Exhibit
10.15


 


NEWKIRK REALTY TRUST, INC.


7 Bulfinch Place


Suite 500


Boston, MA 02114


 


August 5, 2005


 


To Each of the Entities Listed on Schedule 1 hereto


 


Re:          Initial
Public Offering of Newkirk Realty Trust, Inc.


 


Gentlemen:


 


The following sets forth the
agreements between (i) Newkirk Realty Trust, Inc. (the “Corporation”),
(ii) Apollo Real Estate Investment Fund III, L.P. (“Apollo”), (iii) The
Newkirk Master Limited Partnership (the “MLP”), (iv) NKT Advisors LLC (“NKT”),
(v) Vornado Realty Trust, Vornado Realty L.P., VNK Corp., Vornado Newkirk
LLC, and Vornado MLP GP LLC (collectively, “Vornado”), and (vi) WEM-Brynmawr
Associates LLC (“WEM”) with respect to the transactions contemplated by, and
related to, the initial public offering by the Corporation of its common stock
(the “IPO”), all as more fully described in the Corporation’s Registration
Statement on Form S-11 which is attached hereto as Exhibit A (the “Registration
Statement”).  In this regard, the
Corporation, Apollo, NKT, Vornado and WEM agree, as applicable, to (i) consent
to the following transactions in the form in which they are described either
below or in the attached Form S-11 and/or (ii) enter into definitive
documentation reasonably acceptable to each of them and their counsel to affect
each of the following transactions, which are more particularly described in
the Registration Statement:


 


1.             Sale
of MLP Units.


 


a.             By
Vornado.  Vornado shall not sell, nor
shall the Corporation purchase, any units of limited partnership interest in
the MLP held by Vornado in connection with the IPO or in connection with the
expected tender offer to be made by the Corporation for units of limited
partnership interest in the MLP within 90 days after the closing of the IPO for
a number of units of limited partnership interest in the MLP no greater than one
percent of the outstanding units of limited partnership interests (excluding
any units held by the Corporation) (the “Tender Offer”).


 


b.             By
Apollo.  Simultaneous with the
closing of the IPO, the Corporation shall purchase directly from Apollo and its
affiliates units of limited partnership interest in the MLP having a value,
based on the IPO price, equal to $145 million less one percent of the valuation
of the MLP, plus an additional number of units equal to the net proceeds to the
Corporation from the exercise of the underwriters over-allotment option, if
any, divided by the IPO price.  Apollo
shall have the right to sell additional units of limited partnership interest
in the Tender Offer to the extent that the Tender Offer is not fully
subscribed.


 





















 


c.             By
WEM.  Simultaneous with the closing
of the IPO, the Corporation shall purchase directly from WEM units of limited
partnership interest in the MLP having a value, based on the IPO price, of
$5,000,000.  WEM shall not sell any units
of limited partnership interest in the Tender Offer.


 


1b.           Adjustment
to MLP Units.  Each unit of limited
partnership interest in the MLP held by each of the limited partners on the
date of closing of the IPO will have the same value with respect to the assets
of the MLP as each share of common stock of the Corporation.


 


2.             Sale
of Corporation Common Stock to First Union. 
Simultaneous with the closing of the IPO, the Corporation shall sell in
a transaction exempt from the registration requirement of the Securities Act of
1933, as amended (the “Securities Act”), to First Union Real Estate Equity and
Mortgage Investments (“First Union”) a number of shares of the Corporation’s
common stock equal to $50,000,000 divided by the IPO price.


 


3.             Assignment
of Exclusivity Rights.    Simultaneous with the closing
of the IPO, the Corporation shall acquire from First Union an assignment of the
exclusivity rights that First Union holds with respect to Michael Ashner
pursuant to an Exclusivity Agreement between First Union and Michael Ashner
(the “Exclusivity Agreement”) but solely as they relate to Net Lease Assets
(the “Exclusivity Assignment”), and Michael Ashner shall consent to such
Exclusivity Assignment.  As defined, Net
Lease Assets means (i) a property that is either (a) triple net
leased or (b) where a tenant leases at least 85% of the rentable square
footage of the property and, in addition to base rent, the tenant is required
to pay some or all of the operating expenses for the property, and, in both (a) and
(b) the lease has a remaining term, exclusive of all unexercised renewal
terms, of more than 18 months, (ii) management agreements and master
leases with terms of greater than three years where a manager or master lessee
bears all operating expenses of the property and pays the owner a fixed return,
(iii) securities of companies including, without limitation, corporations,
partnerships and limited liability companies, whether or not publicly traded,
that are primarily invested in assets that meet the requirements of clauses (i) and
(ii), and (iv) all retenanting and redevelopment associated with such
properties, agreements and leases, and all activities incidental thereto.


 


The Corporation shall acquire the Exclusivity
Assignment in exchange for the issuance of a number of shares of the
Corporation’s common stock equal to $20,000,000 divided by the IPO price, 50%
of which shall be immediately vested with the balance (the “Restricted Shares”)
vesting ratably over 36 months on a monthly basis.  All of the Restricted Shares shall be
entitled to voting rights and to receive dividends.  The unvested portion of the Restricted Shares
shall be subject to forfeiture by First Union (the “Forfeiture Events”)
if:  (i) the Advisory Agreement (as
hereinafter defined) is terminated by the Corporation for cause; (ii) Michael
Ashner dies or becomes disabled unless the other members of NKT’s senior
management remain in their positions; or (iii) Michael Ashner resigns as
an officer and director of both the Corporation and NKT.  Conversely, all of the Restricted Shares
shall become immediately vested if:  (i) the
Corporation terminates the Advisory Agreement other than for cause; or (ii) NKT
terminates the Advisory Agreement following a breach of a material term of the
Advisory Agreement that is not timely cured.


 


The Exclusivity Assignment shall immediately
be deemed terminated and revert back to First Union (the “Exclusivity
Termination Event”) upon (i) a Forfeiture Event other than as a


 


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result of the death or
disability of Michael Ashner, or (ii) the termination or non-renewal of
the Advisory Agreement for any reason.


