ACQUISITION AGREEMENT
THIS
ACQUISITION AGREEMENT, dated as of November 7, 2005 (this
"Agreement"), is by and between Newkirk
Realty Trust, Inc., a Maryland
corporation (the "Newkirk"), and First
Union Real Estate Equity and Mortgage
Investments, an Ohio business trust ("First
Union").
RECITALS:
WHEREAS,
pursuant to that certain Exclusivity Services Agreement (the
"Exclusivity Agreement"), dated as of
December 31, 2003, between First Union and
Michael L. Ashner ("Ashner"), Ashner is
required to offer to First Union any
Business Opportunity (as defined in the
Exclusivity Agreement) offered to him
during the period that he is serving as
either an executive officer First Union
or as a member of the Board of Trustees of
First Union;
WHEREAS,
Ashner is a director and executive officer of Newkirk;
WHEREAS,
Newkirk is simultaneously herewith making an initial public
offering of its shares of common stock, par
value $.01 (the "Common Stock")
pursuant to a registration statement on
Form S-11 filed by Newkirk (the
"Registration Statement") with the
Securities and Exchange Commission and, in
connection therewith, desires to acquire
from First Union certain rights
presently held by First Union pursuant to
the Exclusivity Agreement in exchange
for shares of Common Stock;
NOW,
THEREFORE, in consideration of the foregoing and of the
respective
covenants and undertakings hereunder and
for other good and valuable
consideration, the receipt and adequacy of
which are hereby acknowledged,
intending to be legally bound, the parties
hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section
1.01. Definitions. As used in this Agreement, the following
terms
have the meanings set forth below.
"Advisor"
shall mean NKT Advisors LLC, a Delaware limited liability
company.
"Advisory
Agreement" shall mean that certain Advisory Agreement dated
November 7, 2005, between Newkirk, the
Operating Partnership and the Advisor.
"Affiliate" shall mean (a) with respect to an individual, any
member of
such individual's family residing in the
same household; (b) with respect to an
entity: (i) any executive officer,
director, partner or Person that owns ten
percent (10%) or more of the outstanding
beneficial interest of or in such
entity, or (ii) any brother, sister,
brother-in-law, sister-in-law, lineal
descendant or ancestor of any executive
officer, director, partner or Person
that owns ten percent (10%) or more of the
outstanding beneficial interest of or
in such entity; and (c) with respect to a
Person, any Person which directly or
indirectly, through one or more
intermediaries, controls, is controlled by, or
is under common control with such Person or
entity; provided, however, that for
purposes of the definition of "Affiliate,"
First Union shall not be deemed an
"Affiliate" of Newkirk.
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"Agreement" shall have the meaning set forth in the preamble.
"Basket"
shall have the meaning set forth in Section 11.03.
"Business
Day" shall mean any day other than (i) a Saturday, (ii) a
Sunday
or (iii) any other day on which banks in
the City of New York are authorized or
required to close.
"By-Laws"
shall mean, when used with respect to a specified Person, the
by-laws of a Person, as the same may be
amended from time to time.
"Capital
Stock" shall mean, with respect to any Person, any and all
shares, shares of beneficial interest,
interests, participations, rights in or
other equivalents (however designated and
whether voting or non-voting) of such
Person's capital stock or any form of
membership, ownership or participation
interests, as applicable, including
partnership interests, whether now
outstanding or hereafter issued and any and
all securities, debt instruments,
rights, warrants or options exercisable or
exchangeable for or convertible into
such capital stock.
"Closing"
shall have the meaning set forth in Section 2.03(a).
"Closing
Date" shall have the meaning set forth in Section 2.03(a).
"Commission Filings" shall have the meaning set forth in Section
3.08.
"Common
Stock" shall have the meaning set forth in the Recitals.
"Company
Subsidiaries" and "Company Subsidiary" shall mean all of the
subsidiaries of the Company as set forth on
Exhibit 21 of the Registration
Statement.
"Consents"
shall mean all governmental and third party consents,
approvals, authorizations, qualifications
and waivers necessary to be received
by a Person for the consummation of the
transaction contemplated by the
Agreement.
"Contract"
shall mean any legally binding contract, agreement, mortgage,
deed of trust, bond, loan, indenture,
lease, license, note, option, warrant,
right, instrument, commitment or other
similar document, arrangement or
agreement, whether written or oral.
"Exchange
Act" shall mean the Securities Exchange Act of 1934, as
amended,
and the rules and regulations of the SEC
promulgated thereunder.
