65-15 ALDERTON STREET

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.... 15 Removal of Fixtures. ........................... 16 Surrender of Expiration of Term. . ........... . 16 Lease Subordinate to Mortgages and Ground Lease •••••••• 17 Mechanic's Lien • . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Cooperation •••• ........................................ 18 Right of Entry; Key .•••••.• ........................... 18 Waivers. ............................................... 18 Notices. . . . . . . . . .............................. 19 Reimbursement of Lessor's Expense •••••••••••••••••••••• 19

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ver, to the rights of present tenants or occupants of the apartment, and subject to any and all mortgages and any underlying or overriding lease or ground lease (any such lease being hereinafter collectively called "ground lease") of the land or building, or both as provided in Paragraph 22 below. -6-

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ny of the fixtures, appliances, equipment or installations, the Lessee herein shall comply with the requirement of such mortgage or mortgages and ·ground lease relating thereto. Upon the Lessee's written re­ quest, Lessor will furnish Lessee with copies of applicable pro­ visions of each and every such mortgage. Lessor's Right to Remedy Lessee's Defaults 19. If the Lessee shall fail for 30 days after notice ·to make repaits to any part of the apartment, its fixtures or equip­ ment as herein required, or shall fail to remedy a condition which has become objectionable to the Lessor for reasons above set forth, or if the Lessee or any person dwelling in the apart­ ment shall request the Lessor, its agents or servants to perform -14-

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he place of storage, or by reason of the negli­ gence of any person in caring for such property while in storage. Lease Subordinate to Mortgages and Ground Leases 22. This lease is and shall be subject and subordinate to all present and future ground leases and to any mortgages now or hereafter liens upon such leases or on the land and building or buildings, and to any and ·all extensions, modifications, consoli­ dations, renewals and replacements thereof and to all security a9reements and chattel mortgages on personal propei:-ty covered by any ground lease or mortgage; This clause shall be self-opara­ tive and no further instrument of subordination shall be required by any such mortgagee or ground lessee. In confirmation ,Jf such subordination the Lessee shall at any time, and fro,n tLne to time, on demand, execute any instruments that may be requii:-ed by any mortgagee, or by the Lessor, for- the pur-pose of mor-e focnal.ly subjecting this lease to the lien of any such mo

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ounting(lO) •.•••.•••.••... _..... 1,800 E'ranchise and Corporate Taxes(ll)........... l_,640 Real Estate Taxes(l2) ....................... 4~,750 Mortgage Indebtedness(l3) •..........••..••.. 76,000 Reserve for Contingencies(14) .........••..•• 1 ,~Sl Total Estimated Expenditures(l5) .........•.. S220,l39 FOOTNOTES 1) Represents ·income for 13 parking spaces to be rented on a first come first serve basis at an initial rate of S30.'.JO each per month.· Subject to change by board of directors. 2 ) Represents income from Coinmach Industries Corp., expires, December 31, 1985. laundry concession leased to: Great Neck, New York. Contract 3) Labor: These wages are in accordance with the Minimum Wage Order for the Building service Industry although this em­ ployee is non-unionized. Superintendent - $7,800 per year plus free apartment. Benefits for such employee: Emoloyee Superintendent unemployment $399 Disability $60 FICA&COMP. $518 Total $977

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es of the Apartment Corp­ oration allocated to the units in the Building. The Property will be transferred subject to the following exceptions: {a) Mortgage indebtedness hereinabove described under the heading "Terms of the Mortgages which will Affect the Property at the Closing of Title", and U.C.C. filings in connection there­ with. {bl Leases in force on the Closing Date and rights of all tenants in possession. (c) Any state of facts shown on a survey made by Louis Montrose dated April 29, 1975., and any- changes since that date, provided such changes do not render title unmarketable. { d) amended Closing present zoning regulations between the date of Date, provided they use of the building. and ordinances, as the same may be presentation of this Plan and the do not prohibit the existence or

