceeds to the payment of the Indebtedness,
whether or not then due. To the extent Lender determines to apply insurance
proceeds to Restoration, Lender shall do so in accordance with Lender’s
then-current policies relating to the restoration of casualty damage on similar
multifamily properties.

     

    
      
        
        

      

      
        Page
23

        
          

        

      

      
        
        

      

    

     

    (g) Lender
shall not exercise its option to apply insurance proceeds to the payment of the
Indebtedness if all of the following conditions are met: (1) no Event of Default
(or any event which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default) has occurred and is continuing; (2) Lender
determines, in its discretion, that there will be sufficient funds to complete
the Restoration; (3) Lender determines, in its discretion, that the rental
income from the Mortgaged Property after completion of the Restoration will be
sufficient to meet all operating costs and other expenses, Imposition Deposits,
deposits to reserves and loan repayment obligations relating to the Mortgaged
Property; (4) Lender determines, in its discretion, that the Restoration will be
completed before the earlier of (A) one year before the maturity date of the
Note or (B) one year after the date of the loss or casualty; and (5) upon
Lender’s request, Borrower provides Lender evidence of the availability during
and after the Restoration of the insurance required to be maintained by Borrower
pursuant to this Section 19.

     

    (h) If the
Mortgaged Property is sold at a foreclosure sale or Lender acquires title to the
Mortgaged Property, Lender shall automatically succeed to all rights of Borrower
in and to any insurance policies and unearned insurance premiums and in and to
the proceeds resulting from any damage to the Mortgaged Property prior to such
sale or acquisition.

     

    20. CONDEMNATION. 

     

    (a) Borrower
shall promptly notify Lender of any action or proceeding relating to any
condemnation or other taking, or conveyance in lieu thereof, of all or any part
of the Mortgaged Property, whether direct or indirect (a “Condemnation”).
Borrower shall appear in and prosecute or defend any action or proceeding
relating to any Condemnation unless otherwise directed by Lender in writing.
Borrower authorizes and appoints Lender as attorney in fact for Borrower to
commence, appear in and prosecute, in Lender’s or Borrower’s name, any action or
proceeding relating to any Condemnation and to settle or compromise any claim in
connection with any Condemnation. This power of attorney is coupled with an
interest and therefore is irrevocable. However, nothing contained in this
Section 20 shall require Lender to incur any expense or take any action.
Borrower hereby transfers and assigns to Lender all right, title and interest of
Borrower in and to any award or payment with respect to (i) any Condemnation, or
any conveyance in lieu of Condemnation, and (ii) any damage to the Mortgaged
Property caused by governmental action that does not result in a Condemnation.

     

    
      
        
        

      

      
        Page
24

        
          

        

      

      
        
        

      

    

     

    (b) Lender
may apply such awards or proceeds, after the deduction of Lender’s expenses
incurred in the collection of such amounts, at Lender’s option, to the
restoration or repair of the Mortgaged Property or to the payment of the
Indebtedness, with the balance, if any, to Borrower. Unless Lender otherwise
agrees in writing, any application of any awards or proceeds to the Indebtedness
shall not extend or postpone the due date of any monthly installments referred
to in the Note, Section 7 of this Instrument or any Collateral Agreement, or
change the amount of such installments. Borrower agrees to execute such further
evidence of assignment of any awards or proceeds as Lender may
require.

     

    21. TRANSFERS OF THE MORTGAGED PROPERTY
OR INTERESTS IN BORROWER. 

     

    (a) The
occurrence of any of the following events shall constitute an Event of Default
under this Instrument:

     

    
      	 	
              (1)

            	
              a
      Transfer of all or any part of the Mortgaged Property or any interest in
      the Mortgaged Property;

            

    

     

    
      	 	
              (2)

            	
              a
      Transfer of a Controlling Interest in
Borrower;

            

    

     

    
      	 	
              (3)

            	
              a
      Transfer of a Controlling Interest in any entity which owns, directly or
      indirectly through one or more intermediate entities, a Controlling
      Interest in Borrower;

            

    

     

    
      	 	
              (4)

