Exhibit 10.3

 

EMPLOYMENT AGREEMENT

BETWEEN

DAVID J. NETTINA

AND

FIRST STATES GROUP, L.P.

 

This Employment Agreement (the “Agreement”), dated as of August 30, 2005 (the
“Effective Date”) between First States Group, L.P., a Delaware limited
partnership (the “Company”), and David J. Nettina (the “Executive”):

 

WHEREAS, American Financial Realty Trust, a Maryland real estate investment
trust (the “REIT”), is a limited partner and the sole owner of the general
partner of the Company;

 

WHEREAS, this Agreement amends and restates the Employment Agreement between the
Company and the Executive, dated April 27, 2005 (the “April 2005 Agreement”);

 

WHEREAS, the April 2005 Agreement amended and restated the Employment Agreement
between the Company and the Executive, dated February 24, 2005 (the “Original
Agreement”), under which the Executive’s employment with the Company became
effective on March 14, 2005 (the “Original Effective Date”);

 

WHEREAS, the Company has determined that appropriate steps should be taken to
encourage the continued attention and dedication of the Executive to his
assigned duties without distraction;

 

WHEREAS, in consideration of the Executive’s continued employment with the
Company, the Company desires to provide the Executive with certain compensation
and benefits set forth in this Agreement in order to ameliorate the financial
and career impact on the Executive in the event the Executive’s employment with
the Company is terminated for a reason related to a Change of Control (as
defined below) of the REIT; and

 

WHEREAS, the Company wishes to continue to employ the Executive in the
capacities and on the terms and conditions set out below, and the Executive has
agreed to continue such employment, in the capacities and on the terms and
conditions set forth below.

 

NOW, THEREFORE, the Company and the Executive, in consideration of the
respective covenants set out below, hereby agree as follows:

 

1. EMPLOYMENT.

 

(a) POSITIONS. The Executive shall continue to be employed by the Company as
Executive Vice President, Chief Financial Officer and Chief Real Estate Officer.
The Executive shall also continue to be an officer of the REIT as its Executive
Vice President, Chief Financial Officer and Chief Real Estate Officer.

 

(b) DUTIES. The Executive shall continue to report to the Chief Executive
Officer of the Company (the “Chief Executive Officer”), and the Executive’s
principal employment duties and responsibilities shall be those duties and
responsibilities consistent with this position

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as are assigned by the Chief Executive Officer or the Board of Trustees of the
REIT (the “Board”).

 

(c) EXTENT OF SERVICES. Except for illnesses and vacation periods, the Executive
shall continue to devote all of his working time and attention and his best
efforts to the performance of his duties and responsibilities under this
Agreement. Notwithstanding the foregoing, the Executive may (i) make any passive
investment where he is not obligated or required to, and shall not in fact,
devote any managerial effort, (ii) participate in charitable, academic or
community activities, and in trade or professional organizations, or (iii) hold
directorships in other companies consistent with the Company’s conflict of
interest policies and corporate governance guidelines as in effect from time to
time.

 

2. TERM. This Agreement shall be in full force and effect for a term ending on
the third anniversary of the Original Effective Date (the “Initial Term”), and
shall be automatically extended for a renewal term of one (1) additional year (a
“Renewal Term”) at the end of the Initial Term, and an additional one (1) year
Renewal Term at the end of each Renewal Term (the last day of the Initial Term
and each such Renewal Term is referred to herein as a “Term Date”), unless
either party notifies the other party of its non renewal of this Agreement not
later than sixty (60) days prior to a Term Date by providing written notice to
the other party of such party’s intent not to renew, or it is sooner terminated
pursuant to Section 7. For purposes of this Agreement, “Term” shall mean the
actual duration of the Executive’s employment hereunder, taking into account any
extensions pursuant to this Section 2 or early termination of employment
pursuant to Section 7.

 

3. BASE SALARY. The Company shall continue to pay the Executive a base salary
annually (the “Base Salary”), which shall be payable in periodic installments
according to the Company’s normal payroll practices. The initial Base Salary
shall be $250,000, which shall be in effect retroactive to April 1, 2005. The
Board or the Compensation and Human Resources Committee of the REIT (the
“Compensation Committee”) shall review the Base Salary at least once a year to
determine whether the Base Salary should be increased effective January 1 of any
year during the Term; provided, however, that on each January 1 during the Term,
the Base Salary shall be increased by a minimum positive amount equal to the
Base Salary in effect on January 1 of the prior year multiplied by the
percentage increase in the Consumer Price Index for such year. The amount of the
increase shall be determined before March 31 of each year and shall be
retroactive to January 1. The Base Salary, including any increases, shall not be
decreased during the Term. For purposes of this Agreement, the term “Base
Salary” shall mean the amount established and adjusted from time to time
pursuant to this Section 3.

 

4. ANNUAL INCENTIVE AWARDS.

 

(a) ANNUAL INCENTIVE BONUS POLICY. For the period beginning on the Original
Effective Date and ending on December 31, 2005, and for each fiscal year
thereafter, the Executive shall be entitled to receive an annual incentive bonus
for each fiscal year during the Term of this Agreement in the form of cash and
Restricted Share Grants (as defined below) in accordance with a bonus policy
adopted by the Compensation Committee by January 31 for each fiscal year
containing individual performance goals for participants and corporate
performance goals set at Threshold, Target and Maximum levels, and allocating
each

 

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participant’s annual incentive bonus on a percentage basis between individual
and corporate performance goals (the “Bonus Policy”). The bonus will be prorated
based on the achievement of individual or corporate performance goals between
such levels as shall be provided for under the Bonus Policy or determined at the
discretion of the Compensation Committee. For each fiscal year, a total bonus
percentage (the “Total Bonus Percentage”) shall be determined under the Bonus
Policy in effect for such fiscal year by how well the Executive has met the
individual performance goals established for the Executive for such year and by
how well the overall corporate goals have been met, on the following basis:

 

Total Bonus Percentage = Individual Bonus Percentage + Corporate Bonus
Percentage

 

where:

 

“Individual Bonus Percentage” = individual goals allocation percentage x
individual performance level achieved (Threshold, Target or Maximum percentage)

 

“Corporate Bonus Percentage” = corporate goals allocation percentage x corporate
performance level achieved (Threshold, Target or Maximum percentage)

 

The percentages established for the Executive for the performance bonus levels
for 2005 shall be 50% for Threshold Level, 100% for Target Level, and 135% for
Maximum Level. After 2005, the percentages shall not be less than the 2005
percentages for each performance bonus level without the written agreement of
the Executive. If the performance criteria contained in such Bonus Policy for a
fiscal year are not achieved, the Executive may be eligible to receive an
incentive bonus for such fiscal year, in such amount as is recommended by the
Chief Executive Officer and subject to the approval by the Compensation
Committee.