 


4.             Restrictions
on Transferability of Units in the MLP and Common Stock in the Corporation.


 


a.             Vornado.  Vornado shall not be permitted to sell,
transfer, pledge, redeem or otherwise dispose of its units in the MLP for a
period of one-year from the date of the IPO.


 


b.             Apollo.  Except as contemplated by Paragraph 1b and as
provided in Paragraph 4e, Apollo shall not be permitted to sell, transfer,
pledge, redeem or otherwise dispose of its units in the MLP for a period of
one-year from the date of the IPO; provided, however, Apollo shall be permitted
to pledge its MLP units and/or shares of common stock in the Corporation in
connection with a loan to have a principal amount no greater than 35% of the
value of all shares of the Corporation’s common stock and MLP units (based on
the IPO price of the Corporation’s common stock) held by Apollo.


 


c.             WEM.  Except as contemplated by Paragraph 1c, WEM
shall not be permitted to sell, transfer, pledge, or otherwise dispose of its
units in the MLP for a period equal to the earlier of (i) four-years from
the date of the IPO or (ii) at such time as NKT is no longer providing
advisory services to the Corporation except if the Advisory Agreement is
terminated by NKT after the initial three-year term for any reason other than a
material breach by the Corporation; provided, however, in no event shall such
period be less than one-year from the date of the IPO.  In addition, WEM shall not be permitted to
redeem its units in the MLP for a period of one-year from the date of the IPO.


 


d.             First
Union.  First Union shall not be
permitted to sell, transfer, pledge, redeem or otherwise dispose of its shares
of common stock in the Corporation for a period equal to the earlier of (i) three-years
from the date of the Corporation’s initial public offering or (ii) at such
time as NKT is no longer providing advisory services to the Corporation;
provided, however, in no event shall such period be less than one-year from the
date of the Corporation’s initial public offering; provided, however, after
one-year from the date of the IPO, First Union shall be permitted to pledge its
shares of common stock in the Corporation in connection with a loan to have a
principal amount no greater than 35% of the value of all shares of the
Corporation’s common stock (based on the IPO price of the Corporation’s common
stock) held by First Union.


 


e.             Permitted
Sales.  Notwithstanding anything
herein to the contrary, during the period of one-year from the date of the IPO,
Apollo shall be permitted to sell their interests in the MLP subject to the
publicly traded partnership rules to the Corporation, Vornado, WEM and
First Union provided that (i) no more than four sales may be made by
Apollo during such period, (ii) each sale must be for not less than 1.25
million units, (iii) such units are first offered to the Corporation, (iv) if
the Corporation elects not to purchase such units, such units are then offered
to Vornado, WEM and First Union and its affiliates in proportion to their
respective beneficial ownership interests in the Corporation (assuming any
units of limited partnership interest in the MLP held by such


 


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parties are
redeemed for common shares of the Corporation), and (iii) the per unit
purchase price for such units is the greater of (x) the IPO price or (y) the
average closing price of the Corporation’s common stock for the ten day period
immediately preceding the sale less, in either case, customary sales costs and
discounts.  To the extent that any of
First Union, Vornado or WEM acquire any units of limited partnership interest
in accordance with this Paragraph 4e, each of Apollo, First Union, Vornado or
WEM agree to take such action as is necessary, subject to any fiduciary duty,
to cause the Corporation to grant a waiver from its excess share provision set
forth in its Articles of Incorporation to enable such party(ies) to acquire
such units, subject to the limitation, which may be waived if deemed advisable,
that no one equityholder of such party shall be deemed to own more than 8.9% of
the outstanding common stock.


 


5.             Waivers.


 


a.             Vornado.
 The Corporation shall grant Vornado and
its affiliates an irrevocable waiver from the Corporation’s excess share
provision set forth in its Articles of Incorporation enabling Vornado to own at
any time up to 22.5% of the Corporation’s common stock (determined in
accordance with Paragraph 5e), or such lesser amount as is required from time
to time under applicable rules of the Internal Revenue Code, provided that
no one equityholder of Vornado is deemed to own more than 8.9% of the
outstanding common stock of the Corporation. 
Vornado shall receive at closing of the IPO an opinion of counsel to the
Corporation with respect to the valid, binding and enforceable nature of the
waiver.  The MLP and the Corporation represent
and warrant to Vornado that upon consummation of the IPO, Vornado’s units in
the MLP will not represent more than 20% of the Corporation’s common stock, such
percentage determined in accordance with Section 5e.  The parties hereto agree that Vornado may
transfer its interest in the MLP to and among wholly-owned subsidiaries of
Vornado for tax planning purposes, including taxable REIT subsidiaries, subject
to publicly traded partnership restrictions.


 


b.             Apollo.  The Corporation shall grant Apollo and its
affiliates an irrevocable waiver from the Corporation’s excess share provision
set forth in its Articles of Incorporation at a level not less than the
percentage required to enable Apollo to have all of its units of limited
partnership interest in the MLP owned upon consummation of the IPO redeemed for
shares of the Corporation’s common stock (determined in accordance with
Paragraph 5e), or such lesser amount as is required from time to time under
applicable rules of the Internal Revenue Code, provided that no one
equityholder of Apollo is deemed to own more than 8.9% of the outstanding
common stock of the Corporation.  Apollo
shall receive at the closing of the IPO an opinion of counsel to the
Corporation with respect to the valid, binding and enforceable nature of the
waiver.


 


c.             WEM.  The Corporation shall grant WEM and its
affiliates an irrevocable waiver from the Corporation’s excess share provision
set forth in its Articles of Incorporation at a level not less than the
percentage required to enable WEM to have all of its units of limited partnership
interest in the MLP owned upon consummation of the IPO redeemed for shares of
the Corporation’s common stock (determined in accordance with Paragraph 5e), or
such lesser amount as is required from time to time under applicable rules of
the Internal Revenue Code, provided that no one equityholder of


 


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WEM is deemed to own more than 8.9% of the
outstanding common stock of the Corporation.