            	
              a
      Transfer of all or any part of Key Principal’s ownership interests (other
      than limited partnership interests) in Borrower, or in any other entity
      which owns, directly or indirectly through one or more intermediate
      entities, an ownership interest in Borrower;

            

    

     

    
      	 	
              (5)

            	
              if
      Key Principal is an entity, (A) a Transfer of a Controlling Interest in
      Key Principal, or (B) a Transfer of a Controlling Interest in any entity
      which owns, directly or indirectly through one or more intermediate
      entities, a Controlling Interest in Key Principal;
  

            

    

     

    
      	 	
              (6)

            	
              if
      Borrower or Key Principal is a trust, the termination or revocation of
      such trust; and

            

    

     

    
      	 	
              (7)

            	
              a
      conversion of Borrower from one type of legal entity into another type of
      legal entity, whether or not there is a
  Transfer.

            

    

     

    Lender
shall not be required to demonstrate any actual impairment of its security or
any increased risk of default in order to exercise any of its remedies with
respect to an Event of Default under this Section 21.

     

    
      
        
        

      

      
        Page
25

        
          

        

      

      
        
        

      

    

     

    (b) The
occurrence of any of the following events shall not constitute an Event of
Default under this Instrument, notwithstanding any provision of Section 21(a) to
the contrary:

     

    
      	 	
              (1)

            	
              a
      Transfer to which Lender has
consented;

            

    

     

    
      	 	
              (2)

            	
              a
      Transfer that occurs by devise, descent, or by operation of law upon the
      death of a natural person;

            

    

     

    
      	 	
              (3)

            	
              the
      grant of a leasehold interest in an individual dwelling unit for a term of
      two years or less not containing an option to
  purchase;

            

    

     

    
      	 	
              (4)

            	
              a
      Transfer of obsolete or worn out Personalty or Fixtures that are
      contemporaneously replaced by items of equal or better function and
      quality, which are free of liens, encumbrances and security interests
      other than those created by the Loan Documents or consented to by
      Lender;

            

    

     

    
      	 	
              (5)

            	
              the
      grant of an easement, if before the grant Lender determines that the
      easement will not materially affect the operation or value of the
      Mortgaged Property or Lender’s interest in the Mortgaged Property, and
      Borrower pays to Lender, upon demand, all costs and expenses incurred by
      Lender in connection with reviewing Borrower’s request;
  and

            

    

     

    
      	 	
              (6)

            	
              the
      creation of a tax lien or a mechanic’s, materialman’s or judgment lien
      against the Mortgaged Property which is bonded off, released of record or
      otherwise remedied to Lender’s satisfaction within 30 days of the date of
      creation.

            

    

     

    (c) Lender
shall consent, without any adjustment to the rate at which the Indebtedness
secured by this Instrument bears interest or to any other economic terms of the
Indebtedness, to a Transfer that would otherwise violate this Section 21 if,
prior to the Transfer, Borrower has satisfied each of the following
requirements:

     

    
      	 	
              (1)

            	
              the
      submission to Lender of all information required by Lender to make the
      determination required by this Section
21(c);

            

    

     

    
      	 	
              (2)

            	
              the
      absence of any Event of Default;

            

    

     

    
      	 	
              (3)

            	
              the
      transferee meets all of the eligibility, credit, management and other
      standards (including any standards with respect to previous relationships
      between Lender and the transferee and the organization of the transferee)
      customarily applied by Lender at the time of the proposed Transfer to the
      approval of borrowers in connection with the origination or purchase of
      similar mortgages, deeds of trust or deeds to secure debt on multifamily
      properties;

            

    

     

    
      
        
        

      

      
        Page
26

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (4)

            	
              the
      Mortgaged Property, at the time of the proposed Transfer, meets all
      standards as to its physical condition that are customarily applied by
      Lender at the time of the proposed Transfer to the approval of properties
      in connection with the origination or purchase of similar mortgages on
      multifamily properties; 

            

    

     

    
      	 	
              (5)