 

(b) CASH INCENTIVE BONUS. The cash portion of the annual incentive bonus for a
fiscal year (the “Cash Incentive Bonus”) shall be an amount related to the
Executive’s Base Salary for such fiscal year (with the Executive’s Base Salary
for this purpose being pro rated and adjusted to reflect the portion of the 2005
fiscal year that the Executive was employed by the Company) determined as
follows:

 

Cash Incentive Bonus = Total Bonus Percentage x Base Salary

 

The Cash Incentive Bonus for a fiscal year shall be paid to the Executive within
one month after the end of such fiscal year.

 

(c) RESTRICTED SHARE INCENTIVE BONUS. The portion of the annual incentive bonus
payable in Restricted Share Grants for a fiscal year (the “Restricted Share
Incentive Bonus”) shall consist of a base grant (the “Base Grant”) plus a
performance grant (the “Performance Grant”) determined as follows:

 

Restricted Share Incentive Bonus = Base Grant + Performance Grant

 

where:

 

“Base Grant” = 50% x Target Grant

 

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“Performance Grant” = 50% x Total Bonus Percentage x Target Grant

 

The Target Grant for 2005 for the Executive has been established at 39,000
Common Shares under the 2005 Bonus Policy (the “January 2006 Restricted Share
Grant”), and the Target Grant for each fiscal year thereafter shall be
established under the Bonus Policy adopted for such fiscal year. The Restricted
Share Incentive Bonus for a fiscal year shall be issued to the Executive in the
form of Restricted Share Grants within one month after the end of such fiscal
year. The Restricted Share Grants issued under the Restricted Share Incentive
Bonus shall vest in accordance with Section 5(c) below, except that, regardless
of the effective date of the grant vesting shall be deemed to commence on the
first business day of the fiscal year immediately following the fiscal year to
which the Restricted Share Incentive Bonus relates.

 

5. LONG TERM AWARDS.

 

(a) 2002 EQUITY INCENTIVE PLAN RESTRICTED SHARE AWARDS. The REIT has established
the 2002 Equity Incentive Plan, which provides for the issuance of restricted
Common Shares (“Restricted Share Grants”) to the extent that such Common Shares
are available thereunder. The Executive shall be eligible to receive Restricted
Share Grants as recommended by the Chief Executive Officer, subject to
Compensation Committee review and approval. The REIT granted the Executive an
initial Restricted Share Grant for 16,000 Common Shares on April 27, 2005 (the
“Initial Restricted Share Grant”).

 

(b) VESTING. The Initial Restricted Share Grant is, and future awards of
Restricted Share Grants shall be, on the following terms: vesting at the rate of
25% of the underlying Common Shares on the one-year anniversary of the effective
date of the grant of Common Shares as Restricted Share Grants and 6.25% of the
underlying Common Shares on the last day of each fiscal quarter thereafter until
fully vested; provided, however, that after a Restricted Share Grant has been
awarded the Executive will be 100% vested and all restrictions will lapse upon
(i) a Change of Control (as defined herein), (ii) a termination by the Company
without Cause (as defined herein), (iii) his death, (iv) his becoming
Permanently Disabled (as defined herein), or (v) the nonrenewal of this
Agreement by the Company. If the Executive is terminated for Cause or if he
voluntarily terminates his employment for any reason, the Company has the right
to repurchase the unvested portion of any Restricted Share Grants that have been
awarded in accordance with the terms of the Equity Incentive Plan. The Common
Shares issued as Restricted Share Grants will have voting and dividend rights,
and, following the restriction period, shall be registered and fully
transferable by the Executive.

 

(c) 2006 LONG-TERM INCENTIVE PLAN. The REIT has established the 2006 Long-Term
Incentive Plan (the “2006 LTIP”), effective as of January 1, 2006, as a
long-term, performance-based plan, using the growth in the REIT’s funds from
operations as the measurement criteria. The Compensation Committee has approved
a Target Unit (as defined in the 2006 LTIP) allocation (“Target Units”) of 7.5%
to the Executive, which will become effective on January 1, 2006 if the
Executive is employed by the Company at that date.

 

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6. BENEFITS.

 

(a) VACATION. The Executive shall be entitled to four (4) weeks paid vacation
per full calendar year in accordance with the Company’s vacation policy, which
shall accrue during the Executive’s employment with the Company.

 

(b) SICK AND PERSONAL DAYS. The Executive shall be entitled to sick and personal
days pursuant to Company policy.

 

(c) EMPLOYEE BENEFIT PLANS. The Executive and his spouse and eligible
dependents, if any, and their respective designated beneficiaries where
applicable, will be eligible for and entitled to participate in any Company
sponsored employee benefit plans, including but not limited to benefits such as
group health, dental, accident, disability insurance, group life insurance, and
a 401(k) plan, as such benefits may be offered from time to time, on a basis no
less favorable than that applicable to other executives of the Company.

 

(d) OTHER BENEFITS.

 

(i) ANNUAL PHYSICAL. The Company shall provide, at its cost, a medical
examination for the Executive on an annual basis by a licensed physician in the
Philadelphia, Pennsylvania area selected by the Executive.

 

(ii) CAR ALLOWANCE. The Company shall pay Executive a monthly car allowance that
is not less than $700.00 per month.

 

(iii) DIRECTORS AND OFFICERS INSURANCE. During the Term, the Executive shall be
entitled to directors and officers insurance coverage for his acts and omissions
while an officer of the Company and the REIT on a basis no less favorable to him
than the coverage provided to current officers and trustees. Additionally, after
any termination of employment of the Executive for any reason, for a period
through the sixth anniversary of the termination of employment, the Company and
the REIT shall maintain directors and officers insurance coverage for the
Executive covering his acts or omissions while an officer of the Company and the
REIT on a basis no less favorable to him than the coverage provided to
then-current officers and trustees or, in the event of a Change of Control, to
former officers and trustees of the Company and the REIT and the then-current
officers and trustees of their respective successor entities.

 

(iv) EXPENSES, OFFICE AND SECRETARIAL SUPPORT. The Executive shall be entitled
to reimbursement of all reasonable expenses, in accordance with the Company’s
policy as in effect from time to time and on a basis no less favorable than that
applicable to other executives of the Company, including, without limitation,
telephone, reasonable travel and reasonable entertainment expenses incurred by
the Executive in connection with the business of the Company, promptly upon the
presentation by the Executive of appropriate documentation. The Executive shall
also be entitled to appropriate office space, administrative support, and such
other facilities and services as are suitable to the Executive’s positions and
adequate for the performance of the Executive’s duties.

 

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(v) RELOCATION. The Executive’s principal place of employment will be at the
Company’s headquarters in Jenkintown, Pennsylvania. In consideration for the
Executive’s relocation to the Philadelphia, Pennsylvania area, the Executive
will receive a relocation package in an amount not to exceed $40,000, inclusive
of required withholding taxes (the “Relocation Amount”) to cover the Executive’s
relocation expenses, including interim hotel stays pending the provision of
temporary housing by the Company (see subsection (vi) below), real estate
transaction costs, moving expenses and temporary travel while relocating. The
Company will reimburse the Executive for reimbursable relocation expenses upon
the submission of written receipts pursuant to the Company’s Executive
Relocation Policy for an amount up to the Relocation Amount, and to the extent
the relocation reimbursement payments made by the Company are subject to
applicable tax withholding by the Company, then the amount of the withholding
taxes shall be counted toward the Relocation Amount.