 


d.             First
Union.  The Corporation shall grant
First Union and its subsidiaries an irrevocable waiver from the Corporation’s
excess share provision set forth in its Articles of Incorporation enabling
First Union to own at any time up to 17.5% of the Corporation’s common stock
(determined in accordance with Paragraph 5e), or such lesser amount as is
required from time to time under applicable rules of the Internal Revenue
Code, provided that no one equityholder of First Union is deemed to own more
than 8.9% of the outstanding common stock. 
First Union shall receive at closing of the IPO an opinion of counsel to
the Corporation with respect to the valid, binding and enforceable nature of
the waiver.


 


e.             Fully
Diluted Basis. The percentage of common stock of the Corporation held by a
person for purposes of the waivers to be granted pursuant to this Section 5
shall be the percentage obtained by dividing (a) the sum of (i) the
number of outstanding shares of common stock of the Corporation held by such
person plus (ii) the number of shares of common stock of the Corporation that
may be obtained upon redemption of such person’s outstanding units of limited
partnership interest of the MLP pursuant to the terms of the MLP partnership
agreement, whether or not such units are then redeemed or redeemable by (b) the
sum of (1) the total number of outstanding shares of common stock of the
Corporation and (2) the total number of shares of common stock of the
Corporation that may be obtained upon redemption of all outstanding units of
limited partnership interest of the MLP pursuant to the terms of the MLP
partnership agreement, whether or not such units are then redeemed or
redeemable.  For example purposes only,
if there are 75,000,000 shares of common stock outstanding and 25,000,000 units
of limited partnership interest issued and outstanding that are held by limited
partners that are redeemable (even if then subject to a lock-up) into common
stock of the Corporation, Vornado’s waiver would entitle it to hold up to
22,500,000 shares of the Corporation’s common stock at such time, assuming that
at such time it does not hold any units of the MLP redeemable for common stock
of the Corporation, whether or not any other units have been redeemed or
additional shares of the Corporation’s common stock have been issued prior to
such redemption


 


22.5% x (75,000,000 +
25,000,000) = 22,500,000


 


and First Union’s waiver would entitle it to
hold up to 17,500,000 shares of the Corporation’s common stock at such time, assuming
that at such time it does not hold any units of the MLP redeemable for common stock
of the Corporation, whether or not any other units have been redeemed or
additional shares of the Corporation’s common stock have been issued prior to
such redemption.


 


17.5% x (75,000,000 +
25,000,000) = 17,500,000.


 


6.             Board
and Board Representation.  Vornado
shall have the right to designate one person to be a member of the Board of
Directors of the Corporation during the period from the date of the closing of
the IPO to the date that is six months from the closing of the IPO (the “Appointment
Period”), subject to the underwriters consent to such person (such person, the


 


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“Vornado Designee”).  Such underwriters’ consent shall only be
applicable to the Vornado Designee if such designee is appointed at the time of
consummation of the IPO.  At such time as
the Vornado Designee is appointed to the Board of Directors of the Corporation,
the number of members of the Board of Directors of the Corporation shall be 11,
with seven such members being “independent directors” as defined by the rules of
the primary exchange on which the Corporation’s common stock is then listed.


 


7.             [intentionally
omitted]


 


8.             Issuance
of Preferred Voting Stock.  The
Corporation shall issue to NKT a Preferred Voting Stock.  The Preferred Voting Stock shall entitle NKT
to a number of votes on any matter submitted to the holders of common stock of
the Corporation equal to the number of Class A Units then outstanding
(units in the MLP held by limited partners in the MLP (other than the
Corporation) on the date of the closing of the Corporation’s initial public
offering less any such Class A Units that are redeemed by the MLP or
acquired by the Corporation).  Pursuant
to the Advisory Agreement, NKT shall be required to:  (i) seek the vote of the holders of the Class A
Units on the matter being submitted to the Corporation’s holders of common
stock; (ii) vote the Preferred Voting Stock in proportion to the votes
submitted by the holders of the Class A Units, provided, however, to the
extent that any holder of Class A Units relinquishes its right to vote its
Class A Units, NKT shall have the right to include the Class A Units
relinquished in determining how to vote the Preferred Voting Stock in such
manner as the managing member of NKT deems advisable in its sole
discretion;  (iii) agree with the
Corporation that the holders of MLP Class A Units shall be third party
beneficiaries of the agreement by NKT to seek the vote of the holders of the Class A
Units, entitled to enforce such agreement directly against NKT and the
Corporation and NKT hereby agrees to pay the costs and expenses of the holders
of Class A Units in the event they successfully litigate their right to
enforce such agreement and that such agreement shall be enforceable.  The Corporation and NKT agree that they shall
be precluded from asserting that the agreement by NKT is not valid, binding and
enforceable.


 


Notwithstanding the foregoing, so long as
Vornado has the right to appoint the Vornado Designee or an affiliate of
Vornado is a member of the Corporation’s Board of Directors, Vornado hereby
relinquishes its right to vote its proportionate share of the Preferred Voting
Stock in the election of the Corporations directors (but only in such
elections); provided, however, that in the event that Vornado
neither has such right nor an affiliate on the Corporation’s Board, Vornado
shall be given the right to vote its proportionate share of the Preferred
Voting Stock for the election of the Corporation’s directors but only to the
extent such vote shall not permit Vornado to vote in excess of 9.9% of the
Corporation’s outstanding voting stock having the right to vote in such
elections.


 


The Corporation and NKT further agree to
stipulate in any such court that the Corporation and NKT are bound by such
agreement and are precluded from making any assertion to the contrary.  For example purposes, if at the closing date
of the initial public offering there are 30,000,000 Class A Units
outstanding and at the time of a vote sought by the Corporation of its holders
of common stock 5,000,000 of such Class A Units had been redeemed, the
Preferred Voting Shares would be entitled to 25,000,000 votes.  If, of the 25,000,000 Class A Units
outstanding, 15,000,000 elected to vote in favor of the proposal submitted to
the holders of common stock of the Corporation, 5,000,000 elected to vote
against the proposal submitted to the holders of common stock of the
Corporation and 5,000,000 did not indicate their vote, NKT


 


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would vote 18,750,000 (75% of
25,000,000) of the Preferred Voting Shares for the proposal and 6,250,000 (25%
of 25,000,000) against the proposal.


