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    EXHIBIT
10.37

    
 

    FIRST AMENDMENT 

    TO

    AMENDED AND
RESTATED

    AGREEMENT OF LIMITED
PARTNERSHIP

    OF

    LIGHTSTONE VALUE PLUS REIT
LP

     

    THIS
FIRST AMENDMENT TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
LIGHTSTONE VALUE PLUS REIT LP (this “Amendment”) is made as of June 26, 2008 by
and among Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland
corporation (the “REIT”), as the General Partner of Lightstone Value Plus REIT
LP., a Delaware limited partnership (the “Partnership”), Lightstone Value Plus
REIT LLC, a Delaware limited liability company, as the Initial Limited Partner
and sole existing limited partner of the Partnership, Lightstone SLP, LLC, a
Delaware limited liability company, as Special General Partner of the
Partnership, Arbor Mill Run JRM LLC, a Delaware limited liability company
(“Arbor JRM”) and Arbor National CJ, LLC, a New York limited liability company
(“Arbor CJ”). Capitalized terms used but not otherwise defined in this Amendment
shall have the meanings given to such terms in the Amended and Restated
Agreement of Limited Partnership of the Partnership, dated as of April 22, 2005,
by and among the REIT, the Initial Limited Partner and Special General Partner
and the other parties signatory thereto (the “Partnership
Agreement”).

     

    WITNESSETH:

     

    WHEREAS,
on the date hereof, Arbor JRM has contributed a 22.08% common interest in Mill
Run L.L.C., a Delaware limited liability company (“Mill Run”), representing all
of its membership interest in Mill Run, to the Partnership (the “Arbor JRM
Contribution”) pursuant to that certain Contribution and Conveyance Agreement
dated as of the date hereof by and between Arbor JRM and the Partnership (the
“Arbor JRM Contribution Agreement”); 

     

    WHEREAS,
on the date hereof, Arbor CJ has contributed a 0.46% common interest in Mill
Run, representing all of its membership interest in Mill Run, to the Partnership
(the “Arbor CJ Contribution”) pursuant to that certain Contribution and
Conveyance Agreement dated as of the date hereof by and between Arbor CJ and the
Partnership (the “Arbor CJ Contribution Agreement”); 

     

    WHEREAS,
AR Prime Holdings LLC, a Delaware limited liability company (“AR Prime”), the
REIT and the Partnership are parties to that certain Contribution and Conveyance
Agreement dated as the date hereof (the “AR Prime Contribution Agreement”)
pursuant to which, upon the closing of the AR Prime Contribution Agreement, AR
Prime will contribute its 25% membership interest in Prime Outlets Acquisition
Company LLC, a Delaware limited liability company (“POAC”), representing all of
its membership interest in POAC, to the Partnership (the “POAC
Contribution”);

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
pursuant to each of the Arbor JRM Contribution Agreement, the Arbor CJ
Contribution Agreement and the AR Prime Contribution Agreement, and in exchange
for each of the Arbor JRM Contribution, the Arbor CJ Contribution and the POAC
Contribution, respectively, the Partnership has agreed to issue to Arbor JRM and
Arbor CJ, respectively, on the date hereof, and to AR Prime, upon the closing of
the POAC Contribution, certain common Limited Partner Interests in the
Partnership as well as certain preferred Limited Partner Interests represented
by a newly designated preferred class of Limited Partner Interest of the
Partnership with the rights, privileges and preferences set forth on Exhibit A
hereto (the “Series A Preferred Units”); and 

     

    WHEREAS,
the parties to this Amendment desire to amend the Partnership Agreement to
reflect the creation of the Series A Preferred Units and the rights, privileges
and preferences thereof.

     

    NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows.

     

    1. Pursuant
to Section 4.3 of the Partnership Agreement, the Partnership Agreement is hereby
amended (i) to create the Series A Preferred Units with the rights, privileges
and preferences set forth on Exhibit A attached hereto and (ii) to admit each of
Arbor JRM and Arbor CJ as a Limited Partner of the Partnership as of the date
hereof in accordance with the provisions of the Arbor JRM Contribution Agreement
and the Arbor CJ Contribution Agreement, respectively, and, upon and as of
closing of the transactions contemplated by the POAC Contribution Agreement, to
admit AR Prime as a Limited Partner of the Partnership effective as of the
closing date of the POAC Contribution in accordance with the provisions of the
AR Prime Contribution Agreement. 

     

    2. Section
5.1 of the Partnership Agreement is hereby amended to provide that,
notwithstanding anything in the Partnership Agreement to the contrary,
distributions payable with respect to the Series A Preferred Units as provided
in Section 4 of Exhibit A attached hereto or, in the event of a Liquidation (as
defined in Exhibit A attached hereto) that is not a Liquidating Event, as
provided in Section 5 of Exhibit A attached hereto, shall have priority over all
of the other distributions to Partners pursuant to Section 5.1 of the
Partnership Agreement. 

     

    3. Article 6
and Exhibit B of the Partnership Agreement are hereby amended to provide that,
notwithstanding anything in the Partnership Agreement to the contrary,
allocations of Net Income and Net Loss to holders of Series A Preferred Units in
any year shall be limited as provided in Section 4(F) of Exhibit A attached
hereto. 

     

    
      
        
        

      

      
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    4. Section
13.2 of the Partnership Agreement is hereby amended to provide that,
notwithstanding anything in the Partnership Agreement to the contrary,
distributions payable with respect to the Series A Preferred Units as provided
in Section 5 of Exhibit A attached hereto shall have priority over all of the
other distributions to Partners following a Liquidating Event, including any
distributions pursuant to Section 13.2(a)(iii)(D).

     

    5. The
Partnership Agreement is hereby amended to the fullest extent necessary to
effect all of the matters contemplated by this Amendment, including but not
limited to the terms set forth on Exhibit A hereto, and including, without
limitation, the voting rights of the holders of Series A Preferred Units and
restrictions on the General Partner and the Partnership that are set forth in
Section 8 of Exhibit A attached hereto. Except as specifically provided for in
this Amendment, the provisions of the Partnership Agreement shall remain in full
force and effect.

     

    6. The
execution, delivery and effectiveness of this Amendment shall not operate (a) as
an amendment or modification of any provision, right or obligation of any
Partner under the Partnership Agreement except as specifically set forth in this
Amendment or (b) as a waiver or consent to any subsequent action or
transaction.

     

    7. This
Amendment shall be construed and enforced in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
laws thereof.

     

    8. This
Amendment contains the entire understanding among the parties with respect to
the subject matter hereof and supersedes any other prior written or oral
understanding or agreements among their with respect thereto.

     

    9. This
Amendment may be executed in one or more counterparts, each of which shall be an
original and all of which, when taken together, shall constitute one and the
same agreement.

     

    10. This
Amendment shall become effective when each party hereto shall have received a
counterpart hereof signed by all of the other parties hereto. 

     

    [SIGNATURE PAGE TO
FOLLOW]

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, each of
the undersigned has caused this Amendment to be duly executed on its behalf as
of the date first above written.

     

    
      	 	 	 
	 	
              GENERAL
      PARTNER:

               

              LIGHTSTONE
      VALUE PLUS REAL ESTATE 

              INVESTMENT
      TRUST, INC.