 

(vi) TEMPORARY HOUSING ALLOWANCE. Beginning April 1, 2005, the Company, at its
cost, shall provide temporary furnished housing for the Executive on a
month-to-month basis for a minimum of three months. Thereafter, the Chief
Executive Officer and the Executive shall review the temporary housing allowance
and mutually determine, on a month-to-month basis, whether to continue it for a
maximum period up to January 31, 2006.

 

7. TERMINATION. The employment of the Executive by the Company pursuant to this
Agreement shall terminate upon the occurrence of any of the following:

 

(a) DEATH OR PERMANENT DISABILITY. Immediately upon death or Permanent
Disability of the Executive. As used in this Agreement, “Permanent Disability”
shall mean an inability due to a physical or mental impairment to perform the
material services contemplated under this Agreement for a period of six
(6) months, whether or not consecutive, during any 365-day period. A
determination of Permanent Disability shall be made by a physician satisfactory
to both the Executive and the Company, provided that if the Executive and the
Company do not agree on a physician, the Executive and the Company shall each
select a physician and these two together shall select a third physician, whose
determination as to Permanent Disability shall be binding on all parties. The
appointment of one or more individuals to carry out the offices or duties of the
Executive during a period of the Executive’s inability to perform such duties
and pending a determination of Permanent Disability shall not be considered a
breach of this Agreement by the Company.

 

(b) FOR CAUSE. At the election of the Company and subject to the provisions of
this Section 7(b), immediately upon written notice by the Company to the
Executive of his termination for Cause. For purposes of this Agreement, “Cause”
for termination shall be deemed to exist solely in the event of (i) the
conviction of the Executive of, or the entry of a plea of guilty or nolo
contendere by the Executive to, a felony (exclusive of any felony relating to
negligent operation of a motor vehicle and not including a conviction, plea of
guilty or nolo contendere arising solely under a statutory provision imposing
criminal liability upon the Executive on a per se basis due to the Company
offices held by the Executive, so long as any act or omission of the Executive
with respect to such matter was not taken or omitted in contravention of any
applicable policy or directive of the Board or the Chief Executive Officer),
(ii) a willful breach of his duty of loyalty which is materially detrimental to
the Company, (iii) a willful failure to perform or adhere to explicitly stated
duties that are consistent with the terms of

 

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this Agreement, or the Company’s reasonable and customary guidelines of
employment or reasonable and customary corporate governance guidelines or
policies, including without limitation any business code of ethics adopted by
the Board, or to follow the lawful directives of the Board (provided such
directives are consistent with the terms of this Agreement) which, in any such
case, continues for thirty (30) days after written notice from the Chief
Executive Officer to the Executive, or (iv) gross negligence or willful
misconduct in the performance of the Executive’s duties. For purposes of this
Section 7(b), no act, or failure to act, on the Executive’s part will be deemed
“gross negligence” or “willful misconduct” unless done, or omitted to be done,
by the Executive not in good faith and without a reasonable belief that the
Executive’s act, or failure to act, was in the best interest of the Company. The
parties agree that in order to terminate the Executive pursuant to Subsections
(ii) and (iv) hereof, the Company shall first be required to prove to the
reasonable satisfaction of the Executive that he engaged in improper conduct
under these Subsections, and if the Executive shall not agree with the Company’s
assessment of his conduct, then the Executive shall not be terminated until an
arbitrator, as provided for in Section 13(b), has determined that the
Executive’s conduct constituted improper conduct under the applicable
Subsection.

 

(c) WITHOUT CAUSE, VOLUNTARY RESIGNATION. At the election of the Company without
Cause, and at the election of the Executive for any reason, in either case upon
thirty (30) days prior written notice to the Executive or the Company, as the
case may be.

 

8. EFFECTS OF TERMINATION.

 

(a) TERMINATION ON PERMANENT DISABILITY OR BY THE COMPANY WITHOUT CAUSE. If the
employment of the Executive should terminate at any time by reason of his
becoming Permanently Disabled or should terminate at the election of the Company
without Cause, then the Company shall pay all compensation and benefits for the
Executive as follows:

 

(i) Any Base Salary, Cash Incentive Bonus, Restricted Share Incentive Bonus,
expense reimbursements and all other compensation related payments that are
payable as of his termination of employment date that are related to his period
of employment preceding his termination date.

 

(ii) The prorated amount of the Cash Incentive Bonus at the Target Level for
both corporate and individual performance for the year in which the termination
of employment occurs, prorated for the portion of such year during which the
Executive was employed prior to the effective date of the termination.

 

(iii) The amount equal to his Base Salary at the rate in effect on the effective
date of the Executive’s termination of employment, that would have been paid or
payable for the duration of the Initial Term of this Agreement, or if greater,
for 12 months (the greater of such periods, being the “Severance Period”).

 

(iv) The issuance of fully vested Common Shares in an amount as determined by
the Compensation Committee in its sole discretion, in lieu of any Restricted
Share Incentive Bonus; provided, however, that if the termination of the
Executive’s employment under this

 

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subsection (a) takes place prior to the award of the January 2006 Restricted
Share Grant, then a Restricted Share Grant shall be awarded to the Executive in
an amount equal to the prorated amount of the Target Grant for 2005, prorated
for the portion of the 2005 fiscal year during which the Executive was employed
prior to the effective date of the termination, and such Restricted Share Grant
shall be 100% vested on the date of the award with no restrictions.

 

The sum of the amount payable under subsections (ii), (iii) and (iv) hereof is
referred to herein as his “Severance Payment”. If a termination of employment
under this Section 8(a) takes place during the Change of Control Termination
Period (as defined below), then the Executive shall receive the Change of
Control Severance Payment (as defined below) in lieu of the Severance Payment
under Sections 8(a)(ii), (iii) and (iv).

 

(v) The Severance Payment shall be made in a single, lump sum cash payment
before the later of (x) thirty (30) days after the effective date of the
Executive’s termination of employment, and (y) the delivery of the signed
Release (as defined below) to the Company and the expiration of the Executive’s
statutory period to revoke the Release. With respect to any Severance Payment
attributable to a period after the expiration of 24 calendar months after the
termination of the Executive’s employment, such payment shall be reduced for
compensation earned from other employment or self-employment after that date,
and the Executive shall refund to the Company any amount due as a result of such
reduction.