 


9.             Advisory
Agreement.  The Corporation agrees to
retain NKT as its advisor, and NKT agrees to serve as the Corporation’s
advisor, all on such terms and conditions set forth in an advisory agreement
(the “Advisory Agreement”) which shall incorporate the provisions outlined
under the heading “OUR
ADVISOR AND THE ADVISORY AGREEMENT; EXCLUSIVITY ARRANGEMENT” in the
Registration Statement.


 


10.           Investment
in NKT.  Simultaneous with the
closing of the IPO, Vornado shall be admitted as a 20% non-managing member and
FUR Holdings LLC shall be the 80% managing member of NKT.  This 20% interest shall entitle Vornado to
all of the rights of a non-managing member of NKT, which shall include  (x) 20% of all base asset management fees
paid or payable to NKT under the Advisory Agreement annually and (y) 20% of all
incentive management fees earned under the terms of the Advisory
Agreement.  Vornado will also be
allocated income and loss from NKT proportional to the distributions
received.  In no event shall NKT be
permitted to pledge, transfer, sell, or assign (including, but not limited to,
by way of a securitization transaction) any of its assets without Vornado’s
consent, which consent may be withheld in Vornado’s sole discretion.  Vornado acknowledges that (i) NKT will
enter into a subadvisory contract with Winthrop Financial Associates or another
affiliate of Michael Ashner for a fee not to exceed $4,200,000 (subject to an
annual consumer price index increase) and its distributions provided for in
clause (x) above will be after any such payments and (ii) First Union will
receive 80% of all incentive management fees (which 80% would otherwise be
allocable to FUR Holdings LLC) earned under the terms of the Advisory
Agreement.  The parties hereto agree that
Vornado shall be entitled to assign its interest in NKT to a wholly-owned
subsidiary, including a taxable REIT subsidiary, for tax planning purposes.  For example purposes only, if during the
calendar year the Corporation pays to NKT $5,000,000 in base management fee and
$1,000,000 in incentive management fee and the amount payable by NKT to
Winthrop Financial Associates under the subadvisory agreement was $4,200,000,
then:


 


(i)            Vornado
would be allocated $160,000 of base management fee [($5,000,000 – $4,200,000) x
20%] and $200,000 of incentive management fee ($1,000,000 x 20%);


 


(ii)           FUR
Holdings would be allocated $640,000 of base management fee [($5,000,000 –
$4,200,000) x 80%] and none of the incentive management fee;


 


(iii)          First
Union would receive $800,000, which is the incentive management fee otherwise
allocable to FUR Holdings ($800,000 x 20%).


 


11.           MLP
Partnership Agreement.  Each party
hereto that holds units of limited partnership interest in the MLP shall
consent to an amendment and restatement of the limited partnership agreement of
the MLP to reflect such changes thereto as are necessary to (i) admit the
Corporation as the general partner of the MLP, (ii) consent to the
withdrawal of MLP GP LLC as the general partner of the MLP, (iii) effect a
unit split such that each unit of limited partnership interest in the MLP will
have the same value with respect to the assets of the MLP as each share of
common stock of the Corporation and that each unit existing on the date of this
agreement shall be treated consistently in such unit split with each other unit
and (iv) such other


 


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provisions as are necessary to
effect the agreements set forth herein and as are customary for limited
partnerships in an umbrella partnership real estate investment trust (UPREIT)
structure, which agreement shall be in substantially the form and substance
attached hereto as Exhibit B, with such modifications thereto as are
necessary to reflect the agreements provided for in the letter agreement;
provided, that if the Offering Funding provision and provisions related thereto
that would have the effect of delaying a redemption date beyond the 10th
Business Day after receipt by the Corporation of a Notice of Redemption (as
defined in the agreement of the MLP) 
including, but not limited to, the provisions of clauses (i), (ii) and
(iii) of the definition of “Specified Redemption Date” ]but in the case of
the inapplicability of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (“HSR”), only to the extent that HSR is deemed by the staff of
the Premerger Notification Office of the Federal Trade Commission not to be
applicable to acquisitions of voting stock of real estate investment trusts by
other real estate investment trusts or another exemption therefrom is not
available] are included in the agreement of the MLP to be signed upon closing
of the IPO, then the Corporation and the MLP shall agree that the Offering
Funding option and provisions related thereto shall not be applicable to
Vornado.


 


12.           Conditions.  The foregoing agreements are subject to the
satisfaction of the following conditions:


 


a.             Agreement
by First Union.  First Union shall
agree to the terms of Paragraphs 2, 3, 4d, 4e, and 5d hereof.


 


b.             Acquisition
of First Union Common Stock.  First
Union shall agree to sell to Vornado or its wholly-owned subsidiary, and Vornado
or its subsidiary shall agree to purchase from First Union, a number of shares
of First Union’s common shares of beneficial interest equal to the lesser of (i) 9.9%
of the outstanding common shares (after giving effect to such issuance) or (ii) 4,000,000,
in each case for a purchase price of $4.00 per share so long as subsequent to
the date of its most recent Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission and assuming its compliance with the
applicable statutes, rules and regulations, hereof, First Union shall not
have experienced a material adverse change in its business, financial
condition, results of operations, cash flows or prospects.  First Union shall agree to provide reasonable
advance notice of any plan or agreement to repurchase First Union common shares
if such repurchase could cause the ownership interest of Vornado in the common
shares to exceed 9.9% of the outstanding common shares.  First Union shall also be required to agree
that Vornado shall be entitled to assign its interest in First Union to a
wholly-owned subsidiary, including a taxable REIT subsidiary, for tax planning
purposes.  The closing of the transaction
shall occur on the earlier of the date of closing of the IPO or March 31,
2006; provided, however, First Union shall have the right to terminate the
agreement if the IPO is not consummated by March 28, 2006.  In connection with such sale, First Union
shall also grant to Vornado a waiver from its excess share provision in its
by-laws or otherwise permit Vornado to own and hold such shares.  The agreement shall provide, among other
things, for the delivery to Vornado of an opinion of counsel of First Union
with respect to the validity of the common shares issued, the validity and
enforceability of the waiver of First Union’s excess share provision, and the
effectiveness of the registration statement of First Union pursuant to which
the common shares are delivered and, to the extent requested by Vornado, such


