Document:

Exhibit 10.16

 

ELEVENTH AMENDMENT TO OPERATING AGREEMENT

 

THIS ELEVENTH AMENDMENT TO
OPERATING AGREEMENT is made and entered into effective as of the 31st
day of May, 2005, by and between DUBUQUE RACING ASSOCIATION, LTD., an Iowa
non-profit corporation (hereinafter referred to as “DRA”) and DIAMOND
JO, LLC (formerly known as
Peninsula Gaming Company, LLC)
(hereinafter referred to as “Peninsula”).

 

WHEREAS, on February 22,
1993, DRA and Peninsula’s predecessor in interest executed an Operating
Agreement setting forth their respective rights, duties and obligations with
regard to excursion gambling boat operations under Chapter 99F of the Iowa
Code, which Operating Agreement was amended on February 22, 1993, March 4,
1993, March 11, 1993 (two amendments signed on that date), April 9, 1993,
November 29, 1993, April 6, 1994, April 29, 1994, July 11, 1995, and July 15,
1999 (unless otherwise noted, the term “Operating Agreement” as used hereafter
shall refer to the original Operating Agreement as amended by all prior
amendments); and

 

WHEREAS, in 2004 the Iowa
General Assembly enacted House File 2302, which authorized the operation of
table games at racetrack enclosures and the operation of gambling barges, both
on certain conditions; and

 

WHEREAS, Chapter 99F of the
Iowa Code, as amended by House File 2302 requires that DRA and Peninsula file
an agreement by June 1, 2005 with the Iowa Racing and Gaming Commission in
order to authorize DRA’s operation of table games and Peninsula’s operation of
the Diamond Jo Dubuque as a barge, and

 

WHEREAS, DRA and Peninsula
have jointly agreed to further amend the terms of the Operating Agreement, as
previously amended, for the above-mentioned purposes.

 

NOW, THEREFORE, IT IS AGREED
that the Operating Agreement is further amended as follows, subject to approval
by the Iowa Racing and Gaming Commission:

 

1.             As used herein, the following terms shall be
defined as follows:

 

(a)           “DRA’s facility” means Dubuque Greyhound Park
& Casino;

 

(b)           “Diamond Jo Dubuque” means the excursion
gambling boat now or hereafter owned and operated by Peninsula in the Ice
Harbor, Port of Dubuque, whether operated as an excursion boat (permanently
moored or otherwise) or as barge; “excursion gambling boat,” “excursion boat,”
and “barge” have the meanings defined in Iowa Code Chapter 99F as of the date
of this 11th Amendment.  A
permanently moored vessel is not a barge.

 

(c)           “Table games” has the meanings defined for
such term in Iowa Code Chapter 99F as of the date of this 11th
Amendment (i.e. any game for which a table games license is required).

 

(d)           “Adjusted gross receipts” has the meaning as
defined in Iowa Code Chapter 99F as of the date of this 11th
Amendment.

 

 

2.             The term of the Operating Agreement, as
amended herein, is extended to, and shall terminate on December 31, 2018 at
11:59 p.m.

 

3.             Peninsula consents to DRA’s operation of
table games, and DRA consents to Peninsula’s operation of Diamond Jo Dubuque as
a barge.  DRA shall be solely responsible
for payment of the three million dollar ($3,000,000.00) fee imposed under Iowa
Code section 99F.4A(8) as a condition of operating table games at a racetrack
enclosure.

 

4.             DRA is authorized to operate one thousand
(1,000) gaming devices (in a mix of slots and video games, including without
limitation video poker and video blackjack, determined by DRA).  In addition DRA is authorized to operate up
to twenty (20) tables for non-video table games.

 

5.             The last unnumbered paragraph in Paragraph
8(h)(1) of the Operating Agreement, as previously amended by paragraph 9 the
Ninth Amendment to Operating Agreement, is amended by deleting it in its
entirety and the following substituted in lieu of same:

 

“(h)         For any periods during which subparagraph
4(a)(4) of the Operating Agreement is applicable, Peninsula and DRA shall use
its best efforts to enter into a non-exclusive joint marketing plan to conduct
cooperative charitable/non-profit contribution advertising and marketing
efforts; This plan shall include recognition of Peninsula’s gross contributions
to the DRA.  As part of and to facilitate
said plan, the following provisions apply:

 

Peninsula may elect to
require that the posted overall weighted average of theoretical payback
percentage, determined in accordance with paragraph 25.11(2)(b) of the Iowa
Racing and Gaming Commission regulations (491 IAC ¶ 25.11(2)(b)) on all DRA
machine games of chance shall not exceed by more than one-half of one
percentage point the posted overall weighted average of theoretical payback
percentage on all Peninsula machine games of chance.  If Peninsula makes such election, the
following provisions shall apply:

 

(i)             Peninsula shall set its rates A) in good
faith, B) in accordance with reasonable commercial standards, and C) not for
the purpose of engaging in predatory pricing practices to the detriment of DRA.

 

(ii)           Peninsula may not require DRA to change rates
on its machines more than four times per contract year.

 

(iii)          Peninsula shall give at least 30 days written
notice of any intended rate changes to DRA; Peninsula shall provide to DRA upon
request the initial posted overall weighted average of theoretical payback
percentage on all Peninsula machine games of chance on the New Boat as defined
in subparagraph 1(a)(1) of this Ninth Amendment, and DRA may not be required to
change its posted weighted average of theoretical payback percentage on all DRA
games of chance until at least thirty days have elapsed after the commencement
of the operations of DRA’s land-based casino or Peninsula’s New Boat, whichever
is later.

 

 

(iv)          The parties shall implement the changes
concurrently, and after any required regulatory approvals.

 

Additionally, subparagraphs 8(h)(2) and
8(h)(3), as previously amended, are deleted.

 

6.             Peninsula consents to maintaining DRA’s
status as lessee/sublessor of access points, including the boarding ramp,
and/or frontage for Diamond Jo Dubuque at current terms (including price of $1
per year), contingent upon the City-DRA lease term for same being extended to
2018, by no later than July 31, 2005.

 

7.             The right of first refusal granted to DRA by
Paragraph 8 of the Operating Agreement, as amended by the Ninth Amendment to
the Operating Agreement, shall be limited to a single property sale of Diamond
Jo Dubuque by Peninsula and shall not extend to a sale of Peninsula Gaming, LLC
(or any of its subsidiaries other than Peninsula) and/or substantially all of
Peninsula Gaming, LLC’s (or any of its subsidiaries other than Peninsula)
assets.  Peninsula shall have a right of
first refusal in the event of a sale of DRA’s facility equivalent to the right
of first refusal granted to DRA by Paragraph 8 of the Operating Agreement, as
amended by the Ninth Amendment to the Operating Agreement.

 

8.             If DRA temporarily or permanently ceases
operations, DRA shall receive 8%-10%-12.5%-15% of Diamond Jo Dubuque’s adjusted
gross receipts in accordance with Paragraph 4(a)(2)-(3) as stated in the
unamended February 22, 1993 Operating Agreement, whether Diamond Jo Dubuque is
operating as an excursion boat, permanently moored vessel, or barge.

 

9.             DRA shall support Peninsula’s application to
the Iowa Racing and Gaming Commission to obtain permanently moored vessel
status for the Diamond Jo Dubuque vessel in operation as of the date of this 11th
Amendment.

 

10.           For purposes of Paragraph 13(d), below, if
for any reason Peninsula fails to operate its current vessel and/or a barge in
the Ice Harbor, Port of Dubuque, as required by the Operating Agreement as
amended herein, DRA shall have no obligation to provide any credits pursuant to
Paragraph 13(d), below, from the date of said failure to operate; provided,
however, that this Paragraph 10 does not authorize Peninsula to suspend or
terminate operations pursuant to the Operating Agreement as amended herein,
prior to December 31, 2018 at 11:59 p.m.