 

(vi) The Company shall allow the Executive to continue to participate during the
Severance Period in any healthcare, dental and prescription drug plans in which
the Executive was entitled to participate immediately prior to his termination,
to the same extent and upon the same terms as the Executive participated in such
plans prior to his termination, provided that the Executive’s continued
participation is permissible or otherwise practicable under the general terms
and provisions of such benefit plans and programs. During the Severance Period,
the Company shall pay for the Executive’s continued participation in said
healthcare, dental and prescription drug plans, including but not limited to
premiums for such programs. To the extent that continued participation is
neither permissible nor practicable, the Company shall take such actions as may
be necessary to provide the Executive with substantially comparable benefits
(without additional cost to the Executive) outside the scope of such plans,
including, without limitation, reimbursing the Executive for his costs in
obtaining such coverage, such as COBRA premiums paid by the Executive and/or his
eligible dependents. If the Executive engages in regular employment after his
termination of employment (whether as an executive or as a self-employed
person), any employee benefit and welfare benefits received by the Executive in
consideration of such employment which are similar in nature to the healthcare,
dental and prescription drug plans provided by the Company will relieve the
Company of its obligation under this Section 8(a)(vi) to provide comparable
benefits to the extent of the benefits so received.

 

(vii) The Executive’s Restricted Share Grants that have been awarded under the
Equity Incentive Plan shall immediately become 100% vested, and all restrictions
shall lapse; provided, however, that this Section 8(a)(vii) shall not apply to
Restricted Share Grants made under the 2006 LTIP.

 

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(viii) If the Severance Period is less than 24 months, then the Noncompete
Period in Section 11 shall be reduced to be equal to the Severance Period.

 

(ix) All Severance Payments are contingent on Executive signing a release of
claims, substantially in the form attached hereto as Exhibit A (the “Release”).

 

(x) The Executive shall be entitled to the rights and benefits as provided for
under the 2006 LTIP.

 

(b) TERMINATION ON DEATH. Upon a termination of employment due to the
Executive’s death, the Executive shall become 100% vested in the Restricted
Share Grants that have been awarded to the Executive under the Equity Incentive
Plan. The Company shall pay to the Executive’s personal representative any Base
Salary, expense reimbursements and all other compensation related payments that
are payable as of his date of death and that are related to his period of
employment preceding his date of death, and within 60 days after the Executive’s
death, shall pay to the Executive’s personal representative the prorated amount
of the Cash Incentive Bonus at the Target Level for both corporate and
individual performance for the year in which the Executive’s death occurs,
prorated for the portion of the year during which the Executive was employed
prior to his death. Upon a termination of employment due to the Executive’s
death, the Executive shall also be entitled to the rights and benefits provided
for under the 2006 LTIP.

 

(c) BY THE COMPANY FOR CAUSE OR VOLUNTARILY BY THE EXECUTIVE. In the event that
the Executive’s employment is terminated by the Company for Cause or voluntarily
by the Executive, the Company shall pay the Executive his Base Salary, expense
reimbursements and all other compensation related payments that are payable as
of his termination of employment date and that are related to his period of
employment preceding his termination date. The Executive shall forfeit all
unvested restricted Common Shares if he is terminated by the Company for Cause,
and, subject to Section 9(b) below, he shall forfeit all unvested restricted
Common Shares if he voluntarily terminates his employment with the Company.

 

(d) TERMINATION OF AUTHORITY. Immediately upon the Executive terminating or
being terminated from his employment with the Company for any reason,
notwithstanding anything else appearing in this Agreement or otherwise, the
Executive will stop serving the functions of his terminated or expired
position(s) and shall be without any of the authority or responsibility for such
position(s).

 

9. CHANGE OF CONTROL.

 

(a) CHANGE OF CONTROL. For purposes of this Agreement, a “Change of Control”
will be deemed to have taken place upon the occurrence of any of the following
events:

 

(i) any person, entity or affiliated group, excluding the REIT or any employee
benefit plan of the REIT, acquiring more than 50% of the then outstanding voting
shares of the REIT,

 

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(ii) the consummation of any merger or consolidation of the REIT into another
company, such that the holders of the voting shares of the REIT immediately
prior to such merger or consolidation is less than 50% of the voting power of
the securities of the surviving company or the parent of such surviving company,

 

(iii) the complete liquidation of the REIT or the sale or disposition of all or
substantially all of the REIT’s assets, such that after the transaction, the
holders of the voting shares of the REIT immediately prior to the transaction is
less than 50% of the voting securities of the acquiror or the parent of the
acquiror, or

 

(iv) a majority of the Board of the REIT votes in favor of a decision that a
Change of Control has occurred.

 

(b) CERTAIN BENEFITS UPON A CHANGE OF CONTROL. In the event of a Change of
Control, the Executive shall become 100% vested in the Restricted Share Grants
that have been awarded to the Executive under the Equity Incentive Plan, and
shall also be entitled to the rights and benefits provided for under the 2006
LTIP. If a Change of Control takes place prior to the award of the January 2006
Restricted Share Grant, then in the event of such Change of Control, a
Restricted Share Grant shall be awarded to the Executive in an amount equal to
the Target Grant Amount, and such Restricted Share Grant shall be 100% vested on
the date of the award with no restrictions.

 

(c) CHANGE OF CONTROL SEVERANCE PAYMENT. If, at any time during (i) the six
months prior to the date on which a Change of Control occurs, or (ii) the two
year period beginning on the date of a Change of Control (collectively, the
“Change of Control Termination Period”), the Executive’s employment is
terminated by the Company for any reason other than Cause, death or his becoming
Permanently Disabled, then the Executive shall receive the severance benefits
described in Section 8(a) of this Agreement, except that, in lieu of the
Severance Payment described in Sections 8(a)(ii), (iii) and (iv), the Executive
shall receive an amount equal to the Change of Control Severance Payment (as
defined below). The Change of Control Severance Payment shall be made in a
single, lump sum cash payment no later than twenty (20) days after the effective
date of the Executive’s termination of employment. If the Executive is entitled
to the Change of Control Severance Payment described in this subsection (c) by
reason of clause (i) above, the Executive shall receive the severance benefits
described in Section 8(a) above after his employment is terminated, regardless
of whether the Change of Control actually occurs, and the Executive shall
receive the Change of Control Severance Payment, less the value of compensation
received in accordance with Sections 8(a)(ii), (iii) and (iv), to the extent
such compensation is received prior to the Change of Control, only if the Change
of Control is consummated within the time period covered by clause (i) and
Executive shall receive such additional amounts in a single, lump sum cash
payment no later than twenty (20) days after the consummation of the Change of
Control.

 

For purposes of this Agreement, “Change of Control Severance Payment” shall mean
2.5 multiplied by the sum of (i) the Executive’s average annual Base Salary for
the three calendar year period immediately prior to the Executive’s date of
termination, which for this purpose is determined by taking the Executive’s Base
Salary in effect on the Executive’s date of termination, as well as the
Executive’s Base Salary in effect for the immediately preceding two

 

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calendar years, plus (ii) the average annual cash incentive bonus actually
received by the Executive for the three full fiscal year periods that
immediately preceded Executive’s date of termination, plus (iii) the average
value of the Restricted Share Grants awarded to the Executive over the three
year period immediately following the Executive’s date of termination (excluding
any restricted shares received by the Executive under the 2006 LTIP), which for
this purpose is determined by taking the value of such Restricted Share Grants
at the time of grant and aggregating the value of all Restricted Share Grants
for the same calendar year. Notwithstanding the foregoing, if the Executive was
employed by the Company for a period less than the measurement period used to
determine any of the averages under clauses (i), (ii) and (iii) of the foregoing
sentence, then such average shall instead be determined using a measurement
period equal to the period that the Executive was employed by the Company prior
to the Executive’s date of termination.