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the net proceeds realized from the sale of the shares, after deducting the Reserve Fund, Working Capital Fund and offering expenses, plus (ii) the mortgage indebtedness encumbering the Property. Assuming all the shares offered in this Plan allocated to apartments are sold at a Cash Purchase Price of $245,00 per share, then the purchase price to the Apart­ ment Corporation in· a "sale" transaction would be $1,569,715 ( cash offering of shares) plus $575,000 (mortgage indebtedness) less the sum of $62,100 (Working Capital Fund) or an aggregate sum of $2,082,615 (before deducting the offering expenses). The basis of the land on Sponsor's books is $185,945 and assuming the same basis for the Apartment Corporation, its basis for deprecia­ tion of the Buildings would be $1,896,670. Accordingly, the Apartment Corporation's basis for depreciation of the Building in a "sale" transaction would have been approximately $606,670 higher than the basis it will obtain in Section 351 "exc

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e, the gain would always be greater than the net proceeds, if any, realized on the sale, after paying off the outstanding principal balance of the mortgage indebtedness. The Apartment Corporation would be required to pay corporate income taxes on such gain, which would reduce the net proceeds available for distribution to its tenant­ shareholders. However, under existing tax law, such gain may be totally or partially avoided at the corporate level by liquidat­ ing the Apartment Corporation within one year following the date of the sale of the Property pursuant to Section 337 of the Code. ~loreover, any tenant-shareholder who purchases shares under this Offering Plan and uses his apartment in his trade or busi­ ness (and not just strictly as a residence) would have lower de­ preciation deductions. However, structuring this transaction as a section 351 exchange does not affect the customary tax deduc­ tions available to tenant-shareholders who use their apartments as a residen

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ate 27 Terms of ~ortgages 30 Su!Th~ary of Proprietary Lease 31 Apartment Corporation 34 Unsold Shares 35 Purchasers for Investment or Resale 37 Working Capital Fund 38 Contract of Exchange 39 Special Tax Consequences of Contract of Exchange 44

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from tirne to time by :::1e 3oard of Directors of the Apartment Corporation. This :::-a­ serve for contingencies is separate and distinct from t:le Working Capital Fund which will be retained by the ~partment Corporation out of Total Cash :;.mount of the offering as pro­ vided for on page 38. 15) The projected operating budget does not include any intec~st income that may be received by the Ap~rtment COr?oration on the \Jerking Ca9ital Fund, nor does it make pr-ovisions for· any net closing adjustments which may be due the Sponsor from the Apartment Corporation pursuant to the provisions of the Con tract of Exchange. ( See page_ 39.) IN THE OPINION OF THE SELLING AGE:-!T, THE PROJECTED RECEI 2TS ARE ADEQUATE TO MEET THE ESTIMATED EXPENSES FOR THE APARTMENT CORPORATION'S FIRST YEAR OF OPERATION, ASSUMING SUCH FIRST YEAR TO BE THE FISCAL YEAR COMMENCING November 30, 1984, THE FOREGO­ ING SCHEDULE, HOWEVER, IS NOT INTENDED AND SHOULD NOT BE TAKEN AS A GUARANTEE BY ANYONE THA

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-19d- RICHARD P. EISENBERG, P. C. he reports his income. It should be noted that additional income may be realize,i from investment of the Working Capital Fund to be retained by the ;1..~)a~t::-,.12nt Corporation on the Closing Date. Lf th1-;: tot3.l income from this source and from any other source other than tenant­ stockholders exceed the aggregate of a) expenses attributable to earning such income and b) allowable depreciation d2.i,1ctions rel­ ated to these income sources, the excess income may be taxable to the Apartment Corporation. See Section 277 of the Code. In addition, the Apartment Corporation must file coc;;,,.,rate tax re­ turns and report its taxable income, if any. If the working Cap­ ital Fund or any budgeted reserve for contingencies is insuff­ icient to pay any resulting taxes, it may be necessa1'.'y to in­ crease the maintenance charges payable by tenant-stockholders to ,,O'Jer that tax payment. very truly yours, lUCHARD P. EISENBERG, P.C. BY: Richar1 D

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) will agree to_ deposit with the managing agent, at closing, a sum not less than an amount equal to two months' maintenance charges to be used as working capital to furnish services required under the non­ purchasing tenant's lease and the Rent Laws. Upon notice the non-occupant purchaser will be required to replenish the fund within sixty days.