 

11.           Peninsula shall be solely responsible for
payment of City taxes imposed under Iowa Chapter 99F.

 

12.           Peninsula and DRA shall enter into a joint
campaign effort related to the 2010 county referendum to re-authorize gambling
games in Dubuque County.  The joint
campaign effort shall urge Dubuque County voters to vote in favor of approving
re-authorization for (i) riverboat gambling operations in Dubuque County, and
(ii) gambling operations at Dubuque Greyhound Park & Casino.  Peninsula shall commit to spend between
$250,000 and $400,000 on the joint campaign effort, to be pre-funded in equal
annual installments prior to the referenda. All funds will be disbursed by a
joint committee of equal representatives from DRA and Dubuque Diamond Jo.  During this campaign both parties will enter
into a quiet period (defined as the period commencing sixty (60) days prior to
the referendum) of any individual advertising promoting solely each party’s own
referendum or each party’s

 

 

separate contributions to the City and charities.

 

13.           Non-Barge Operations.  So long as Diamond Jo Dubuque continues to operate its current vessel
at its current location as an excursion boat or as a permanently moored vessel,
and not as a “Barge Operation” pursuant to Section 14, below:

 

(a)           Diamond Jo Dubuque is authorized to expand to
eight hundred (800) gaming devices on the Diamond Jo Dubuque.   Diamond Jo Dubuque may increase the number
of gaming devices by twenty-five (25) to eight hundred twenty-five (825); at
such time as Diamond Jo Dubuque’s gaming devices exceed eight hundred (800) DRA
may increase the number of its gaming devices to one thousand twenty-five
(1,025).  Diamond Jo Dubuque may increase
the number of gaming devices by twenty-five (25) to eight hundred fifty (850); at
such time as Diamond Jo Dubuque’s gaming devices exceed eight hundred
twenty-five (825), DRA may increase the number of its gaming devices to one
thousand fifty (1,050).

 

(b)           Until December 31, 2008, Diamond Jo Dubuque
shall maintain in good condition the quantity and quality of games it had in
operation on May 28, 2005.  Prior to
December 31, 2008, Peninsula Gaming shall not decrease the number or quality of
gambling game positions , or materially change the hours and days of operation,
or make other material changes in its operation that have the purpose or effect
of decreasing adjusted gross receipts below the level that they would otherwise
achieve.

 

(c)           Peninsula shall continue to pay DRA fifty
cents (50¢) per admission on Diamond Jo Dubuque through December 31, 2008,
after which such obligation shall terminate. 
Fee shall be payable by Peninsula to DRA by the 15th of each
month for the preceding month.  Peninsula
shall be reimbursed by DRA amount of rents paid by Peninsula to the City of
Dubuque for rents for the Portside patio and for non-exclusive parking in Lots
1 and 2 (also known as Parking Lots A and C, respectively) in the Ice Harbor,
said reimbursement for rent payments not to exceed two hundred fifty thousand
dollars ($250,000.00) per year. 
Reimbursements to be paid on the same schedule as rents paid by
Peninsula to the City of Dubuque.

 

(d)           From the date that DRA commences operation of
table games and continuing until December 31, 2008, DRA shall pay to Peninsula
thirty three cents (33¢) for each one dollar ($1.00) of reduction in Diamond Jo
Dubuque’s adjusted gross receipts after DRA commences operation of table
games.  DRA shall commence operation of
table games not later than June 1, 2006. 
DRA shall provide Peninsula with not less than thirty (30) days notice
prior to the date they intend to commence operating table games.

 

Diamond Jo Dubuque’s loss of
adjusted gross receipts shall be based upon the difference between Diamond Jo
Dubuque’s adjusted gross receipts in a month compared to the same month during
the twelve month period immediately preceding the commencement of table game
operations by DRA (hereinafter the “Base Term”).  For Example:

 

If DRA commences operation
of table games on June 1, 2006, the Base Term would be June 1, 2005 through and
including May 31, 2006.  Accordingly, to

 

 

show loss of adjusted gross
receipts during May 2007, Diamond Jo Dubuque would compare adjusted gross
receipts for May 2007, to the adjusted gross receipts of May 2006, and multiply
the difference by 0.33.  The calculation
would be as follows: (May 2006) — (May 2007) x 0.33 = payment received by
Diamond Jo Dubuque based on diminished adjusted gross receipts.

 

The maximum amount of loss of adjusted gross
receipts for which the 33¢ credit will be given is fifteen percent (15%) of
Base Term AGR.  Provided, however, that
DRA shall not be required to compensate Peninsula for declines in Diamond Jo
Dubuque’s adjusted gross receipts if such reduction is caused by construction by
Dubuque Diamond Jo, strikes, lockouts, labor troubles, unavailability of
construction materials, unavailability or excessive price of fuel, power
failure, riots, insurrection, war, terrorist activities, explosions, hazardous
conditions, fire, flood, weather or acts of God, or by reason of any other
cause beyond the exclusive and reasonable control of DRA.

 

If/when a gambling operation commences within
125 miles of Dubuque, Iowa,  for purposes
of the computation called for in the preceding paragraph, Diamond Jo Dubuque’s
adjusted gross receipts for the twelve month period preceding the commencement
of table games at DRA’s facility shall first be reduced by seven percent (7%)
before being compared to current results. 
This maximum reduction in AGR is seven percent (7%) no matter if two or
more gambling operations commence.  For
Example:

 

If DRA commences operation of table games on
June 1, 2006 and Waterloo and Washington County commence operations in January
2007.  The Base Term AGR (June 1, 2005
through and including May 31, 2006) is multiplied by 93% to establish a New
Base Term AGR.  Accordingly, to show loss
of adjusted gross receipts during January 2007, Diamond Jo Dubuque would
compare adjusted gross receipts for January 2007, to the adjusted gross
receipts of January 2006 multiplied by 93% and multiply the difference by
..33.  The calculation would be as
follows:  ((January 2006 x .93) —
(January 2007 ))  x 0.33 = payment
received by Peninsula based upon diminished adjusted gross receipts.

 

Whether Peninsula exists as a non-barge or barge,
payments to Peninsula related to diminished adjusted gross receipts as
calculated above will be payable on a monthly basis on the 15th of
each month for the preceding month.  In
the event such payments exceed the amounts otherwise payable to DRA by Peninsula
under this Agreement, such excess shall be accrued and carried forward without
interest.  Commencing January 1, 2009,
the total of such carry forward shall be paid to Peninsula in monthly payments
starting January 1, 2009 through December 31, 2015.  The amount of the monthly payments starting
in January 1, 2009 shall equal the amounts paid by Peninsula to DRA for the
same month under the Operating Agreement. 
In no event shall the amounts paid by DRA to Peninsula in a calendar
year exceed the amount received from Diamond Jo Dubuque for the same year under
the Operating Agreement.  On December 31,
2015 all remaining accrued payments due to Peninsula related to diminished
adjusted gross receipts shall be forfeited by Peninsula.

 

(e)           Commencing January 1, 2009, Peninsula shall
pay to DRA three percent (3%) of Diamond Jo Dubuque’s adjusted gross receipts.  Peninsula shall be reimbursed by DRA the
amount of rents paid by Diamond Jo Dubuque to the City of Dubuque for rents for
the Portside patio and for non-exclusive parking in Lots 1 and 2 (also known as
Parking Lots A and C, respectively) in the Ice Harbor, said reimbursement for
rent payments not to exceed two hundred fifty thousand dollars ($250,000.00)
per year.  Reimbursements to

 

 

be paid on the same schedule
as rents paid by Peninsula to the City of Dubuque.

 

14.           Barge Operation. 
Beginning at such time, if any, that Diamond Jo Dubuque commences
operation as a barge, and through the remaining term of the Operating Agreement
as amended herein:

 

(a)           Both DRA and Diamond Jo Dubuque shall be
authorized to increase to a maximum of one thousand five hundred (1,500) gaming
positions, provided, however, that if DRA’s facility is at less than 1,500
gaming positions, said barge shall not exceed the total number of gaming
positions at DRA’s facility by more than 2%. 
The 2% calculation on Diamond Jo exceeding the number of DRA’s gaming
positions will be calculated off of the highest number of gaming positions that
are operating at the DRA at any time during this agreement.