"Forfeiture Event" shall mean (i) the termination of the
Advisory
Agreement by Newkirk for Cause (as defined
in the Advisory Agreement), (ii)
Michael L. Ashner's resignation as the
Chief Executive Officer and director of
Newkirk and the Advisor, or (iii) the death
or disability of Michael L. Ashner
unless the other members of the Advisor's
senior management at such time remain
in such positions.
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"GAAP"
shall mean generally accepted accounting principles applied on
a
consistent basis as used in the United
States of America.
"Governmental Body" shall mean any government or governmental
or
quasi-governmental authority including,
without limitation, any federal, state,
territorial, county, municipal or other
governmental or quasi-governmental
agency, board, branch, bureau, commission,
court, arbitral body (public or
private), department or other
instrumentality or political unit or subdivision,
whether located in the United States or
abroad, the National Association of
Securities Dealers, Inc., the New York
Stock Exchange, the Nasdaq National
Market, the Nasdaq SmallCap Market or the
American Stock Exchange.
"Indemnitee" shall have the meaning set forth in Section 10.01.
"Indemnitor" shall have the meaning set forth in Section 10.01.
"Law"
shall mean any treaty, statute, ordinance, code, rule,
regulation,
Order or other legal requirement enacted,
adopted, promulgated, applied or
followed by any Governmental Body.
"Legal
Proceeding" shall mean any judicial, administrative or arbitral
actions, suits, proceedings (public or
private) or governmental proceedings.
"Legend"
shall mean the Legend set forth in Section 4.02(e).
"Lien"
shall mean any mortgage, pledge, lien (statutory or otherwise),
security interest, hypothecation,
conditional sale agreement, encumbrance or
similar restriction or agreement.
"Lock-up
Agreement" shall have the meaning ascribed thereto in the
Securities Purchase Agreement.
"Loss"
shall have the meaning set forth in Section 10.01.
"Material
Adverse Effect" shall mean any event, condition or contingency
that has had, or is reasonably likely to
have, a material adverse effect on (i)
the assets, business, condition (financial
or otherwise), results of operations,
stockholders' equity, properties or
prospects of Newkirk, the Operating
Partnership, Newkirk REIT Advisor LLC, a
Delaware limited liability company (the
"Manager") and the Company Subsidiaries,
taken as a whole; (ii) the long-term
debt or capital stock of Newkirk, the
Operating Partnership, the Manager or any
Company Subsidiary; or (iii) the offering
contemplated by the Registration
Statement or consummation of any of the
other transactions contemplated by this
Agreement, the Registration Statement or
the Prospectus.
"Net Lease
Assets" shall mean (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
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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.
"Notice"
shall have the meaning set forth in Section 10.02(a).
"NYSE"
shall mean the New York Stock Exchange.
"Offering"
shall mean the offering and sale of the Shares contemplated by
the Registration Statement and
Prospectus.
"Operating
Partnership" shall mean The Newkirk Master Limited Partnership,
a Delaware limited partnership.
"Order"
shall mean any order, injunction, judgment, decree, ruling,
writ,
assessment or arbitration award.
"Person"
shall mean any individual, corporation, partnership, firm,
limited liability company, joint venture,
trust, association, unincorporated
organization, group, joint-stock company,
Governmental Body or other entity.
"Prospectus" shall mean the prospectus, in the form in which it is
to be
filed with the SEC pursuant to Rule 424(b),
or, if the prospectus is not to be
filed with the SEC pursuant to Rule 424(b),
the prospectus in the form included
as part of the Registration Statement at
the time the Registration Statement
becomes effective.
"Purchase
Price" shall have the meaning set forth in Section 2.02.
"Qualified
Institutional Buyer" shall mean a Person that is a "qualified
institutional buyer" within the definition
contained in Rule 144A under the
Securities Act.
"Registration Rights Agreement" shall mean that certain
Registration
Rights Agreement, dated of even date
herewith, between Newkirk and First Union.
"Registration Statement" shall have the meaning set forth on the
Recitals.
"Reversion
Event" shall mean (i) the termination or non-renewal of the
Advisory Agreement or (ii) Michael L.
Ashner's resignation as the Chief
Executive Officer and director of Newkirk
and the Advisor.
"SEC"
shall mean the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and
the rules and regulations of the SEC
promulgated thereunder.
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"Securities Purchase Agreement" shall mean that certain
Securities
Purchase Agreement, dated of even date
herewith, among Newkirk and First Union.
"Shares"
shall mean the shares of Common Stock issued to First Union
pursuant to the terms hereof.