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ded; and (vii) copy of notice of uncured violations of rec­ ord in the unit that are the responsibility of the proprietary lessee to cure, if any. WORKING CAPITAL FUND On the Closing Date, from the amount of cash raised by this offering, the Apartment Corporation will retain the sum of ·$62,100 as a working capital fund (plus or minus closing adjust­ ments) and for repairs and other appropriate corporate purposes as determined by the Board of Directors. At the Closing, any net adjustment in favor of the Sponsor will be paid out of the Work­ ing Capital Fund,

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-39- While the Sponsor is in control of the Board of Directors, the working capital fund may not be used to reduce projected maintenance charges in the Plan • .....___ THE PROPERTY IS OFFERED IN ITS CURRENT CONDITION AS SET FORTH IN THIS OFFERING PLAN. NEITHER THE DEPARTMENT OF LAW NOR ANY GOVERNMENTAL AGENCY HAS PASSED UPON THE ADEQUACY OF THE RESERVE FUND OR ON THE PHYSICAL CONDITION OF THE BUILD­ ING. Anything to the contrary in this Plan notwithstanding, as to those adjustments which affect prepaid expenses that will be in­ curred during the first year of operation of the Apartment Cor­ poration and any deposits in escrow with any mortgagee, the Spon- ~sor may elect, rather than having the adjustment paid in cash at the closing, to have it paid in equal monthly installments by the Apartment Corporation during its first year of operation. Clos­ ing costs may not be deducted from the reserve fund. Closing costs may be paid by the Apartment Corporation from .the proceeds o

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the Apartment Corporation up to and including the Closing Date under this Plan from the sale of its shares, less $62,100, which will constitute the Working Capital ,Fund of the Apartment Corporation; B. by the issuance of Unsold Shares in accordance with this Plan; c. by acceptance of title subject to the mortgage(s) des­ cribed in this Plan. SPECIAL TAX CONSEQUENCES OF CONTRACT OF EXCHANGE This Plan has been structured with the intention of meeting the requirements of Section 351 of the Internal Revenue Code (the "Code"). Under Section 351, property may be transferred to a controlled corporation in exchange for its stock and securities, with gain or loss being recognized by the transferor of the prop­ erty to the extent only of the additional consideration (if any) received by such transferor on the exchange. Structuring this transaction as a Section 351 exchange does not affect the customary tax deductions available to tenant­ shareholders who use their apartments as a

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he purchase price of the Property would ordinarily equal the sum of ( i) the net proceeds realized from the sale of the shares, after deducting the Reserve Fund, Working Capital Fund and offering expenses, plus (ii) the mortgage indebtedness encumbering the Property. Assuming all the shares offered in this Plan allocated to apartments are sold at a Cash Purchase Price of $245,00 per share, then the purchase price to the Apart­ ment Corporation in· a "sale" transaction would be $1,569,715 ( cash offering of shares) plus $575,000 (mortgage indebtedness) less the sum of $62,100 (Working Capital Fund) or an aggregate sum of $2,082,615 (before deducting the offering expenses). The basis of the land on Sponsor's books is $185,945 and assuming the same basis for the Apartment Corporation, its basis for deprecia­ tion of the Buildings would be $1,896,670. Accordingly, the Apartment Corporation's basis for depreciation of the Building in a "sale" transaction would have been approxi

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s staff and office overhead). The fee and amount so reim­ bursed shall be paid from the proceeds of sale of the shares,· but shall not diminish the Reserve Fund. :(2) if the Plan is abandoned, the Sales Agent will not receive a fee. The purchasers of unsold Shares shall pay the Agent compar­ able fees~in connection with the sale of the unsold Shares. The Apartment:carporation will have no responsibility for such fee. The Apartment Corporation shall indemnify the Sales Agent against all liabilities._ claims, costs, etc., ( including, without limitation, attorneys' fees) resulting from the failure of the Sponsor-Seller or the Apartment Corporation to comply with its obligations under the Offering Plan or any Purchase Agreement, unless sa!lle .. · is due to the Agent's malfeasance, misfeasance or nonfeasanc_e. Any sums payable pursuant to such indemnity shall be considered an Offering Expense and pa id from the proceeds of this offering, but shall in no eve·nt reduce the Re

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the cash requirements shall otherwise direct. Lessee shall also pay Lessee's pro rata share ( determined in the same manner as maintenance) of any special assessments that may be levied by Lessor from time to time to pay for any repair, alteration, or improvement to the corporate property, or any deficit from opera­ tions for a prior period, or other cash requirements. Such special assessment shall be deemed additional rent and shall be payable in a lump sum or in periodic installments, as the Direc­ tors shall determine. The Lessee shall also pay such additional rent as may be provided for herein when due.