 

(b)           DRA shall receive four and one-half percent
(4.5%) of Diamond Jo Dubuque’s adjusted gross receipts payable by the 15th
of each month for the preceding month.   Peninsula shall be reimbursed by DRA amount of
rents paid by Diamond Jo Dubuque to the City of Dubuque for the Portside patio
and for non-exclusive parking in Lots 1 and 2 (also known as Parking Lots A and
C, respectively) in the Ice Harbor, such reimbursement for rent payments not to
exceed $500,000 per year.  Reimbursements
to be paid on the same schedule as rents paid by Peninsula to the City of
Dubuque.

 

(c)           Peninsula shall no longer be obligated to pay
DRA fifty cents (50¢) for each boat admissions.

 

(d)           At the time Diamond Jo Dubuque commences
operation as a barge, pursuant to this Section 14, DRA shall have no further duty
to accrue payments related to diminished adjusted gross receipts to Peninsula
pursuant to Section 13(d) of this 11th Amendment to the Operating
Agreement.

 

15.           Peninsula’s operation of any gambling
operations, other than the current Diamond Jo Dubuque vessel as an excursion
boat docked in the Ice Harbor, or as a permanently moored vessel in the Ice
Harbor, or operation as a barge in the Ice Harbor, is not authorized under the
Operating Agreement.

 

16.           If any provision of this 11th
Amendment shall be declared by any court or regulatory authority of competent
jurisdiction to be illegal, void or unenforceable, all other provisions of this
11th Amendment, and all other provisions of the Operating Agreement
shall not be affected and shall remain in full force and effect.

 

17.           This 11th Amendment is subject to
and conditioned upon the extension of existing leases, at current terms,(including
without limitation Lot C (also known as Lot 2), Lot D, the fifteen foot strip
between the waterline and the Portside facility and the docking facilities/boarding
ramp) between the City of Dubuque as Lessor and Dubuque Racing Association,
Ltd. as Lessee through December 31, 2018, by no later than July 31, 2005.

 

18.           Both parties shall use their best efforts to
secure their approval of this 11th Amendment to the Operating
Agreement, at the earliest practicable dates, from the Iowa Racing and Gaming

 

 

Commission.  Peninsula shall use
its best efforts in assisting DRA to secure necessary lease amendments referred
to in paragraphs 6 and 17, above, at the earliest practicable dates.

 

19.           Each party shall provide the other a
certified resolution approving this 11th Amendment not later than June
1, 2005.

 

20.           Except as specifically amended above, all of
the provisions of the February 22, 1993 Operating Agreement and prior
Amendments thereto shall remain in full force and effect.  In the event of a conflict between the terms
of this 11th Amendment and any other terms of the Operating Agreement,
as amended through the 10th Amendment to Operating Agreement, the
terms of this 11th Amendment shall govern.

 

21.           For all purposes, this 11th
Amendment and the Operating Agreement shall be deemed drafted by all parties
hereto even though one of the parties may have initially drafter the 11th
Amendment and/or the Operating Agreement and submitted it to the other for
review.  No provision shall be
interpreted for or against a
particular party due to the fact that the party drafted the provision.

 

 

	
  Dubuque
  Racing Association, Ltd.

  
	
   

  
	
  /s/
  Bruce W. Wentworth

  	
   

  
	
  By: 
  Bruce W. Wentworth, General Manager

  
	
   

  
	
   

  
	
  Diamond
  Jo, LLC

  
	
   

  
	
  /s/
  Natalie Schramm

  	
   

  
	
  By: 
  Natalie Schramm, General Manager for Diamond Jo, LLC (formerly known as
  “Peninsula Gaming Company, LLC”)

  
	
   

  
	
   

  
	
  Peninsula
  Gaming, LLC

  
	
   

  
	
  /s/
  Natalie Schramm

  	
   

  
	
  By: 
  Natalie Schramm, Chief Financial Officer for Peninsula Gaming, LLC

  

 

 

STATE
OF IOWA

COUNTY
OF DUBUQUE

 

On this first day of June, 2005 before me, a NOTARY PUBLIC in and for
the State of Iowa, personally appeared Natalie Schramm, to me personally known,
who being by me duly sworn did say that the person is the Chief Financial
Officer of Peninsula Gaming, LLC and General Manager of Diamond Jo, LLC
executing the forgoing instrument, that the instrument was signed on behalf of
the said limited liability companies by authority of the companies and the said
Natalie Schramm acknowledged the execution of said instrument to be the
voluntary act and deed of said limited liability companies by them voluntarily
executed.

 

 

	
  /s/
  Kathryn Malone

  	
   

  
	
  Notary
  Public in the State of Iowa

  	
   

  

 

 

STATE
OF IOWA

COUNTY
OF DUBUQUE

 

On this first day of June, 2005 before me, a NOTARY PUBLIC in and for
the State of Iowa, personally appeared Bruce Wentworth, to me personally known,
who being by me duly sworn did say that the person is the General Manager of
Dubuque Racing Association, Ltd executing the forgoing instrument, that the
instrument was signed on behalf of the said corporation by authority of the
companies and the said Bruce Wentworth acknowledged the execution of said
instrument to be the voluntary act and deed of said corporation by them
voluntarily executed.

 

 

	
  /s/ Kathryn Malone

  	
   

  
	
  Notary Public in the State
  of IowaExhibit 10.1

 

ADVISORY
AGREEMENT

 

BETWEEN

 

NEWKIRK
REALTY TRUST, INC.,

 

THE NEWKIRK
MASTER LIMITED PARTNERSHIP

 

AND

 

NKT
ADVISORS LLC

 

 

Dated as of November 7,
2005

 

 

ADVISORY
AGREEMENT

 

THIS
AGREEMENT, made as of
November 7, 2005, among NEWKIRK REALTY TRUST,
INC., a Maryland corporation (“Newkirk”), THE NEWKIRK MASTER LIMITED PARTNERSHIP, a Delaware limited
partnership (the “Operating Partnership” and together with Newkirk, the “Company”),
and NKT ADVISORS LLC (the “Advisor”).

 

WHEREAS, Newkirk, through the Operating Partnership,
owns, manages and operates real estate assets;

 

WHEREAS, Newkirk intends to be qualified as a real
estate investment trust under the Internal Revenue Code of 1986, as amended;
and

 

WHEREAS, the Company desires to retain the Advisor
for the purpose of providing day-to-day management and administrative services
to the Company as described herein on the terms and conditions hereinafter set
forth;

 

NOW,
THEREFORE, in
consideration of the premises and of the mutual agreements herein set forth,
the parties hereto agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1         
Definitions.  As used in this Agreement, the
following terms have the meanings set forth below.

 

“Adjusted Funds From Operations”
— Funds From Operations of the Operating Partnership, adjusted to add back any
asset impairment charges and non-cash restricted stock issuances.

 

“Advisor” - NKT Advisors
LLC, a Delaware limited liability company.

 

“Advisor Affiliate” - means
any entity Controlling, Controlled by or under common Control with the Advisor
whose day to day business and operations are managed and supervised by Michael
Ashner.

 

“Advisor Change in Control”
- a change in the direct or indirect (i) beneficial ownership of more than
fifty percent (50%) of the combined voting power (of any Person together with
any affiliates of such Person or Persons otherwise associated or acting in
concert with such Person) of the Advisor’s then outstanding equity interests,
or (ii) power to direct or control the management policies of the Advisor
whether through the ownership of beneficial equity interests, common directors
or officers, by contract or otherwise.  Advisor Change of Control shall
not include public offerings of the membership or other equity interests of
Advisor or any assignment of this Agreement by the Advisor as permitted hereby
and in accordance with the terms hereof.