"Subsidiary" shall mean, as to any Person, any other Person more
than 50%
of the shares of the voting stock, voting
interests, membership interests or
partnership interests of which are owned or
controlled, or the ability to select
or elect more than 50% of the directors or
similar managers is held, directly or
indirectly, by such first Person or one or
more of its Subsidiaries or by such
first Person and one or more of its
Subsidiaries.
"Vesting
Event" shall mean (i) the termination of the Advisory Agreement
by the Advisor following a breach by
Newkirk of the Advisory Agreement that
remains uncured by Newkirk, (ii) the
non-renewal of the Advisory Agreement, or
(iii) termination of the Advisory Agreement
by Newkirk other than for Cause (as
defined in the Advisory Agreement).
Section
1.02. Rules of Construction. Unless the context otherwise
requires:
(a) an accounting term defined by GAAP that is not otherwise
defined
herein has the meaning assigned to it in
accordance with GAAP;
(b) "or" is not exclusive;
(c) words in the singular include the plural, and words in the
plural include the singular;
(d) the words "include" and "including" shall be deemed to mean
"include, without limitation," and
"including, without limitation";
(e) "herein," "hereof," "hereto," "hereunder" and other words
of
similar import refer to this Agreement as a
whole and not to any particular
article, section, paragraph or clause where
such terms may appear;
(f) references to sections mean references to such section in
this
Agreement, unless stated otherwise; and
(g) the use of any gender shall be applicable to all genders.
ARTICLE II
ASSIGNMENT OF RIGHTS; ISSUANCE OF SHARES
Section
2.01. Assignment of Rights. Upon the terms and subject to the
conditions of this Agreement, First Union
shall sell, assign, convey and
transfer to Newkirk all of First Union's
right, title and interest under the
Exclusivity Agreement solely with respect
to Net Lease Assets (the "Exclusivity
Assignment"), free and clear of any lien or
other encumbrance.
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Section
2.02. Purchase Price. In consideration of the assignment
provided
for in Section 2.01 hereof, Newkirk shall
issue to First Union shares of Common
Stock having a value of $20,000,000 (the
"Purchase Price"), based on a purchase
price per share equal to the initial public
offering price of the Common Stock
sold to the public pursuant to the
Registration Statement.
Section
2.03. Closing.
(a) Subject to the satisfaction or waiver of the conditions set
forth in this Agreement, the closing of the
transaction contemplated by Sections
2.01 and 2.02 (the "Closing") shall take
place simultaneously with the closing
of Newkirk's initial public offering, or at
such other time as may be mutually
agreed upon by First Union and Newkirk (the
"Closing Date"). The Closing shall
occur on the Closing Date at the offices of
Katten Muchin Rosenman, 575 Madison
Avenue, New York, New York.
(b) At the Closing: (i) Newkirk will deliver to First Union (x)
a
certificate for the Shares registered in
the name of First Union and (y) legal
opinions of counsel to Newkirk addressed to
First Union, satisfactory to counsel
to First Union (the "Newkirk Counsel
Opinions"); (ii) First Union, in full
payment for the Shares, will execute and
deliver to Newkirk an assignment in
form and substance reasonably satisfactory
to Newkirk to evidence the
Exclusivity Assignment ; and (iii) each
party shall take or cause to happen such
other actions, and shall execute and
deliver such other instruments or
documents, as shall be required under
Article VIII.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NEWKIRK
Newkirk represents and warrants to First Union as follows:
Section
3.01. Organization and Good Standing. Each of Newkirk, the
Operating Partnership and the Subsidiaries
has been duly organized and validly
exists as a corporation, partnership,
limited partnership or limited liability
company in good standing under the laws of
its jurisdiction of organization.
Each of Newkirk, the Operating Partnership
and Newkirk Subsidiaries has all
requisite power and authority to carry on
its business as it is currently being
conducted and as described in the
Prospectus, and to own, lease and operate its
respective properties. Each of Newkirk, the
Operating Partnership and the
Company Subsidiaries is duly qualified to
do business and is in good standing as
a foreign corporation, partnership, limited
partnership or limited liability
company in each jurisdiction in which the
character or location of its
properties (owned, leased or licensed) or
the nature or conduct of its business
makes such qualification necessary, except
for those failures to be so qualified
or in good standing which (individually and
in the aggregate) could not
reasonably be expected to have a Material
Adverse Effect. Newkirk has heretofore
delivered or made available to First Union
complete and correct copies of the
Articles of Incorporation of Newkirk, as
amended to date (the "Articles of
Incorporation").
Section
3.02. Authority; Binding Effect. Newkirk has the full right,
power
and authority to execute and deliver this
Agreement, to perform its obligations
hereunder and to consummate the
transactions contemplated by this Agreement, the
Registration Statement and the Prospectus.