 


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other reasonable deliveries by First Union
and its counsel as are made in connection with a typical underwritten offering
of common stock (other than with respect to a “comfort letter” from the company’s
independent registered public accounting firm) including a letter from First
Union’s counsel stating that they are not aware of any material misstatement or
omission in the information included or incorporated by reference in the
registration statement of First Union pursuant to which the common shares are
delivered.  First Union and Vornado shall
enter into an agreement providing for the ability of Vornado to dispose of such
common shares in an underwritten offering pursuant to an effective registration
statement so long as (i) Vornado then holds the 4,000,000 shares acquired
or, if less, 10% of the outstanding shares of First Union’s common shares of
beneficial interest; (ii) Vornado pays all out-of-pocket costs associated
with such registration statement; and (iii) if requested by KIMCO Realty
Corp. (“KIMCO”), 1,000,000 common shares of beneficial interest in First Union
held by KIMCO are included in the registration statement provided that KIMCO
pays its proportionate share of such costs billed to Vornado.


 


c.             Effectiveness
of the Registration Statement.  The
Registration Statement shall have been declared effective by the Securities and
Exchange Commission.


 


d.             Listing
of Common Stock.  The Corporation’s
shares of common stock shall have been listed on the New York Stock Exchange,
the American Stock Exchange, NASDAQ or any comparable exchange.


 


e.             Registration
Rights Agreements.  Each of Vornado,
Apollo, First Union and WEM shall have entered into a Registration Rights
Agreement with the Corporation providing for the registration of their
respective shares of common stock acquired in connection with the transactions
contemplated hereby or upon the conversion of units of limited partnership
interest in the MLP held upon consummation of the transactions contemplated
hereby, in each case in form and substance reasonably acceptable to the parties
and each other and consistent with transactions of the nature provided for
herein.


 


f.              Opinion of Katten Muchin Rosenman LLP.  Vornado shall have received an opinion from Katten Muchin Rosenman LLP, in form and substance reasonably acceptable to Vornado and its counsel, to the effect that the transactions being consummated at the time of the IPO, in the manner described in the Registration Statement, either have been registered under the Securities Act or do not require registration under the Securities Act due to the existence of a valid exemption from such registration requirement.
 
g.             Opinion of Ballard Spahr.  Vornado shall have received an opinion from Ballard Spahr, in form and substance reasonably accept to Vornado and its counsel, limited solely to matters of Maryland corporation law, to the effect that the Preferred Voting Stock may be voted by NKT in the manner and at the times described in the Registration Statement and that the agreement between the Corporation and NKT to provide that NKT shall seek the vote of the holders of the Class A Units on the matter being submitted to the holders of Corporation’s common stock.


 


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h.             Ashner.  Michael Ashner shall confirm to the Corporation that the Exclusivity Assignment together with the Advisory Agreement includes any opportunities relating to Net Lease Assets (other than assets then owned by First Union or Winthrop Financial Associates) that are generated by him or offered to him in any capacity.  In addition, Ashner shall confirm that if First Union terminates the Exclusivity Agreement but the Exclusivity Assignment would not otherwise be terminated, the exclusivity rights assigned in the Exclusivity Assignment shall become a direct obligation between Michael Ashner and the Corporation; provided, that such exclusivity may be terminated upon an Exclusivity Termination Event.
 
i.              Other Opinions.  If requested by a party, such party shall have received such other opinions from counsel to the other parties hereto with respect to the due authorization, execution and delivery, no conflicts, and the valid, binding and enforceable nature of agreements by or against the other parties hereto, but only to the extent (i) such agreements are described in the Registration Statement or this agreement and (ii) the requesting party and at least one other party hereto are party to such agreement.
 
j.              First Union REIT Requirement.  First Union shall agree to the provisions of Schedule 2 hereto.
 


13.           Representation
and Warranty.  Except as disclosed in
the Registration Statement or in this agreement, each party hereto represents
and warrants to each other party hereto that with respect to itself and its
respective executive officers, none of them have any interest in the
transactions described in the Registration Statement or in the Corporation or
the MLP.


 


14.           Publicly
Traded Partnership and  REIT Provisions.  The Corporation and the MLP shall comply with
the provisions of Schedule 3 hereto.


 


15.           Reliance.  The parties hereto acknowledge that the
Corporation, in reliance on the agreements set forth herein, will file with the
Securities Exchange Commission the Registration Statement and agree to
diligently pursue the consummation of any additional documentation that may be
reasonably required to effect the agreements set forth herein.


 


[signatures on following pages]


 


10





















 


Please sign in the space indicated below to
acknowledge your agreement to the foregoing.


 


	
   

  	
  NEWKIRK REALTY TRUST, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ 

  	
   

  
	
   

  	
   

  	
  Michael L. Ashner

  
	
   

  	
   

  	
  Chief Executive Officer

  
					



 


	
  AGREED AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  APOLLO REAL ESTATE INVESTMENT FUND III, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Apollo Real Estate Advisors III, L.P.,

  	
   

  
	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Apollo Real Estate Capital Advisors III, Inc.,

  	
   

  
	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  THE NEWKIRK MASTER LIMITED PARTNERSHIP

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  MLP GP LLC

  	
   

  
	
   

  	
  its general partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Newkirk MLP Corp.

  	
   

  
	
   

  	
   

  	
  Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NKT ADVISORS LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/ 

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
									



 


[signatures continued on
following page]


 


11





















 


	
  VORNADO REALTY TRUST

  
	
   

  
	
   

  
	
  By

  	
  /s/ 

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
   

  
	
  VNK CORP.

