Document:

Edward J. Matey Jr. Employment Agreement

 Exhibit 10.4 
  
 EMPLOYMENT AGREEMENT 
 BETWEEN 
 EDWARD J. MATEY JR. 
 AND 
 FIRST STATES GROUP, L.P. 
  
 This Employment Agreement (the “Agreement”), dated as of August 30, 2005 (“Effective Date”), between First States Group, L.P., a
Delaware limited partnership (the “Company”), and Edward J. Matey Jr. (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 January 1, 2004 (the “January 2004 Agreement”); 
  
 WHEREAS, the January 2004 Agreement amended and restated the Employment Agreement between the Company and the Executive, dated May 15, 2003 (the
“May 2003 Agreement”); 
  
 WHEREAS, the May 2003
Agreement amended and restated the Employment Agreement between the REIT (which assigned that agreement to the Company) and the Executive, dated October 1, 2002 (the “Original Agreement”); 
  
 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 and General Counsel. The Executive shall also continue to be an officer of the REIT as its Executive Vice President and General Counsel. 

 (b) DUTIES. The Executive shall report to the Chief Executive Officer of the Company (the
“Chief Executive Officer”) and his principal employment duties and responsibilities shall be those duties and responsibilities customary for this position 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 efforts, (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. 
  
 (d) RELOCATION REIMBURSEMENT. In the event the Company
changes the principal place of business at which the Executive performs his duties to a location that is outside of a 50 mile radius of Jenkintown, Pennsylvania, the Company shall reimburse the Executive for all reasonable relocation expenses,
including but not limited to, temporary housing for the Executive and his family. 
  
 2. TERM. This Agreement shall be effective as of the Effective Date and shall continue in full force and effect thereafter until May 15, 2006 (the “Initial Term”); and shall be automatically be extended
for an additional one (1) year renewal term at the end of the Initial Term (a “Renewal Term”), and an additional one (1) year Renewal Term on each one year anniversary of the previous one year 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 terminates 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 Base Salary shall be $401,000, which shall consist of a base amount of $261,000 (the “Base Amount”) and a guaranteed bonus amount of $140,000 (the “Guaranteed Bonus Advance”). 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, and the
allocation of such increase between the Base Amount and the Guaranteed Bonus Advance; 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.

  

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 4. ANNUAL INCENTIVE AWARDS. 
  
 (a) ANNUAL INCENTIVE BONUS POLICY. Effective as of January 1, 2005, and for each 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 Janaury 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 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
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 determined as follows: 
  
 Cash Incentive Bonus = (Total Bonus Percentage x Base Salary)
– Guaranteed Bonus Advance 
  
 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: 
  

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 Restricted Share Incentive Bonus = Base Grant + Performance Grant 
  
 where: 
  
 “Base Grant” = 50% x Target Grant 
  
 “Performance Grant” = 50% x Total Bonus
Percentage x Target Grant 
  
 The Target Grant for 2005 for the
Executive has been established at 32,184 Common Shares under the 2005 Bonus Policy, 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 OPTION GRANTS. The REIT has
established the 2002 Equity Incentive Plan (“Equity Incentive Plan”). Under the Original Agreement, on the closing of the 144A Offering, the REIT granted the Executive an initial grant of options (the “Initial Grant Options”) to
purchase 37,500 common shares of beneficial ownership of the Company, par value $.001 (“Common Shares”). The Initial Grant Options have an exercise price of $10.00 per share and a term of ten (10) years and will vest and become
exercisable with respect to 25% of the underlying Common Shares on the one-year anniversary of the date of grant and 6.25% of the underlying Common Shares on the last day of each fiscal quarter thereafter until fully vested; provided,
however, that the Executive will be 100% vested in the Initial Grant Options 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 Company’s failure to renew this Agreement. The Executive will forfeit all unvested Initial Grant Options if he is terminated at any time for Cause, and will forfeit all unvested
Initial Grant Options if he voluntarily terminates his employment with the Company for any reason. The Executive shall be eligible to receive future option grants as recommended by the Chief Executive Officer, subject to review and approval by the
Compensation Committee. 
  