 

(d) EXCISE TAX.

 

(i) Anything in this Agreement to the contrary notwithstanding, in the event
that it shall be determined that any payment (including any of the Tax Gross-Up
Payments as defined below in this Section 9(d)) or benefit (including any
accelerated vesting of options or other equity awards) made or provided, or to
be made or provided, by the Company or the REIT (or any successor thereto or
affiliate thereof) to or for the benefit of the Executive, whether pursuant to
the terms of this Agreement, any other agreement, plan, program or arrangement
of or with the Company or the REIT (or any successor thereto or affiliate
thereof) or otherwise (a “Total Payment”), will be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”) or any comparable tax imposed by any replacement or successor provision
of United States tax law (the “Excise Tax”), then the Company shall pay to the
Executive one or more additional cash payments (the “Tax Gross-Up Payments”) in
such amounts so that the net cash amount retained by the Executive, after
deduction or payment of (A) the Excise Tax imposed on the Total Payments
(including the Excise Tax imposed on the Tax Gross-Up Payments) and (B) all
federal, state and local income and employment taxes imposed upon the Tax
Gross-Up Payments, shall equal the excess of the Total Payments over the Tax
Gross-Up Payments (it being understood that this is a circular definition that
requires a reiterative calculation).

 

(ii) One or more determinations (each a “Tax Determination”) as to (A) whether
any of the Total Payments will be subject to the Excise Tax, (B) the amount of
the Excise Tax imposed thereon, and (C) the calculation of the related Tax
Gross-Up Payment shall be made by the Company in consultation with such
accounting and tax professionals as the Company considers necessary (with all
costs related thereto paid by the Company). For purposes of determining whether
any of the Total Payments will be subject to the Excise Tax, (1) all of the
Total Payments shall be treated as “parachute payments” (within the meaning of
Section 280G of the Code) unless and to the extent that, in the written opinion
of independent tax counsel selected (and paid for) by the Company and reasonably
acceptable to the Executive (“Tax Counsel”), certain Payments do not constitute
parachute payments, and (2) all “excess parachute payments” (within the meaning
of Section 280G of the Code) shall be treated as subject to the Excise Tax
unless and only to the extent that, in the written opinion of Tax Counsel (upon
which the Executive may rely), such excess parachute payments are not subject to
the Excise Tax. For purposes of determining the amount of any Tax Gross-Up
Payment, the

 

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Executive shall be deemed to pay (x) federal income tax at the highest marginal
rate in effect for the calendar year during which such Tax Gross-Up Payment is
to be made, (y) FICA taxes at the highest rate applicable to wages in excess of
the Social Security taxable wage base in effect for such calendar year, and
(z) state and local income taxes at the highest marginal rates in effect for
such calendar year in the state and local municipality of the Executive’s
principal residence as of the date of termination or the date that any portion
of the Total Payment becomes subject to the Excise Tax, net of the reduction in
federal income tax attributable to the deduction of such state and local income
taxes, and taking into account any limitation on deductions or credits or
comparable negative impact for purposes of federal income tax as a result of the
Total Payments made to the Executive during such calendar year.

 

(iii) An initial Tax Gross-Up Payment shall be made to the Executive on the date
that the Change of Control Severance Payment is made, and within ten (10) days
after each date that any portion of any Total Payment becomes subject to the
Excise Tax (each such date is referred to as a “Payment Date”); provided that if
the amount thereof cannot be fully determined by the Payment Date, the Company
shall pay to the Executive by the Payment Date an estimate of such payment,
determined by the Company reasonably and in good faith, and the Company shall
pay to the Executive the remainder of such payment (if any) as soon as the
amount thereof can be determined but in no event later than twenty (20) days
after the Payment Date. Whenever any Tax Gross-Up Payment (or estimate thereof)
is made to the Executive, the Company shall provide to the Executive the
Company’s Tax Determination related to such payment, together with detailed
supporting calculations and explanations and, if applicable, opinions of Tax
Counsel. The Executive shall have the right to dispute any Tax Determination (a
“Tax Dispute”) by so notifying the Company within fifteen (15) days after
receiving such Tax Determination and the required supporting documentation. Each
Tax Determination shall become final and binding upon the parties (A) if there
is no Tax Dispute, at the end of such fifteen (15) day period, without change,
or (B) if there is a Tax Dispute, upon final resolution of such Tax Dispute,
with such changes as may result from such Tax Dispute. Other than the initial or
an estimated Tax Gross-Up Payment as provided for above, any Tax Gross-Up
Payment due from the Company to the Executive shall be paid within five (5) days
after the related Tax Determination becomes final and binding, provided that, in
the event of a Tax Dispute, any undisputed portion of the Tax Gross-Up Payment
shall be paid within five (5) days after the Executive notifies the Company of
the Tax Dispute.

 

(iv) The parties acknowledge that, as a result of potential uncertainties in the
application of the provisions of the Code dealing with the Excise Tax, it is
possible that Tax Gross-Up Payments should have been made by the Company but
were not (an “Underpayment”) or that Tax Gross-Up Payments made by the Company
should not have been made (an “Overpayment”). In either such event, the Company
shall make a Tax Determination of the amount of the Underpayment or Overpayment
that has occurred, and the Executive shall have the right to initiate a Tax
Dispute related thereto. In the case of an Underpayment, the amount of such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive. In the case of an Overpayment, the Executive shall, at the direction
and expense of the Company, take such steps as are reasonably necessary
(including the filing of amended returns and claims for refunds), follow the
Company’s reasonable instructions and otherwise reasonably cooperate with the
Company to correct such Overpayment.

 

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(v) Notwithstanding anything to the contrary in this Section 9(d), in the event
that the Total Payment may be structured or allocated in such a manner so as to
minimize or eliminate the Excise Tax and, therefore, the Tax Gross-up Payments
without reducing the value of the Total Payment that the Executive is entitled
to receive, the Executive agrees to provide such assistance as is reasonabley
necessary so that the Company (or any successor thereto) can eliminate or reduce
the Tax Gross-up Payments.

 

10. CONFIDENTIAL INFORMATION. The Executive recognizes and acknowledges that
certain assets of the Company constitute Confidential Information. The term
“Confidential Information” as used in this Agreement shall mean all information
which is known only to the Executive or the Company, other employees of the
Company, or others in a confidential relationship with the Company, and relating
to the Company’s business including, without limitation, information regarding
clients, customers, pricing policies, methods of operation, proprietary Company
programs, sales products, profits, costs, markets, key personnel, formulae,
product applications, technical processes, and trade secrets, as such
information may exist from time to time, which the Executive acquired or
obtained by virtue of work performed for the Company, or which the Executive may
acquire or may have acquired knowledge of during the performance of said work.
The Executive shall not, during or after the Term, disclose all or any part of
the Confidential Information to any person, firm, corporation, association, or
any other entity for any reason or purpose whatsoever, directly or indirectly,
except as may be required pursuant to his employment hereunder, unless and until
such Confidential Information becomes publicly available other than as a
consequence of the breach by the Executive of his confidentiality obligations
hereunder by law or in any judicial administrative proceeding (in which case,
the Executive shall provide the Company with notice). In the event of the
termination of his employment, whether voluntary or involuntary and whether by
the Company or the Executive, the Executive shall deliver to the Company all
documents and data pertaining to the Confidential Information and shall not take
with him any documents or data of any kind or any reproductions (in whole or in
part) or extracts of any items relating to the Confidential Information. The
Company acknowledges that prior to his employment with the Company, the
Executive has lawfully acquired extensive knowledge of the industries and
businesses in which the Company engages in business, and that the provisions of
this Section 10 are not intended to restrict the Executive’s use of such
previously acquired knowledge.