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              David
      Lichtenstein

              Chief
      Executive Officer and President

            

    

     

    
      	 	 	 
	 	
              LIMITED
      PARTNER:

              

                LIGHTSTONE
      VALUE PLUS REIT LLC

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              David
      Lichtenstein

              Authorized
      Person

            

     

    
      	 	 	 
	 	
              SPECIAL GENERAL
      PARTNER:

               

              
                LIGHTSTONE
      SLP, LLC

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              David
      Lichtenstein

              Authorized
      Person

            

    

     

    
      	 	 	 
	 	
              ARBOR JRM:

              

                ARBOR
      MILL RUN JRM LLC

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              

              Name:
      

            
	 	Title:

    

     

    
      
        
        

      

      
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              ARBOR CJ:

              

                ARBOR
      NATIONAL CJ, LLC

              

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
      Name:
	 	Title:

    

     

    
      
        
        

      

      
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    EXHIBIT A

     

    TERMS OF SERIES A PREFERRED
UNITS

     

    In
accordance with Section 4.3 of the Partnership Agreement, set forth below are
the terms and conditions of the Series A Preferred Units established by the
Partnership on June 26, 2008.

     

    1. Definitions. For
purposes of the Series A Preferred Units, the following terms shall have the
meanings indicated in this Section 1. Capitalized terms used but not otherwise
defined in this Exhibit A shall have the meanings set forth in Article I of the
Partnership Agreement, as amended by the Amendment to which this Exhibit A is
attached.

     

    “Common
Units” shall mean any class or series of Partnership Interest that does not have
a priority or preference in the payment of distributions in the distribution of
assets upon any Liquidation, including but not limited to all partnership
Interests issued to the General partner or to the Special General Partner.

     

    “Estimated
Market Price” shall have the meaning set forth in Section 6(A) of this Exhibit
A.

     

    “Liquidation”
shall mean the occurrence of any Liquidating Event or any lease or transfer of
all or substantially all of the Partnership’s property or assets. 

     

    “Lockout
Date” shall mean June 26, 2013.

     

    “Series A
Distribution Payment Date” shall mean with respect each calendar quarter a date
that is no later than 30 days after the end of such calendar quarter.

     

    “Series A
Distribution Period” shall mean quarterly distribution periods commencing on
January 1, April 1, July 1 and October 1 of each year and ending on and
including the day preceding the first day of the next succeeding Series A
Distribution Period. 

     

    “Series A
Distribution Record Date” shall have the meaning set forth in Section 6(C) of
this Exhibit A.

     

    “Series A
Junior Units” shall mean Common Units and any Partnership Units of any other
class or series now or hereafter issued and outstanding that are not Series A
Senior Units, Series A Preferred Units or Series A Parity Units.

     

    “Series A
Liquidation Preference” shall have the meaning set forth in Section 5(A) of this
Exhibit A.

     

    “Series A
Parity Units” shall mean any class or series of Limited Partner Interest now or
hereafter issued and outstanding, whether or not the distribution rates thereof
shall be different from those of the Series A Preferred Units, if the holders of
such class or series and the Series A Preferred Units shall be entitled to (i)
the receipt of distributions in proportion to their respective amounts of
accrued and unpaid distributions per unit and (ii) amounts distributable upon
Liquidation in proportion to their respective liquidation preferences, in each
case without preference or priority one over the other. 

     

    
      
        
        

      

      
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    “Series A
Senior Units” shall mean any class or series of Partnership Interest of the
Partnership hereafter issued and outstanding, if the holders of such class or
series shall be entitled to the receipt of distributions prior to a Liquidation
or of amounts distributable upon any event of Liquidation, in preference or
priority to the holders of Series A Preferred Units.

     

    2. Number of Preferred Units
and Designation. This
series of preferred Partnership Interests shall be designated as the 4.6316%
Series A Preferred Limited Partner Interests (the “Series A Preferred Units”).
The number of units which shall initially constitute such series shall be 80,000
units.

     

    3. Ranking. The
Series A Preferred Units shall, with respect to the payment of distributions and
the right to receive the Series A Liquidation Preference upon a Liquidation,
rank junior to all Series A Senior Units; rank senior to all Series A Junior
Units, and rank in parity with all Series A Parity Units.

     

    4. Distributions.

     

    (A) Subject
to the preferential rights of the holders of any Series A Senior Units, the
holders of Series A Preferred Units shall be entitled to receive, when, as and
if declared by the General Partner, cumulative preferential distributions
payable in cash in an amount per unit equal to an annual rate of 4.6316% payable
in arrears shall be
calculated daily and shall be computed on the actual number of days elapsed over
a month of 30 days and a year of 360 days; provided,
however, that
in the
event that the Series A Preferred Units are not redeemed by the Partnership on
the Lockout Date or within fifteen (15) days thereafter, the annual distribution
rate applicable to the Series A Preferred Units shall increase from 4.6316% to
fifteen percent (15%) per annum for so long as the Series A Preferred Units
remain outstanding. The
distributions shall begin to accrue and shall be fully cumulative from the day
of issuance of any such Series A Preferred Units and shall be payable quarterly,
when, as and if declared by the General Partner, in arrears, on each Series A
Distribution Payment Date. Each such distribution shall be payable to the
holders of record of Series A Preferred Units as they appear in the records of
the Partnership at the close of business on such record date, not less than 10
nor more than 30 days preceding such Series A Distribution Payment Dates
thereof, as shall be fixed by the General Partner. Accrued and unpaid
distributions for any past Series A Distribution Periods may be declared and
paid at any time and for such interim periods, without reference to any regular
Series A Distribution Payment Date, to holders of record on such date, not less
than 10 nor more than 30 days preceding the payment date thereof, as may be
fixed by the General Partner. Any distribution payment made on Series A
Preferred Units shall first be credited against the earliest accrued but unpaid
distribution due with respect to Series A Preferred Units which remains
payable.

     

    (B) The
amount of distributions payable for any Series A Distribution Period shorter
than a full calendar quarter on the Series A Preferred Units shall be computed
by dividing the number of days in such period by 360 and multiplying the result
by the product of the annual distribution rate (i.e., 4.6316%) multiplied by the
Series A Liquidation Preference (i.e., $1,000.00 per Series A Preferred Unit).
Holders of Series A Preferred Units shall not be entitled to any distributions,
whether payable in cash, property or shares, in excess of cumulative
distributions, as herein provided, on the Series A Preferred Units. No interest,
or sum of money in lieu of interest, shall be payable in respect of any
distribution payment or payments on the Series A Preferred Units which may be in
arrears.

     

    
      
        
        

      

      
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    (C) So long
as any Series A Preferred Units are outstanding, no distributions, except as
described in the immediately following sentence, shall be declared or paid or
set apart for payment on any class or series of Series A Junior Units for any
period unless full cumulative distributions have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series A Preferred Units for all Series A
Distribution Periods terminating on or prior to the distribution payment date on
such class or series of Series A Junior Units. 

     

    (D) So long
as any Series A Preferred Units are outstanding, no distributions, except as
described in the immediately following sentence, shall be declared or paid or
set apart for payment on any class or series of Series A Parity Units for any
period unless full cumulative distributions have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment on the Series A Preferred Units for all Series A
Distribution Periods terminating on or prior to the distribution payment date on
such class or series of Series A Parity Units. When distributions are not paid
in full or a sum sufficient for such payment is not set apart, as aforesaid, all
distributions declared upon Series A Preferred Units and all distributions
declared upon any other class or series of Series A Parity Units shall be
declared ratably in proportion to the respective amounts of distributions
accumulated and unpaid on the Series A Preferred Units and accumulated and
unpaid on such Series A Parity Units.

     

    (E) No
distributions on Series A Preferred Units shall be declared by the General
Partner or paid or set apart for payment by the Partnership at such time as the
terms and provisions of any agreement of the Partnership, including any
agreement relating to its indebtedness, prohibits such declaration, payment or
setting apart for payment or provides that such declaration, payment or setting
apart for payment would constitute a breach thereof or a default thereunder, or
if such declaration or payment shall be restricted or prohibited by
law.