 (b) 2002 EQUITY
INCENTIVE PLAN RESTRICTED SHARE AWARDS. The Equity Incentive Plan provides for the issuance of Common Shares as 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 72,000 Common
Shares on July 1, 2003 (the “Initial Restricted Share Grant”). The Compensation Committee also approved a Restricted Share Grant to the Executive for 30,000 Common Shares, effective January 2, 2004 (the “January 2004
Restricted Share Grant”) and a Restricted Share Grant to the Executive for 32,184 Common Shares, effective January 4, 2005 (the “January 2005 Restricted Share Grant”). 
  

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 (c) VESTING OF RESTRICTED SHARE AWARDS. The vesting of the January 2004 Restricted Share
Grant and the January 2005 Restricted Share Grant are, 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 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
Company’s failure to renew this Agreement. If the Executive is terminated for Cause or if he voluntarily terminates his employment for any reason, the Company has the right to repurchase any unvested Restricted Share Grants 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. 
  
 (d) OUTPERFORMANCE PLAN BONUS. The REIT previously
established the 2003 Outperformance Plan (the “OPP”) as an incentive compensation plan for key employees with awards determined based on the annual and the three-year total return to shareholders of the REIT over the period ending
December 31, 2005. 
  
 (e) 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 4.5% to the Executive, which will become effective on January 1, 2006 if the Executive is
employed by the Company at that date. 
  
 6. BENEFITS. 

 
 (a) VACATION. The Executive shall be entitled to four
(4) weeks paid vacation per full calendar year, which shall accrue during the Executive’s employment with the Company. The Executive shall be entitled to cash in lieu of any accrued but unused vacation time in accordance with the
Company’s vacation policy. 
  
 (b) SICK AND
PERSONAL DAYS. The Executive shall be entitled to sick and personal days pursuant to Company policy. 
  
 (c) EMPLOYEE BENEFITS. 
  
 (i) PARTICIPATION IN 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. 
  

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 (ii) DISABILITY INSURANCE. The Company shall maintain, at its cost, supplemental
renewable long-term disability insurance as agreed to by the Company and the Executive. 
  
 (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 as determined by the Chief Executive Officer provided such allowance is consistent with amounts paid to other similarly situated executives
of the Company and is not less than $750.00 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 and director 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. 
  
 (v) PROFESSIONAL LICENSES; CONTINUING EDUCATION. The Company
shall pay for the professional licenses of the Executive in all states in which he is licensed to practice law, and shall reimburse the Executive for all reasonable costs incurred in his complying with any continuing legal education requirements
required to maintain his license(s). 
  
 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 

  

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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 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 OR VOLUNTARY RESIGNATION. At the election of the Company without Cause, or 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 by 

  

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reason of his becoming Permanently Disabled or a termination by the Company for any reason other than 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, and 
  
 (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 that the Executive was employed prior to
the effective date of his termination, and 
  
 (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 “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. 
  
 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, vision 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, vision and prescription drug plans, including but not limited to premiums for such programs. To the extent that continued participation is neither permissible nor practicable, 

  

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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, vision 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 stock options awarded under the
Equity Incentive Plan (or any other or successor plan) shall immediately become 100% vested and he shall have a two-year period following the effective date of his termination of employment in which to exercise his vested stock options, including
those stock options that vested upon his termination of employment. 
  
 (viii) The Executive’s restricted Common Shares awarded under the Equity Incentive Plan (or any other or successor plan) shall immediately become 100% vested and all restrictions shall lapse; provided, however,
that this Section 8(a)(viii) shall not apply to any restricted Common Shares issued under the 2006 LTIP. 
  
 (ix) The Executive would be entitled to vest in and receive a percentage of his total OPP allocation for the 3-year term of the OPP (the
“OPP Allocation”) equal to (x) the number of complete months the Executive had participated in the OPP through the effective date of his termination of employment, divided by (y) 36 (representing the total number of months in the
OPP term), in lieu of the scheduled vesting of his OPP Allocation under the OPP. This percentage of his OPP Allocation would be paid to the Executive (less any cash OPP payments previously received by the Executive) after the OPP reward is
determined at the end of the OPP plan term. 
  
