PARTICIPATION AGREEMENT
Agreement
dated as of January 4, 2007, by and between Xxxxxxxxx Associates, L.P.,
a New
York limited partnership having an office at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (hereinafter referred to as “Xxxxxxxxx”) and 0000 Xxxxxxxx Xxxx Xxxxxx
LLC, a Delaware limited liability company having an office at 000 Xxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as “Lightstone”).
Whereas,
pursuant to a sale and purchase of leasehold agreement dated October 25, 2006
between Xxxxxxxxx, as seller, and Lightstone, as purchaser, (the “Sale and
Purchase Agreement”), Xxxxxxxxx’x interest in the Operating Lease (as such term
is hereinafter defined) and other real and personal property relating thereto
has been sold and transferred to Lightstone.
Whereas,
the parties have agreed that, under certain circumstances, Xxxxxxxxx shall
participate in and have an interest in certain profits, proceeds, rents and
revenues which might hereafter be derived by Lightstone, its successors and
assigns, from or relating to the Operating Lease.
Now,
therefore, in consideration of the premises and the mutual covenants, conditions
and promises contained herein and in the Sale and Purchase Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereby agree as follows:
1. Certain
Definitions.
For
purposes of this Agreement, the terms set forth below shall be defined as
follows:
1.1. “Operating
Lease” shall mean that certain Sub-Lease, dated February 1, 1954, between Xxxx
& Xxxxx, Inc., as landlord, and Xxxxxxxxx, as tenant, which Sub-Lease was
recorded in the Office of the Register of the City of New York, New York County
(the “Register”) on February 6, 1954, in Liber 4868 of Conveyances, Page 339, as
amended to date.
1.2. “Land”
shall mean the land located at and known as 000 Xxxxxxx Xxxxxx (also known
as
0000 Xxxxxxxx) in the Borough of Manhattan, City, County and State of New York,
which is more particularly described on Exhibit A annexed hereto and made a
part
hereof.
1.3. “Improvements”
shall mean all buildings and improvements located on the Land, together with
all
facilities located in said buildings and improvements or on the Land (such
buildings, improvements and facilities are hereinafter collectively referred
to
as the “Improvements”).
1.4.
“Premises” shall mean the Land and the Improvements.
1.5. “Transfer”
shall mean a sale, transfer, exchange, conveyance, sublease, sub-sublease,
assignment or other disposition of any nature whatsoever.
1.6.
“Transferee” shall mean a party who shall offer or agree to purchase or acquire
all or any portion of or interest in the Operating Lease or the membership,
equity or other ownership interests in Lightstone, or to sub-sublease all or
substantially all of the Premises, or who shall purchase or acquire all or
any
portion of or interest in the Operating Lease or the membership, equity or
other
ownership interests in Lightstone, or who shall sub-sublease all or
substantially all of the Premises, in any case either directly or indirectly
or
in one or more separate transactions. For purposes of this Agreement, a
sub-sublease of all or substantially all of the Premises shall not be deemed
to
include an individual office space sub-sublease of a portion of the Premises
for
use and occupancy by the sub-sublessee thereof.
1.7. “Net
Adjusted Transfer Proceeds” shall mean the gross proceeds (including, without
limitation, all cash or cash equivalents and the net present value (as
determined pursuant to the provisions of paragraph 2 below) of all mortgages
or
other forms of financing or other installment or deferred payment arrangements
granted or subject to which a Transfer is made) of a Transfer of the Operating
Lease or the membership, equity or other ownership interests in Lightstone
or
any interest therein or portion thereof, less
(i)
reasonable brokerage commissions actually paid by the transferor (not to exceed
six (6%) percent of the gross proceeds of the Transfer in the aggregate), (ii)
New York State and New York City real property transfer taxes actually paid
by
the transferor, (iii) reasonable attorneys’ fees actually paid by the
transferor, (iv) the amount of any prepayment fee in respect of the transferor’s
leasehold mortgage loan actually paid by the transferor in connection with
the
Transfer (if any) and (v) the sum of one hundred twenty-two million and 00/100
($122,000,000.00) dollars multiplied by the percentage interest (not to exceed
100%) in the Operating Lease or in the aggregate membership, equity or other
ownership interests in Lightstone which is subject to the Transfer.
1.8. “Net
Adjusted Sub-sublease Proceeds” shall mean all cash and other consideration paid
in connection with the granting of any sub-sublease of all or substantially
all
of the Premises, plus the excess of all rent and additional rent paid by or
on
behalf of the lessee throughout the entire term of the sub-sublease over the
amount of rent and additional rent paid by the lessee under the Operating Lease
throughout the entire term of the sub-sublease.