 

 

“Applicable Annualized Return” —
with respect to any quarter, the greater of (i)  the Yield on 10-Year
U.S. Treasuries as of the last business day of such quarter plus two hundred
fifty basis points (2.5%) per annum and (ii) for any quarter ending during
the years listed below, the rate set forth opposite such year in the table
below:

 

	
  Year

  	
   

  	
  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2005

  	
   

  	
  25

  	
  %

  
	
  2006

  	
   

  	
  25

  	
  %

  
	
  2007

  	
   

  	
  22

  	
  %

  
	
  2008

  	
   

  	
  20

  	
  %

  
	
  2009

  	
   

  	
  15

  	
  %

  
	
  2010

  	
   

  	
  12

  	
  %

  
	
  Thereafter

  	
   

  	
  10

  	
  %

  

 

“Appollo Amount – means at such
time as Apollo Real Estate Investment Fund III, L.P. or its subsidiary, sells
Partnership Units or has Partnership Units converted into Common Stock, in
whole or from time to time, up to 5,000,000 Partnership Units, an amount per
sold or converted Partnership Unit equal to the lesser of (x) $19 and (y) the
per Partnership Unit price at which such Partnership Units are sold or, if
converted, the per share closing price of Common Stock on the day on which such
Partnership Units are converted.

 

“Base Amount” — as of any date,
means the greater of (i) $650,000,000 or (ii) an amount equal
to (1) the gross proceeds to Newkirk in the IPO and the sale of
Common Stock to First Union pursuant to the Securities Purchase Agreement dated
of even date herewith between Newkirk and First Union plus (2) $209,116,000
[the book value of partners equity in the Operating Partnership at June 30,
2005] plus (3) the gross proceeds of any subsequent issuance of Common
Equity Securities minus (4) all cash amounts paid by the Company to
repurchase any Common Equity Securities (other than the amounts used from the
proceeds of the IPO to purchase Partnership Units from existing limited
partners).

 

“Board” — the Board of
Directors of Newkirk.

 

“Cause” — means:  (i) the
Advisor’s continuous and intentional failure to perform its duties under this
Agreement after written notice from the Company to the Advisor of such
non-performance; (ii) the Advisor commits any act of gross negligence in
the performance of its duties under this Agreement; (iii) the Advisor
commits any act of fraud, misappropriation of funds, or embezzlement against
the Company; (iv) the Advisor commits any other willful and intentional
misconduct which is materially injurious to the Company, monetarily or
otherwise; (v) the Advisor defaults in the performance or observance of
any material term, condition or covenant contained in this Agreement to be
performed or observed on its part, and such default continues for a period of
thirty (30) days after written notice thereof from the Company specifying
such default and requesting that the same be remedied within such thirty
(30) day period; provided, however, the Advisor shall have an additional
sixty (60) days to cure such default if (A) such default cannot
reasonably be cured with in thirty (30) days but can be cured within
ninety (90) days, and (B) the Advisor shall have commenced to cure
such default within the initial thirty (30) day period and thereafter diligently
proceeds to cure the same within ninety (90) days of the date of the
Company’s original notice of the default; (vi) an Advisor Change in
Control; or (vii) Michael L. Ashner is no longer Chief Executive Officer
of the Advisor (provided such condition is not a result of Michael Ashner’s
death or disability).

 

“Code” - Internal Revenue
Code of 1986, as amended.

 

“Common Stock” — means shares of
common stock of Newkirk.

 

2

 

“Common Equity Securities” —
means Common Stock and Partnership Units which may be redeemed for Common Stock
pursuant to the terms of the Partnership Agreement.

 

“Control” - means the direct
or indirect ownership of at least 51% of the beneficial equity interests and
voting power of an entity.

 

“Equity Securities” — REIT Equity
Securities and Operating Partnership Equity Securities.

 

“Exchange Act” - Securities
Exchange Act of 1934, as amended.

 

“First Union” - First Union
Real Estate Equity and Mortgage Investments.

 

“Funds From Operations” — has the
meaning assigned thereto by the National Association of Real Estate Investment
Trusts, namely, net income (computed in accordance with GAAP), excluding gains
(or losses) from debt restructuring and sales of property, plus depreciation
and amortization on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures.

 

“GAAP” — means generally
accepted accounting principles in the United States of America as of the date
applicable.

 

“IPO” — the initial public
offering of Common Stock.

 

“Issuance Price” — means, (i) with
respect to REIT Equity Securities, the issuance price of such securities after
deducting any underwriting discounts, commissions, and placement fees and other
expenses and costs relating to the issuance thereof exclusive of REIT Equity
Securities issued in connection with the redemption of Operating Partnership
Equity Securities, and (ii) with respect to Operating Partnership Equity
Securities, either the cash price paid for such securities, or if such
securities are issued in exchange for something other than cash, the per share
Cash Amount (as defined in the Partnership Agreement) on the date of issuance
of the applicable Operating Partnership Equity Security (assuming such
Operating Partnership Equity Securities were then redeemable).  The
Issuance Price will be modified accordingly in the event of stock splits.

 

“Net Lease Asset” 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.

 

3

 

“Newkirk” — Newkirk Realty
Trust, Inc., a Maryland corporation.

 

“Operating Partnership” —
The Newkirk Master Limited Partnership, a Delaware limited partnership.

 

“Operating Partnership Equity
Securities” — all Partnership Units issued after the closing date of the IPO
other than those issued to Newkirk.

 

“Partnership Agreement” —
the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, as hereinafter amended, supplemented and modified.

 

“Partnership Units” — shall
have the meaning ascribed thereto in the Partnership Agreement.

 

“Person” - any individual,
corporation, partnership, joint venture, limited liability company, estate,
trust, unincorporated association, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting
in such capacity on behalf of any of the foregoing.

 

“Quarterly Threshold Amount” —
the Adjusted Funds From Operations required to produce an annualized return on
the Base Amount equal to the Applicable Annualized Return.

 

“REIT Equity Securities” —
Common Stock, convertible preferred shares, convertible debt and perpetual
preferred shares that do not require dividend payments, in each case, that are
issued by Newkirk.

 

“Repurchase Amount” — means
an amount equal to the aggregate Issuance Price for all Equity Securities
repurchased by Newkirk or the Operating Partnership from and after the IPO
other than those Partnership Units acquired from proceeds of the IPO and
Operating Partnership Equity Securities redeemed in exchange for REIT Equity
Securities.  For purposes hereof, if Newkirk or the Operating Partnership
is unable to determine the actual Issuance Price for an Equity Security that is
repurchased, the Repurchase Amount shall be the weighted average Issuance Price
of all Equity Securities for which a Base Management Fee is payable hereunder.

 

“SOX” - The Sarbanes-Oxley
Act of 2002.

 

“Special Voting Preferred
Stock” - means shares of Special Voting Preferred Stock, $0.01 par value per
share, of Newkirk issued to the Advisor.

 

“Winthrop”- collectively,
Winthrop Financial Associates, A Limited Partnership and First Winthrop
Corporation.

 

“Yield on 10-Year U.S.
Treasuries” — the arithmetic average of the weekly average yield to maturity
for actively traded current coupon U.S. Treasury fixed interest rate securities
(adjusted to constant maturities of 10 years) published by the Federal
Reserve Board during a quarter, or, if such rate is not published by the
Federal Reserve Board, any Federal Reserve Bank or agency or department of the
federal government selected by Newkirk.  If Newkirk determines in

 

4

 

good faith that the 10-year U.S. Treasury rate
cannot be calculated as provided above, then the rate shall be the arithmetic
average of the per annum average yields to maturities, based upon closing ask
prices on each business day during a quarter, for each actively traded
marketable U.S. Treasury fixed interest rate security with a final maturity
date not less than eight nor more than 12 years from the date of the closing
asked prices as chosen and quoted for each business day in each such quarter in
New York City by at least three recognized dealers in U.S. government
securities selected by Newkirk

 

ARTICLE II

RETENTION
OF ADVISOR

 

Subject to the terms and
conditions hereinafter set forth, the Company hereby retains the Advisor as its
agent to manage, operate and administer the assets, liabilities and business of
the Company and the Advisor hereby agrees to perform each of the duties set
forth herein in accordance with the provision of this Agreement.  By its
execution and delivery of this Agreement, the Advisor represents and warrants
that (i) it is duly organized, validly existing, in good standing under
the laws of the state of Delaware and has all requisite power and authority to
enter into and perform its obligations under this Agreement, (ii) the
person signing this Agreement for the Advisor is duly authorized to execute
this Agreement on the Advisor’s behalf, (iii) the execution and delivery
of this Agreement by the Advisor and the performance by the Advisor of its
obligations hereunder do not violate any provisions of the Advisor’s
constituent documents, constitute a breach or default by the Advisor under any
material agreement to which the Advisor is a party or cause the Advisor to
violate any Federal or New York law, regulation or rule applicable to the
Advisor.