     

    (F) Subject
at all times to Section 2 and Section 3(a), (b), (e) and (f) of Exhibit B to the
Partnership Agreement, with respect to any Partnership Year, the holders
of Series A Preferred Units shall be
allocated Net Income, Net Loss and other allocable Partnership items of income,
gain, loss or expense, only with respect to and to the extent of the amounts
actually distributed to such holder of Series A Preferred Units for such
Partnership Year (but in no event distributed later than 30 days after the end
of that Partnership Year) pursuant to this Section 4 on account of the annual
return accrued on the Series A Preferred Units, but none of such items shall be
allocated to the holders of Series A Preferred Units on account of any other
distributions (all such other distributions representing a return of contributed
capital).

     

    
      
        
        

      

      
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    5. Liquidation
Preference.

     

    (A) In the
event of any Liquidation, subject to the prior preferences and other rights of
any Series A Senior Units, before any payment or distribution of the assets of
the Partnership (whether capital or surplus) shall be made to or set apart for
the holders of Series A Junior Units, the holders of the Series A Preferred
Units shall be entitled to receive One Thousand Dollars ($1,000.00) (the “Series
A Liquidation Preference”) per Series A Preferred Unit plus an amount equal to
all distributions (whether or not earned or declared) accrued and unpaid thereon
to the date of final distribution to such holders; but such holders shall not be
entitled to any further payment. If, upon any Liquidation, the assets of the
Partnership, or proceeds thereof, distributable among the holders of the Series
A Preferred Units and all Series A Parity Units shall be insufficient to pay in
full the preferential amount aforesaid and liquidating payments on any other
units of any class or series of Series A Parity Units, then such assets, or the
proceeds thereof, shall be distributed among the holders of Series A Preferred
Units and any such other Series A Parity Units ratably in accordance with the
respective amounts that would be payable on such Series A Preferred Units and
any such other Series A Parity Units if all amounts payable thereon were paid in
full. 

     

    (B) Subject
to the rights of the holders of any Series A Parity Units or Series A Senior
Units, upon any liquidation, dissolution or winding up of the Partnership, after
payment shall have been made in full to the holders of the Series A Preferred
Units, as provided in this Section 5, the holders of Series A Preferred Units
shall have no other claim to the remaining assets of the Partnership and any
other series or class or classes of Series A Junior Units shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the holders
of the Series A Preferred Units shall not be entitled to share therein.

     

    6. Conversion.

     

    (A) Unless
such Series A Preferred Units have previously been redeemed pursuant to Section
8 hereof, at the option of the holder thereof, any Series A Preferred Units may
be converted, in whole or in part, at any time and from time to time after the
Lockout Date, into such number of Common Units obtained by dividing the
aggregate Series A Liquidation Preference (including for this purpose any
distributions accrued and unpaid in respect of any prior Series A Distribution
Periods but not the then-current Series A distribution Period) of such Series A
Preferred Units by the estimated fair market value of one common share in the
REIT (the “Estimated Market Value”) as determined by Robert A. Stanger &
Co., Inc. or another nationally recognized independent valuation firm with
expertise in valuing the securities of real estate investment trusts, reasonably
acceptable to the Partnership and holders owning at least sixty six and two
thirds percent (66 and 2/3%) of Series A Preferred Units.

     

    (B) In order
to exercise the conversion right, the holder of each applicable Series A
Preferred Unit shall surrender the certificate representing such Series A
Preferred Unit, duly endorsed or assigned to the Partnership in blank, to the
Partnership, accompanied by written notice to the Partnership that the holder
thereof elects to convert such Series A Preferred Units.

     

    
      
        
        

      

      
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    (C) Holders
of Series A Preferred Units at the close of business on the record date (a
“Series A Distribution Record Date”) in respect if any Series A Distribution
Payment Date shall be entitled to receive the distribution payable on such units
on the corresponding Series A Distribution Payment Date notwithstanding the
conversion thereof following such Series A Distribution Record Date and prior to
such Series A Distribution Payment Date.

     

    (D) Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the date on which the certificate for the Series A Preferred
Units shall have been surrendered and such notice received by the Partnership as
aforesaid.

     

    (E) No
fractional units or scrip representing fractions of Common Units shall be issued
upon conversion of the Series A Preferred Units. Instead of any fractional
interest in a Common Unit that would otherwise be deliverable upon the
conversion of a Series A Preferred Unit, the Partnership shall pay to the holder
of such Series A Preferred Unit an amount equal in cash based upon the then
Estimated Market Price. If more than one Series A Preferred Unit shall be
surrendered for conversion at one time by the same holder, the number of Common
Units issuable upon conversion thereof shall be computed on the basis of the
aggregate number of Series A Preferred Units so surrendered.

     

    7. Redemption. The
Series A Preferred Units shall have no mandatory redemption or maturity date.
The Series A Preferred Units shall not be redeemable by the Partnership prior to
the Lockout Date. On or after the Lockout Date, the Series A Preferred Units may
be redeemed at the option of the Partnership (which notice may be delivered
prior to the Lockout Date as long as the redemption does not occur prior to the
Lockout Date), in whole but not in part, on thirty (30) days’ prior written
notice at the option of the Partnership, at a redemption price per Series A
Preferred Unit equal to the sum of the Series A Liquidation Preference plus an
amount equal to all distributions (whether or not earned or declared) accrued
and unpaid thereon to the date of redemption, and the redemption price shall be
payable in cash. During any redemption notice period, the holders of the Series
A Preferred Units shall retain any conversion rights with respect to the Series
A Preferred Units. The Series A Preferred Units shall not be subject to any
sinking fund or other obligation of the Partnership to redeem or retire the
Series A Preferred Units.

     

    8. Voting.

     

    (A) Other
than as expressly provided in below in this Section 8, the Series A Preferred
Units shall not have any voting rights or powers, and the consent of the holders
thereof, shall not be required for the taking of any Partnership
action.

     

    (B) As long
as any of the Series A Preferred Units shall remain outstanding, the Partnership
shall not, and the General Partner shall not have the authority to cause the
Partnership to, take any of the following actions without the prior written
consent of holders owning at least sixty-six and two-thirds percent (66 and
2/3%) of the Series A Preferred Units then issued and outstanding, voting as a
single class, in person or by proxy:

     

    
      
        
        

      

      
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    (1) Issue any
Series A Senior Units or additional Series A Preferred Units, except for Series
A Preferred Units that are issued to AR Prime pursuant to the AR Prime
Contribution Agreement; provided,
however, nothing
in this clause 8(B)(1) shall prohibit the Partnership from issuing Series A
Junior Units or Series A Parity Units.

     

    (2) Issue any
Series A Parity Units if (x) the liquidation preference for such units exceeds
the value of the consideration received by the Partnership for the issuance of
such units, as determined by the Board of Directors of the REIT in its sole
discretion, (y) the rates at which distributions are payable on such units are
calculated on a base amount that is higher than the liquidation preference for
such units, or (z) the distribution payment dates for such units are not the
same as those for the Series A Preferred Units.

     

    (3) Redeem or
repurchase any Series A Junior Units.

     

    (4) Redeem or
repurchase any Series A Parity Units on or after the Lockout Date, unless
concurrently therewith all of the Series A Preferred Units are being
redeemed.

     

    (5) Redeem or
repurchase any Series A Party Units prior to the Lockout Date, unless the full
cumulative distributions have been or contemporaneously are declared and paid or
set apart for payment for any past Series A Distribution Periods; provided that in
the case of a repurchase, Series A Parity Units may not be purchased by the
Partnership at a price higher than the redemption price for such Series A Parity
Units or if no redemption price is provided for, the liquidation preference for
such Series A Parity Units, plus any accrued and unpaid distributions thereon to
the extent not otherwise included in the calculation of the liquidation
preference for such Series A Parity Units.