            	
              in
      the case of a Transfer of all or any part of the Mortgaged Property, or
      direct or indirect ownership interests in Borrower or Key Principal (if an
      entity), if transferor or any other person has obligations under any Loan
      Document, the execution by the transferee or one or more individuals or
      entities acceptable to Lender of an assumption agreement (including, if
      applicable, an Acknowledgement and Agreement of Key Principal to Personal
      Liability for Exceptions to Non Recourse Liability) that is acceptable to
      Lender and that, among other things, requires the transferee to perform
      all obligations of transferor or such person set forth in such Loan
      Document, and may require that the transferee comply with any provisions
      of this Instrument or any other Loan Document which previously may have
      been waived by Lender;

            

    

     

    
      	 	
              (6)

            	
              if
      a guaranty has been executed and delivered in connection with the Note,
      this Instrument or any of the other Loan Documents, the Borrower causes
      one or more individuals or entities acceptable to Lender to execute and
      deliver to Lender a guaranty in a form acceptable to Lender;
      and

            

    

     

    
      	 	
              (7)

            	
              Lender’s
      receipt of all of the following:

            

    

     

    
      	 	
              (A)

            	
              a
      non refundable review fee in the amount of $3,000 and a transfer fee equal
      to 1 percent of the outstanding Indebtedness immediately prior to the
      Transfer.

            

    

     

    
      	 	
              (B)

            	
              In
      addition, Borrower shall be required to reimburse Lender for all of
      Lender’s out-of-pocket costs (including reasonable attorneys’ fees)
      incurred in reviewing the Transfer request, to the extent such expenses
      exceed $3,000.

            

    

     

    (d) For
purposes of this Section, the following terms shall have the meanings set forth
below:

     

    
      	 	
              (1)

            	
              “Initial
      Owners” means, with respect to Borrower or any other entity, the persons
      or entities who on the date of the Note own in the aggregate 100% of the
      ownership interests in Borrower or that
entity.

            

    

     

    
      	 	
              (2)

            	
              A
      Transfer of a “Controlling Interest” shall mean, with respect to any
      entity, the following:

            

    

     

    
      	 	
              (i)

            	
              if
      such entity is a general partnership or a joint venture, a Transfer of any
      general partnership interest or joint venture interest which would cause
      the Initial Owners to own less than 51% of all general partnership or
      joint venture interests in such
entity;

            

    

     

    
      
        
        

      

      
        Page
27

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              if
      such entity is a limited partnership, a Transfer of any general
      partnership interest;

            

    

     

    
      	 	
              (iii)

            	
              if
      such entity is a limited liability company or a limited liability
      partnership, a Transfer of any membership or other ownership interest
      which would cause the Initial Owners to own less than 51% of all
      membership or other ownership interests in such
  entity;

            

    

     

    
      	 	
              (iv)

            	
              if
      such entity is a corporation (other than a Publicly-Held Corporation) with
      only one class of voting stock, a Transfer of any voting stock which would
      cause the Initial Owners to own less than 51% of voting stock in such
      corporation;

            

    

     

    
      	 	
              (v)

            	
              if
      such entity is a corporation (other than a Publicly-Held Corporation) with
      more than one class of voting stock, a Transfer of any voting stock which
      would cause the Initial Owners to own less than a sufficient number of
      shares of voting stock having the power to elect the majority of directors
      of such corporation; and

            

    

     

    
      	 	
              (vi)

            	
              if
      such entity is a trust, the removal, appointment or substitution of a
      trustee of such trust other than (A) in the case of a land trust, or (B)
      if the trustee of such trust after such removal, appointment or
      substitution is a trustee identified in the trust agreement approved by
      Lender.

            

    

     

    
      	 	
              (3)

            	
              “Publicly-Held
      Corporation” shall mean a corporation the outstanding voting stock of
      which is registered under Section 12(b) or 12(g) of the Securities and
      Exchange Act of 1934, as amended.