 

In the event that the Executive receives a request or is required (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process) to disclose all or any part of the Confidential
Information, the Executive agrees to (a) promptly notify the Company in writing
of the existence, terms and circumstances surrounding such request or
requirement, (b) consult with the Company on the advisability of taking legally
available steps to resist or narrow such request or requirement, and (c) assist
the Company in seeking a protective order or other appropriate remedy. In the
event that such protective order or other remedy is not obtained or that the
Company waives compliance with the provisions hereof, the Executive shall not be
liable for such disclosure unless disclosure to any such tribunal was caused by
or resulted from a previous disclosure by the Executive not permitted by this
Agreement.

 

11. NON-COMPETITION AND NONSOLICITATION. During the Term and, except as
otherwise provided in Section 8(a)(viii), for a period of 24 calendar months
after the termination

 

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of the Executive’s employment (the “Noncompete Period”), the Executive shall
not, directly or indirectly, either as a principal, agent, employee, employer,
stockholder, partner or in any other capacity whatsoever: (a) engage or assist
others engaged, in whole or in part, in any business which is engaged in a
business or enterprise that is substantially similar to the business that the
Company was engaged in during the period of the Executive’s employment with the
Company, or (b) without the prior consent of the Board, employ or solicit the
employment of, or assist others in employing or soliciting the employment of,
any individual employed by the Company at any time while the Executive was also
so employed; provided, however, that the provisions of this Section 11 shall not
apply in the event the Company materially breaches this Agreement or the
Release.

 

Nothing in this Section 11 shall prohibit Executive from making any passive
investment in a public company, or where he is the owner of five percent (5%) or
less of the issued and outstanding voting securities of any entity, provided
such ownership does not result in his being obligated or required to devote any
managerial efforts.

 

The Executive agrees that the restraints imposed upon him pursuant to this
Section 11 are necessary for the reasonable and proper protection of the Company
and its subsidiaries and affiliates, and that each and every one of the
restraints is reasonable in respect to subject matter, length of time and
geographic area. The parties further agree that, in the event that any provision
of this Section 11 shall be determined by any court of competent jurisdiction to
be unenforceable by reason of its being extended over too great a time, too
large a geographic area or too great a range of activities, such provision shall
be deemed to be modified to permit its enforcement to the maximum extent
permitted by law.

 

12. INTELLECTUAL PROPERTY. During the Term, the Executive shall promptly
disclose to the Company or any successor or assign, and grant to the Company and
its successors and assigns without any separate remuneration or compensation
other than that received by him in the course of his employment, his entire
right, title and interest in and to any and all inventions, developments,
discoveries, models, or any other intellectual property of any type or nature
whatsoever (“Intellectual Property”), whether developed by him during or after
business hours, or alone or in connection with others, that is in any way
related to the business of the Company, its successors or assigns. This
provision shall not apply to books or articles authored by the Executive during
non-work hours, consistent with his obligations under this Agreement, so long as
such books or articles (a) are not funded in whole or in part by the Company,
and (b) do not contain any Confidential Information or Intellectual Property of
the Company. The Executive agrees, at the Company’s expense, to take all steps
necessary or proper to vest title to all such Intellectual Property in the
Company, and cooperate fully and assist the Company in any litigation or other
proceedings involving any such Intellectual Property.

 

13. DISPUTES.

 

(a) EQUITABLE RELIEF. The Executive acknowledges and agrees that upon any breach
by the Executive of his obligations under Sections 10, 11, or 12 hereof, the
Company will have no adequate remedy at law, and accordingly will be entitled to
specific performance and other appropriate injunctive and equitable relief.

 

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(b) ARBITRATION. Excluding only requests for equitable relief by the Company
under Section 13(a), in the event that there is any claim or dispute arising out
of or relating to this Agreement or the breach hereof, and the parties hereto
shall not have resolved such claim or dispute within 60 days after written
notice from one party to the other setting forth the nature of such claim or
dispute, then such claim or dispute shall be settled exclusively by binding
arbitration in Montgomery county, Pennsylvania, in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association
(“Rules”), by an arbitrator mutually agreed upon by the parties hereto or, in
the absence of such agreement, by an arbitrator selected according to such
Rules. Notwithstanding the foregoing, if either the Company or the Executive
shall request, such arbitration shall be conducted by a panel of three
(3) arbitrators, one selected by the Company, one selected by the Executive and
the third selected by agreement of the first two arbitrators, or, in the absence
of such agreement, in accordance with such Rules. Judgment upon the award
rendered by such arbitrator(s) shall be entered in any Court having jurisdiction
thereof upon the application of either party. The parties agree to use their
reasonable best efforts to have such arbitration completed as soon as is
reasonably practicable. Notwithstanding anything herein to the contrary, except
as provided in Section 13(c) below, the losing party shall pay the reasonable
costs and expenses (including reasonable attorney fees and expenses) of the
prevailing party with respect to such arbitration, except the Executive, if he
is the losing party, shall not be required to pay such expenses and costs if the
claim relates to statutory discrimination claims that he would not otherwise be
required to pay if such claim had been brought in a court of competent
jurisdiction.

 

(c) LEGAL FEES. The Company shall pay or promptly reimburse the Executive for
the reasonable legal fees and expenses incurred by the Executive in successfully
enforcing or defending any right of the Executive pursuant to this Agreement,
even if the Executive does not prevail on each issue.

 

14. INDEMNIFICATION. The Company shall indemnify the Executive, to the maximum
extent permitted by applicable law, against all costs, charges and expenses
incurred or sustained by the Executive, including the cost of legal counsel
selected and retained by the Executive in connection with any action, suit or
proceeding to which the Executive may be made a party by reason of the Executive
being or having been an officer, director, or employee of the Company or the
REIT.

 

15. COOPERATION IN FUTURE MATTERS. The Executive hereby agrees that for a period
of 18 months following his termination of employment he shall cooperate with the
Company’s reasonable requests relating to matters that pertain to the
Executive’s employment by the Company, including, without limitation, providing
information or limited consultation as to such matters, participating in legal
proceedings, investigations or audits on behalf of the Company, or otherwise
making himself reasonably available to the Company for other related purposes.
Any such cooperation shall be performed at scheduled times taking into
consideration the Executive’s other commitments, and the Executive shall be
compensated at a reasonable hourly or per diem rate to be agreed upon by the
parties to the extent such cooperation is required on more than an occasional
and limited basis. The Executive shall not be required to perform such
cooperation to the extent it conflicts with any requirements of exclusivity of
services for another employer or otherwise, nor in any manner that in the good
faith belief of the Executive would conflict with his rights under or ability to
enforce this Agreement.