 

ARTICLE III

RESPONSIBILITIES
OF ADVISOR

 

3.1         
General Responsibility.  Subject to the supervision
of the Board, the Advisor shall:

 

(a)          
Except as provided in Section 7.2(m), provide executive and administrative
personnel, office space and office services required in rendering services to
the Company;

 

(b)          
Manage, operate and administer the Company’s day to day operations, business
and affairs, as may be agreed upon by the Advisor and the Company, and shall
have such authority as the Company may delegate to it, including, without
limitation, the authority to oversee and conduct the Company’s investment
activities in accordance with guidelines and policies adopted and implemented
by the Board, monitor leases, mortgages and debt obligations, make payment of
the Company’s debt and obligations, make payment of dividends or distributions
to Newkirk’s stockholders and maintain the appropriate back office
infrastructure to perform such administrative functions;

 

5

 

(c)          
Serve as the Company’s consultant with respect to the periodic review of the
investment criteria and parameters for the investments, borrowings and
operations of the Company for the approval of the Board;

 

(d)          
Counsel the Company in connection with policy decisions to be made by the
Board;

 

(e)          
Use commercially reasonable efforts to cause expenses incurred by the Company
or on its behalf to be reasonable and customary and within any budgeted
parameters or expense guidelines set by the Board from time to time;

 

(f)           
Advise the Board as to the Company’s capital structure and capital raising
activities;

 

(g)          
Coordinate and manage operations of any joint venture or co-investment
interests held by the Company and conduct all matters with the joint venture or
co-investment partners;

 

(h)          
Communicate on the Company’s behalf with the holders of any of the Company’s
equity or debt securities as required to satisfy the reporting and other
requirements of any governmental bodies or agencies or trading markets and to
maintain effective relations with such holders;

 

(i)           
Handle and resolve all claims, disputes or controversies (including all
litigation, arbitration, settlement or other proceedings or negotiations) in
which the Company may be involved or to which the Company may be subject
arising out of the Company’s day to day operations, subject to such limitations
or parameters as may be imposed from time to time by the Board;

 

(j)           
Evaluate and recommend to the Board, and engage in potential hedging activities
on the Company’s behalf, consistent with Newkirk’s status as a real estate
investment trust and with the Company’s investment guidelines;

 

(k)          
Investigate, analyze and select possible investment opportunities and
originate, acquire, finance, retain, sell, negotiate for prepayment,
restructure or dispose Company investments consistent with the guidelines
adopted and implemented by the Board;

 

(l)           
Assist the Company in developing criteria for asset purchase commitments that
are specifically tailored to the Company’s investment objectives and making
available to the Company its knowledge and experience with respect to real
estate and other real estate related assets;

 

(m)         
Engage and supervise, on the Company’s behalf and at the Company’s expense,
independent contractors who provide investment banking, mortgage brokerage,
securities brokerage and other financial services and such other services as
may be required relating to the investments;

 

6

 

(n)          
Invest or reinvest any of the Company’s money or securities, including
investing in short term investments pending investment in other investments,
payment of fees, costs and expenses, or payments of dividends or distributions
to the Company’s stockholders, and advising the Board as to the Company’s
capital structure and capital raising;

 

(o)          
Obtain appropriate credit facilities or other financings for the investments
consistent with the guidelines adopted and implemented by the Board;

 

(p)          
Assist the Company in complying with all regulatory requirements applicable to
it in respect of the Company’s business activities, including preparing or
causing to be prepared all consolidated financial statements required under
applicable regulations and contractual undertakings and all reports and
documents, if any, required under the Exchange Act;

 

(q)          
Take all necessary actions to enable the Company to make required tax filings
and reports, including soliciting stockholders for required information to the
extent provided by the real estate investment trust provisions of the Code and
the regulations promulgated thereunder;

 

(r)           
Counsel the Company regarding the maintenance of the Company’s qualification
for taxation as a real estate investment trust and monitor compliance with the
various real estate investment trust qualification tests and other rules set
out in the Code and the Treasury Regulations promulgated thereunder and use
commercially reasonable efforts to cause the Company to qualify for taxation as
a REIT;

 

(s)          
Counsel the Company regarding the maintenance of the Company’s exclusion from
status as an investment company under the Investment Company Act and monitor
compliance with the requirements for maintaining such exclusion and using
commercially reasonable efforts to cause the Company to maintain such exclusion
from status as an investment company under the Investment Company Act;

 

(t)           
Monitor the operating performance of the investments and provide periodic
reports with respect thereto to the Board;

 

(u)          
Cause the Company to retain qualified accountants and legal counsel, as
applicable, to assist in developing appropriate accounting procedures,
compliance procedures and testing systems with respect to financial reporting
obligations and compliance with the real estate investment trust provisions of
the Code and the regulations promulgated thereunder and to conduct quarterly
compliance reviews with respect thereto;

 

(v)          
Cause the Company to qualify to do business in all applicable jurisdictions and
to obtain and maintain all appropriate licenses;

 

(w)         
Cause the Company to obtain insurance covering such risks, with such insurers
and on such terms as the Company may reasonably determine;

 

(x)           
Perform such other services as may be required from time to time for management
and other activities relating to the Company’s assets as the Board shall
reasonably request or the Advisor shall deem appropriate under the particular
circumstances; and

 

7

 

(y)          
Use commercially reasonable efforts to cause the Company to comply with all
other applicable laws.

 

3.2         
Authority.  The Advisor shall have full discretion and
authority pursuant to this Agreement to perform the duties and services
specified in Section 3.1 hereof in such manner as the Advisor reasonably
considers appropriate subject to the terms and restrictions contained in
Newkirk’s Articles of Incorporation and By-laws, as the same may be amended
from time to time, and the Operating Partnership’s Certificate of Limited
Partnership and the Partnership Agreement.  In furtherance of the
foregoing, Newkirk and the Operating Partnership hereby designate and appoint
the Advisor or its designee as the agent and attorney-in-fact of Newkirk and
the Operating Partnership, with full power and authority and without further
approval of Newkirk and the Operating Partnership, for purposes of
accomplishing on its behalf any of the foregoing matters or any matters which
are properly the subject matter of this Agreement.  The Advisor may
execute, in the name and on behalf of Newkirk and the Operating Partnership and
their affiliates all such documents and take all such other actions which the
Advisor reasonably considers necessary or advisable to carry out its duties hereunder.

 

3.3         
Subcontract of Services.  The Company acknowledges
and agrees that the Services will be provided by employees of Winthrop,
pursuant to a written agreement between the Advisor and Winthrop pursuant to
which Winthrop will make available to the Advisor its employees and
facilities.  The Advisor agrees not to terminate or amend any such
agreement with Winthrop without the consent of a majority of the independent
directors of the Board.

 

3.4         
Reporting Requirements.  As frequently as the
Advisor may deem necessary or advisable, or at the direction of the Board, the
Advisor shall prepare, or cause to be prepared, with respect to any investment (i) reports
and information on the Company’s operations and asset performance and (ii) other
information reasonably requested by the Company.