1.9. “Term”
shall mean the two (2) year period commencing on the date of this Agreement
and
terminating on the day immediately preceding the second (2nd)
anniversary of the date of this Agreement.
2. Xxxxxxxxx’x
Participation in Net Adjusted Transfer Proceeds.
If,
during the Term, (i) Lightstone shall effect a Transfer of the Operating Lease
or the membership, equity or other ownership interests in Lightstone, or any
interest therein or portion thereof, to a Transferee (other than a Permitted
Transferee, as such term is defined in the Sale and Purchase Agreement), or
(ii)
Lightstone shall enter into a contract or agreement for the Transfer of the
Operating Lease or the membership, equity or other ownership interest in
Lightstone, or any interest therein or portion thereof, to a Transferee or
(iii)
a mortgage foreclosure proceeding in respect of the Operating Lease shall be
commenced by any leasehold mortgagee other than an independent institutional
leasehold mortgagee, or the Operating Lease or the membership, equity or other
ownership interests in Lightstone, or any interest therein or portion thereof,
shall be otherwise subject to a Transfer pursuant to judicial order or decree,
then in any such event, Lightstone shall pay to Xxxxxxxxx, and Xxxxxxxxx shall
be entitled to receive, at the closing of any such Transfer, an amount equal
to
fifty (50%) percent of the Net Adjusted Transfer Proceeds in respect of such
Transfer. If any portion of the Net Adjusted Transfer Proceeds are payable
by
the Transferee in installments or by means of one or more deferred payments,
then in addition to the portion of the Transfer Proceeds payable in cash or
by
cash equivalents, Xxxxxxxxx shall also receive, at the closing of such Transfer,
a lump sum payment from Lightstone equal to the then net present value of the
aggregate amount of all such installments and/or deferred payments thereafter
becoming due and payable, discounted at the rate then being paid on newly issued
U.S. Treasury Bonds having a maturity date most closely approximating the date
on which the last such installment or deferred payment shall become due and
payable.
3. Xxxxxxxxx’x
Participation in Net Adjusted Sub-sublease Proceeds.
If,
during the Term, Lightstone, as lessee under the Operating Lease, shall enter
into a sub-sublease agreement in respect of all or substantially all of the
Premises with a Transferee, regardless of the term of any such sub-sublease
or
sub-sublease agreement, Lightstone shall pay to Xxxxxxxxx, and Xxxxxxxxx shall
be entitled to receive, as and when Lightstone shall receive same, amounts
equal
to fifty (50%) percent of the Net Adjusted Sub-sublease Proceeds in respect
of
such sub-sublease or sub-sublease agreement throughout the term thereof,
irrespective of whether such term shall extend beyond the Term.
4. Notice
of Transfer.
It
shall
be a condition precedent to the effectiveness of any Transfer subject to this
Agreement that Lightstone shall give notice to Xxxxxxxxx of such Transfer,
together with true and complete copies of all contracts, leases, subleases,
and
other agreements relating to such Transfer, not less than fifteen (15) days
prior to the effective date of such Transfer, time
being of the essence.
5. Intentionally
Deleted.
6. Arbitration.
If any
dispute shall arise between or involving the parties hereto with respect to
any
matter or thing relating to this Agreement, then such dispute shall be promptly
submitted to and decided by binding arbitration by the American Arbitration
Association in the County of New York in accordance with the Expedited
Procedures of the Commercial Arbitration Rules of the American Arbitration
Association, as same may hereafter be amended, supplemented, supplanted or
replaced. The award rendered by the arbitrators shall be final, and judgment
may
be entered upon such award in accordance with applicable law in any court having
jurisdiction. Each party shall bear its own legal and accounting fees in
connection with such arbitration hearing and all filing fees shall be borne
equally by the parties; however, the arbitrators shall have the power to award
legal fees and costs to either party as the arbitrators may see fit.
7. Guaranty
of Lightstone’s obligations by Lightstone Holdings, LLC.