 (x) 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. 
  
 (xi) All Severance Payments are contingent on Executive signing a release of claims, substantially in the
form attached hereto as Exhibit A (the “Release”). 
  
 (xii) 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
his stock options and restricted Common Shares awarded under the Equity Incentive Plan. The Executive’s personal representative shall have a one-year period following the Executive’s death in which to exercise his vested stock options,
including those stock options that vested on death. The Company shall pay to the Executive’s personal representative any Base Salary, Cash Incentive Bonus, Restricted Share Incentive Bonus, expense reimbursements and all other compensation
related payments 

  

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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, Cash Incentive Bonus, 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. If the Executive is terminated for Cause or if he
voluntarily terminates his employment for any reason, he shall forfeit all unvested options, subject to Section 9(b) below, and the Company has the right to repurchase any unvested Restricted Share Grants in accordance with the terms of the
Equity Incentive Plan. 
  
 (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). On request of the Board at any time following his termination of employment for any reason, the Executive shall resign from the
Board if then a member. 
  
 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, 
  
 (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. 
  

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 (b) CERTAIN BENEFITS UPON A CHANGE OF CONTROL. In the event of a Change of Control, the
Executive shall become 100% vested in the stock options and restricted Common Shares awarded under the Equity Incentive Plan (or any other or successor plan), and shall also be entitled to the rights and benefits provided for under the 2006 LTIP. If
the Executive voluntarily terminates his employment for any reason during the Change of Control Termination Period, then the Executive shall have a one-year period following the Change of Control in which to exercise his vested stock options,
including those stock options that vested upon the Change of Control. 
  
 (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 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. 
  
 (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

  

 11 

 
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 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 

  

 12 

 
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. 
  
 (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 

  

 13 

 
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)(x), for a period of 24 calendar months
after the termination 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 of the Company 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 

  

 14 

 
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. 
  
 (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 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 

  

 15 

 
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.

  
 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. 
  

 16 

 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 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, the May 2003 Agreement, and the January 2004 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. 
  

 17 

 (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 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. 
  

 18 

 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.
	 	 	 	 EDWARD J. MATEY JR.

	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 Edward J. Matey Jr., 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

  

 19 

 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                      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 

  

 A-1 

 
Discrimination in Employment 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. 
  

 A-2 

 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, 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. 
  

 A-3 

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

	
	
	 

  

 A-4Third Amendment to Loan Agreement

 Exhibit 10.5 
  
 THIRD AMENDMENT TO LOAN AGREEMENT 
  
 This Third Amendment to Loan Agreement (the “Amendment”), dated as of September 30, 2005, is made by and among FIRST STATES
INVESTORS DB I, LLC (and each Property-Owning Borrower that has joined the Loan Agreement from time to time as listed on the signature pages hereto, collectively, “Borrower”), DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH, as agent
(“Agent”), and LASALLE BANK NATIONAL ASSOCIATION, a national banking association, as collateral agent (the “Collateral Agent”). 
  
 R E C I T A L S: 
  
 The Borrower, the Agent and the Collateral Agent are party to a Loan Agreement, dated as of July 18, 2003, as amended by the First Amendment to Loan
Agreement, dated as of August 9, 2004 and further amended by the Second Amendment to Loan Agreement, dated as of September 30, 2004 (as it may hereafter be amended, supplemented or otherwise modified, the “Loan
Agreement”), pursuant to which the Agent agreed, subject to the terms and conditions set forth in the Loan Agreement, to provide a series of loan advances (each, an “Advance” and collectively, the “Loan”)
as provided in the Loan Agreement. Terms used but not defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement, as amended hereby. 
  
 The parties wish to increase the amount available to be borrowed under the Loan Agreement and to make certain other
modifications to the Loan Agreement as provided herein. 
  
 NOW,
THEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows, effective as of the date hereof. 
  