            

    

     

    22. EVENTS OF DEFAULT. 

     

    The
occurrence of any one or more of the following shall constitute an Event of
Default under this Instrument:

     

    (a) any
failure by Borrower to pay or deposit when due any amount required by the Note,
this Instrument or any other Loan Document;

     

    (b) any
failure by Borrower to maintain the insurance coverage required by Section
19;

     

    (c) any
failure by Borrower to comply with the provisions of Section 33;

     

    
      
        
        

      

      
        Page
28

        
          

        

      

      
        
        

      

    

     

    (d) fraud or
material misrepresentation or material omission by Borrower, or any of its
officers, directors, trustees, general partners or managers, Key Principal or
any guarantor in connection with (A) the application for or creation of the
Indebtedness, (B) any financial statement, rent roll, or other report or
information provided to Lender during the term of the Indebtedness, or (C) any
request for Lender’s consent to any proposed action, including a request for
disbursement of funds under any Collateral Agreement;

     

    (e) any Event
of Default under Section 21;

     

    (f) the
commencement of a forfeiture action or proceeding, whether civil or criminal,
which, in Lender’s reasonable judgment, could result in a forfeiture of the
Mortgaged Property or otherwise materially impair the lien created by this
Instrument or Lender’s interest in the Mortgaged Property;

     

    (g) any
failure by Borrower to perform any of its obligations under this Instrument
(other than those specified in Sections 22(a) through (f)), as and when
required, which continues for a period of 30 days after notice of such failure
by Lender to Borrower, but no such notice or grace period shall apply in the
case of any such failure which could, in Lender’s judgment, absent immediate
exercise by Lender of a right or remedy under this Instrument, result in harm to
Lender, impairment of the Note or this Instrument or any other security given
under any other Loan Document; 

     

    (h) any
failure by Borrower to perform any of its obligations as and when required under
any Loan Document other than this Instrument which continues beyond the
applicable cure period, if any, specified in that Loan Document;
and

     

    (i) any
exercise by the holder of any other debt instrument secured by a mortgage, deed
of trust or deed to secure debt on the Mortgaged Property of a right to declare
all amounts due under that debt instrument immediately due and
payable.

     

    23. REMEDIES
CUMULATIVE. 

     

    Each
right and remedy provided in this Instrument is distinct from all other rights
or remedies under this Instrument or any other Loan Document or afforded by
applicable law, and each shall be cumulative and may be exercised concurrently,
independently, or successively, in any order. 

     

    24. FORBEARANCE. 

     

    (a) Lender
may (but shall not be obligated to) agree with Borrower, from time to time, and
without giving notice to, or obtaining the consent of, or having any effect upon
the obligations of, any guarantor or other third party obligor, to take any of
the following actions: extend the time for payment of all or any part of the
Indebtedness; reduce the payments due under this Instrument, the Note, or any
other Loan Document; release anyone liable for the payment of any amounts under
this Instrument, the Note, or any other Loan Document; accept a renewal of the
Note; modify the terms and time of payment of the Indebtedness; join in any
extension or subordination agreement; release any Mortgaged Property; take or
release other or additional security; modify the rate of interest or period of
amortization of the Note or change the amount of the monthly installments
payable under the Note; and otherwise modify this Instrument, the Note, or any
other Loan Document.

     

    
      
        
        

      

      
        Page
29

        
          

        

      

      
        
        

      

    

     

    (b) Any
forbearance by Lender in exercising any right or remedy under the Note, this
Instrument, or any other Loan Document or otherwise afforded by applicable law,
shall not be a waiver of or preclude the exercise of any other right or remedy.
The acceptance by Lender of payment of all or any part of the Indebtedness after
the due date of such payment, or in an amount which is less than the required
payment, shall not be a waiver of Lender’s right to require prompt payment when
due of all other payments on account of the Indebtedness or to exercise any
remedies for any failure to make prompt payment. Enforcement by Lender of any
security for the Indebtedness shall not constitute an election by Lender of
remedies so as to preclude the exercise of any other right available to Lender.
Lender’s receipt of any awards or proceeds under Sections 19 and 20 shall not
operate to cure or waive any Event of Default.