This Agreement and the transactions
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contemplated by this Agreement, the
Registration Statement and the Prospectus
have been duly and validly authorized by
Newkirk. This Agreement has been duly
and validly executed and delivered by
Newkirk. This Agreement constitutes the
legal, valid and binding obligation of
Newkirk, enforceable in accordance with
its terms, except as such enforceability
may be subject to the effects of any
applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization,
moratorium or similar Laws affecting
creditors' rights generally and subject to
the effects of general equitable
principles
Section
3.03. Organization and Good Standing of Company Subsidiaries.
Newkirk Subsidiaries constitute all of the
Subsidiaries of Newkirk and the
Operating Partnership. Each of Newkirk, the
Operating Partnership and the
Company Subsidiaries has all necessary
consents, approvals, authorizations,
orders, registrations, qualifications,
licenses, filings and permits of, with
and from all judicial, regulatory and other
legal or governmental agencies and
bodies and all third parties, foreign and
domestic (collectively, the
"Consents"), to own, lease and operate its
properties and conduct its business
as it is now being conducted and as
disclosed in the Registration Statement and
the Prospectus except where the failure to
obtain such consents would not have a
Material Adverse Effect, and each such
Consent is valid and in full force and
effect, and none of Newkirk, the Operating
Partnership nor any Company
Subsidiary has received notice of any
investigation or proceedings which results
in or, if decided adversely to Newkirk, the
Operating Partnership or any Company
Subsidiary, could reasonably be expected to
result in, the revocation of, or
imposition of a materially burdensome
restriction on, any Consent. Each of
Newkirk, the Operating Partnership and the
Company Subsidiaries is in compliance
with all applicable laws, rules,
regulations, ordinances, directives, judgments,
decrees and orders, foreign and domestic,
except where failure to be in
compliance could not reasonably be expected
to have a Material Adverse Effect.
No Consent contains a materially burdensome
restriction not adequately disclosed
in the Registration Statement and the
Prospectus.
Section
3.04. Capitalization. The capitalization table set forth in the
Registration Statement and Prospectus
accurately sets forth as of the date
indicated therein, (i) the authorized
capitalization of Newkirk, the number of
shares of each class issued and outstanding
and the number of shares reserved
for issuance in connection with Newkirk's
stock option plans, and (ii) all
options, warrants, convertible securities,
rights to subscribe to, calls,
contracts, undertakings, arrangements and
commitments to issue which may result
in the issuance of stock of Newkirk. All of
the issued and outstanding shares of
Newkirk's Capital Stock have been duly and
validly authorized and issued and are
fully paid and non-assessable and are not
subject to any preemptive rights. No
securities of Newkirk are entitled to
preemptive or similar rights, and no
person has any right of first refusal,
preemptive right, right of participation,
or any similar right to participate in the
transaction contemplated by this
Agreement. All of the issued partnership
interests, shares of capital stock of
or other ownership interests in the
Operating Partnership and in each Company
Subsidiary have been duly and validly
authorized and issued and are fully paid
and non-assessable and (except as otherwise
set forth in the Prospectus) at the
Closing will be owned directly or
indirectly by Newkirk (in the case of the
Operating Partnership) or by the Operating
Partnership or a Company Subsidiary,
free and clear of any Lien, charge,
mortgage, pledge, security interest, claim,
equity, trust or other encumbrance,
preferential arrangement, defect or
restriction of any kind whatsoever.
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Section
3.05. No Violations; Consents. Neither the execution, delivery
or
performance by Newkirk of this Agreement
nor the consummation of the transaction
contemplated hereby, will (a) conflict
with, or result in the breach of, any
provision of the organizational documents
of Newkirk, the Operating Partnership
or any Company Subsidiary, (b) conflict
with, violate, result in the breach or
termination of, or constitute a default or
give rise to any right of
termination, amendment, cancellation or
acceleration or right to increase the
obligations or otherwise modify the terms
thereof under any Contract or Order to
which Newkirk, the Operating Partnership or
any Company Subsidiary is a party or
by which Newkirk or any Company Subsidiary
or any of the properties or assets of
Newkirk, the Operating Partnership or any
Company Subsidiary is bound, (c)
constitute a violation of any Law
applicable to Newkirk, the Operating
Partnership or any Company Subsidiary; or
(d) result in the creation of any Lien
upon the properties or assets of Newkirk,
the Operating Partnership or any
Company Subsidiary. Except for the approval
of the NYSE referred to in Section
6.01(c) and the declaration by the SEC of
the effectiveness of the Registration
Statement, no Consent is required on the
part of Newkirk, the Operating
Partnership or the Company Subsidiaries in
connection with the execution and
delivery of this Agreement and the
consummation of the transaction contemplated
hereby, including the issuance, sale and
deliver of the Shares to be issued,
sold and delivered hereunder.