 Section 1. Modified Definitions. Under Section 1.1 of the Loan
Agreement, the following definitions shall be deleted in their entirety, replaced with the following and inserted in their proper alphabetical order: 
  
 1.1 “Maturity Date” means the earlier of (a) the Payment Date in October, 2008 or (b) such earlier date on
which the entire Loan is required to be paid in full, by acceleration or otherwise under this Agreement or any of the other Loan Documents. 
  
 1.2 “Exit Fee” means either (1) with respect to any Advance equal to $100 million or less, 0.25% or (2) with
respect to any Advance equal to more than $100 million, 0.50%, in each case, of the principal amount of each Advance made pursuant to the Loan Agreement, which shall be due and payable at the time such Advance is repaid (whether on the Maturity
Date, by acceleration or otherwise); provided that the Exit Fee will be waived (i) with respect to up to $100 million of Advances in aggregate during any twelve month period commencing on October 1st of a year and ending on September 30th of the following year, if the related Property is the subject of a bonafide Capital Event (i.e. sale or transfer) to an independent third party during the initial ninety (90) day period after the
Advance is made to a party that, in accordance with GAAP, is not required to be consolidated with Borrower or its Affiliates and (ii) if the Property acquired with the proceeds of the Advance is immediately upon repayment of such Advance being
including in a securitization in which Deutsche Bank Securities Inc. acts as 

 
lead manager and sole book runner or if the Advance is refinanced with permanent financing provided by Deutsche Bank Securities Inc. or its Affiliates.

  
 1.3 “Advance Rate” means,
(a) with respect to each acquisition of Property other than FPC Property, the product of the Advance Percentage and the lesser of (x) the related Capital Markets Execution and (y) the related Acquisition Cost, and (b) with
respect to each acquisition of FPC Property, the product of the Advance Percentage and the related Capital Markets Execution. 
  
 1.4 “Capital Markets Execution” means, with respect to each Property and the related Advance, the maximum amount of debt
financing that can be issued with respect to such Property as determined by the Agent in its good faith business judgment. In making such determination with respect to FPC Properties, the Agent will take into consideration the unique value the
market affords properties comparable to the FPC Properties. 
  
 Section 2. Additional Definitions 
  
 Under
Section 1.1 of the Loan Agreement, the following definition shall be added and inserted in its proper alphabetical order: 
  
 2.1 “FPC Property” means a property acquired by Borrower pursuant to the “formula price contract program” of
Borrower or its Affiliates. An FPC Property may be either a CTL Property or a Conduit CMBS Property, based upon the criteria provided in such definitions. 
  
 Section 3. Increase in Loan Amount 
  
 3.1 Under the Recitals to the Loan Agreement, the term “Loan Amount”, which is defined therein to equal $300,000,000, is
hereby modified and increased to equal $400,000,000 effective on the date hereof. 
  
 3.2 On the date hereof, Borrower shall execute an Amended and Restated Promissory Note in the amount of $400,000,000 to reflect such
increase to the Loan Amount. 
  
 Section 4. Clause (a) of the
first sentence of Section 3.2 shall be amended to read: (a) to finance (i) up to $300 million of a portion of the acquisition or refinancing costs of any CTL Property or Conduit CMBS Property and (ii) up to $100 million of a
portion of the acquisition cost of property acquired under Borrower’s “formulated price contract program”. 
  
 Section 5. The following section shall be inserted as Section 2.3(b)(xiii): 
  
 (xiii). Officer’s Certificate. Borrower shall have delivered to Agent an Officer’s
Certificate setting forth: 
  
 (1) no Event of
Default has occurred or is continuing; 
  
 (2)
all representations and warranties made by Borrower in the Loan Agreement with respect to the Properties securing both the current Advance and all prior Advances remain true and correct as of the date of such proposed Advance; and 
  

 2 

 (3) except as provided in Section 3.11, no Property that has previously been
encumbered under the Loan has been released from the Lien. 
  
 Section 6. The first sentence of clause (a) of Section 2.3 shall be amended to insert the words “three (3) Business Days prior” after the word Agent and before the word written. 
  