     

    25. LOAN CHARGES. 

     

    If any
applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower is interpreted so that any charge provided for in any
Loan Document, whether considered separately or together with other charges
levied in connection with any other Loan Document, violates that law, and
Borrower is entitled to the benefit of that law, that charge is hereby reduced
to the extent necessary to eliminate that violation. The amounts, if any,
previously paid to Lender in excess of the permitted amounts shall be applied by
Lender to reduce the principal of the Indebtedness. For the purpose of
determining whether any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower has been violated, all
Indebtedness which constitutes interest, as well as all other charges levied in
connection with the Indebtedness which constitute interest, shall be deemed to
be allocated and spread over the stated term of the Note. Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest so computed is uniform throughout the
stated term of the Note.

     

    26. WAIVER OF STATUTE OF
LIMITATIONS. 

     

    Borrower
hereby waives the right to assert any statute of limitations as a bar to the
enforcement of the lien of this Instrument or to any action brought to enforce
any Loan Document.

     

    27. WAIVER OF
MARSHALLING. 

     

    Notwithstanding
the existence of any other security interests in the Mortgaged Property held by
Lender or by any other party, Lender shall have the right to determine the order
in which any or all of the Mortgaged Property shall be subjected to the remedies
provided in this Instrument, the Note, any other Loan Document or applicable
law. Lender shall have the right to determine the order in which any or all
portions of the Indebtedness are satisfied from the proceeds realized upon the
exercise of such remedies. Borrower and any party who now or in the future
acquires a security interest in the Mortgaged Property and who has actual or
constructive notice of this Instrument waives any and all right to require the
marshalling of assets or to require that any of the Mortgaged Property be sold
in the inverse order of alienation or that any of the Mortgaged Property be sold
in parcels or as an entirety in connection with the exercise of any of the
remedies permitted by applicable law or provided in this
Instrument.

     

    
      
        
        

      

      
        Page
30

        
          

        

      

      
        
        

      

    

     

    28. FURTHER
ASSURANCES. 

     

    Borrower
shall execute, acknowledge, and deliver, at its sole cost and expense, all
further acts, deeds, conveyances, assignments, estoppel certificates, financing
statements, transfers and assurances as Lender may require from time to time in
order to better assure, grant, and convey to Lender the rights intended to be
granted, now or in the future, to Lender under this Instrument and the Loan
Documents. 

     

    29. ESTOPPEL
CERTIFICATE. 

     

    Within 10
days after a request from Lender, Borrower shall deliver to Lender a written
statement, signed and acknowledged by Borrower, certifying to Lender or any
person designated by Lender, as of the date of such statement, (i) that the Loan
Documents are unmodified and in full force and effect (or, if there have been
modifications, that the Loan Documents are in full force and effect as modified
and setting forth such modifications); (ii) the unpaid principal balance of the
Note; (iii) the date to which interest under the Note has been paid; (iv) that
Borrower is not in default in paying the Indebtedness or in performing or
observing any of the covenants or agreements contained in this Instrument or any
of the other Loan Documents (or, if the Borrower is in default, describing such
default in reasonable detail); (v) whether or not there are then existing any
setoffs or defenses known to Borrower against the enforcement of any right or
remedy of Lender under the Loan Documents; and (vi) any additional facts
requested by Lender. 

     

    30. GOVERNING LAW; CONSENT TO
JURISDICTION AND VENUE. 

     

    (a) This
Instrument, and any Loan Document which does not itself expressly identify the
law that is to apply to it, shall be governed by the laws of the jurisdiction in
which the Land is located (the “Property Jurisdiction”). 

     

    (b) Borrower
agrees that any controversy arising under or in relation to the Note, this
Instrument, or any other Loan Document shall be litigated exclusively in the
Property Jurisdiction. The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over
all controversies which shall arise under or in relation to the Note, any
security for the Indebtedness, or any other Loan Document. Borrower irrevocably
consents to service, jurisdiction, and venue of such courts for any such
litigation and waives any other venue to which it might be entitled by virtue of
domicile, habitual residence or otherwise. 