     

    (6) (x) Effectuate
amendments to the Partnership Agreement (other than amendments to this Exhibit
A) that would materially adversely affect the terms and conditions of, or the
rights, privileges or preferences of the holders of the Series A Preferred Units
or (y) effectuate amendments to any provisions set forth in this Amendment that
would adversely affect the terms and conditions of, or the rights, privileges or
preferences of the holders of the Series A Preferred Units.

     

    (C) In the
event that the Series A Preferred Units have not been redeemed by the
Partnership
on the Lockout Date or within fifteen (15) days thereafter, from and after such
date the Partnership shall not, and the General Partner shall not have the
authority to cause the Partnership to, take any
of the following actions without the prior written consent of holders owning at
least sixty-six and two-thirds percent (66 and 2/3%) of the Series A Preferred
Units then issued and outstanding, voting as a single class in person or by
proxy:

     

    (1) Issue any
Partnership Interests other than Common Units.

     

    (2) Purchase
or otherwise acquire any direct or indirect interest in real property, except
that the Partnership shall be permitted to make purchases or acquisitions of
interests in real property where the sole consideration for such purchases or
acquisitions is exclusively the issuance of Common Units. Notwithstanding the
foregoing, the Partnership shall be permitted to consummate any purchase or
acquisition from a Person other than the REIT Advisor, the Special General
Partner or any of their respective Affiliates provided that such purchase or
acquisition (i) was the subject of an executed purchase agreement dated at least
90 days prior to the Lockout Date or (ii) is a follow-on investment in existing
real property owned by the Partnership that involves an acquisition (a) of
property adjoining property already owned by the Partnership or (b) a greater
ownership interest in property already owned by the Partnership; provided that, in
the case of (a) and (b) above, such purchase or acquisition is being effected in
order to protect, preserve or enhance the Partnership’s existing
investment.

     

    
      
        
        

      

      
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    (3) Sell,
transfer, lease as an entirety, or otherwise dispose of any direct or indirect
interest in real property; provided,
however, that
the Partnership shall be permitted to sell, transfer, lease or otherwise dispose
of any real property to a Person other than the REIT Advisor, the Special
General Partner or any of their respective Affiliates if such transaction (i)
was the subject of a binding executed purchase agreement dated at least 90 days
prior to the Lockout Date, or (ii) none of the net proceeds of such transaction
(after customary third party transaction costs, other than those payable to
Person the REIT Advisor, the Special General Partner or any of their respective
Affiliates) shall be distributed to any holders of Series A Junior Units and all
of such net proceeds shall instead either (x) be applied to redeem the Series A
Preferred Units at the closing of such transaction or (y) be held in a
segregated account which may be used solely for the redemption of the Series A
Preferred Units.

     

    (4) Lend
money to or guarantee the obligation of, any person other than direct or
indirect subsidiaries of the REIT or the Partnership, in excess of $500,000 per
annum in the aggregate; provided that the
Partnership shall be permitted to make any loan or guarantee that is required to
be made pursuant to a binding executed agreement dated at least 90 days prior to
the Lockout Date; provided,
further, that
any such loan or guarantee permitted by the previous proviso shall not be
permitted to be made to the REIT Advisor, the Special General Partner or any of
their respective Affiliates.

     

    (5) Effectuate
a merger, consolidation or recapitalization of the Partnership or a conversion
of the Partnership to an entity other than a Delaware limited
partnership.

     

    (6) Enter
into any new agreement or transaction, or modify or waive the terms of, or agree
to terminate, any existing agreement or transaction, with the REIT Advisor, the
Special General Partner or any of their respective Affiliates; provided,
however, that
the foregoing restriction shall not apply to the annual renewal of the advisory
agreement with affiliates of the Partnership and the annual renewal of the
management agreements with affiliates of the Partnership; and provided,
further, that in
addition to the renewal or extension of the term of any such advisory and
management agreement, additional amendments or modifications to such agreements
may be made as long as such amendments or modifications (including, without
limitation with respect to fees payable pursuant to such agreements) are
determined by the Board of Directors of the REIT to be market provisions and
amendments as evidenced by a report produced or compiled by Robert A Stanger
& Co., Inc. or another independent, nationally recognized valuation firm
selected by the Board of Directors of the REIT.

     

    (D) Notwithstanding
anything in this Section 8 to the contrary, no consent of the holders of the
Series A Preferred Units shall be required with respect to any transaction if
(x) prior to the closing of such transaction the Partnership has given written
notice that it intends to fully redeem all of the Series A Preferred Units and
(y) at the closing of such transaction the Series A Preferred Units are fully
redeemed by the Partnership. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (E) The
Partnership shall not, and the General Partner shall not have the authority to
cause the Partnership to, enter into any binding agreement to take any action
that would violate the provisions of this Section 8 (a “Restricted Agreement”);
provided,
however, that
the General Partner shall have the authority to cause the Partnership to enter
into a Restricted Agreement if, upon the closing of the transaction contemplated
by such Restricted Agreement, the Series A Preferred Units will be redeemed in
full by the Partnership.

     

    9. Transfers. Prior
to the Lockout Date, no Series A Preferred Unit shall be transferred, sold,
assigned, conveyed, gifted, pledged, encumbered, hypothecated, mortgaged,
exchanged or otherwise disposed of by law or otherwise (collectively, a
“Transfer”) without the prior written consent of the General Partner, which may
be withheld or denied by the General Partner it is sole and absolute discretion;
provided,
however, that
notwithstanding anything in the Partnership Agreement to the contrary but
subject to the limitations set forth in Sections 11.3 (c), (d), and (e) of the
Partnership Agreement as in effect as of June 26, 2008, prior to the Lockout
Date there
shall be no approval required for, and no restrictions whatsoever on,
any
Transfer of Series A Preferred Units to Arbor Realty Trust, Inc., Arbor
Commercial Mortgage, LLC or any of their respective controlled Affiliates, and
there shall be no approval required for, or restrictions on, the pledge of any
Series A Preferred Units to the REIT. Notwithstanding anything in the
Partnership Agreement to the contrary, (i) from and after the Lockout Date, the
only restrictions in the Partnership Agreement on the Transfer of Series A
Preferred Units are those set forth in Sections 11.3 (c), (d), and (e) of the
Partnership Agreement as in effect as of June 26, 2008 and (ii)
any Transfer in contravention of the terms of this Exhibit A shall be void and
ineffectual and shall not be binding upon, or recognized by the
Partnership.

     

    10. Opt-in to Article 8 of the
Uniform Commercial Code.
Pursuant to and in accordance with 6 Del. Code Section 8-103(c), all Series A
Preferred Units shall be considered and treated as “securities” (within the
meaning of Del. Code Section 8-102(a)(15)) governed by Article 8 of the Delaware
Uniform Commercial Code. All Series A Preferred Units shall upon issuance be
evidenced and represented by Certificates of Series A Preferred Units issued by
the Partnership to each holder of Series A Preferred Units. Such Certificate of
Series A Preferred Interest is intended to be and shall be considered a
“security certificate” within the meaning of 6 Del. Code Section 8-102(a)(16).
The Series A Preferred Units represented or evidenced by such Certificate are
intended to be treated and shall be considered “certificated securities” within
the meaning of 6 Del. Code Section 8-102(a)(4). The General Partner and the
officers thereof are hereby authorized, empowered and directed to execute and
deliver any such Certificate and such Certificates shall be delivered by the
Partnership to the applicable holder concurrently with the date of
issuance.