 Section 7. The third sentence of clause (a)(i) of Section 3.12 which
reads “Borrower shall provide to Agent proof of such delivery” shall be deleted in its entirety and substituted with the following: 
  
 “Within four (4) weeks following the related Advance Closing Date, Borrower shall deliver to Agent, Collateral Agent and Agent’s counsel a
copy of the irrevocable direction letter sent to the tenant.” 
  
 Section 8. The following section shall be inserted as Section 3.12(a)(ii), and the existing paragraphs 3.12(a)(ii) and 3.12(a)(iii) shall be re-numbered accordingly to reflect such change: 
  
 3.12 (a)(ii). Commencing with the Advance that closed on August 4, 2005
and is secured by the Property demised to Regions Bank and continuing with all Advances thereafter, Collateral Agent shall establish and maintain individual sub-accounts of the Collection Account, each of which shall be an Eligible Account, to
receive all Rents and Money received under Leases and derived from the Property under each individual portfolio of Property which is the subject of an Advance (each a “Property Sub-Account” and collectively, the “Property
Sub-Accounts”). As of the close of business on the Business Day immediately preceding each Payment Date, Collateral Agent shall sweep all amounts on deposit in each of the Property Sub-Accounts into the Collection Account to be distributed
in accordance with the provisions of Section 3.12(b) hereof. 
  
 Section 9. The following section shall be inserted as Section 5.1(dd): 
  
 5.1(dd). Borrower shall furnish to Agent, not later than ten (10) days after the end of each calendar month, a statement detailing the assets that
have been financed by Agent with the proceeds of an Advance and remain encumbered under the Loan, as of the last day of the applicable calendar month. 
  
 Section 10. Effect Upon Loan Documents. 
  
 10.1 Except as specifically set forth herein, the Loan Documents shall remain in full force and effect and are hereby ratified and
confirmed. All references to “Loan Agreement” in the Loan Documents shall mean and refer to the Loan Agreement as modified and amended hereby. 
  
 10.2 The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Agent
under the Loan Documents, or any other document, instrument or agreement executed and/or delivered in connection therewith. 
  

 3 

 Section 11. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED, INTERPRETED AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PRINCIPLES. 
  
 Section 12. Counterparts. This Amendment may be executed in any number of counterparts, and all such counterparts shall together constitute the same agreement. 
  
 [REST OF PAGE INTENTIONALLY LEFT BLANK] 
  

 4 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year
first above written. 
  

			
	AGENT AND INITIAL LENDER:
	
	DEUTSCHE BANK AG, CAYMAN ISLANDS BRANCH, a Cayman Islands Branch of a Foreign Bank
		
	By:	 	 
	 	 	 Name:

	 	 	 Title:

		
	By:	 	 
	 	 	 Name:

	 	 	 Title:

					
	
	BORROWERS:
	
	FIRST STATES INVESTORS DB I, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 2550A, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

					
	FIRST STATES INVESTORS 4100D, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 2100, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 2101, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 2102, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 2103, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

  

 6 

					
	FIRST STATES INVESTORS 2104, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 2105, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 2106, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 2107, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 2108, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

  

 7 

					
	FIRST STATES INVESTORS 4026, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4029, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4044, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4048, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4055, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

  

 8 

					
	FIRST STATES INVESTORS 4062, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4067, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4076, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4081, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4085, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

  

 9 

					
	FIRST STATES INVESTORS 4082, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4063, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4065, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4054, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4042, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

  

 10 

					
	FIRST STATES INVESTORS 4010, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

	
	FIRST STATES INVESTORS 4200, LLC, a
Delaware limited liability company
		
	By:	 	 
	 	 	 Name:
	 	 Sonya A. Huffman

	 	 	 Title:
	 	 Vice President

  

 11 

			
	COLLATERAL AGENT:
	
	LA SALLE BANK NATIONAL ASSOCIATION, a
national banking association (as Collateral Agent for the Lenders only)
		
	By:	 	 
	 	 	 Name:

	 	 	 Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00093-of-00352.parquet"}]]