 

3.5         
Devotion of Time; Exclusivity.  The Advisor will provide a
management team to deliver the management services to the Company hereunder,
with the members of such management team devoting such of their time to the
management of the Company as the Advisor deems reasonably necessary and
appropriate for the proper performance of all of the Advisor’s duties
hereunder, commensurate with the level of activity of the Company from time to
time. The Company shall have the benefit of the Advisor’s reasonable judgment
and effort in rendering services and, in furtherance of the foregoing, the
Advisor shall not undertake activities which, in its reasonable judgment, will
substantially adversely affect the performance of its obligations under this
Agreement.  The Advisor shall take all reasonable steps to ensure that all
of its officers, directors and managers and any persons or entities to which it
subcontracts any of its services hereunder shall agree, as a condition to their
acting in such capacities, to offer to Newkirk any business opportunities
related to Net Lease Assets that are offered to or generated by such person or
entity during the term of this Agreement.

 

3.6         
Bank Accounts.  At the direction of the Board, the Advisor may
establish and maintain as an agent on behalf of the Company one or more bank
accounts in the name of the Company or any other Subsidiary (any such account,
a “Company Account”), collect and

 

8

 

deposit
funds into any such Company Account and disburse funds from any such Company
Account, under such terms and conditions as the Board may approve. The Advisor
shall from time-to-time render appropriate accountings of such collections and
payments to the Board and, upon request, to the auditors of Company.

 

3.7         
Book and Records; Confidentiality.

 

(a)          
Records.  The Advisor shall
maintain appropriate books of account, records data and files (including
without limitation, computerized material) (collectively, “Records”) relating
to the Company and the investments generated or obtained by the Advisor in
performing its obligations under this Agreement, and such Records shall be
accessible for inspection by representatives of the Company at any time during
normal business hours.  The Advisor shall have full responsibility for the
maintenance, care and safekeeping of all Records.

 

(b)          
Confidentiality  The Advisor
shall keep confidential any nonpublic information obtained in connection with
the services rendered under this Agreement and shall not disclose any such
information (or use the same except in furtherance of its duties under this
Agreement), except with (i) the prior written consent of the Board; (ii) to
legal counsel, accountants and other professional advisors; (iii) to
appraisers, financing sources and others in the ordinary course of the Company’s
business; (iv) to governmental officials having jurisdiction over the
Company; (v) in connection with any governmental or regulatory filings of
the Company or disclosure or presentations to Company investors; or (vi) as
required by law or legal process to which the Advisor or any Person to whom
disclosure is permitted hereunder is a party. The foregoing shall not apply to
information which has previously become available through the actions of a
Person other than the Advisor not resulting from Advisor’s violation of this Section 3.7(b).
The provisions of this Section 3.7(b) shall survive the expiration or
earlier termination of this Agreement for a period of one year.

 

3.8         
Obligations of Advisor; Restrictions.

 

(a)          
Internal Control.  The
Advisor shall (i) establish and maintain (and require property managers
and other contractors to establish and maintain) a system of internal
accounting and financial controls (including, without limitation, internal
controls to safeguard records and to permit the Company to comply with the
Exchange Act and SOX designed to provide reasonable assurance of the reliability
of financial reporting, the effectiveness and efficiency of operations and
compliance with applicable laws, (ii) maintain records for each Company
investment on a GAAP basis, (iii) develop accounting entries and reports
required by the Company to meet its reporting requirements under applicable
laws, (iv) consult with the Company with respect to proposed or new
accounting/reporting rules identified by the Advisor or the Company and (v) prepare
quarterly and annual financial statements as soon after the end of each such
period as may be reasonably requested and general ledger journal entries and
other information necessary for the Company’s compliance with applicable laws,
including the Exchange Act, Regulation S-X and SOX, in accordance with GAAP and
cooperate with the Company’s independent accounting firm in connection with the
auditing or review of such financial statements, the cost of any such audit or
review to be paid by the Company.

 

9

 

(b)          
Management Letters.  The
Advisor shall provide to the Company as soon after the end of each quarter or
year as may be reasonably requested (within deadlines required for the Company
to comply with applicable legal requirements) by the Company, a completed
management questionnaire letter to the Board, in such form as the Company may
reasonably request in response to applicable legal requirements, on accounting,
reporting, internal controls and disclosure issues in support of any management
representation letter to be issued by the Company to its independent accounting
firm.

 

(c)          
Restrictions.  The Advisor
shall refrain from any action that, in its sole judgment made in good faith, (i) is
not in compliance with the investment guidelines and policies approved by the
Board, (ii) would adversely affect the status of the Company as a REIT or
its exclusion from status as an investment company under the Investment Company
Act, or (iii) would violate any law, rule or regulation of any
governmental body or agency having jurisdiction over the Company or that would
otherwise not be permitted by the Company’s Governing Instruments. If the
Advisor is ordered to take any such action by the Board, the Advisor shall
promptly notify the Board of the Advisor’s judgment that such action would
adversely affect such status or violate any such law, rule or regulation
or Governing Instruments. Notwithstanding the foregoing, the Advisor, its
directors, managers, officers, members and employees shall not be liable to the
Company, the Board or the Company’s stockholders for any act or omission by the
Advisor, its directors, managers, officers, members or employees taken in good
faith or except as provided in Section 5.1.

 

ARTICLE IV

SPECIAL
VOTING STOCK

 

4.1         
Voting.  Pursuant to the requirements of Section 7.1.A(6) of
the Partnership Agreement, the Advisor shall cast all votes with respect to
shares of Special Voting Preferred Stock in proportion to the votes (the “LP
Direction Votes”) that the Advisor receives from the holders of Partnership
Units (other than Newkirk) that are outstanding as of the effective date of the
IPO, subject to the Advisor Voting Direction Exclusions (as defined in the
Partnership Agreement).  To the extent Vornado Realty Trust is not granted
LP Direction Votes in respect of any of its Partnership Units by virtue of the
Advisor Voting Direction Exclusions, the Advisor shall be entitled to vote such
Special Voting Preferred Stock in its sole discretion.

 

4.2         
Voting Procedure.  In order to give effect to the provisions of
Section 4.1, the Advisor agrees to (i) prepare and file with the
Securities and Exchange Commission preliminary proxy material in accordance
with the provisions of Regulation 14A under the Exchange Act as to any matter as
to which votes or consents are sought by Newkirk from the holders of Special
voting Stock and (ii) deliver definitive proxy materials with respect to
the matters referred to in the foregoing clause (i).

 

10

 

ARTICLE V

INDEMNIFICATION

 

5.1         
Indemnity.

 

(a)          
The Company shall indemnify and hold harmless the Advisor, and its members,
officers, affiliates, agents and employees, from and against any and all
liability, claims, demands, expenses and fees, fines, suits, losses and causes
of action of any and every kind or nature arising from or in any way connected
with the performance by the Advisor of its obligations under this Agreement,
other than any liability, claim, demand, expense, fee, suit, loss or cause of
action arising from or in any way connected with (i) any acts of the
Advisor, or its members, officers, affiliates, agents or employees, outside the
scope of the authority of the Advisor under this Agreement unless such person
acted in good faith and reasonably believed that his conduct was within the
scope of authority of the Advisor under this Agreement except for claims by the
Advisors’ employees relating to terms and conditions of their employment, or (ii) the
gross negligence, willful misconduct or material breach of this Agreement or
the violation of applicable laws by the Advisor, its members, officers,
affiliates, agents or employees.  In addition, Advisor shall be named as
an additional insured on all policies of insurance maintained by the Company
including, without limitation, the Commercial General Liability, Comprehensive
Automobile Liability, Umbrella and Excess Liability Insurance policy. 
Certificates of Insurance evidencing compliance with the provisions of the
immediately preceding sentence shall be furnished to the Advisor on request.

 

(b)          
The Advisor shall indemnify and hold harmless the Company and its directors,
officers, affiliates, agents and employees, from and against any and all
liability, claims, demands, expenses and fees, fines, suits, losses and causes
of action of any and every kind or nature arising from third party actions and
connected with the performance by the Advisor of its obligations under this
Agreement to the extent caused by (i) any acts of the Advisor, or its
members, officers, affiliates, agents or employees, outside the scope of the
authority of the Advisor under this Agreement unless such person acted in good
faith and reasonably believed that his conduct was within the scope of authority
of the Advisor under this Agreement, (ii) the gross negligence, willful
misconduct or material breach of this Agreement or the violation of applicable
laws by the Advisor, its members, officers, affiliates, agents or employees or (iii) claims
by the Advisors’ employees relating to terms and conditions of their
employment.