     

    
      
        
        

      

      
        Page
31

        
          

        

      

      
        
        

      

    

     

    31. NOTICE. 

     

    (a) All
notices, demands and other communications (“notice”) under or concerning this
Instrument shall be in writing. Each notice shall be addressed to the intended
recipient at its address set forth in this Instrument, and shall be deemed given
on the earliest to occur of (1) the date when the notice is received by the
addressee; (2) the first Business Day after the notice is delivered to a
recognized overnight courier service, with arrangements made for payment of
charges for next Business Day delivery; or (3) the third Business Day after the
notice is deposited in the United States mail with postage prepaid, certified
mail, return receipt requested. As used in this Section 31, the term “Business
Day” means any day other than a Saturday, a Sunday or any other day on which
Lender is not open for business.

     

    (b) Any party
to this Instrument may change the address to which notices intended for it are
to be directed by means of notice given to the other party in accordance with
this Section 31. Each party agrees that it will not refuse or reject delivery of
any notice given in accordance with this Section 31, that it will acknowledge,
in writing, the receipt of any notice upon request by the other party and that
any notice rejected or refused by it shall be deemed for purposes of this
Section 31 to have been received by the rejecting party on the date so refused
or rejected, as conclusively established by the records of the U.S. Postal
Service or the courier service. 

     

    (c) Any
notice under the Note and any other Loan Document which does not specify how
notices are to be given shall be given in accordance with this Section
31.

     

    32. SALE OF NOTE; CHANGE IN
SERVICER. 

     

    The Note
or a partial interest in the Note (together with this Instrument and the other
Loan Documents) may be sold one or more times without prior notice to Borrower.
A sale may result in a change of the Loan Servicer. There also may be one or
more changes of the Loan Servicer unrelated to a sale of the Note. If there is a
change of the Loan Servicer, Borrower will be given notice of the change.

     

    33. SINGLE ASSET
BORROWER. 

     

    Until the
Indebtedness is paid in full, Borrower (a) shall not acquire any real or
personal property other than the Mortgaged Property and personal property
related to the operation and maintenance of the Mortgaged Property; (b) shall
not operate any business other than the management and operation of the
Mortgaged Property; and (c) shall not maintain its assets in a way difficult to
segregate and identify.

     

    34. SUCCESSORS AND ASSIGNS
BOUND. 

     

    This
Instrument shall bind, and the rights granted by this Instrument shall inure to,
the respective successors and assigns of Lender and Borrower. However, a
Transfer not permitted by Section 21 shall be an Event of Default.

     

    
      
        
        

      

      
        Page
32

        
          

        

      

      
        
        

      

    

     

    35. JOINT AND SEVERAL
LIABILITY. 

     

    If more
than one person or entity signs this Instrument as Borrower, the obligations of
such persons and entities shall be joint and several.

     

    36. RELATIONSHIP OF PARTIES; NO THIRD
PARTY BENEFICIARY. 

     

    (a) The
relationship between Lender and Borrower shall be solely that of creditor and
debtor, respectively, and nothing contained in this Instrument shall create any
other relationship between Lender and Borrower.

     

    (b) No
creditor of any party to this Instrument and no other person shall be a third
party beneficiary of this Instrument or any other Loan Document. Without
limiting the generality of the preceding sentence, (1) any arrangement (a
“Servicing Arrangement”) between the Lender and any Loan Servicer for loss
sharing or interim advancement of funds shall constitute a contractual
obligation of such Loan Servicer that is independent of the obligation of
Borrower for the payment of the Indebtedness, (2) Borrower shall not be a third
party beneficiary of any Servicing Arrangement, and (3) no payment by the Loan
Servicer under any Servicing Arrangement will reduce the amount of the
Indebtedness.

     

    37. SEVERABILITY;
AMENDMENTS. 

     

    The
invalidity or unenforceability of any provision of this Instrument shall not
affect the validity or enforceability of any other provision, and all other
provisions shall remain in full force and effect. This Instrument contains the
entire agreement among the parties as to the rights granted and the obligations
assumed in this Instrument. This Instrument may not be amended or modified
except by a writing signed by the party against whom enforcement is
sought.