By
execution of a copy of this Agreement below, and as a material inducement to
Xxxxxxxxx to enter into and perform under this Agreement, Lightstone Holdings,
LLC (“Guarantor”) hereby absolutely, unconditionally and irrevocably guarantees
to Xxxxxxxxx, and to Xxxxxxxxx’x partners, agents, successors and assigns, the
full and timely performance, payment and observation by Lightstone of all of
Lightstone’s covenants, obligations, representations and warrantees under and/or
pursuant to this Agreement. Guarantor hereby waives notice of acceptance of
the
provisions of this paragraph 7, notice of default under this Agreement or any
other notices required under this Agreement, and all other notices to which
Guarantor might otherwise be entitled, whether by statute, rule of law or
otherwise, and any demand for payment or performance under the provisions of
this paragraph 7. Guarantor’s obligations under this Agreement shall remain in
full force and effect without regard to, and shall not be impaired or affected
by: (a) any amendment, extension, renewal or modification of, or addition or
supplement to, any of the terms, conditions or provisions of this Agreement;
(b)
any compromise, release, consent, extension, indulgence or other action or
inaction with respect to any of the terms, conditions or provisions of this
Agreement; (c) any exercise, non-exercise or delay in exercise by Xxxxxxxxx
of
any right, power or remedy under or in respect of this Agreement, or any waiver
of any such right, power or remedy; (d) any bankruptcy, insolvency,
reorganization, arrangement, adjustment, composition, liquidation, or the like
of Lightstone or any other guarantor, or the discharge or release of Lightstone
or any other guarantor in any such bankruptcy proceeding; (e) any sale, lease
or
transfer of any or all of the assets, shares of stock, partnership interests
or
other ownership interests of Lightstone or Guarantor or (f) any other
circumstance, whether or not Guarantor, Lightstone or Xxxxxxxxx shall have
had
actual or constructive notice or knowledge thereof. The liability of Guarantor
is coextensive with that of Lightstone and also joint and several with
Lightstone, and action or suit may be brought against Guarantor and carried
to
final judgment and/or completion and recovery had, either with or without making
Lightstone a party thereto. Insofar as the payment by of any sums of money
to
Xxxxxxxxx is involved, the provisions of this paragraph 7 shall constitute
a
guaranty of payment and not of collection.
8.
Miscellaneous.
8.1. Further
Actions.
Each of
the parties shall do all things reasonably necessary to consummate the
transactions contemplated hereby. Without limitation of the foregoing,
Lightstone shall fully cooperate with Xxxxxxxxx and shall furnish, execute
and
deliver upon request therefor all information, documents and forms relating
to
Lightstone, any Transferee, the Operating Lease, the Premises, any Transfer
or
proposed Transfer in respect of the Operating Lease, and/or this Agreement,
as
Xxxxxxxxx or Xxxxxxxxx’x attorneys shall deem reasonably necessary or required
in connection with this Agreement.
8.2. Modification.
This
Agreement sets forth the entire understanding of the parties with respect to
the
subject matter hereof, supersedes all existing agreements between them
concerning such subject matter, and may be modified only by a written instrument
duly executed by each party.
8.3. Notices.
Any
notice or other communication made in connection with this Agreement shall
be in
writing and shall be sent by overnight courier with receipt of delivery
obtained, mailed by certified mail, return receipt requested or personally
delivered against receipt to the party to whom it is to be given. Any such
notice shall be deemed to have been received on the date personal delivery
is
effected, one (1) business day after deposit with an overnight courier, or
three
(3) business days after deposit in the U.S. mail, as the case may be, as
follows:
To
Xxxxxxxxx:
Xxxxxxxxx
Associates, L.P.
0000
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xx. Xxxxxx X. Xxxxxxxxx
With
a
copy sent in like manner to:
Xxxx
X.
Xxxxxxxx, Esq.
Xxxxxxx
Xxxxxxxx Xxxxxxxxx & Grun, LLP
000
Xxxx
00xx Xxxxxx,
0xx
xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
To
Lightstone:
0000
Xxxxxxxx Xxxx Xxxxxx LLC
c/o
The
Lightstone Group
000
Xxxxx
Xxxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
With
a
copy sent in like manner to:
Xxxxxxx
Xxxxxxxx, Esq.
Xxxxxxx,
Xxxxxxxxx LLP
0
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
To
Guarantor:
Lightstone
Holdings, LLC
c/o
The
Lightstone Group
000
Xxxxx
Xxxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
With
a
copy sent in like manner to:
Xxxxxxx
Xxxxxxxx, Esq.
Xxxxxxx,
Xxxxxxxxx LLP
0
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Any
party
may by notice given in accordance with this Paragraph to any other party
designate another address or person for receipt of notices hereunder. Notices
may be validly given by a party’s attorneys for all purposes hereunder.
8.4. Intentionally
Deleted.
8.5. Waiver.
Any
waiver by any party of a breach of any provision of this Agreement shall not
operate as or be construed to be a waiver of any other breach of that provision
or of any breach of any other provisions of this Agreement. The failure of
a
party to insist upon strict adherence to any term of this Agreement on one
or
more occasions will not be considered to be a waiver or deprive that party
of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement. Any waiver must be in writing.