 

5.2         
Additional Costs; Survival.  The obligation to indemnify
set forth in Section 5.1 above shall include the payment of reasonable
attorneys’ fees and investigation costs, as well as other reasonable costs and
expenses incurred by the indemnified party in connection with any such
claim.  At the option of, and upon receipt of notice from, the indemnified
party, the indemnifying party shall promptly and diligently defend any such
claim, demand, action or proceeding.  The provisions of Sections 5.1 and
5.2 hereof shall survive the expiration or earlier termination of this
Agreement.

 

11

 

ARTICLE VI

COMPENSATION

 

The Advisor agrees to accept
from the Company the compensation set forth in this Article V as full and
complete consideration for all services to be rendered by the Advisor pursuant
to this Agreement.  Except as hereinafter provided, neither the Advisor
nor any of its affiliates shall be entitled to receive any other fees or
compensation relating to the Company or its properties, including but not
limited to leasing commissions, acquisition fees, disposition fees or loan
fees.

 

6.1         
Base Management Fee.  The Advisor shall be
entitled to receive a base management fee (the “Base Management Fee”), which
shall be payable in arrears on a quarterly basis. The Base Management Fee shall
be equal to the greater of (i) $4,800,000 or (ii) 1.5% per annum of
an amount equal to (1) the gross proceeds to Newkirk from the IPO and from
the sale of Common Stock to First Union less underwriting discounts and
placement fees (excluding Common Stock issued to First Union in respect of the
assignment of certain exclusivity rights), plus (2) the Issuance Price of
Equity Securities of the Company issued following the completion of the IPO,
plus (3) the Apollo Amount, minus (4) the Repurchase Amount (other
than amounts used to purchase Partnership Units that were outstanding
immediately following completion of the IPO).

 

6.2         
Property Management Fees.

 

(a)          
Subject to Section 6.2(b) hereof, the Company may enter into separate
property management agreements (the “Property Management Agreements”) with
third parties, the Advisor or an affiliate of the Advisor for each Company
property, pursuant to which the Advisor or its affiliate shall be entitled to
receive fees for property management services at a rate for each property equal
to 3% of gross revenues of such property with respect to office properties and
1% of gross revenues of such property with respect to industrial
properties.  Such Property Management Agreements may be terminated in the
same manner as proscribed in Section 8.2 of this Agreement and shall
contain commercially reasonable and customary terms for such arrangements.

 

(b)          
Notwithstanding the provisions of Section 6.2(a) hereof, the Company
may only enter into a Property Management Agreement with respect to a property
that is not net leased following expiration of the primary term of the lease or
the date that a tenant terminates the lease.

 

6.3         
Incentive Management Fee. As additional compensation for
its services hereunder, the Advisor shall be paid a fee (the “Incentive
Management Fee”), which shall be payable in arrears on a quarterly basis. 
The Incentive Management Fee shall be determined on a quarterly basis and shall
be equal to (i) twenty percent (20%) multiplied by (ii) the positive
difference if any, between (1) the Adjusted Funds From Operations for such
quarter (before deducting the Incentive Management Fee but after providing for
dividends on any preferred equity of Newkirk) and (2) the Quarterly
Threshold Amount:

 

6.4         
Construction Management Fee.  The Advisor shall be
entitled to receive construction management fees for performing construction
management services for the Company.

 

12

 

All
construction management fees payable to the Advisor shall be market-rate
compensation based on the prevailing market rates for similar services provided
on an arms-length basis in the area in which the subject property is located
and shall require the prior written approval of a majority of independent
directors of the Board.

 

6.5         
Other Services.  Other than as specifically provided in this
Agreement, or as approved in writing by a majority of independent directors of
the Board, the Advisor shall not be compensated by the Company for services
rendered to the Company.  The Advisor shall disclose to the Board the
terms of any sub-contracting arrangement entered into by the Advisor with third
parties with respect to the services to be provided by the Advisor hereunder.

 

ARTICLE VII

EXPENSES

 

7.1         
Expenses Paid by Advisor.  Without regard to the
amount of compensation received hereunder by the Advisor, the Advisor shall
bear the following expenses of the Company:

 

(a)          
Except as provided in Section 7.2(m), all direct and indirect remuneration
and all other employment expenses of employees of the Advisor, including but
not limited to, salaries, wages, payroll taxes and the costs of employee
benefit plans, and fees, if any, paid to members of the Board who are employed
by the Advisor;

 

(b)          
rent, telephone, utilities, office furniture, equipment and machinery and other
office expenses of the Advisor and the Company; and

 

(c)          
administrative expenses relating to performance by the Advisor of its duties
hereunder other than payments to third parties as provided in Section 7.2.

 

7.2         
Expenses paid by the Company.  The following expenses
relating to the operation and management of the Company shall be paid by the
Company:

 

(a)          
Underwriting, brokerage, listing, reporting, registration and other fees, and
printing, engraving and other expenses and taxes incurred in connection with
the issuance, distribution, transfer, trading, registration and securities
exchange or quotation system listing of the Company’s securities;

 

(b)          
Fees, other compensation and expenses paid to members of the Board who are not
affiliated with the Advisor, independent advisors, consultants and other agents
employed by or on behalf of the Company ;

 

(c)          
The costs associated with the establishment and maintenance of any credit
facilities and other indebtedness of the Company (including commitment fees,
accounting fee, legal fees, closing costs, etc.);

 

(d)          
Third party expenses directly connected with the acquisition, disposition,
ownership and operation of real estate interests or other property (including
the costs of

 

13

 

foreclosure,
insurance premiums, legal services, brokerage and sales commissions, taxes and
assessments on real property and all other taxes, utilities, maintenance,
repair and improvement of property and expenses for which reimbursement or
payment by the Company is provided for under the Property Management
Agreements);

 

(e)          
Issuance and transaction costs incident to the acquisition, disposition and
financing of investments;

 

(f)           
Third party expenses connected with payments of dividends or interest or
distributions in cash or any other form made to beneficiaries of the Company;

 

(g)          
All third party expenses connected with SOX compliance and communications to
the equity holders of the Company including with the proxy solicitation
materials and reports to holders of Newkirk’s stock and the Partnership Units;

 

(h)          
Transfer agent’s, registrar’s and indenture trustee’s fees and charges;

 

(i)           
Legal, investment banking, and external accounting, auditing and tax return
preparation fees and expenses;

 

(j)           
The cost of the liability insurance to indemnify the Company’s directors and
officers;

 

(k)          
All expenses in connection with communication to holders of the Company’s
securities and in complying with the continuous reporting and other
requirements of the Securities and Exchange Commission and other governmental
bodies and in connection with meetings of equity holders;

 

(l)           
All expenses relating to membership of the Company in any trade or similar
association; and

 

(m)         
Unless retained directly by the Company, expenses relating to the employment of
full-time employees, to be chosen at the discretion of the Advisor, which
employees will be dedicated solely to property acquisition, disposition and
investment functions on behalf of the Company.

 

ARTICLE VIII

TERM
OF AGREEMENT; TERMINATION

 

8.1         
Term.  This Agreement shall become effective on the date
hereof and shall continue in force for a period expiring on December 31,
2008, and thereafter shall be automatically renewed for successive one-year
periods unless terminated in accordance with the provisions of this Agreement.

 

14

 

8.2         
Right of Termination.

 

(a)          
The Company shall have the right to elect not to renew this Agreement at the
expiration of the initial term or any renewal term thereafter as set forth in Section 8.1,
or terminate this Agreement other than for Cause during any renewal term,
provided such election not to renew or to terminate shall require the
affirmative vote of at least two-thirds of the independent directors of Newkirk
and Newkirk shall deliver to the Advisor at least six (6) months’ prior
written notice thereof.  In such notice, Newkirk shall specify the date,
not less than six (6) months from the date of such notice, on which this
Agreement shall terminate.