     

    11. Miscellaneous.

     

    (A) Series A
Preferred Units will not have any designations, preferences, conversion or other
rights, voting powers, restrictions, limitations as to distributions,
qualifications or terms and conditions of redemption, other than those
specifically set forth herein, in the Partnership Agreement, and as may be
provided under applicable law.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    (B) The
headings of the various subdivisions herein are for convenience only and will
not affect the meaning if interpretation of any of the provisions
herein.

     

    (C) The
preferences, conversion and other rights, voting powers, restrictions,
limitations as to distributions, qualifications and terms and conditions of
redemption of the Series A Preferred Units may be waived, and any of such
provisions of the Series A Preferred Units may be amended, with the approval of
holders of at least sixty-six and two-thirds percent (66 and 2/3%) of the issued
outstanding Series A Preferred Units, voting as a single class in person or by
proxy.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    12. Severability of
Provisions.
Whenever possible, each provision hereof shall be interpreted in a manner as to
be effective and valid under applicable law, but if any provision hereof is held
to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or otherwise adversely affecting the remaining provisions hereof.
If a court of competent jurisdiction should determine that a provision hereof
would be valid or enforceable if a period of time were extended or shortened or
a particular percentage were increased or decreased, the such court may make
such change as shall be necessary to render the provision in question effective
and valid under applicable law.

     

    
      
        
        

      

      
        15Unassociated Document

    EXHIBIT
10.38

    
 

    TAX PROTECTION
AGREEMENT

     

    THIS TAX
PROTECTION AGREEMENT (“Agreement”), dated as of June 26, 2008, is made by
LIGHTSTONE VALUE PLUS REIT, L.P., a Delaware limited partnership (“LVP”), and
ARBOR MILL RUN JRM, LLC, a Delaware limited liability company (“AMR”) that will
become a limited partner of LVP as a result of the Contribution (defined
below).

     

    WHEREAS AMR
owns a membership interest in Mill Run
LLC (“MRL”)
corresponding to a 22.08% Common Interest (as defined in the Second Amended and
Restated Operating Agreement of Mill Run LLC, dated as of September 20, 2005, as
amended);

     

    WHEREAS
MRL owns, indirectly through entities that are treated as disregarded entities
for U.S. federal tax purposes, a property known as the Orlando Design Center and
a property known as Orlando Outlet World (collectively, the “Properties”);

     

    WHEREAS,
pursuant to that certain Contribution and Conveyance Agreement, dated as of the
date hereof, between AMR and LVP (the “Contribution Agreement”), AMR will
contribute all of its membership interest in MRL (the “Contributed Interest”) to
LVP in exchange for Units (as defined in the Contribution Agreement) of LVP (the
“Contribution”); 

     

    WHEREAS,
for federal income tax purposes, it is intended that the Contribution will be
treated as a tax-free contribution by AMR to LVP of the Contributed Interest in
exchange for Units under Section 721 of the Code;

     

    WHEREAS,
pursuant to the Contribution Agreement, LVP has agreed to make certain
undertakings to AMR as provided herein;

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties agree as follows:

     

    1. Definitions. All
capitalized terms used and not otherwise defined in this Agreement shall have
the meaning set forth in the Partnership Agreement (as defined below). As used
herein, the following terms have the following meanings:

     

    “Approved
Firms” shall mean any of the following firms: Baker & McKenzie LLP, Deloitte
& Touche LLP, Dewey & LeBoeuf LLP, McKee Nelson LLP, Kaye Scholer LLP,
and DLA Piper; and if any of the aforementioned law firms shall disband, the
parties hereto shall each make a good faith effort to choose a replacement for
each such firm.

     

    “Built-in
Gain” means gain allocable under Section 704(c) of the Code or under so-called
“reverse” Section 704(c) principles pursuant to Treasury Regulation Section
1.704-1(b)(4)(i) to AMR with respect to the Properties or the Contributed
Interest (taking into account any special inside basis of AMR under Section
743(b) of the Code with respect to the Properties or the Contributed Interest).
For purposes of determining Built-in Gain with respect to the Properties, the
assets of MRL shall be deemed to have been revalued for federal income tax
purposes, and the capital accounts of the partners therein adjusted, immediately
prior to the Contribution pursuant to the principles of Treasury Regulation
Section 1.704-2(b)(2)(iv)(f) (notwithstanding that no event described in
Treasury Regulation Section 1.704-2(b)(2)(iv)(f)(5) occurs with respect to MRL
in connection with the Contribution). After the Closing Date, the Built-in Gain
shall be reduced from time to time pursuant to the principles set forth in the
Code and the Regulations thereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Closing”
shall mean the closing of the exchange of the Contributed Interest for Units
pursuant to the Contribution Agreement.

     

    “Closing
Date” shall mean the date on which the Closing occurs. 

     

    “Code”
means the Internal Revenue Code of 1986, as amended.

     

    “Contributed
Interest” shall have the meaning set forth in the Recitals.

     

    “Contribution”
shall have the meaning set forth in the Recitals.

     

    “Disposition”
shall
have the meaning set forth in Section 2(a).

     

    “Excluded
Transfer” shall have the meaning set forth in Section 2(g).

     

    “Nonrecourse
Built-in Gain” means gain recognized under Section 731(a)(1) of the Code as a
result of a deemed distribution under Section 752(b) of the Code or gain
recognized under Section 465(e) of the Code as a result of a reduction of the
amount of liabilities allocable to AMR under Section 752 of the Code below the
Protected Amount.

     

    “Partnership
Agreement” shall mean the Amended and Restated Agreement of Limited Partnership,
dated as of April 22, 2005, of LVP, as amended. 

     

    “Permitted
Transfer” shall mean (i) a
transfer of any of the Properties or the Contributed Interest in an involuntary
bankruptcy against MRL, (ii) the
condemnation or other taking of any of the Properties by a governmental entity
or authority in eminent domain proceedings, (iii) if LVP elects the Application
of Section 2(f), a transfer of the Orlando Design Center, or (iv) if LVP elects
the Application of Section 2(g), an Excluded Transfer.

     

    “Prohibited
Transaction” shall mean a transaction that is prohibited under Section
2(a).

     

    “Properties”
shall have the meaning set forth in the Recitals.

     

    “Protected
Amount” shall mean an amount equal to the product of (i) AMR’s negative tax
capital account in MRL as of the date hereof and (ii) negative one (-1), as such
amount may be reduced pursuant to the following sentence. Upon any other sale,
exchange, transfer or disposition either (a) by AMR of some or all of its Units
or (b) by any person or entity of some or all of its direct or indirect equity
interest in AMR, the Protected Amount shall be reduced to the extent of (x) in
situation (a), any gain recognized by AMR, but only to the extent such gain is
attributable to the amount of nonrecourse liabilities of LVP of which AMR is
deemed relieved under Section 752 of the Code and the regulations thereunder as
a result of such transaction, and (y) in situation (b), any gain recognized by
such person (or, in the case of a transfer resulting from the death of such
person, the difference between the adjusted tax basis, for federal income tax
purposes, of the transferee with respect to the transferred property and the
adjusted tax basis, for federal income tax purposes, of such person with respect
to such property), but only to the extent such gain is attributable to the
amount of nonrecourse liabilities of LVP of which such person is deemed relieved
under Section 752 of the Code and the regulations thereunder as a result of such
transaction. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Protected
Period” means the period beginning on the Closing Date, but after the Closing,
and ending on the date that is five (5) years after the Closing
Date.

     

    “Qualifying
Opinion” shall have the meaning set forth in Section 3(d).