8.6. Binding
Effect; Recordation.
The
provisions of this Agreement shall be deemed to be covenants running with the
land with respect to the Premises and shall be binding upon and inure to the
benefit of Xxxxxxxxx and Lightstone, and any Transferee(s), and their respective
immediate and remote successors, heirs, legal representatives and assigns.
It is
the intention of the parties that this Agreement be recorded by Xxxxxxxxx,
and
Xxxxxxxxxx shall fully cooperate with Xxxxxxxxx and shall promptly execute
and
deliver all necessary documents and tax returns in connection with such
recordation. Xxxxxxxxx
shall pay any real property transfer tax which may be imposed as a condition
to
the recordation of this Agreement. Lightstone shall duly execute and deliver
any
transfer tax returns or other documentation required for Xxxxxxxxx to record
this Agreement.
8.7. Headings.
The
headings in this Agreement are solely for convenience of reference and shall
be
given no effect in the construction or interpretation of this Agreement.
8.8. Assignment.
Xxxxxxxxx shall have the right to assign all or any portion of its interest
in
this Agreement.
8.9. Void
or Unenforceable Provisions.
If any
provision of this Agreement is found to be void or unenforceable by a court
of
competent jurisdiction, the remaining provisions of this Agreement shall
nevertheless be binding upon the parties with the same effect as though the
void
or unenforceable part had been severed and deleted.
8.10. Counterparts;
Governing Law; Construction.
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. This Agreement shall be governed by and construed and interpreted
in
accordance with the laws of the State of New York, without giving effect to
conflict of laws. This Agreement shall be construed and interpreted without
regard to any presumption or rule requiring construction or interpretation
against the party causing this Agreement to be drafted.
In
witness whereof, the parties hereto have duly executed and delivered this
Agreement as of the date first above written.
| Xxxxxxxxx Associates, L.P., Seller | |||
|
By:
Xxxxxxxxx Ltd., general partner
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|
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by: /s/ Xxxxxx X.
Xxxxxxxxx
Name:
Xxxxxx X. Xxxxxxxxx
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Title:
President
|
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0000
Xxxxxxxx Xxxx Xxxxxx LLC
|
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By: /s/ Xxxxx Xxxxxxxxxxxx
Name:
Xxxxx Xxxxxxxxxxxx
|
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Title:
President
|
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Lightstone
Holdings, LLC
|
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By: /s/ Xxxxx Xxxxxxxxxxxx
Name:
Xxxxx Xxxxxxxxxxxx
|
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Title:
President
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EXHIBIT
A
DESCRIPTION
OF PREMISES
ALL
that
certain plot, piece or parcel of land, situate, lying and being in the Borough
of Manhattan, City, County and State of New York, bounded and described as
follows:
BEGINNING
at the corner formed by the intersection of the Southerly side of 00xx Xxxxxx
with the Westerly side of Broadway;
RUNNING
THENCE Southeasterly along the Westerly side of Broadway 205 feet more or less
to the corner formed by the intersection of the Northerly side of 00xx Xxxxxx
with the said Westerly side of Broadway;
THENCE
Westerly along the Northerly side of 00xx Xxxxxx 156 feet 2-3/8 inches, more
or
less to a point distant 200 feet East of 0xx Xxxxxx;
THENCE
Northerly at right angles to 00xx Xxxxxx 98 feet 9 inches to the center line
of
the block;
THENCE
Westerly along said center line of the block and parallel with 00xx Xxxxxx
200
feet to the Easterly side of 0xx Xxxxxx;
THENCE
Northerly along the Easterly side of 7th Avenue 98 feet 9 inches to the corner
formed by the intersection of the said Easterly side of 7th Avenue with the
Southerly side of 00xx Xxxxxx;
THENCE
Easterly along the Southerly side of 00xx Xxxxxx 301 feet 2-5/8 inches to the
corner aforesaid, the point or place of BEGINNING.
Xxxxxxxxx
Associates, L.P.
-with-
0000
Xxxxxxxx Xxxx Xxxxxx LLC
Guarantor:
Lightstone Holdings, LLC
|
Premises:
|
0000
Xxxxxxxx
|
|
Xxx
Xxxx, Xxx Xxxx
|
|
|
Block:
814
|
|
|
Lot:
15
|
Record
and Return To:
Xxxxxxx
Xxxxxxxx Xxxxxxxxx & Grun, LLP
000
Xxxx
00xx
Xxxxxx,
0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx X. Xxxxxxxx, Esq.