 

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16. GENERAL.

 

(a) NOTICES. All notices and other communications hereunder shall be in writing
or by written telecommunication, and shall be deemed to have been duly given if
delivered personally or if sent by overnight courier or by certified mail,
return receipt requested, postage prepaid or sent by written telecommunication
or telecopy, to the relevant address set forth below, or to such other address
as the recipient of such notice or communication shall have specified in writing
to the other party hereto, in accordance with this Section 16(a).

 

If to the Company, to:    First States Group, L.P.      1725 The Fairway     
Jenkintown, PA 19046     

Attn:    Nicholas S. Schorsch, President and

    

             Chief Executive Officer

     Facsimile: 215-887-2585

 

If to Executive, at his last residence shown on the records of the Company.

 

Any such notice shall be effective (i) if delivered personally, when received,
(ii) if sent by overnight courier, when receipted for, (iii) if mailed, five
(5) days after being mailed, and (iv) on confirmed receipt if sent by written
telecommunication or telecopy, provided a copy of such communication is sent by
regular mail, as described above.

 

(b) SEVERABILITY. If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect under any law, the validity, legality
and enforceability of the remaining provisions hereof shall not in any way be
affected or impaired.

 

(c) WAIVERS. No delay or omission by either party hereto in exercising any
right, power or privilege hereunder shall impair such right, power or privilege,
nor shall any single or partial exercise of any such right, power or privilege
preclude any further exercise thereof or the exercise of any other right, power
or privilege.

 

(d) COUNTERPARTS. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. In making proof of this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.

 

(e) ASSIGNS. This Agreement shall be binding upon and inure to the benefit of
the Company’s successors and the Executive’s personal or legal representatives,
executors, administrators, heirs, distributees, devisees and legatees. This
Agreement shall not be assignable by the Executive, it being understood and
agreed that this is a contract for the Executive’s personal services. This
Agreement shall not be assignable by the Company except that the Company shall
assign it in connection with a transaction involving the succession by a third
party to all or substantially all of the Company’s business and/or assets
(whether direct or indirect and whether by purchase, merger, consolidation,
liquidation or otherwise). When assigned to a successor, the assignee shall
assume this Agreement and expressly agree to perform this Agreement in the same
manner and to the same extent as the Company would be required to

 

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perform it in the absence of such an assignment. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets that executes and delivers the assumption agreement
described in the immediately preceding sentence or that becomes bound by this
Agreement by operation of law.

 

(f) ENTIRE AGREEMENT. This Agreement contains the entire understanding of the
parties, supersedes all prior agreements and understandings, including the
Original Agreement and the April 2005 Agreement, whether written or oral,
relating to the subject matter hereof and may not be amended except by a written
instrument hereafter signed by the Executive and the Chief Executive Officer or
a duly authorized representative of the Board (other than the Executive).

 

(g) GOVERNING LAW. This Agreement and the performance hereof shall be construed
and governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to principles of conflicts of law.

 

(h) CONSTRUCTION. The language used in this Agreement shall be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party. The headings of sections
of this Agreement are for convenience of reference only and shall not affect its
meaning or construction. Whenever any word is used herein in one gender, it
shall be construed to include the other gender, and any word used in the
singular shall be construed to include the plural in any case in which it would
apply and vice versa.

 

(i) PAYMENTS AND EXERCISE OF RIGHTS AFTER DEATH. Any amounts payable hereunder
after the Executive’s death shall be paid to the Executive’s designated
beneficiary or beneficiaries, whether received as a designated beneficiary or by
will or the laws of descent and distribution. The Executive may designate a
beneficiary or beneficiaries for all purposes of this Agreement, and may change
at any time such designation, by notice to the Company making specific reference
to this Agreement. If no designated beneficiary survives the Executive or the
Executive fails to designate a beneficiary for purposes of this Agreement prior
to his death, all amounts thereafter due hereunder shall be paid, as and when
payable, to his spouse, if she survives the Executive, and otherwise to his
estate.

 

(j) CONSULTATION WITH COUNSEL. The Executive acknowledges that he has had a full
and complete opportunity to consult with counsel or other advisers of his own
choosing concerning the terms, enforceability and implications of this
Agreement, and that the Company has not made any representations or warranties
to the Executive concerning the terms, enforceability and implications of this
Agreement other than as are reflected in this Agreement.

 

(k) WITHHOLDING. Any payments provided for in this Agreement shall be paid net
of any applicable income tax withholding required under federal, state or local
law.

 

(l) CONSUMER PRICE INDEX. For purposes of this Agreement, the term “CPI” refers
to the Consumer Price Index as published by the Bureau of Labor Statistics of
the United States Department of Labor, U.S. City Average, All Items for Urban
Wage Earners and Clerical Workers (1982-1984=100). If the CPI is hereafter
converted to a different standard reference

 

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base or otherwise revised, the determination of the CPI adjustment shall be made
with the use of such conversion factor, formula or table for converting the CPI,
as may be published by the Bureau of Labor Statistics, or, if the bureau shall
no longer publish the same, then with the use of such conversion factor, formula
or table as may be published by an agency of the United States, or failing such
publication, by a nationally recognized publisher of similar statistical
information.

 

(m) SECTION 409A OF THE CODE. To the extent that any payment under this
Agreement is deemed to be deferred compensation subject to the requirements of
Section 409A of the Code, the Company and the Executive shall amend this
Agreement so that such payments will be made in accordance with the requirements
of Section 409A of the Code.

 

(n) SURVIVAL. The provisions of Sections 8, 9, 10, 11, 12, 13, 14 and 15 shall
survive the termination of this Agreement.

 

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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto
have caused this Agreement to be duly executed as of the date first above
written.

 

FIRST STATES GROUP, L.P.

     

DAVID J. NETTINA

By:  

First States Group, LLC

Its general partner

            By:                

Name:

  Nicholas S. Schorsch            

Title:

  President and Chief Executive Officer         Dated: August 30, 2005      
Dated: August 30, 2005

 

GUARANTEE:

 

For good and valuable consideration, including the Executive’s agreement to
serve as an officer of American Financial Realty Trust, the obligations of First
States Group, L.P. under this Employment Agreement, dated August 30, 2005, with
David J. Nettina, shall be guaranteed by American Financial Realty Trust.

 

AMERICAN FINANCIAL REALTY TRUST

By:    

Name:

  Nicholas S. Schorsch

Title:

  President and Chief Executive Officer

 

Dated: August 30, 2005

 

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EXHIBIT A

 

RELEASE AND WAIVER

 

This release and waiver (the “Termination Release”) is made as of the         
day of                     , 200   by                              (the
“Executive”).