     

    38. CONSTRUCTION. 

     

    The
captions and headings of the sections of this Instrument are for convenience
only and shall be disregarded in construing this Instrument. Any reference in
this Instrument to an “Exhibit” or a “Section” shall, unless otherwise
explicitly provided, be construed as referring, respectively, to an Exhibit
attached to this Instrument or to a Section of this Instrument. All Exhibits
attached to or referred to in this Instrument are incorporated by reference into
this Instrument. Any reference in this Instrument to a statute or regulation
shall be construed as referring to that statute or regulation as amended from
time to time. Use of the singular in this Agreement includes the plural and use
of the plural includes the singular. As used in this Instrument, the term
“including” means “including, but not limited to.”

     

    39. LOAN SERVICING. 

     

    All
actions regarding the servicing of the loan evidenced by the Note, including the
collection of payments, the giving and receipt of notice, inspections of the
Property, inspections of books and records, and the granting of consents and
approvals, may be taken by the Loan Servicer unless Borrower receives notice to
the contrary. If Borrower receives conflicting notices regarding the identity of
the Loan Servicer or any other subject, any such notice from Lender shall
govern.

     

    
      
        
        

      

      
        Page
33

        
          

        

      

      
        
        

      

    

     

    40. DISCLOSURE OF
INFORMATION. 

     

    Lender
may furnish information regarding Borrower or the Mortgaged Property to third
parties with an existing or prospective interest in the servicing, enforcement,
evaluation, performance, purchase or securitization of the Indebtedness,
including trustees, master servicers, special servicers, rating agencies, and
organizations maintaining databases on the underwriting and performance of
multifamily mortgage loans. Borrower irrevocably waives any and all rights it
may have under applicable law to prohibit such disclosure, including any right
of privacy.

     

    41. NO CHANGE IN FACTS OR
CIRCUMSTANCES. 

     

    All
information in the application for the loan submitted to Lender (the “Loan
Application”) and in all financial statements, rent rolls, reports, certificates
and other documents submitted in connection with the Loan Application are
complete and accurate in all material respects. There has been no material
adverse change in any fact or circumstance that would make any such information
incomplete or inaccurate.

     

    42. SUBROGATION. 

     

    If, and
to the extent that, the proceeds of the loan evidenced by the Note are used to
pay, satisfy or discharge any obligation of Borrower for the payment of money
that is secured by a pre-existing mortgage, deed of trust or other lien
encumbering the Mortgaged Property (a “Prior Lien”), such loan proceeds shall be
deemed to have been advanced by Lender at Borrower’s request, and Lender shall
automatically, and without further action on its part, be subrogated to the
rights, including lien priority, of the owner or holder of the obligation
secured by the Prior Lien, whether or not the Prior Lien is released.

     

    43. ACCELERATION; REMEDIES; WAIVER OF
PERMISSIVE COUNTERCLAIMS. 

     

    At any
time during the existence of an Event of Default, Lender, at Lender’s option,
may declare the Indebtedness to be immediately due and payable without further
demand, and may foreclose this Instrument by judicial proceeding and may invoke
any other remedies permitted by Florida law or provided in this Instrument or in
any other Loan Document. Lender shall be entitled to collect all costs and
expenses incurred in pursuing such remedies, including attorneys’ fees, costs of
documentary evidence, abstracts and title reports. Borrower waives any and all
rights to file or pursue permissive counterclaims in connection with any legal
action brought by Lender under this Instrument, the Note or any other Loan
Document.

     

    44. RELEASE. 

     

    Upon
payment of the Indebtedness, Lender shall release this Instrument. Borrower
shall pay Lender’s reasonable costs incurred in releasing this
Instrument.