Section
3.06. Listing. Newkirk has applied to have its shares of Common
Stock listed on the NYSE.
Section
3.07. Financial Statements. The pro forma financial statements,
financial statement schedules and pro forma
data set forth in the Registration
Statement and Prospectus accurately reflect
the books and records of Newkirk and
the Operating Partnership and present
fairly, in all material respects, the
financial position of Newkirk and the
Operating Partnership and the Company
Subsidiaries and the results of their
operations and their cash flows for the
period and date covered thereby, in
conformity with GAAP, except for changes
resulting from year-end adjustments (none
of which will be material in amount).
The assumptions used in preparing the pro
forma and financial information
included in the Registration Statement and
the Prospectus provide a reasonable
basis for presenting the significant
effects directly attributable to the
transactions or events described
therein.
Section
3.08. Commission Filings. The Operating Partnership has filed
all
reports, registration statements, proxy
statements and other materials, together
with any amendments required to be made
with respect thereto, that were required
to be filed with the SEC under the
Securities Act or the Exchange Act from and
after January 1, 2002 (all such reports and
statements are collectively referred
to herein as the "Commission Filings"). As
of their respective dates, the
Commission Filings, including the financial
statements contained therein,
complied in all material respects with all
of the statutes and published rules
and regulations enforced or promulgated by
the regulatory authority with which
the Commission Filings were filed, and,
except to the extent the information in
any Commission Filing has been revised or
superseded by a later filed Commission
Filing, did not and do not as of the date
hereof contain any untrue statement of
a material fact or omit to state any
material fact required to be stated therein
or necessary in order to make the
statements therein, in the light of the
circumstances under which they were made,
not misleading. The financial
statements of the Operating Partnership
included in the Commission Filings
comply in all material respects with
applicable accounting requirements and the
rules and regulations of the SEC with
respect thereto as in effect at the time
of filing.
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Section
3.09. Absence of Certain Developments. Except as specifically
disclosed in the Commission Filings, since
December 31, 2004 and as of the date
hereof no event or series of events has
occurred which could reasonably have a
Material Adverse Effect.
Section
3.10. Litigation. There are no Legal Proceedings pending or, to
the knowledge of Newkirk, threatened, that
question the validity of this
Agreement or the transaction contemplated
hereby or any action taken or to be
taken by Newkirk, the Operating Partnership
or any Company Subsidiary in
connection with the consummation of the
transaction contemplated hereby. There
are no material Legal Proceedings pending
or, to the knowledge of Newkirk,
threatened, against or involving Newkirk,
the Operating Partnership or any
Company Subsidiary or any of their
respective properties or assets, at Law or in
equity which in the aggregate could
reasonably have a Material Adverse Effect.
There is no outstanding or, to the
knowledge of Newkirk, threatened, Order of
any Governmental Body against Newkirk, the
Operating Partnership or any Company
Subsidiary or any of their respective
properties or assets, which Order could
reasonably have a Material Adverse
Effect.
Section
3.11. Compliance with Laws. Newkirk, the Operating Partnership
and
the Company Subsidiaries are in compliance
in all material respects with all
Laws and Orders promulgated by any
Governmental Body applicable to Newkirk, the
Operating Partnership and the Company
Subsidiaries or to the conduct of the
business or operations of Newkirk, the
Operating Partnership and the Company
Subsidiaries or the use of their properties
(including any leased properties)
and assets, except where failure to comply
would not have a Material Adverse
Effect. Since July 1, 2005 neither Newkirk,
the Operating Partnership nor any
Company Subsidiary has received any written
notice of violation or alleged
material violation of any such Law or Order
by any Governmental Body in any
material respect that has not been
resolved. Since July 1, 2005 neither Newkirk,
the Operating Partnership nor any Company
Subsidiary has received written notice
that it is the subject of an investigation
by any Governmental Body which has
not been resolved or which could reasonably
have a Material Adverse Effect.
Section
3.12. Financial Advisors. No agent, broker, investment banker,
finder, financial advisor or other Person
is or will be entitled to any broker's
or finder's fee or any other commission or
similar fee from Newkirk, directly or
indirectly, in connection with the
transaction contemplated hereby.
Section
3.13. Registration Statement. At the time of the effectiveness
of
the Registration Statement, the
Registration Statement and Prospectus and any
amendments thereof and supplements