 

WHEREAS, the Executive and First States Group, L.P. (the “Company”) have entered
into an Employment Agreement (the “Agreement”) dated as of                     ,
200   that provides for certain compensation and severance amounts upon his
termination of employment; and

 

WHEREAS, the Executive has agreed, pursuant to the terms of the Agreement, to
execute a release and waiver in the form set forth in this Release and Waiver
(“Termination Release”) in consideration of the Company’s agreement to provide
the compensation and severance amounts upon his termination of employment set
out in the Agreement; and

 

WHEREAS, the Executive has incurred a termination of employment effective as of
                    , 20    ; and

 

WHEREAS, the Company and the Executive desire to settle all rights, duties and
obligations between them, including without limitation all such rights, duties,
and obligations arising under the Agreement or otherwise out of the Executive’s
employment by the Company.

 

NOW THEREFORE, intending to be legally bound and for good and valid
consideration the sufficiency of which is hereby acknowledged, the Executive
agrees as follows:

 

1. RELEASE. In consideration for the payments to be made pursuant to the
Agreement:

 

(a) Executive knowingly and voluntarily releases, acquits and forever discharges
the Company, and its respective owners, parents, stockholders, predecessors,
successors, assigns, agents, directors, officers, employees, representatives,
divisions and subsidiaries (collectively, the “Releasees”) from any and all
charges, complaints, claims, liabilities, obligations, promises, agreements,
damages, causes of action, suits, rights, costs, losses, debts and expenses of
any nature whatsoever, known or unknown, suspected or unsuspected, foreseen or
unforeseen, matured or unmatured, against them which the Executive or any of his
heirs, executors, administrators, successors and assigns (“Executive Persons”)
ever had, now has or at any time hereafter may have, own or hold by reason of
any matter, fact, or cause whatsoever from the beginning of time up to and
including the date of this Termination Release, including without limitation all
claims for salary, bonuses, severance pay, vacation pay or any benefits arising
under the Employee Retirement Income Security Act of 1974, as amended; any
claims of sexual harassment, or discrimination based upon race, color, national
origin, ancestry, religion, marital status, sexual orientation, citizenship
status, medical condition or disability under Title VII of the Civil Rights Act
of 1964, the Civil Rights Act of 1991, the American with Disabilities Act,
Section 1981 of the Civil Rights Acts of 1866 and 1871, the Equal Pay Act, The
Rehabilitation Act, The Consolidated Omnibus Budget Reconciliation Act, as
amended, The Fair Labor Standards Act, as amended, and any other federal, state
or local law prohibiting discrimination in employment; any claims of age
discrimination under the Age Discrimination in Employment

 

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Act, as amended by the Older Workers Benefit Protection Act, or under any other
federal, state or local law prohibiting age discrimination; claims of breach of
implied or express contract, breach of promise, misrepresentation, negligence,
fraud, estoppel, defamation, infliction of emotional distress, violation of
public policy, wrongful or constructive discharge, or any other
employment-related tort; any claim for costs, fees, or other expenses, including
attorneys fees; and all claims under any other federal, state or local laws
relating to employment, except in any case to the extent such release is
prohibited by applicable federal, state and/or local law.

 

(b) Executive represents that he has not filed or permitted to be filed against
the Releasees, any complaints, charges or lawsuits and covenants and agrees that
he will not seek or be entitled to any personal recovery in any court or before
any governmental agency, arbitrator or self-regulatory body against any of the
Releasees arising out of any matters set forth in Section 1(a) hereof. If
Executive has filed a complaint, charge, grievance, lawsuit or similar action,
he agrees to remove, dismiss or take similar action to eliminate such complaint,
charge, grievance, lawsuit or similar action within five (5) days of signing
this Termination Release.

 

(c) Notwithstanding the foregoing, this Termination Release is not intended to
interfere with Executive’s right to file a charge with the Equal Employment
Opportunity Commission (hereinafter referred to as the “EEOC”) in connection
with any claim he believes he may have against the Company. However, Executive
hereby agrees to waive the right to recover money damages in any proceeding he
may bring before the EEOC or any other similar body or in any proceeding brought
by the EEOC or any other similar body on his behalf. This Termination Release
does not release, waive or give up any claim for workers’ compensation benefits,
vested retirement or welfare benefits he is entitled to under the terms of the
Company’s retirement and welfare benefit plans, as in effect from time to time,
any right to unemployment compensation that Executive may have, or his right to
enforce his rights under the Agreement.

 

2. CONFIRMATION OF OBLIGATIONS. Executive hereby confirms and agrees to his
continuing obligation under the Agreement after termination of employment not to
directly or indirectly disclose to third parties or use any Confidential
Information (as defined in the Agreement) that he may have acquired, learned,
developed, or created by reason of his employment with the Company.

 

3. CONFIDENTIALITY; NO COMPETITION; NONSOLICITATION. Executive hereby confirms
and agrees to his confidentiality, nonsolicitation and non-competition
obligations under the Agreement.

 

4. NO DISPARAGEMENT. Each of the Executive and the Company agree not to
disparage the other, including making any statement or comments or engaging in
any conduct that is disparaging or derogatory toward the Executive or the
Company, as the case may be, whether directly or indirectly, by name or
innuendo; provided, however, that nothing in this Termination Release shall
restrict communications protected as privileged under federal or state law to
testimony or communications ordered and required by a court or an administrative
agency of competent jurisdiction.

 

5. CONFIDENTIALITY. Each of the Executive and the Company agree to keep the
terms of this Termination Release confidential and shall not disclose the fact
or terms to third parties,

 

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except as required by applicable law or regulation or by court order; provided,
however, that Executive may disclose the terms of this Termination Release to
members of his immediate family, his attorney or counselor, and persons
assisting him in financial planning or tax preparation, provided these people
agree to keep such information confidential; provided, further, however, that
the Company may disclose the terms of this Termination Release to its certified
public accountants, outside counsel or others on a need to know basis, provided
these people agree to keep such information confidential.

 

6. ACKNOWLEDGMENT. The Company has advised the Executive to consult with an
attorney of his choosing prior to signing this Termination Release and the
Executive hereby represents to the Company that he has been offered an
opportunity to consult with an attorney prior to signing this Termination
Release. The Executive shall have forty-five (45) days to consider the waiver of
his rights in this Termination Release, although he may sign this Termination
Release sooner if he chooses. Once he has signed this Termination Release, the
Executive shall have seven (7) additional days from the date of execution to
revoke his consent to the waiver of his rights. If no such revocation occurs,
the Executive’s waiver of rights in this Termination Release shall become
effective seven (7) days from the date of execution by the Executive. In the
event that the Executive revokes his waiver of rights in this Termination
Release, this Termination Release will have no force and effect and no Severance
Payments (as defined in the Agreement) shall be due or payable.

 

7. GOVERNING LAW. This Termination Release shall be governed and construed in
accordance with the laws of Commonwealth of Pennsylvania, without giving effect
to principles of conflicts law.

 

IN WITNESS WHEREOF, the Executive has executed this Termination Release as of
the day and year first above written.

 

 

 

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