     

    2. Restrictions on Disposition
of the Properties.

     

    (a) Subject
to Section 2(b), LVP agrees that during the Protected Period neither LVP, nor
any entity in which LVP holds a direct or indirect interest, will consummate a
sale, transfer, exchange or other disposition of all or any portion of the
Properties, the Contributed Interest, or any indirect interest in all or any
portion of the Properties or the Contributed Interest (a “Disposition”), or
engage in any other transaction, that results in the recognition and allocation
to AMR of all or any portion of its Built-in Gain that it would not otherwise
have recognized at such time as a result of the application of the Code and
Regulations in the absence of such transaction or any other transaction. In
addition, LVP shall not enter into any transaction described in the first
sentence of Section 3(d) unless LVP shall have first provided AMR with a
Qualifying Opinion in a timely manner pursuant to the requirements of Section
3(d). AMR shall have the right to seek and obtain specific performance or
injunctive relief as a remedy with respect to any breach or threatened breach of
the covenant set forth in the preceding sentence.

     

    (b) The first
sentence of Section 2(a) shall not apply to (i) a
transfer of any of the Properties or the Contributed Interest in an involuntary
bankruptcy against MRL or (ii) the
condemnation or other taking of any of the Properties by a governmental entity
or authority in eminent domain proceedings. 

     

    (c) Any
property that is exchanged for or replaces any of the Properties, the
Contributed Interest, or any portion thereof and that is “substituted basis
property,” as defined in Section 7701(a)(42) of the Code, with respect
thereto shall thereafter be treated as a “Property,” the “Contributed Interest,”
or a portion thereof, as the case may be, for all purposes of this Agreement;
however, the Property, the Contributed Interest, or the portion thereof that was
exchanged for or replaced by such new property shall continue to be treated as a
“Property,” the “Contributed Interest,” or a portion thereof to the extent that
a subsequent disposition of (or other transaction involving) the Property, the
Contributed Interest, or the portion thereof could result in the recognition and
allocation to AMR of any Built-in Gain.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (d) Within 18
weeks after the Closing Date, LVP shall provide to AMR a spreadsheet showing its
calculation of (i) the Built-in Gain with respect to the Properties and the
Contributed Interest and (ii) AMR’s negative tax capital account in MRL as of
the Closing Date. The calculation of the Built-in Gain shall be based on the
fair market values for the Properties and the Contributed Interest shown on
Schedule A hereto. The calculation of the Built-in Gain shall also reflect any
Section 704(c) or “reverse” Section 704(c) gain or loss existing with respect to
the Properties immediately prior to the Closing.

     

    (e) For
federal, state, and local income tax purposes, LVP shall report (i) AMR’s
contribution of the Contributed Interest to LVP as a tax-free contribution
pursuant to Section 721 of the Code (or the corresponding provision of state or
local law, as applicable) and (ii) AMR as a partner in LVP with respect to all
of the Units received by LVP; provided that,
upon a reasonable request from LVP’s accountant, AMR shall provide (at LVP’s
expense) to the accountant, at AMR’s election, either (i) a letter from Cooley
Godward Kronish LLP to the accountant, (ii) an opinion letter from Cooley
Godward Kronish LLP which shall provide that the accountant is entitled to rely
on it, or (iii) an opinion letter from an Approved Firm to the accountant, in
each case providing the required level of comfort to the accountant to sign the
return or returns. Notwithstanding the foregoing, LVP shall not be deemed to
have breached its obligations under this Section 2(e) solely because a
governmental taxing authority determines that LVP would be required to file an
amended tax return or amended information statement that reports the
Contribution other than as a contribution pursuant to Section 721 of the
Code.

     

    (f) LVP may
elect to apply this Section 2(f) by treating any taxable direct or indirect
disposition of the Orlando Design Center as not subject to indemnification under
the first sentence of Section 2(a); provided,
however, that
LVP shall not be entitled to elect the application of this Section 2(f) if LVP
shall have previously elected the application of Section 2(g). If LVP elects the
application of this Section 2(f), then the first sentence of Section 2(a) shall
not apply to a transfer of the Orlando Design Center.

     

    (g) LVP may
elect to apply this Section 2(g) by treating all or part of one or more taxable
direct or indirect Dispositions of Properties (other than the Orlando Design
Center), occurring at any time after the one year anniversary of the Closing
Date, as an Excluded Transfer or Excluded Transfers (as defined below) not
subject to indemnification under the first sentence of Section 2(a), within the
limits set forth in the following sentence; provided,
however, that
LVP shall not be entitled to elect the application of this Section 2(g) if LVP
shall have previously or concurrently elected the application of Section 2(f).
If LVP elects or has elected the application of this Section 2(g) and in any
calendar year, taking into account all direct or indirect Dispositions by LVP of
one or more Properties or portions thereof that (i) are taxable in whole or in
part and (ii) occur during such calendar year and after the one year anniversary
of the Closing Date, LVP transfers Properties or portions thereof having an
aggregate value as of the date hereof as set forth on Schedule A hereto that is
less than or equal to ten percent (10%) of the total value of the Properties as
of the date hereof as set forth on Schedule A hereto, then the first sentence of
Section 2(a) shall not apply to such Dispositions (each such Disposition, an
“Excluded Transfer”); moreover, if the aggregate value of the Properties
transferred in such Dispositions is less than ten percent (10%) of the total
value (as of the date hereof as set forth on Schedule A hereto) of the
Properties as of the date hereof as set forth on Schedule A hereto, then such
deficit shall carry over to the following calendar year and increase the amount
of Properties the transfers of which may qualify as Excluded Transfers for such
year, and if such amounts are not transferred, all such amounts shall carry over
to the next successive year, and so on, until the term of this Agreement shall
expire. If the preceding sentence does not apply to Dispositions by LVP in any
calendar year because the aggregate value (as of the date hereof as set forth on
Schedule A hereto) of the Properties (or portions thereof) disposed of exceeds
ten percent (10%) of the total value of the Properties as of the date hereof as
set forth on Schedule A hereto, then only a ratable portion of each such
Disposition shall qualify as an Excluded Transfer not subject to Section 2(a).
With respect to the first calendar year that begins after the date hereof, the
preceding two sentences shall be applied by substituting for each occurrence of
“ten percent (10%)” the product of (i) ten percent (10%) and (ii) a fraction,
the numerator of which is the number of days from the one year anniversary of
the date hereof to December 31 of such calendar year, and the denominator of
which is 365. Notwithstanding anything to the contrary herein, a direct or
indirect Disposition or other transfer of a Property or a portion thereof shall
not constitute an Excluded Transfer if such transfer is effectuated with a party
“related” to LVP (applying the principles of Code Sections 267(b) and 707(b)) in
a transaction that lacks a bona fide commercially motivated business purpose.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (h) No later
than the earlier of (i) the date that is 30 days after LVP consummates a direct
or indirect Disposition, taxable in whole or in part, of one or more Properties
or portions thereof and (ii) December 31 of the calendar year in which such
Disposition occurs, LVP shall provide AMR with written notification of such
disposition, including (I) the Property, Properties, or portions thereof
disposed of, (II) the amount and nature of the consideration received, and (III)
the amount of gain (including Built-in Gain) allocable to AMR as a result of
such Disposition; provided,
however, that
LVP shall not be required to provide such notification if it shall have
previously provided the identical information to AMR pursuant to the
notification provisions of Section 3(a).