 

(b)          
The Company shall have the right to terminate this Agreement for Cause at any
time upon thirty (30) days’ prior written notice to the Advisor by the vote of
a majority of the independent directors.

 

(c)          
In the event that this Agreement shall have been terminated by the Company for
Cause, the Company shall have the right to offset any direct damages to the
Company caused by the actions giving rise to such termination for cause against
the fee otherwise payable under Section 8.3.

 

(d)          
The Advisor may terminate this Agreement effective upon 30 days prior
written notice of termination to the Company in the event that the Company
shall default in the performance or observance of any material term, condition
or covenant in this Agreement and such default shall continue for a period of
30 days after written notice thereof specifying such default and
requesting that the same be remedied in such 30 day period.

 

8.3         
Termination Fee.  Upon termination of or failure to renew this
Agreement in accordance with Section 8.2(a) or (d) above, the
Company will be obligated to pay the Advisor a termination fee equal to two
times the average of the sum of the Base Management Fees and Incentive
Management Fee earned by the Advisor during the period of twenty four (24) full
calendar months most recently ended prior to such termination.  If this
Agreement is terminated or not renewed for any reason other than pursuant to Section 8.2(a) or
8.2(d), the Advisor shall be entitled only to payment of all earned and unpaid
Base Management Fees and Incentive Management Fees through the date of
termination.

 

8.4         
Continued Responsibility.  Notwithstanding termination
of this Agreement as provided above, the Advisor agrees to use its best efforts
in the performance of its duties under this Agreement until the effective date
of the termination of this Agreement.

 

8.5         
Responsibilities upon Termination.  Upon termination of this
Agreement, the Advisor shall forthwith deliver the following to the Company, as
applicable, on the effective date of termination:

 

(a)          
A final accounting reflecting the balance of funds held on behalf of the
Company as of the date of termination;

 

(b)          
All files, records, documents and other property of any kind relating to the
Company, including, but not limited to, computer records, contracts, leases,
warranties, bank statements, rent rolls, employment records, plans and
specifications, inventories,

 

15

 

correspondence,
tenant records, receipts, paid and unpaid bills or invoices, maintenance
records; and

 

(c)          
Agreements to terminate all property management, construction management and
other agreements with affiliates of the Advisor and third parties retained on a
subcontracting basis by the Advisor, in each case, with respect to the services
to be provided by the Advisor hereunder.

 

ARTICLE IX

MISCELLANEOUS
PROVISIONS

 

9.1         
Notice.  Any notice required or permitted under this
Agreement shall be in writing and shall be given by being delivered to the
following addresses or fax numbers of the parties hereto:

 

	
  To the Company:

  	
   

  	
  Newkirk Realty Trust, Inc.

  
	
   

  	
   

  	
  7 Bulfinch Place

  
	
   

  	
   

  	
  Suite 500, P.O. Box 9507

  
	
   

  	
   

  	
  Boston, Massachusetts 02114

  
	
   

  	
   

  	
  Telephone No.:  (617) 570-4600

  
	
   

  	
   

  	
  Telecopier No.:  (617) 742-4643

  
	
   

  	
   

  	
  Attention:  Carolyn Tiffany

  
	
   

  	
   

  	
   

  
	
  To the Advisor:

  	
   

  	
  NKT Advisors LLC

  
	
   

  	
   

  	
  7 Bulfinch Place

  
	
   

  	
   

  	
  Suite 500, P.O. Box 9507

  
	
   

  	
   

  	
  Boston, Massachusetts 02114

  
	
   

  	
   

  	
  Telephone No.:  (617) 570-4600

  
	
   

  	
   

  	
  Telecopier No.:  (617) 742-4643

  
	
   

  	
   

  	
  Attention:  Carolyn Tiffany

  

 

or to such other address or fax number as may be
specified from time to time by such party in writing.

 

9.2         
No Joint Venture.  Nothing in this Agreement shall be
construed to make the Company and the Advisor partners or joint venturers or
impose any liability as such on either of them.

 

9.3         
Release of Money or Other Property upon Written Request.  The Advisor agrees
that any money or other property of the Company held by the Advisor under this
Agreement shall be held by the Advisor as custodian for the Company, and the
Advisor’s records shall be clearly and appropriately marked to reflect the
ownership of such money or other property by the Company. Upon the receipt by
the Advisor of a written request signed by a duly authorized officer of the
Company requesting the Advisor to release to the Company any money or other
property then held by the Advisor for the account of the Company under this
Agreement, the Advisor shall release such money or other property to the
Company within a reasonable period of time, but in no event later than thirty
(30) days following such request. The

 

16

 

Advisor,
its directors, officers, managers and employees will not be liable to the
Company, any Subsidiary, the Advisor any of their directors, officers,
stockholders, managers, owners or partners for any acts or omissions by the
Company in connection with the money or other property released to the Company
in accordance with the terms hereof. The Company shall indemnify the Advisor
and its Affiliates, officers, directors, members, employees, agents and
successors and assigns against any and all expenses, losses, damages,
liabilities, demands, charges and claims of any nature whatsoever which arise
in connection with the Advisor’s release of such money or other property to the
Company in accordance with the terms of this Section 9.3.

 

9.4         
Entire Agreement; Amendment.  This Agreement contains the
entire agreement of the parties hereto with respect to the subject matter
hereof.  This Agreement shall not be amended or modified in any respect
unless agreed to in writing by the Company and the Advisor.

 

9.5         
Governing Law.  This Agreement shall be construed, interpreted and
applied in accordance with, and shall be governed by, the laws of the State of
New York without reference to principles of conflicts of law.

 

9.6         
Arbitration.  Any dispute or controversy between the Advisor or
any of its employees and the Company or any of its affiliates arising in
connection with this Agreement, any amendment thereof, or the breach thereof
shall be determined and settled by arbitration in New York, New York, by a
panel of three arbitrators in accordance with the rules of the American
Arbitration Association.  Any award rendered therein shall be final and
binding upon the Company, its affiliates and the Advisor and their respective
legal representatives and judgment may be entered in any court having
jurisdiction thereof. The expenses of such arbitration shall be paid by the
party against whom the award shall be entered, unless otherwise directed by the
arbitrators.

 

9.7         
Assignment.  This Agreement may not be assigned by any party
hereto without the prior written consent of the other parties hereto; provided,
however, that the Advisor shall be permitted to assign this Agreement or any of
its rights hereunder, and delegate any and all of its responsibilities and
obligations hereunder, to an Advisor Affiliate, provided that the Advisor shall
be fully responsible to us for all errors or omissions of such assignee.

 

9.8         
Binding Nature of Agreement; Successor and Assigns.  This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns as
provided in this Agreement.

 

9.9         
Indulgences, Not Waivers.  Neither the failure nor any
delay on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.

 

17

 

9.10        Titles
Not to Affect Interpretation.  The titles of sections,
paragraphs and subparagraphs contained in this Agreement are for convenience
only, and they neither form a part of this Agreement nor are they to be
used in the construction or interpretation of this Agreement.

 

9.11        Execution
in Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding
when one or more counterparts of this Agreement, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.

 

9.12        Provisions
Separable.  The provisions of this Agreement are independent of
and separable from each other, and no provision shall be affected or rendered
invalid or unenforceable by virtue of the fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.

 

9.13        Principles
of Construction.  Words used herein regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or
neuter, as the context requires. All references to recitals, sections,
paragraphs and schedules are to the recitals, sections, paragraphs and
schedules in or to this Agreement unless otherwise specified.

 

[Remainder of page intentionally
left blank]

 

18

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date and year first above
written.

 

	
   

  	
  NEWKIRK REALTY TRUST INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter Braverman

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Peter Braverman

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE NEWKIRK MASTER LIMITED PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Newkirk Realty Trust Inc.,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Peter Braverman

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter Braverman

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NKT ADVISORS LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  FUR Holdings LLC

  
	
   

  	
   

  	
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  WEM-FUR Investors LLC

  
	
   

  	
   

  	
   

  	
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Michael L. Ashner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Michael L. Ashner

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Member

  
										

 

19

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