  
	
   

  
	
   

  
	
  By

  	
  /s/ 

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
  VORNADO NEWKIRK LLC

  
	
   

  
	
   

  
	
  By

  	
  /s/ 

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
  VORNADO MLP GP LLC

  
	
   

  
	
   

  
	
  By

  	
  /s/ 

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
  WEM BRYNMAWR ASSOCIATES LLC

  
	
   

  
	
   

  
	
  By

  	
  /s/ 

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
   

  
	
  FOR PURPOSES OF PARAGRAPH 3 ONLY:

  
	
   

  
	
  /s/ 

  	
   

  
	
  Michael L. Ashner

  



 


12





















 


Schedule 1


 


Apollo Real Estate Investment Fund III, L.P.


60 Columbus Circle

20th Floor

New York, New York 10023


Attn:  Lee Neibart


 


The Newkirk Master Limited Partnership


7 Bulfinch Place


Suite 500


Boston, Massachusetts 02114


Attn:  Ms. Carolyn Tiffany


 


NKT Advisors LLC


Two Jericho Plaza


Wing A


Jericho, New York 11753


Attn:       Michael L. Ashner


 


Vornado Realty Trust


Vornado MLP GP LLC


VNK Corp.


Vornado Newkirk LLC


888 Seventh Avenue


New York, New York 10019


Attn:  Clifford Broser


 


WEM-Brynmawr Associates LLC


Two Jericho Plaza


Wing A


Jericho, New York 11753


Attn:       Michael L. Ashner


 


13





















 


Schedule 2


 


First Union shall deliver to Vornado, at such times as may reasonably
be requested by Vornado (but in any event no less frequently than on a
quarterly basis), a certificate or certificates signed by an authorized officer
of First Union to the effect that First Union has complied with the asset and
income tests set forth in Section 856 of the Code, and that such officer
anticipates that First Union will continue to comply with such
requirements.  In addition, First Union
shall cooperate with Vornado, including, without limitation, by providing information
and documents in its control relating to the income and assets of First Union
at such times as may be reasonably requested by Vornado, even if Vornado at
such time no longer holds an interest in First Union, in addressing issues
raised by any taxing authority in any audit or similar proceeding that relates
to or arises out of Vornado’s investment in First Union.  Vornado shall reimburse First Union for any
increased out of pocket costs attributable to providing the certifications and
information described in this paragraph to Vornado.  First Union shall give Vornado at least sixty
days advance notice of any determination by First Union to elect to cease to be
treated as REIT for federal income tax purposes.


 


14





















 


Schedule 3


 


For purposes of this Schedule, the following terms shall the meanings
ascribed to them below:


 


“Excluded Securities” shall mean securities that are considered “real
estate assets” within the meaning of Section 856(c)(5) of the Code;
U.S. Government securities; equity securities of an entity treated as a
partnership, or disregarded as an entity, for federal income tax purposes;
securities described in Section 856(m) of the Code; and securities of a
corporation for which such corporation, the Corporation and Vornado agree to
make an election to be treated as a “taxable REIT subsidiary” under Section 856(l)
of the Code.


 


“General REIT Rule” shall mean that the Corporation and the MLP
Entities shall be operated and managed so as not to cause the Corporation to
fail to maintain its qualification as a REIT.


 


“Corporation” shall mean Newkirk Realty, Inc., a Maryland
corporation.


 


“MLP” shall mean The Newkirk Master Limited Partnership, a
Delaware limited partnership, and its successors.


 


“MLP Entities” shall mean, collectively, the MLP and its
respective subsidiaries and individually, any of the foregoing (an single such
entity, an MLP Entity”).


 


“Restriction Period” shall mean the period commencing on the
date hereof and ending sixty business days after the date on which Vornado
first receives notice from the Corporation that its aggregate direct or
indirect (whether through or by attribution from another entity) ownership of
the Corporation and the MLP represents less than two percent (2%) of the value
of the MLP; provided, however, that such sixty business day period shall be
extended by the number of days, if any, that Vornado has been prevented by the
Corporation (including but not limited to the Corporation’s delivery to Vornado
of a notice pursuant to section 2(d) or 5(l) of the Registration
Rights Agreement between Vornado and the Corporation) from disposing of its
common stock pursuant to an effective “resale” registration statement.


 


“Vornado” shall mean shall mean each of (i) Vornado Realty
L.P., a Delaware limited partnership, (ii) Vornado Realty Trust, a
Maryland real estate investment trust, and (iii) any affiliate of Vornado
Realty L.P.


 


The parties hereto agree that the following
covenants shall apply for all taxable years of the Corporation or any MLP
Entity during the Restriction Period:


 


1.   Operation in
Accordance with REIT Requirements.


 


The Corporation shall and shall manage and operate the MLP Entities so
as to cause each of the MLP Entities to (1) be in compliance with the
Specified REIT Rules and (2) be in compliance with the General REIT
Rule.  Each of the Corporation and the
MLP agrees, for the benefit of Vornado, that the Corporation shall not and
shall cause the MLP to not act, directly or indirectly, in any manner that
would result in violation of any of clauses (a) through (h) and
clauses (i) below (such provisions, as the same shall be deemed to be
revised or supplemented from time to time to reflect changes in applicable
laws, the “Specified REIT Rules”).


 


15





















 


(a)                           Not
more than 25 percent of the gross income of the Corporation and the MLP
Entities allocable (for purposes of Section 856(c)(3) of the Code) to
Vornado for any taxable year shall fail to qualify as one of the following:


 


(i)            “rents
from real property” within the meaning of Section 856(d) of the Code,


 


(ii)           interest
on obligations secured by mortgages on real property or on interests in real
property, provided, however, if Vornado has agreed that any MLP Entity may
retain a note that is not secured by real property or interests in real
property, interest on such note shall be excluded for purposes of this clause
(a),


 


(iii)          gain
from the sale or other disposition of real property (including interests in
real property and interests in mortgages on real property) that is not
described in Section 1221(a)(l) of the Code,


 


(iv)          dividends
or other distributions on, and gain (other than gain from “prohibited
transactions”, as defined in Section 857(b)(6) of the Code) from the
sale or other disposition of transferable shares in qualifying real estate
investment trusts (“REITs”), or


 


(v)           amounts
described in Section 856(c)(3)(E) through 856(c)(3)(I) of the Code.