     

    3. Indemnity by LVP for Breach
of Obligations set forth in Section 2.

     

    (a) In the
event that LVP engages in a Prohibited Transaction in breach of its obligations
set forth in Section 2(a), LVP shall pay to AMR an amount equal to (i) the
aggregate federal, state and local income taxes deemed incurred by AMR with
respect to any portion of its Built-in Gain that it recognizes as a result of
such Prohibited Transaction plus (ii) a “gross-up” amount so that, after the
hypothetical payment by AMR of all federal, state and local income taxes on
amounts received pursuant to this Section 3(a), AMR would retain from such
payments hereunder an amount equal to its total deemed income tax liability
incurred as a result of the Prohibited Transaction and its recognition of such
Built-in Gain. If (i) gain is recognized by AMR or allocated to AMR as a result
of the closing of the transactions contemplated by the Contribution Agreement
and (ii) such gain recognition is attributable to (I) incorrect information
provided by MRL or an affiliate or agent thereof to AMR or (II) a breach of
LVP’s or the Lightstone Value Plus Real Estate Investment Trust, Inc.’s
obligations under the Contribution Agreement or this Agreement, then LVP shall
indemnify AMR for such Built-in Gain under this Section 3(a) as if such Built-in
Gain had resulted from a Prohibited Transaction. Notwithstanding anything herein
to the contrary, it is the understanding and the intention of the parties hereto
that this Agreement shall in no manner create liability for LVP as a result of
any tax that may be recognized as a result of (i) the structure and effectuation
of the transactions contemplated hereby and by the Contribution Agreement or
(ii) any conversion of Units into stock of the REIT at AMR’s election and that
the only liability that may arise as to LVP shall be as a result of its breach
of its obligations imposed by this Agreement or the Contribution Agreement, if
any, or as a result of any provision of incorrect information. At the
time LVP enters into an agreement to consummate a Prohibited Transaction that,
if consummated, would breach Section 2(a) hereof and result in the recognition
by AMR of all or any portion of its Built-in Gain, and in any case not less than
thirty (30) days prior to consummating such Prohibited Transaction, LVP shall
notify AMR in writing of such proposed Prohibited Transaction and of the
approximate sales price or other amount to be realized for income tax purposes
in connection therewith and all other relevant details of the Prohibited
Transaction and shall request from AMR such information that is
within AMR’s possession or control as is
reasonably necessary for LVP to calculate the amount of the indemnity set forth
herein. Upon receipt of such notice, AMR shall provide LVP with any information
reasonably requested by LVP of AMR that is within AMR’s possession or control
and is relevant to calculation of the indemnity set forth herein within ten (10)
days of such request. Within ten (10) days after receipt of such information
from AMR (or, if no such information is requested, at the same time that LVP
notifies AMR of the Prohibited Transaction as provided above), LVP shall provide
to AMR (i) a computation of the indemnity payment, if any, owing to AMR under
this Section 3(a). LVP shall make any required indemnity payment owing to AMR
pursuant to this Section 3(a) no later than five (5) days prior to the due date
of the quarterly estimated tax payment for individuals which next follows the
date that the Prohibited Transaction is consummated or, if later, ten (10) days
after the date required for LVP’s delivery of the computation of the indemnity
payment to AMR. For purposes of determining the amount of the deemed income
taxes incurred by AMR and the amount of the indemnity for Built-in Gain under
this Section 3(a), (i) all income arising from a transaction or event that is
taxable at ordinary income rates (including, without limitation, “recapture”
under Code Sections 1245 or 1250 and net short-term capital gain) under the
applicable provisions of the Code and allocable to AMR shall be treated as
subject to federal, state and local income tax at the then applicable effective
tax rate imposed on ordinary income of individuals residing in the city of New
York, New York, determined using the maximum federal rate of tax on ordinary
income and the maximum state and local rates of tax on ordinary income then in
effect in New York City and New York State, (ii) all long-term capital gain
arising from the transaction or event allocable to AMR shall be treated as
subject to federal, state, and local income tax at the then applicable effective
tax rate imposed on long-term capital gains of individuals residing in the city
of New York, New York, determined using the maximum federal, state and local
rates on long-term capital gains then in effect (taking into account any special
capital gains rate attributable to recapture of prior depreciation deductions),
and (iii) any amounts payable with respect to state and local income taxes shall
be assumed to be fully deductible (without limitation or phaseout) for federal
income tax purposes. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (b) Notwithstanding
any provision of this Agreement to the contrary, other than the last sentence of
Section 2(a), Section 3(c), and Section 3(d), the sole and exclusive rights and
remedies of AMR for a breach or violation of the covenants set forth in
Sections 2(a) and 3(a) shall be a claim for payment against LVP, computed
as set forth in Section 3(a), and for interest and enforcement costs as
provided in Section 9(e). Except as provided in Sections 2(a), 3(c), and 3(d),
AMR shall not be entitled to pursue a claim for specific performance of the
covenant set forth in Section 2(a) or bring a claim against any person that
acquires the Contributed Interest or any of the Properties in violation of
Section 2(a).

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c) Notwithstanding
anything to the contrary herein, LVP may not enter into a Prohibited Transaction
unless, at least fourteen (14) days prior to entering into such transaction, LVP
will have provided AMR with evidence reasonably satisfactory to AMR that,
following such transaction, and including any proceeds from such transaction,
LVP will have the requisite liquidity to make any necessary indemnification
payments required pursuant to this Agreement. AMR shall have the right to seek
and obtain specific performance or injunctive relief as a remedy with respect to
any breach or threatened breach of this covenant.

     

    (d) Prior to
the time that LVP enters into an agreement to consummate a transaction that (i)
may result in the realization of Built-in Gain but (ii) which LVP may report,
for federal, state, or local income tax purposes, as not resulting (in whole or
in part) in the recognition of such realized Built-in Gain, and in any case not
less than thirty (30) days prior to consummating such transaction, LVP shall
provide AMR with a written description of the transaction containing all
relevant details and shall thereafter, as promptly as possible upon AMR’s
reasonable request, and in any case not less than twenty (20) days prior to
consummating such transaction, provide AMR with an opinion from any Approved
Firm that (i) meets all the requirements for “covered opinions” set forth in
Section 10.35(c) of IRS Circular 230, including the requirement that a covered
opinion consider all significant federal tax issues, (ii) is based on a
statement of facts that is not inaccurate or unreasonable in any material
respect, and (iii) concludes, at at least a “more likely than not” level of
comfort, that all or part of the Built-in Gain realized in such transaction will
not be recognized for tax purposes (such an opinion, a “Qualifying Opinion”). If
LVP does not provide AMR with a description of the transaction and, if
reasonably requested by AMR, a Qualifying Opinion in a timely manner pursuant to
the first sentence of this paragraph, then LVP shall not consummate such
transaction. Furthermore, LVP shall not report any transaction as resulting (in
whole or in part) in the realization, but not the nonrecognition, of Built-in
Gain unless either (i) LVP previously provided AMR with a Qualifying Opinion in
a timely manner pursuant to the first sentence of this paragraph or (ii) LVP
obtains the consent of AMR prior to taking such reporting position. AMR shall
have the right to seek and obtain specific performance or injunctive relief as a
remedy with respect to any breach or threatened breach of the covenants set
forth in this paragraph.

     

    4. Section 704(c)
Method. LVP
shall use, and shall cause any other entity in which LVP has a direct or
indirect interest to use, the “traditional method” under Treasury Regulation
Section 1.704-3(b) without curative allocations for purposes of making
allocations under Section 704(c) of the Code or reverse Section 704(c)
allocations with respect to the Contributed Interest and the Properties to take
into account the book-tax disparities as of the effective time of the
Contribution with respect to the Contributed Interest and the Properties.