     

    
      
        
        

      

      
        Page
34

        
          

        

      

      
        
        

      

    

     

    45. FUTURE ADVANCES. 

     

    Lender
may from time to time, in Lender’s discretion, make optional future or
additional advances (collectively, “Future Advances”) to Borrower, except that
at no time shall the unpaid principal balance of all indebtedness secured by the
lien of this Instrument, including Future Advances, be greater than an amount
equal to two hundred percent (200%) of the original principal amount of this
Note as set forth on the first page of this Instrument plus accrued interest and
amounts disbursed by Lender under Section 12 or any other provision of this
Instrument that treats a disbursement by Lender as being made under Section 12.
All Future Advances shall be made, if at all, within twenty (20) years after the
date of this Instrument, or within such lesser period that may in the future be
provided by law as a prerequisite for the sufficiency of actual or record notice
of Future Advances as against the rights of creditors or subsequent purchasers
for value. Borrower shall, immediately upon request by Lender, execute and
deliver to Lender a promissory note evidencing each Future Advance together with
a notice of such Future Advance in recordable form. All promissory notes
evidencing Future Advances shall be secured, pari passu, by the lien of this
Instrument, and each reference in this Instrument to the Note shall be deemed to
be a reference to all promissory notes evidencing Future Advances. 

     

    46. WAIVER OF TRIAL BY
JURY. 

     

    BORROWER
AND LENDER EACH (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH
RESPECT TO ANY ISSUE ARISING OUT OF THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN
THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B)
WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT
ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE
BENEFIT OF COMPETENT LEGAL COUNSEL. 

     

    ATTACHED EXHIBITS. The
following Exhibits are attached to this Instrument:

     

    |X| Exhibit
A Description
of the Land (required).

     

    |X| Exhibit
B Modifications
to Instrument

     

    THIS IS A BALLOON MORTGAGE AND THE
FINAL PRINCIPAL PAYMENT OR THE PRINCIPAL BALANCE DUE UPON MATURITY IS
$26,204,468.90, TOGETHER WITH ACCRUED INTEREST, IF ANY, AND ALL ADVANCEMENTS
MADE BY THE MORTGAGEE (LENDER) UNDER THE TERMS OF THIS
MORTGAGE

     

    
      
        
        

      

      
        Page
35

        
          

        

      

      
        
        

      

    

    IN WITNESS WHEREOF,
Borrower has signed and delivered this Instrument or has caused this Instrument
to be signed and delivered by its duly authorized representative. 

     

    
      	
              WITNESSES:

               

                
      

              Print
      Name:

              
                
       

               

              
                
      

              Print
      Name:

              
                
       

            	 	
              BORROWER:

               

              LVP TAMPA ISLES
      LLC,
      a

              Delaware
      limited liability company

               

               

              By: 

              
                
      

              Name:   David
      Lichtenstein 

              Title:     President

            

    

     

    
      	STATE OF NEW JERSEY	)	 	 
	 	)	 	 
	COUNTY OF OCEAN	)	 	 

    

     

    The
foregoing instrument was acknowledged before me this ____ day of November, 2007,
by DAVID LICHTENSTEIN,
as PRESIDENT of
LVP TAMPA ISLES LLC,
a
Delaware limited liability company.

     

    
      	 	 	 	 
	[NOTARIAL SEAL]	 	 	Notary: 
	
            	 	 	
              
                
      

              Print Name:

              
                
      

              
                Notary
      Public, State of 

              

              
                
      

              My
      Commission expires:

              
                
       

            

    

     

    
      	 	o
      Personally Known        OR       
      o Produced
      Identification
	 	Type of Identification
      Produced:
	 	
              
                
       

            
	 	 	 	 	 

    

     

    
      
        
        

      

      
        Page
36

        
          

        

      

      
        
        

      

    

    KEY
PRINCIPAL

    

    
      	
              Key
      Principal

            	 	 
	 	 	 
	
              Name:

            	
              Lightstone
      Value Plus Real Estate Investment Trust, Inc.

            	 
	 	 	 
	
              Address

            	
              326
      Third Street

            	 
	 	
              Lakewood,
      New York 08701 

            	 

    

     

     

    
 

    
      
        
        

      

      
        Page
37

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
A

     

    [DESCRIPTION OF THE
LAND]

     

    

     

     

     

    
      
        
        

      

      
        Page
A-1

        
          

        

      

      
        
        

      

    

    EXHIBIT
B

     

    MODIFICATIONS TO
INSTRUMENT

     

    The
following modifications are made to the text of the Instrument that precedes
this Exhibit:

     

     

     

     

     

     

    
      
        
        

      

      
        Page
B-1

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