 


(b)                           Not
more than 5 percent of the gross income of the Corporation and the MLP Entities
allocable (for purposes of Section 856(c)(2) of the Code) to Vornado
for any such taxable year shall fail to qualify as one of the following:


 


(i)            the
items of income described in clause (a) of this Section 1,


 


(ii)           gain
realized from the sale or other disposition of stock or securities which are
not property described in Section 1221(a)(l) of the Code,


 


(iii)          interest,
within the meaning of Section 856(c)(2), or


 


(iv)          dividends,
within the meaning the meaning of Section 856(c)(2).


 


Except to the
extent provided by Treasury Regulations, income from a hedging transaction (as
defined in clause (ii) or (iii) of Section 1221(b)(2)(A) of
the Code) which is clearly identified pursuant to Section 1221(a)(7),
including gain from the sale or disposition of such a transaction, shall not
constitute gross income under this subsection (b) to the extent that
the transaction hedges any indebtedness incurred or to be incurred to acquire
or carry real estate assets (within the meaning of Sections 856(c)(4) and
856(c)(5)(B) of the Code).


 


(c)                           As
of the close of each quarter of each such taxable year, not more than 25
percent of the total assets of the Corporation and the MLP Entities (for
purposes


 


16





















 


of Section 856(c)(4) of the Code) allocable
to Vornado would fail to qualify as one of the following (subject to any
applicable grace period permitted by statute or regulation):


 


(i)            real
estate assets within the meaning of Sections 856(c)(4) and 856(c)(5)(B) of
the Code,


 


(ii)           cash
and cash items (including receivables which arise in the ordinary course of the
any MLP Entity’s operations, but not including receivables purchased from
another person), or


 


(iii)          U.S.
Government securities.


 


(d)                           Neither
the Corporation nor any MLP Entity shall own, directly or indirectly,
securities (other than Excluded Securities) if, for purposes of Section 856(c)(4)(B)(iii),
the Corporation or any MLP Entity would be considered to own (a) more than
43% of the total voting power of the outstanding securities of any one issuer,
or (b) more than 43% of the total value of the outstanding securities of
any one issuer.  Not more than 5% of the
value of the total assets of the Corporation or the MLP Entities will be
represented by securities (other than Excluded Securities) of any one issuer.


 


(e)                           Neither
the Corporation nor any MLP Entity shall hold, directly or indirectly (as
determined for purposes of Section 857(b)(6) of the Code) any (i) stock
in trade or other property of a kind that would properly be includable in
inventory at hand at the close of a taxable year or (ii) property held
primarily for sale to customers in the ordinary course of a trade or business.


 


(f)                            Neither
the Corporation nor any MLP Entity shall hold, directly or indirectly (as determined
for purposes of Section 860E of the Code), other than through a Taxable
REIT subsidiary of the Corporation, any REMIC residual interests.


 


(g)                           No
later than five days after the date hereof, the Corporation shall provide a
list to Vornado of each entity that the Corporation or any MLP Entity, and any
entity that is treated as a partnership for federal income tax purposes in
which any MLP Entity holds, or is treated as holding an interest, is both (i) utilizing
to provide services to tenants or with respect to the properties in which any
MLP Entity owns a direct or indirect interest, and (ii) treating as an “independent
contractor”, within the meaning of Section 856(d)(3) of the Code and
Treasury Regulations Section 1.856-4(b)(5)(iii), for purposes of
determining compliance with the agreements set forth in clauses (a) and (b) of
this Section 1.  No MLP Entity shall
use any entities other than those listed on such list to provide such services,
except as specified in the next sentence. 
The Corporation may add entities to such list from time to time by
notice to Vornado; provided, however, that if such notice is delivered at time
when Vornado owns securities in such entity or has otherwise entered into an
arrangement causing Vornado to derive income from such entity, then, subject to
the following proviso, such entity shall not be added to the list; provided
further that if such notice is given at a time in which (x) Vornado is engaged
in active discussions with such entity regarding an arrangement described above
or (y) Vornado owns securities of such entity with a fair market value of less
than $1,000,000, then, in each case, the parties shall jointly determine in
good faith, based on the parties’


 


17





















 


relative economic interests and REIT qualification
interests with respect to any such entity, whether Vornado shall enter into
such arrangement (in the case of clause (x)) or whether Vornado shall dispose
of such securities (in the case of clause (y)).


 


(h)                           The
Corporation shall deliver to Vornado, at such times as may reasonably be
requested by Vornado (but in any event no less frequently than on a quarterly
basis), a certificate or certificates signed by an authorized officer of the
Corporation to the effect that the Corporation and the MLP Entities have
complied with the agreements set forth in this schedule, and that such officer
anticipates that the Corporation and the MLP Entities will continue to comply
with such agreements.  In addition, the
Corporation shall cooperate with Vornado, including, without limitation, by
providing information and documents in Corporation’s or any MLP Entities
control relating to the income and assets of the Corporation and the MLP
Entities at such times as may be reasonably requested by Vornado, even if
Vornado at such time no longer holds an interest in any such entity, in
addressing issues raised by any taxing authority in any audit or similar
proceeding that relates to or arises out of Vornado’s investment in the
Corporation or any MLP Entity.  The
Corporation shall retain Deloitte & Touche LLP, or such other national
recognized accounting firm reasonably acceptable to Vornado to prepare the
certifications and information described in this subsection (i).  The Corporation shall cause nationally
recognized tax counsel to prepare and deliver to Vornado’s counsel, at such
times as Vornado shall reasonably request, an opinion to the effect that the
Corporation has been organized in conformity with the requirements for
qualification as a REIT under the Code, its manner of operations has enabled it
to satisfy the requirements for qualification as a REIT for taxable years
ending on or prior to the date of such opinion and its proposed method of
operations will enable it to satisfy the current requirements for qualification
and taxation as a REIT for subsequent taxable years.  In issuing such opinion, such counsel shall
be entitled to rely on customary representations from the Corporation and its
affiliates.  Vornado shall reimburse the
Corporation and the MLP Entities for any increased out of pocket costs of the
Corporation or the MLP Entities attributable to providing the opinions,
certifications and information described in this subsection (h) to
Vornado.  The Corporation shall give
Vornado at least 60 days advance notice of any determination by the Corporation
to elect to cease to be treated as REIT for federal income tax purposes.