     

    5. Obligation of LVP to
Maintain Certain Debt.

     

    (a) At all
times through the Protected Period, LVP agrees to maintain, directly or
indirectly, an amount of indebtedness allocable to AMR under Section 752 of the
Code (and specifically as one or more nonrecourse liabilities under Treasury
Regulation Section 1.752-3) at least equal to the Protected Amount. AMR shall
have the right to seek and obtain specific performance or injunctive relief as a
remedy with respect to any breach or threatened breach of this covenant. For the
avoidance of doubt, the purpose of this Section 5(a) is not to require LVP to
increase the amount of liabilities to which the Properties or any other
properties are subject, provided that LVP
maintains in place the liabilities of MRL and its subsidiary entities existing
as of the date hereof and does not take any actions (or cause or permit any
actions to be taken) that would decrease the amounts of such liabilities that
are allocable to AMR under Section 752 and the regulations
thereunder.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (b) Federal,
state and local income tax returns filed by LVP for all taxable periods
beginning prior to the expiration of the Protected Period shall report
allocations of nonrecourse liabilities to AMR in an amount at least equal to the
Protected Amount. 

     

    6. Indemnity by LVP for Breach
of Obligations set forth in Section 5. In the
event that (i) LVP breaches its obligations set forth in Section 5 and as a
result AMR recognizes Nonrecourse Built-in Gain and (ii)
such breach has not occurred in connection with a Permitted Transfer,
LVP shall
pay to AMR, upon written demand by AMR, an amount equal to (i) the aggregate
federal, state and local income taxes deemed incurred by AMR as a result of such
Nonrecourse Built-in Gain recognized by AMR by reason of such breach plus (ii) a
“gross-up” amount so that, after the hypothetical payment by AMR of all federal,
state and local income taxes on amounts received pursuant to this Section 6, AMR
would retain from such payments hereunder an amount equal to its total income
tax liability deemed incurred as a result of the breach by LVP of its
obligations set forth in Section 5 and AMR’s recognition of such Nonrecourse
Built-in Gain. The principles and tax rates set forth in Section 3(a) shall
apply for purposes of determining the timing and amount of payment to be made to
AMR pursuant to this Section 6 (including, without limitation, the calculation
of the aggregate federal, state and local income taxes deemed incurred by AMR).
In addition, the notification procedures set forth in Section 3(a) shall apply
for purposes of this Section 6 with respect to transactions that would result in
a breach of Section 5. 

     

    7. Requests for
Information. Upon
the request of LVP, AMR shall provide to LVP copies of such tax returns,
schedules and other information that is within the possession or control of AMR
(including, without limitation, copies of state and federal tax returns and
related working papers) reasonably requested by LVP (“Tax Protection
Information”) to enable it to make any necessary calculations with respect to
payments required to be made by LVP hereunder, including, without limitation,
calculations of Built-in Gain and Nonrecourse Built-in Gain claimed to be
recognized by AMR. No Tax Protection Information acquired by LVP or any of its
representatives may be disclosed to any individual or entity other than (i)
those representatives of LVP who need to know the Tax Protection Information for
the purpose of assisting LVP in evaluating and performing its obligations under
this Agreement (it being understood that prior to such disclosure LVP’s
representatives will be informed of the confidential nature of the Tax
Protection Information and shall agree in writing to be bound by the
requirements of this Section 7 of this Agreement), (ii) as required by
applicable law, or (iii) if necessary, upon the advice of counsel, in order to
comply with any judicial order, civil or criminal subpoena or any discovery
demand in pending litigation, whether or not LVP or any of its representatives
is a party thereto. LVP agrees to be responsible for any breach of this
Agreement by its representatives.

     

    8. Term. This
Agreement shall terminate upon the expiration of the Protected Period. In
addition, Section 5 of this Agreement shall terminate in the event that the
Protected Amount is reduced to zero. Notwithstanding the foregoing, LVP's
payment obligations under Sections 3, 6 and 9(e) shall survive the termination
of this Agreement or the termination of Section 5, as the case may be, to the
extent such obligations relate to a breach of LVP’s obligations under Section 2
or 5 occurring before such termination of this Agreement (or in the case of
liability under Section 6, the termination of Section 5). 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    9. General
Provisions.

     

    (a) Notices. All
notices, requests, claims, demands and other communications under this Agreement
shall be in writing and shall be deemed given if delivered personally, sent by
overnight courier (providing proof of delivery) or sent by telecopy (providing
confirmation of transmission) to the parties at the following addresses or
telecopy numbers (or at such other address or telecopy number for a party as
shall be specified by like notice):

     

    (i) if to
LVP, to:

     

    c/o The
Lightstone Group

    326 Third
Street

    Lakewood,
NJ 08701

    Attn:
Joseph E. Teichman 

    Fax
No.: 732-612-1444

    

    with a
copy to:

     

    Herrick,
Feinstein LLP

    2 Park
Avenue

    New York,
NY 10016

    Attn:
Sheldon Chanales, Esq. 

    Fax No.:
(212) 545-3313 

    

    (ii) if to
AMR, to:

     

    c/o Arbor
Commercial Mortgage LLC

    333 Earle
Ovington Boulevard

    Uniondale,
NY 11553

    Attention:
Guy R. Milone, Jr. 

    Fax No.:
(516) 506-4045

    

    with a
copy to:

     

    Cooley
Godward Kronish LLP

    1114
Avenue of the Americas

    New York,
NY 10036

    Fax No.:
(212) 479-6275

    Attn:
Thomas D. O’Connor, Esq. 

    

    (b) Counterparts. This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other party.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (c) Governing
Law. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

     

    (d) Severability. If any
term, covenant or condition of this Agreement shall be held to be invalid,
illegal or unenforceable in any respect, this Agreement shall be construed
without such provision.

     

    (e) Interest and Enforcement
Costs. In the
event that LVP fails to pay AMR any amount due pursuant to this Agreement on the
date such amount is due, then such past due amount shall bear interest until the
date paid at a rate equal to 15% per annum. In the event of any breach by LVP of
any of its covenants in this Agreement, LVP shall pay all of AMR’s costs of
enforcement of its rights under this Agreement, including but not limited to
reasonable attorneys’ fees, disbursements, expenses and court
costs.

     

    (f) Subsidiary Entities of
LVP. All
references herein to the consummation, engaging in, entering into, or reporting
of a Disposition or other transaction, or entering into an agreement to do any
of the foregoing, by LVP shall
also apply to and include the consummation, engaging in, entering into, or
reporting of a Disposition or other transaction, or entering into an agreement
to do any of the foregoing, by any entity in which LVP owns, directly or
indirectly, an equity interest. 

     

    (g) List of Properties Correct
and Complete. LVP
represents to AMR that MRL owns, indirectly through entities that are treated as
disregarded entities for U.S. federal tax purposes, the Orlando Design Center
and Orlando Outlet World, and that LVP does not own, directly or indirectly, any
properties other than the Orlando Design Center and Orlando Outlet World and
holding entities for the Orlando Design Center and Orlando Outlet World.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, LVP and AMR have caused this Agreement to be signed by their
respective authorized signatories all as of the date first written
above.

    

    
      	 	 	 
	 	
              LIGHTSTONE
      VALUE PLUS REIT, L.P. 

              By
      Lightstone Value Plus Real Estate Investment Trust, Inc., its general
      partner

            
	 
 	 
 	 
 
	
            	       	By:
	 	
              
                
      Name:

            
	 	
              Title:

            

    

    

    
      	 	 	 
	 	
              ARBOR
      MILL RUN JRM, LLC

              By
      Arbor Commercial Mortgage, LLC, Member 

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
      Name: 
	 	Title:

    

     

    
      
        
        

      

      
        11

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