 


(i)                            Without
the prior written consent of Vornado, neither the Corporation nor the MLP
Entity will, directly or indirectly, acquire securities of, or otherwise enter
into an arrangement causing the Corporation or any MLP Entity to derive income
from, a person identified on in a notice described below that Vornado actually
treats as an “independent contractor” for purposes of Section 856 of the
Code.  Vornado shall provide a written
notice listing such persons no later than five days after the date hereof.  In addition, Vornado may add entities to such
list from time to time by notice to the Corporation; provided, however, that if
such notice is delivered at time when the Corporation or an MLP Entity owns
securities in such entity or has otherwise entered into any arrangement
described above, then, subject to the following proviso, such entity shall not
be added to the list; provided further that if such notice is given at a time
in which (x) the Corporation or any MLP Entity is engaged in active discussions
with such entity regarding an arrangement described or (y) the Corporation and
the MLP Entities own securities of such entity with a fair market value of less
than $1,000,000, then, in each


 


18





















 


case, the parties shall jointly determine in good
faith, based on the parties’ relative economic interests and REIT qualification
interests with respect to any such entity, whether the Corporation or such MLP
Entity shall enter into such arrangement (in the case of clause (x)) or whether
the Corporation and the MLP Entities shall dispose of such securities (in the
case of clause (y)).


 


(j)                            For
purposes of the above covenants:


 


(i)            Gross
income will be treated as described in a particular subsection or
paragraph of Section 856 of the Code, only if such gross income may
properly be so treated by Vornado.


 


(ii)           “Interest”
excludes any interest received or accrued, directly or indirectly, where the
determination of the amount of interest depends on the income or profits of any
person, except where interest is based on a fixed percentage or percentages of
receipts or sales (within the meaning of Section 856(f)(1)(A) of the
Code).


 


(l)            No
taxable REIT subsidiary of the Corporation shall, directly or indirectly,
operate property as a lodging facility (within the meaning of Section 856(d)(9)(D)(ii) of
the Code) or a health care facility (within the meaning of Section 856(e)(6)(D)(ii)).


 


(k)           No
later than five days after the date hereof, Vornado shall provide the
Corporation a list of persons with respect to which rent received by Vornado
would be described in Section 856(d)(2)(B) of the Code, and neither
the Corporation nor any of the MLP Entities shall lease any property or
otherwise receive rents (as described above) from any entity on such list.  Vornado may update such schedule by
notice to the Corporation from time to time, and neither the Corporation nor
any MLP Entity shall lease any property or otherwise receive rents (as
described above) from any entity in such a notice, except to the extent that
the Corporation or any MLP Entities has a preexisting contractual relationship with
such entity at the time such notice is received; provided, however, that if
Vornado provides such notice at a time when the Corporation or any MLP Entity
is engaged in active discussions with such entity regarding a potential lease
with any such entity, then the parties shall jointly determine in good faith,
based on the parties’ relative economic interests and REIT qualification
interests with respect to any such entity, whether the Corporation or such MLP
Entity shall enter into such arrangement. 
Upon request from Vornado, the Corporation shall provide Vornado a list
of the current tenants of the Corporation and the MLP Entities and the rents
attributable thereto.


 


(l)            For
purposes of Section 15.11 of the partnership agreement of the MLP, the
term “REIT Partner” shall not refer to Vornado. 
If section references in such partnership agreement change between
the date hereof and the effective date of the partnership agreement, this
provision shall be read as applying to the appropriate corresponding section.


 


19





















 


2.   Publicly Traded
Partnership


 


(a)           The
Corporation shall manage and control the MLP such that interests in the MLP are
not traded on an “established securities market” as defined in Treas. Reg. § 1.7704-1(b).


 


(b)           During
each tax year of the MLP, the sum of the percentage interests in MLP capital or
profits transferred (other than transfers described in any of paragraphs (e), (f) and
(g) of Treas. Reg. § 1.7704-1 or as to which the MLP has received an
opinion of counsel of recognized standing concluding that the transfers will
not cause the MLP to be treated as a publicly traded partnership within the
meaning of Section 7704(b) of the Code) shall not exceed 2 percent of
the total interests in the MLP’s capital or profits and the MLP shall take all
actions reasonably available to it to avoid treatment of the MLP as a publicly
traded partnership within the meaning of Section 7704(b) of the
Code.  For purposes of this
representation, the percentage interests in the MLP’s capital and profits shall
be determined in accordance with Treas. Reg. § 1.7704-1(k).


 


(c)           The
MLP believes that it is not a publicly traded partnership within the meaning of
Section 7704(b) of the Code and has not reported or taken a position
with the Internal Revenue Service or its partners that the MLP is a publicly
traded partnership within the meaning of Section 7704(b) of the Code.


 


3.   Remedies


 


If either the Corporation or any of the MLP Entities
fails to satisfy its obligations under this Agreement and, as a result of such
failure, Vornado (1) fails to maintain its qualification as a REIT or (2) otherwise
incurs any liability for any tax, penalty or similar charges), the Corporation
and the MLP Entities shall indemnify Vornado for all losses, damages,
liabilities, costs and expenses (including, without limitation, the loss of any
deduction or other tax benefit) attributable to such failure, including without
limitation, the loss of REIT status.


 


20